Tesla CEO Elon Musk believes inflation has peaked and the U.S. economy will be in recession for about 18 months.” “We have a fair amount of insight into where the price of things will go over time,” the billionaire explained, noting that “inflation will decline rapidly.
Elon Musk explains why he thinks inflation has peaked and the recession will last 18 months
Tesla and SpaceX CEO Elon Musk shared his views on the U.S. economy, inflation, and recession at Tesla’s 2022 annual shareholders meeting on Thursday.
In response to a question about inflation, he explained.” We get a fair amount of insight into where the price of things are going over time, because when you’re making millions of cars, you have to buy goods months before when they are needed … It is a long supply chain with a tremendous amount of inertia, so we kind of get some insight into where prices are headed over time.”
Musk elaborated.” The interesting thing we’re seeing now is that most of our commodities, most – not all, but more than half – of what goes into Tesla tend to be priced down six months from now, six months from now.” He added,
trend down suggests that we are past the peak of inflation.
However, Mask noted.
“Making macroeconomic prognostications is a recipe for disaster, but my guess is that we are past the peak of inflation and we will be in a recession. I think it will be a relatively mild recession, but I am only speculating here.”
Emphasizing that his views were “complete speculation,” he opined.
Our guess is that it is a mild recession for 18 months or something like that, that would be my best guess right now.
He explained. “There is no fundamental misallocation of capital in the U.S., as there was until 2008, when primary housing was being built at twice the rate of household formation, which obviously makes no sense. Many companies were over-leveraged.
Musk concluded.
The Tesla CEO’s remarks at the shareholder meeting were identical to a tweet he made on July 28. He wrote at the time:” Inflation may be trending downward… More Tesla commodity prices are trending down than up.”
Musk began talking about the U.S. economy falling into recession a few months ago after revealing in March that both Tesla and SpaceX were under significant inflationary pressure.
“We are probably in a recession and that recession will get worse, but these things will pass and then there will be a boom again … It will probably, I don’t know, go some tough for a year, maybe 12 to 18 months,” he said in May.
He then said that a recession is “actually a good thing” for the U.S. economy, adding.
“We’ve been raining money down on fools for far too long. Some bankruptcies need to happen.”
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