Days after Amazon's Jeff Bezos warning of an impending recession, his billionaire counterpart Elon Musk on Wednesday said US Federal Reserve's actions are "massively amplifying the probability of a severe recession".
Musk's remarks on Twitter came in an exchange with Tesmanian co-founder Vincent Yu who said he's "expecting a real economic recession in 2023, be prepare for any macro storm ahead of us".
Musk said, "Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession."
Musk said 'exactly' to a tweet by NorthmanTrader founder Sven Henrich that read, "The Fed stayed too easy for too long totally misreading inflation and now they've tightened aggressively into the highest debt construct ever without accounting for the lag effects of these rate hikes risking they'll be again late to realize the damage done."
In a similar exchange on October 24, the world’s richest man estimated a global recession could last "until the spring ’24", though he noted he was "just guessing".
In recent days, Fed officials have said they expect smaller increases ahead than the four consecutive 75 basis point increases seen this year. Fed Chairman Jerome Powell will addressing the public Wednesday afternoon (US time) in a speech to be delivered at the Brookings Institution.
The Brookings panel will likely be Powell's final public remarks before the December 13-14 meeting, when officials are expected to approve a half-percentage-point rate increase that will bring the total policy tightening this year to 4.25 percentage points, including the kickoff 25-basis-point hike on March 16.
Bezos recently warned consumers and businesses in a CNN interview that they should consider postponing large purchases in the coming months as an economic recession might be in the offing.
The billionaire told American families not to buy new cars and TVs as US is staring at a recession, with household debt soaring to $16.5 trillion and Americans relying on credit to make ends meet.
“My advice to people, take some risks off the table. If you’re going to make a purchase, maybe slow down that purchase a little bit. Keep that cash, see what happens - take some risks off the table," advised Bezos.
"If you're an individual considering to purchase a big-screen TV, you might want to wait, hold onto your money, and see what transpires. The same is true with a new automobile, refrigerator, or whatever else. Just remove some risk from the equation," said Bezos during the interview.
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