Elon Musk warns that if the Fed raises interest rates next week, it will make the recession worse

Elon Musk said that the next rate hike by the U.S. Federal Reserve will exacerbate the recession.

Michael Saylor replied to Elon Musk’s post,

Elon Musk predicted a recession

Earlier this year, in October, Elon Musk predicted that the recession would last “until spring ’24“. In October, the Tesla Owners Silicon Valley Twitter account asked Elon Musk how long he thought the recession would last, and he replied, “I’m guessing, but probably until Spring ’24.

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Economists say the Federal Reserve will likely announce the final 2022 hike in the coming week. Fed Chairman Jerome Powell also hinted that the central bank’s benchmark interest rate will most likely be raised by a smaller increment at its meeting next week. However, it is unclear whether the rate increase will be 0.5 or 0.75 percentage points. The U.S. Federal Reserve’s interest rates will be announced on December 14.

Last month, the Federal Reserve announced a fourth consecutive 0.75 percentage point rate hike in November in an effort to keep inflation in check.

Economists’ take on the recession

Many economists believe a recession is more likely in 2023 because of continued rate hikes that discourage borrowing. 42 economists responding to a Bloomberg survey believe the likelihood of a recession in the coming year has increased to 60%.

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Between October and November, the cost of goods rose just 0.1 percent, while wholesale gasoline prices fell 6 percent. (Food prices were the exception; they rose 3.3 percent last month due to higher prices for chicken, eggs, and vegetables.)

In contrast, the cost of services is rising more, by 0.4 percent, mainly due to higher prices for financial services. The Consumer Price Index, the U.S. government’s best-known inflation indicator, will be released. Prices were up 7.7 percent from a year earlier in the latest October CPI report, showing a moderation in inflation. This is the lowest comparison figure since January, despite the fact that it is still high.

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