Home / News / World /  Why does Elon Musk have a ‘super bad feeling’ about the economy?
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Tesla CEO Elon Musk has a "super bad feeling" about the economy therefore he wants to cut 10% of the jobs at his company Tesla Inc.

In an email Musk directed to "pause all hiring worldwide" at Tesla as he had a "super bad feeling" about the economy. Tesla employed around 100,000 people at the end of 2021, according to its annual SEC filing. This week, the Tesla CEO even told his staff to return to the workplace or leave the company, a demand that has already faced pushback in Germany where the company has a new factory.

Elon Musk's fears are supported by economists and experts who predict that the US is headed into a recession because of record-high inflation on the back of surging food and petrol prices. In April, US consumer prices were 8.3% higher than a year before and inflation stood at 6.2%. As a ripple effect of Ukraine war and China's zero-covid policy bottlenecks in the supply chain are keeping prices high. Growing unemployment numbers are also adding to economic pressure.

Fed interest rates hike by a half-point in May and signs of a similar uptick in the following months of June and July will look to cool off hotest inflation data in 2 decades. The Beige Books has suggested that an uncertain economic outlook has also forced businesses to pull back on spending and investing. “Eight districts reported that expectations of future growth among their contacts had diminished; contacts in three districts specifically expressed concerns about a recession," the Fed has said in a report.

Musk's stark warning of a potential recession and the knock-on effect for automakers is the most direct and high-profile forecast of its kind in the industry.

While concerns about the risk of a recession have grown, demand for Tesla cars and other electric vehicles has remained strong and many of the traditional indicators of a downturn - including increasing dealer inventories in the United States - have not materialised.

But Tesla has struggled to restart production at its Shanghai factory after Covid-19 lockdowns forced costly outages at the plant. Elon Musk's gloomy outlook echoes recent comments from executives including JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron.

A "hurricane is right out there down the road coming our way," Dimon said this week.


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