Billionaire Elon Musk, the chief executive of Tesla and Spacex, has warned that the recession will be “greatly amplified” if the Federal Reserve raises interest rates again next week. He added that things will “probably start to look better” in the second quarter of 2024.
Tesla CEO Elon Musk on the recession and Fed rate hikes
Tesla CEO and Twitter boss Elon Musk has reiterated his warning about a US recession. He tweeted on Friday that if the Federal Reserve raises interest rates again next week, the “recession will be greatly amplified.”
Musk was asked on Twitter how long he thinks the recession will last. The Tesla boss responded:
Just a rough guess, but things will probably start to look better in the second quarter of 2024.
This was not the first time Musk had warned of the consequences of the Fed’s interest rate hikes. In late November, the billionaire said the trend was worrying. The urged the Federal Reserve to cut interest rates immediately, stating that the US central bank is “greatly increasing the probability of a severe recession”.
He agreed with Ark Invest CEO Cathie Wood that Fed actions could lead to a Great Depression like that of 1929.
Federal Reserve Chairman Jerome Powell has signaled a 50 basis point rate hike in December after four consecutive 75 basis point hikes. “It makes sense to ease the pace of our rate increases as we get closer to the level of easing that will be enough to bring inflation down,” Powell said. said. Fed officials will announce their decision on Wednesday after a two-day meeting of the Federal Open Market Committee (FOMC).
According to gold lover Peter Schiff, “The risk is not that the Federal Reserve will cause a recession by unnecessarily tightening too much, as it believes that a strong economy will prevent inflation from falling.” He explained in a tweet last week: “The risk is that the current recession worsens, causing the Fed to pivot too soon as it mistakenly believes inflation will decline.”
Some people expect a mild recession in 2023, including analysts at Citi Group. The impending recession “will not be as deep, but it will be significant.” said David Bailin, chief investment officer and director of Citi Global Wealth Investments. Some, however, expect a severe recessionincluding veteran investors jim rogers.
Do you agree with Elon Musk? Let us know in the comments section.
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