Published: June 22, 2022
Elon Musk, the CEO of Tesla and Twitter’s biggest stakeholder, said that the chances of a recession happening in the US in the near future are real and more likely than not.
The tech mogul and the richest man in the world also went on to say that, although it’s likely, nothing suggests that the said recession is a certainty at the moment.
Musk isn’t the only one to openly express his opinion on this topic. Namely, a team of experts from Goldman Sachs issued a research note earlier on Monday stating that the recession risks are indeed real and on the rising trajectory.
Their team suggests that the chance of entering a recession in 2023 currently sits at 30%, while the probability of that happening in 2024, should the former be avoided, is 25%.
The cumulative probability over the next two years implies it to be at 48%, 13% higher than previously predicted.
Economists, led by Jan Hatzius, attribute these rising probabilities to the lower baseline growth, which could set off the Fed to respond more viciously to inflation expectations should energy prices continue to rise.
Roubini, the CEO of Roubini Macro Associates, stated on Bloomberg Television that he sees the recession happening by the end of the year. He credited the decline in consumer-based and manufacturing activities during the high inflation as the main culprit for such a scenario.
Just last week, the Fed accelerated its monetary-tightening campaign by increasing its interest rates to levels never seen before since 1994. This action significantly increased the risk of recession and put even bigger pressure on President Joe Biden.
However, despite all of these, the US President emphasized on Monday that a recession in the US isn’t “inevitable,” following a discussion with former Treasury Secretary Larry Summers, who believes that the country can battle stagflation.