Elon Musk thinks US recession is more likely than not in the near term. Photo / AP
Billionaire Elon Musk has predicted an "inevitable" recession in the United States is likely to happen "in the near term" and detailed all the consequences it would entail for the rest of the world.
Musk, the CEO of Tesla and SpaceX, spoke at the Qatar Economic Forum overnight. He was interviewed by John Micklethwait, the editor-in-chief of Bloomberg.
Micklethwait asked him about the repeated comments from US President Joe Biden and his top administration officials in recent days denying that a recession was unavoidable.
"Well a recession is inevitable at some point," Musk said.
"As to whether there is a recession in the near term, I think that is more likely than not. It's not a certainty. But it appears more likely than not."
Speaking to the Associated Press last week, Biden was more optimistic, striking a defiant tone when asked whether a battle against rising inflation would tip his nation into recession.
"It's not inevitable," he insisted. His remark was then echoed by other officials.
"I don't think recession is at all inevitable," Treasury Secretary Janet Yellen told the ABC show This Week over the weekend.
"Clearly inflation is unacceptably high. It's President Biden's top priority to bring it down. And (Federal Reserve Chairman) Jerome Powell has said that his goal is to bring inflation down while maintaining a strong labour market.
"That's going to take skill and luck, but I believe it's possible. I don't think a recession is inevitable."
Brian Deese, Director of the National Economic Council, also backed up the US President.
"Not only is the recession not inevitable, but I think that a lot of people are underestimating those strengths and the resilience of the American economy," he told Fox News on Sunday.
Musk's assessment of the situation was only a small moment in a wide-ranging interview with Micklethwait. He was also asked about his stalled deal to buy Twitter, his vision for the social media platform's future, lay-offs at Tesla, his support and advocacy for cryptocurrency, and of course his political views.
"There's a limit to what I can say publicly, given that it is somewhat of a sensitive matter. So I'll have to be measured in my responses here, so as not to generate incremental lawsuits," Musk said of the Twitter deal.
"There are still some unresolved matters. You've probably read about the question as to whether the number of fake and spam users on the system is less than 5 per cent, as Twitter claims. Which is, I think, probably not most people's experience when using Twitter. So we're still awaiting a resolution on that matter.
"Then of course there is the question of will the debt portion come together, and then will the shareholders vote in favour. So those are the three things that need to be resolved before the transaction can complete."
Micklethwait asked him whether there was "a limit at all" to who he believes should be allowed on the platform.
"My aspiration for Twitter or, in general, for the digital town square, would be that it is as inclusive – in the broader sense of the word – as possible. (And) that it is an appealing system to use," said Musk.
"So ideally I'd like to get 80 per cent that's in North America, and perhaps half the world, ultimately, on Twitter in one form or another. And that means it must be appealing to people. It can't be a place where they feel uncomfortable or harassed, or they'll simply not use it.
"I think there's this big difference between freedom of speech and freedom of reach, in that one can obviously in the United States go in the middle of the town square and pretty much yell anything you want. You'll annoy the people around you, but you're kind of allowed to just yell whatever you want in a crowded public space, more or less.
"But whatever you say, however controversial, does not need to be broadcast to the whole country. So I think generally, the approach of Twitter should be to let people say what they want within the bounds of the law, but then limit who sees that based on any given Twitter user's preferences.
"So if your preferences are to see or read anything, you'll get that. But if your preferences are that you'd prefer not to see comments that you find offensive in one form or another, then you can have that as a setting and not see it.
"But one way or another, we need to take the steps that entice most people to want to be on Twitter and enjoy and find it informative, and entertaining, and funny, and useful."
Asked whether he wanted to become CEO of Twitter, and whether he would continue to hold that job at Tesla and SpaceX, Musk said his exact job title wasn't particularly important.
"I would drive the product. Which is what I do at SpaceX and Tesla," he explained.
"Whether I'm called the CEO or something else is much less important than my ability to drive the product in the right direction."
The next subject was Tesla's plan to lay off 10 per cent of its salaried workforce. That has been a source of some confusion since it was first reported at the start of the month, and on Sunday two former Tesla employees filed a lawsuit alleging the company had violated US laws concerning "mass lay-offs".
"Initially you said 10 per cent (of jobs) would be cut, then 10 per cent of salaried would be cut, then salaried would stay flat and overall headcount would go up. What is the number?" asked Micklethwait.
"Tesla is reducing the salaried workforce by roughly 10 per cent over the next three months or so," Musk clarified.
"We expect to grow our hourly workforce. But we grew very fast on the salaried side, and we grew a little too fast in some areas. So it requires a reduction in the salaried workforce.
"We're about two-thirds hourly and one-third salaried. So I guess technically, a 10 per cent reduction in the salaried workforce is only a 3-3.5 per cent reduction in total headcount."
He also dismissed that aforementioned lawsuit, labelling it "trivial".
"Let's not read too much into a pre-emptive lawsuit that has no standing; that is a small lawsuit of minor consequence," he said.
"Everything relating to Tesla gets big headlines, whether it is a bicycle accident or something much more serious. It seems like anything related to Tesla gets a lot of clicks, whether it is trivial or significant. I would put that lawsuit you're referring to in the trivial category."
Musk recently doubled down on his support for the cryptocurrency dogecoin, which has lost about 90 per cent of its value in the last 13 months.
He and his companies are currently facing a US$258 billion class action lawsuit alleging they were complicit in a "dogecoin crypto pyramid scheme".
"Since Musk and his corporations began purchasing, developing, promoting, supporting and operating dogecoin in 2019, plaintiff and the class have lost approximately US$86 billion in this crypto pyramid scheme," the lawsuit claims.
Musk told Micklethwait he'd "never said that people should invest in crypto".
"In the case of Tesla, SpaceX, myself – we all did buy some bitcoin. But it's a small percentage of our total cash assets. So not all that significant.
"I also bought some dogecoin, and Tesla accepts dogecoin for some merchandise, and SpaceX will do the same. And I intend to keep supporting dogecoin, because I just know a lot of people who are not that wealthy who have encouraged me to buy and support dogecoin, so I am responding to those people.
"Just people, when I walk around the factory at SpaceX or Tesla, they're asking me to support dogecoin, so I'm doing so."
Elon Musk pledges to support Dogecoin, the cryptocurrency created as a joke in 2013, because some of his employees have asked him to https://t.co/vgcLXORtWD #QatarEconomicForum #منتدى_قطر_الاقتصادي pic.twitter.com/vwrVBR3EYv
— Bloomberg Live (@BloombergLive) June 21, 2022
Finally, Musk was quizzed on who he'll end up rooting for in the 2024 presidential election in the US.
He has previously expressed an openness to supporting Florida Governor Ron DeSantis, a Republican. Micklethwait asked whether that was still true, and whether he would consider supporting Donald Trump, should he run again.
"I was simply asked if I had decided on who I would be supporting in the next presidential race. And I said I had not decided who I would support. Then I was asked, 'Who might you be leaning towards?' I said possibly DeSantis," Musk replied.
Pressed for his opinion on Trump, he merely said: "I think I am undecided at this point on that election."
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