As the U.S. economy confronts the threat of a catastrophic recession, Elon Musk, the CEO of Tesla and Twitter, has urged the Federal Reserve to lower interest rates to avert a potential significant recession.
The Federal Reserve has increased interest rates six times this year to slow the economy and bring prices back down to combat the U.S.’s skyrocketing inflation.
Investors are uneasy due to the rate rises’ pace and magnitude; many are concerned that, if the Fed hasn’t already, it will overcorrect and push the economy into a recession.
Elon Musk, CEO of Tesla and Twitter, also holds this opinion. He wrote on Twitter on Wednesday that the most recent economic trends are “concerning,” adding that not only is a recession highly likely, but the Fed also runs the risk of making the recession more severe by sticking to its plan of interest rate hikes.
“The trend is alarming. The Fed must reduce interest rates right away. They are significantly increasing the likelihood of a severe recession, Musk said.
Though the tech CEO has grown more anxious in recent months about the possibility of a downturn, Musk has previously warned of an impending recession.
Even if there have been some signs of inflation cooling off over the past month, the Fed is still on track to raise rates further, indicating that it will likely continue to do so into next year, albeit with lower increases.
Recessionary Predictions From Musk
Over the past few months, Musk’s predictions of an economic crisis have grown much more menacing.
In May, he predicted that a recession would likely last “12 to 18 months.” Still, he also described a dip in the economy as a necessary part of the business cycle and not necessarily a negative thing.
There will be boom times once more, he said. “What usually happens is that if a boom lasts for too long, capital is misallocated—basically, it starts to pour money on idiots.”
The internet entrepreneur estimated in October that a recession would likely extend until the spring of 2024. Despite this, he maintained that recessions might be beneficial since they clean out so-called zombie firms that don’t contribute anything to the economy.
At the time, Musk stated on Twitter that “recessions do have a silver lining in that enterprise that shouldn’t exist quit operating.”
No Possibility Of A Fed Turn
Musk joins the clamour of investors and market observers who have been avidly looking for signs of a Fed “pivot” this year, indicating that the central bank would soon cease hiking interest rates and possibly even reverse them by urging the Fed to decrease interest rates.
The prospects of a change, of course, are slim, even though Fed officials have indicated they are open to lesser rate increases in the future as inflation shows indications of levelling off; Jerome Powell, the head of the Federal Reserve, said on Wednesday that the Fed was getting ready for gradual rate increases in the future.