The economy is on everyone’s mind.
What concerns everyone is the health of economic activity as the midterm elections loom.
President Joe Biden, whose party has a fragile majority in Congress, continues to say the situation is not so hopeless.
“We are starting to see some of the good news about the economy. Gas prices plummeted in 46 of the 50 states because of what we did. We’re moving in the right direction,” Biden said during an Oct. 20 news conference.
He was trying to avoid Republican attacks on the economy and inflation.
The president’s message contrasts with many business leaders and economists who believe the Federal Reserve’s (Fed) policy of aggressively raising interest rates to crush inflation will cause a so-called hard landing in the economy, called a recession.
Business leaders say recession is imminent
JPMorgan Chase CEO Jamie Dimon said on Oct. 10 that the economy will enter a recession “six to nine months from now.”
David Solomon, CEO of investment bank Goldman Sachs (GS) agrees.
“I think it’s time to be cautious,” Solomon said during an interview with CNBC on Oct. 18. “And I think if you’re running a risk-based business, it’s time to think more carefully about the risk box, the risk appetite. I think you have to expect more volatility on the horizon.”
The banker added: “Now, that doesn’t necessarily mean we have a really tough economic scenario, but in the distribution of outcomes, there’s a good chance we’re going to 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 tell you to blow the hatches,” Bezos tweeted on Oct. 18.
Recession Will Last ‘Until Spring 2004’
More than two-thirds (69%) of Americans are worried about the possibility of a recession by the end of 2023, according to a July survey by personal finance website Bankrate.com.
Many tech groups have already announced hiring freezes, job pulls, job cuts, travel budgets, marketing budgets and employee benefits. There are those who have also canceled certain projects. Technology companies are companies that thrive in times of growth. They are often the first to be hit by a recession.
Elon Musk, the world’s richest man and the head of four companies, predicts that the looming recession will last at least until the spring of 2024. For Musk, there is no doubt about an economic decline. And that will continue for at least another 18 months.
It all started with a Twitter thread started by Billy Marcus, co-creator of the Dogecoin (DOGE) meme currency, of which Musk is one of the biggest supporters.
“Oh wow, the coronavirus numbers are actually pretty low,” Marcus tweeted on Oct. 21. “I guess all we have to worry about now is the impending global recession and nuclear apocalypse.”
“It sure would be nice to have a year without a horrible global event,” Musk replied.
Then 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 a guess, but probably by the spring of the 24th,” the billionaire replied.
How bad will it be?
“How much worse do you think it will be?” the user continued. “Like worse or a ton worse?”
According to Musk, it is difficult to say exactly how much the economic situation will deteriorate. But he believes the positive side of the recession is that companies without true fundamentals will disappear.
“Very summery,” Musk said. “Tesla and SpaceX are in good positions, but many other companies are not.”
He added: “Recessions have a clarifying reason in that companies that shouldn’t exist cease to exist.”
This is not the first time that Musk has predicted that the economy will enter a recession. Also, he has already warned that “shit companies go bankrupt, and the ones that make useful products prosper.”
“I think we’re probably in a recession, and that recession is going to get worse,” the billionaire said on May 16 during a virtual appearance at the recent All-In Conference held in Miami. “But you know, these things pass and then it will be boom times again.”
adze (TSLA) The CEO added that the recession will “probably” last 12 to 18 months. “It’s usually the time it takes for a correction to happen.”
Tesla, Musk’s flagship company, continues to hire and has no plans to slow down its vehicle production.