Tesla CEO and Twitter boss Elon Musk has warned of a severe recession in the United States. The billionaire stressed that the Federal Reserve must cut interest rates “immediately”, pointing out that the Fed “massively amplifies the probability of a severe recession”.
Elon Musk warns of a severe recession
Tesla CEO and Twitter chief Elon Musk warned Wednesday of a severe recession in the United States.
Responding to Vincent Yu who tweeted that he “expects a real economic recession in 2023”, Musk said the trend is concerning, stressing that the Federal Reserve “must cut interest rates immediately”. The billionaire pointed out that the Fed “massively amplifies the likelihood of a severe recession”.
Sven Henrich, Founder and Senior Market Strategist for Northmantrader, joined the discussion. He replied to Musk and Yu: “Ironically, the Fed continues to project positive GDP growth for next year despite all the obvious signs. But they did the same in 2008. As always, they will lower panic rates once the impact of the recession sets in and then blame unforeseen factors. In another tweet, Henrich described:
The Fed has been too quiet for too long totally misinterpreting inflation and now it has aggressively tightened in building the highest debt ever without considering the lag effects of these rate hikes, risking being late again to realize the damage caused.
Musk agreed, tweeting: “Exactly.”
Many people agreed with Musk. One tweeted: “Musk is actually right about this. Inflation is now mainly driven by housing, and interest rates are so high at this point that they are depressing investment in home construction, threatening to aggravate the underlying problem. Another wrote: “Right. Higher rates hurt people. The notion of raising rates as a hedge against inflation has always been sketchy. Some people have said the Fed ‘should be abolished.’
In October, Musk said the recession could last until spring 2024. In August he said he thought inflation had peaked and we would be in a recession for 18 months. In September, the Tesla boss warned that a major Fed rate hike risked deflation.
Do you agree with Elon Musk about the Fed and a severe recession? Let us know in the comments section below.
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