Elons Musk, the richest man in the world, issued a warning on Tuesday about the increasing probability that the US economy will enter a recession.
Speaking at the Qatar Economic Forum in Doha, Tesla’s CEO said a recession in the United States seems likely in the near future.
“I think a recession is inevitable at some point. As for whether there is a recession in the short term, it is more likely than not. It’s not a certainty, but it seems more likely than not,” Musk said when asked by the editor-in-chief of BloombergNewsJohn Micklethwait.
His outlook fuels fears of a sharp drop in the world’s largest economy as the US Federal Reserve raises interest rates to counter the fastest pace of inflation in decades. President Joe Biden stressed on Monday that a recession in the United States is not “inevitable” after a conversation with former Treasury Secretary Larry Summers, who sees a significant possibility that he is fighting stagflation.
An economic adviser to President Biden declared Tuesday that the United States government is concerned about a potential recession but considered that the foundations of the economy are solid enough to face that risk. “Obviously it is a concern, but our economy remains strong”expressed Cecilia Rouse to the chain CNBC.
“If we look at the main elements of GDP in the last quarter (when activity contracted), they were solid in terms of consumer spending,” he said. “The labor market remains strong” and growth continues, added the counselor, for whom the weakness in the first quarter was due to reduced exports.
The Gross Domestic Product (GDP) of the United States contracted by 1.5% in the first quarter in the annualized measurement, the most used in the country, which compares the GDP with the previous quarter and, according to the conditions at the time of the measurement, projects the estimated growth in 12 months.
In the comparison with the first quarter of 2021, instead, the GDP registered an expansion of 3.5%. And quarter on quarter, a contraction of 0.4% is observed between the first quarter of 2022 and the last quarter of 2021.
“I don’t think a recession is inevitable,” Treasury Secretary Janet Yellen told the network over the weekend ABC. Yellen admitted that he expects “the economy to slow down.”
An economy is considered to enter a recession when there are two consecutive quarters of contraction in gross domestic product.
The successive increases in interest rates by the Federal Reserve make planning in the United States the hypothesis of an eventual recession of the economy.
“We foresee a slight recession in the coming months, with persistent inflation that will force a more pronounced adjustment of monetary policy”Gregory Daco, chief economist at EY-Parthenon, said in a note published Tuesday.
(With information from AFP and Bloomberg)
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