Billionaire Elon Musk, CEO of Tesla and Spacex, 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 improve” in the second quarter of 2024.
Tesla CEO Elon Musk talks about the recession and Fed rate hikes.
Tesla CEO and Twitter chief Elon Musk has reiterated his warning of a recession in the United States. He tweeted Friday that if the Federal Reserve raises interest rates again next week, the “recession will be greatly magnified.“
If the Fed raises rates again next week, the recession will be greatly amplified
– Elon Musk (@elonmusk) December 9, 2022
Musk was then asked on Twitter how long he thinks the recession will last. The Tesla boss replied:
Just a rough estimate, but things probably start to improve in Q2 2024.
This wasn’t the first time Musk warned about the consequences of the Fed raising interest rates. In late November, the billionaire said the trend was a concern. He urged the Federal Reserve to immediately cut interest rates, saying the U.S. central bank “is massively amplifying the probability of a severe recession.“
He agrees with Cathie Wood, CEO of Ark Invest, that the Fed’s actions could lead to a 1929-like Great Depression.
Federal Reserve Chairman Jerome Powell signaled a 50 basis point rate hike in December, following four consecutive 75 basis point hikes. “It makes sense to moderate the pace of our rate hikes as we approach the level of restraint that will be sufficient to bring inflation down” said Jerome Powell. said. Fed officials will announce their decision Wednesday after a two-day Federal Open Market Committee (FOMC) meeting.
According to Peter Schiff “the risk is not that the Fed will cause a recession by unnecessarily tightening monetary policy too much, because it believes that a strong economy will keep inflation from falling.“He explained in a tweet last week, “The risk is that the current recession will worsen, causing the Fed to pivot too soon, because they mistakenly think inflation will fall.“
That’s true, but if the #Fed doesn’t raise rates #inflation will be greatly amplified, which will ultimately amplify the #recession even more.
– Peter Schiff (@PeterSchiff) December 9, 2022
Some expect a mild recession in 2023, including analysts at Citi Group. The impending recession “will not be that deep, but it will be significant” said. David Bailin, chief investment officer and head of Citi Global Wealth Investments. Some, however, expect a severe recession, including investor Jim Rogers.