The economy is on everyone’s lips.
What concerns everyone is the health of economic activity in light of the upcoming midterm elections.
President Joe Biden, whose party has a weak majority in Congress, goes on to say the situation is not so dire.
“We’re starting to see some of the good news about the economy. Gas prices have plummeted in 46 of the 50 states because of what I did. We’re moving in the right direction,” Biden said during a speech press conference on Oct. 20.
He tried to fend off Republican attacks on the economy and inflation.
The President’s message contrasts with many business leaders and economists who believe that the Federal Reserve’s (Fed) policy of aggressively raising interest rates to combat inflation will cause the economy to experience what it calls a hard landing, also known as a recession.
Business leaders say a recession is imminent
Jamie Dimon, CEO of JPMorgan Chase, said Oct. 10 that the economy will enter a recession “in six to nine months.”
David Solomon, CEO of investment bank Goldman Sachs (GS) agrees.
“I think it’s time to be careful,” Solomon said in an Oct. 18 interview with CNBC. “And I think if you’re running a risk-based business, it’s time to start thinking more carefully about your risk box, your risk appetite. I think you have to expect more volatility on the horizon.
The banker added: “It doesn’t necessarily mean that we have a really difficult economic scenario, but looking at the distribution of the results, there is a good chance that we could have a recession.”
On the same day Jeff Bezos, the founder of Amazon (AMZN) one of the barometers of public consumption, advised businesses and consumers to prepare for a rainy day.
“Yes, the odds in this economy are telling you to shut the hatches,” Bezos tweeted Oct. 18.
Recession lasts “until spring 2004”
More than two-thirds (69%) of Americans worry about the possibility of a recession by the end of 2023, according to a July poll by personal finance website Bankrate.com.
Many technology companies have already announced hiring freezes, withdrawn job offers, job cuts, travel budgets, marketing budgets and employee benefits. There are also those who have canceled certain projects. Technology companies are companies that thrive in times of growth. They are often the first to be hit by a downturn.
Elon Musk, the richest man in the world and CEO of four companies, estimates that the looming recession will last at least until spring 2024. Musk has no doubts about an economic downturn. And this will continue for at least 18 months.
It all started with a Twitter thread initiated by Billy Marcus, co-creator of the Dogecoin (DOGE) meme coin, of which Musk is a major supporter.
“Oh wow the coronavirus numbers are actually pretty low,” Marcus posted on Twitter on Oct. 21. “I think all we have to worry about now is the coming global recession and the nuclear apocalypse.”
“It sure would be nice to have a year without a terrible global event,” Musk replied.
At the time, a Twitter user asked him how long he thought the recession would last.
“How long do you think the recession will last,” the user asked.
“Just guessing, but probably by Spring 24,” the billionaire replied.
How bad will it be?
“How much worse do you think it gets?” The user continued. “Like a little worse or a ton worse?”
According to Musk, it is difficult to say how much the economic situation will deteriorate. But he believes the upside of the recession is that companies without real fundamentals will die out.
“Very different,” Musk said. “Tesla & SpaceX are well positioned, but many other companies are not.”
He added, “Recessions have a silver lining as companies that shouldn’t exist cease to exist.”
This isn’t the first time Musk has predicted the economy will fall into recession. He has also warned that “the bullshit companies go bankrupt and those who make useful products prosper.”
“I think we’re probably in a recession and this recession is going to get worse,” the billionaire said May 16 during a virtual appearance at the recent All-In conference in Miami. “But you know, these things pass and then there are boom times again.”
Tesla (TSLA) The CEO added that the recession is “likely” to last 12 to 18 months. “It’s usually the time it takes for a correction to occur.”
Tesla, Musk’s flagship company, is still hiring and has no plans to curb its vehicle production.
