Business, Finance, Analysis Titans Warn of a Recession in the US Economy

Elon Musk, Nouriel Roubini and economists from Goldman Sachs warned of a growing likelihood that the US economy will fall into recession

Elon Musk speaks via video link during the Qatar Economic Forum in Doha.
June 21, 2022 | 08:24 AM

Bloomberg — Elon Musk, Nouriel Roubini and Goldman Sachs Group Inc. (GS) have warned of a growing likelihood that the US economy will fall into recession.

Their outlooks will stoke fears of a hard landing for the world’s biggest economy as the Federal Reserve jacks up interest rates to counter the fastest pace of inflation in decades.

Tesla Inc. (TSLA) Chief Executive Officer Musk said Tuesday that a recession in the US looks likely in the near future.

“A recession is inevitable at some point. As to whether there is a recession in the near term, that is more likely than not,” Musk said in an interview with Bloomberg News Editor-in-Chief John Micklethwait at the Qatar Economic Forum in Doha.


“It is not a certainty, but it appears more likely than not,” Musk said.

Goldman Sachs economists cut their US growth forecasts and warned in a research note Monday that the risk of recession is rising.

The Goldman team sees a 30% probability of entering a recession over the next year, up from 15% previously, and a 25% conditional probability of entering a recession in the second year if one is avoided in the first. That implies a 48% cumulative probability in the next two years versus 35% previously.


“We now see recession risk as higher and more front-loaded,” economists led by Jan Hatzius wrote. “The main reasons are that our baseline growth path is now lower and that we are increasingly concerned that the Fed will feel compelled to respond forcefully to high headline inflation and consumer inflation expectations if energy prices rise further, even if activity slows sharply.”

In his outlook, Roubini said he expects a US recession by the end of the year. Measures of consumer confidence, retail sales, manufacturing activity and housing are all slowing sharply while inflation is high, the chief executive officer of Roubini Macro Associates said on Bloomberg Television.

“We’re getting very close,” he said.

Seeking to quell a surge in living costs, the Fed accelerated its monetary-tightening campaign last week with its biggest interest-rate increase since 1994. That drove fresh losses on Wall Street and has increased the odds of a recession, piling pressure on President Joe Biden.


Biden reiterated Monday that a US recession isn’t “inevitable” following a conversation with former Treasury Secretary Larry Summers, who sees a significant chance the country will find itself battling stagflation.

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