On June 21, Tesla CEO and billionaire Elon Musk warned that a recession in the United States is inevitable in his interview at the Qatar Economic Forum hosted by Bloomberg.
Musk Talks About US Recession
The 50-year-old businessman answered questions about the economy of the United States, his recent purchase of the social media platform Twitter, and the planned cut of Tesla's salaries staff over the next three months.
John Micklethwait, editor-in-chief of Bloomberg and host of the event, asked the richest man in the world about the current economic state of the country and what his thoughts were about President Biden's statement that a recession won't happen.
Musk believes that a recession is bound to happen, but it won't last long. He also confirmed that he will reduce Tesla's salaried staff numbers by 10% in an internal email received by Reuters.
The Tesla CEO said that the company is expecting to grow their hourly workforce, but they grew too fast on the salaried side, which is why they need to balance it out.
The automaker has less than 100,000 employees, but Musk said that their layoffs would amount to a reduction of around 3.5% because salaried workers represent one-third of the company's workforce.
Meanwhile, Tesla's hourly basis employees account two-thirds of the workforce.
Musk Talks About Twitter Purchase
Musk also talked about his $44 billion bid to purchase Twitter. He revealed that there are issues that still needs fixing, including the debt part of the deal and removing the problem with spam on the platform.
The billionaire stated that his lawyers advised him to walk away from the deal if they can't come up with a better plan to fix Twitter's fake accounts and spam.
Musk added that his goal is to add 80% of North America and half of the world on Twitter, according to The Guardian.
Rising Inflation
Musk's comments about the recession follow other tech giant leaders who have voiced their concerns that rising inflation and the response of the Federal Reserve may affect the economic growth of the country.
A recession happens when the gross domestic product falls for two successive economic quarters.
To combat inflation, the Federal Reserve raised interest rates by three-quarters of a percentage point last week. This is the largest increase in an interest rate since 1994.
The stocks fell after the announcement, with the Dow Jones Industrial Average recording its worst loss since 2020, according to The Hill.
As the Federal Reserve takes the necessary steps to try to get inflation under control, economists and experts have expressed concern that slowing down the economy could just result in its shrinking.
On June 17, a survey of top business executives was surveyed about when they believe the recession will happen, and it showed that 60% of CEOs believe it might occur by the end of 2022.
Meanwhile, on June 20, Goldman Sachs economists said that there is a chance of a recession has increased. They believe that in 2023, the chance of recession will increase from 15% to 30%.
Related Article: Elon Musk Says Tesla Will Terminate 3.5% of Staff After Ex-Workers Allege Company of Violating Labor Laws
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Written by Sophie Webster
