Elon Musk Warns Fed Rate Hike Will Amplify Recession

Elon Musk, CEO of Twitter, stated that the next US Federal Reserve rate hike will exacerbate the recession. In a Twitter exchange, the world’s richest man and mercurial electric car executive said,

Michael Saylor responded to Elon Musk’s post after some time,

Elon Musk predicted a recession

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

According to economists, the Federal Reserve will likely announce the final hike of 2022 in the coming week. Fed Chair Jerome Powell also hinted that the central bank’s benchmark interest rate will most likely be raised by a smaller increment when it meets next week. However, whether the rate hike is 0.5 or 0.75 percentage points is in doubt. The US Federal Reserve’s interest rates will be announced on December 14.

The Federal Reserve last month announced a fourth consecutive 0.75 percentage point rate hike in November in an effort to tame inflation.

Economists view on recession

Many economists believe that a recession is more likely in 2023 as a result of continued rate increases discouraging borrowing. 42 economists responding to a Bloomberg survey estimate that the likelihood of a recession over the upcoming year has increased to 60%.

Between October and November, the cost of goods increased just 0.1%, while wholesale gas prices fell by 6%. (Food prices were an exception; they rises 3.3% last month as a result of higher-priced chicken, eggs, and vegetables.)

In contrast, the cost of services rises more, by 0.4%, primarily as a result of higher financial service prices. The consumer price index, the US government’s most widely known inflation indicator, will be released. Prices were up 7.7% from a year ago in the most recent CPI report for October, which showed a moderating of inflation. That was the lowest comparison figure since January, despite the fact that it was still high.

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