Elon Musk believes United States is likely in an 18-month recession

Elon Musk stated on Monday that the United States is in a recession that would deteriorate.

The Tesla founder and CEO made the remarks via video at All-In, a Miami tech conference held by the “All-In” podcast, where he predicted that the recession will endure between a year and 18 months.

“Recessions are not necessarily a bad thing,” he said at the conference. “I’ve been through a few of them. And what tends to happen is if you have a boom that goes on too long, you get a misallocation of capital. It starts raining money on fools, basically.”

He went on to warn that when this situation “gets out of control,” the economy suffers from a misallocation of human capital in which “where people are doing things that are silly and not useful to their fellow human beings.”

Musk quipped that a “economic enema” might be required to “clear out the pipes” at some point.

“And sort of the bullshit companies go bankrupt, and the ones that are doing useful products are prosperous,” he said.

“And there’s certainly a lesson here that if one is making a useful product and has a company that makes sense: Make sure you’re not running things too close to the edge from a capital standpoint,” he continued. “They’ve got some capital reserves to last through irrational times.”

Musk seems to blame President Joe Biden and his administration for the recession.

“This administration, it doesn’t seem to get a lot done,” Musk said. “The Trump administration, leaving Trump aside, there were a lot of people in the administration who were effective at getting things done.”

He went on to blame US inflation on White House policy.

“The obvious reason for inflation is the government printed a zillion amount of more money than it had,” he argued. “The government can’t just issue checks for an excessive revenue without there being inflation. Velocity of money held constant.”

“This is not, like, supercomplicated,” he added.

The billionaire has already criticised the Biden administration. Musk has referred to Biden as a “damp sock puppet in human form.” He has repeatedly chastised the government for failing to invite Tesla to an electric-vehicle meeting and has complimented General Motors and Ford over Tesla.

“It’s hard to tell what Biden’s doing, to be totally frank,” Musk said on Monday.

This isn’t the first time Musk has attempted to forecast a recession. In 2021, Tesla CEO Elon Musk predicted that the next recession would occur within two years.

Musk is not an economist, but he is hardly the first high-profile figure to suggest that a recession is possible. Former Goldman Sachs CEO Lloyd Blankfein told CBS on Sunday that a recession was a “very, very high” likelihood. In April, Deutsche Bank researchers forecast that the United States would enter a recession in 2023, citing rising inflation and interest rates.

After the Federal Reserve boosted interest rates in early May, US Federal Reserve Chair Jerome Powell spoke out against concerns that the economy was headed for a downturn. He told reporters that nothing indicated the economy was “on the verge of or vulnerable to a recession.” Powell, however, appeared to backtrack on Thursday.

“The question of whether we can execute a soft landing or not, may actually depend on factors that we don’t control,” he said, implying that Russia’s invasion on Ukraine and supply-chain snarls could offer additional challenges.

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