Elon Musk believes it would be beneficial for the US economy to go into a recession and that “some bankruptcies need to happen.”
Tesla’s billionaire boss said that the domestic economy is in for a “rude awakening.” He also said that working from home has made Americans lazy.
When asked by a Twitter user if he thought there would be a recession, Musk replied: “Yes, but this is actually a good thing. It has been raining money on fools for too long.”
He then added: “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!”
Musk was then asked how long he thought the recession would last.
“Based on past experience, about 12 to 18 months,” the tech mogul replied.
“Companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources.”
Analysts have said in recent weeks that there is greater risk that the US economy will fall into a recession due to stubbornly high rates of inflation as well as COVID-related disruptions in the supply chain.
The federal government on Thursday released data indicating that the gross domestic product, which is the broadest measure of goods and services produced across the economy, fell by 1.5% in the first quarter of 2022.
The 1.5% contraction came in sharp contrast to the 6.9% growth in GDP that was reported in the final quarter of 2021.
Analysts said the result was due to robust US consumer spending on imports, which exceeded spending on exports.
Absent the trade imbalance, the GDP would have been 3.2% higher.
The contraction was also attributed to a slower restocking of goods in stores and warehouses, which reduced 1.1% off the GDP.
The economy continues to be burdened by soaring levels of inflation, which has prompted analysts to raise their risks of recession.
The consumer price index rose 8.3% in April.
Earlier this month, the Fed enacted a larger-than-normal half-point interest rate hike – effectively making it more expensive to borrow money with a goal of cooling spending.
Fed Chair Jerome Powell has signaled similar hikes to come in June and July.
[Written in collaboration with other media outlets with information from the following sources]
