Billionaire Elon Musk, CEO of Tesla and Spacex, has warned that the recession will be “significantly amplified” if the Federal Reserve raises interest rates again next week. He added that things will “likely start to look up” in the second quarter of 2024.
Tesla CEO Elon Musk on the recession and Fed rate hikes
Tesla CEO and Twitter chief Elon Musk 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 further asked on Twitter how long he thinks the recession will last. The Tesla boss replied:
Just a rough estimate, but things will probably start looking up in Q2 2024.
It was not the first time Musk had warned of the consequences of the Fed raising interest rates. In late November, the billionaire said the trend was concerning. He urged the Federal Reserve to cut interest rates immediately, saying the US central bank is “massively magnifying the likelihood of a severe recession.”
He agreed with Ark Invest CEO Cathie Wood that the actions of the Fed could lead to a Great Depression similar to that of 1929.
Federal Reserve Chairman Jerome Powell announced a 50 basis point rate hike in December after four consecutive 75 basis point hikes. “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said. Fed officials will announce their decision on Wednesday after a two-day meeting of the Federal Open Market Committee (FOMC).
According to gold bug Peter Schiff, “The risk is not that the Fed will cause a recession by unnecessarily tightening too much because it thinks a strong economy will keep inflation from falling.” He explained in a tweet last week: “The risk is that the current recession will deepen, forcing the Fed to pivot too soon, as it mistakenly believes inflation will come down.”
Some people are expecting a mild recession in 2023, including Citi Group analysts. The impending recession “won’t 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 veteran investor Jim Rogers.
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