Recession fears have been growing in the U.S. as the Federal Reserve has tightened its monetary policy.
Tesla Inc (NASDAQ:TSLA) CEO Elon Musk says the U.S. economy is already in a recession, and it could be “tough going” for 12 to 18 months.
In a recent Twitter post, a user asked Musk if he still thinks the U.S. is heading for a recession.
Musk replied that a recession is a necessary part of the economic cycle, also mentioning the impact of the work-from-home culture during the COVID pandemic.
Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.
Also, all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!
— Elon Musk (@elonmusk) May 27, 2022
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Another Twitter user asked how long the recession would last, Musk responded that historically a downturn lasts for at least a year.
Based on past experience, about 12 to 18 months. Companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources.
— Elon Musk (@elonmusk) May 27, 2022
Greg Daco, the chief economist at EY-Parthenon, has warned that the odds of an economic downturn in the U.S. over the next year are somewhere between 35% and 40%.
“A U.S. recession is unlikely in the near term, but there are several uncertainties on the horizon,” Daco wrote.
Photo: Created with an image from Ministerio Das Comanicacoes on Flickr
