Wednesday, February 8, 2023
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Elon Musk says ‘recession will be amplified if…’

Billionaire Elon Musk thinks the recession will deepen if the US Fed raises rates next week. In a Twitter exchange, the mercurial executive of electric cars and the world’s richest man said, “If the Fed raises rates again next week, the recession will be massively reinforced”.

Earlier, in October of this year, Musk predicted that the recession could last “until the spring of ’24”.

A Twitter account called Tesla Owners Silicon Valley asked Musk in October how long he thought the recession would last, to which he replied, “I’m guessing, but probably until the spring of ’24.”

Economists say the Federal Reserve is likely to announce its final increase of 2022 in the coming week.

Fed Chair Jerome Powell also indicated that the central bank is likely to raise its benchmark rate by a smaller increment when it meets next week.

However, the interest rate hike, whether it is 0.5 or 0.75 percentage points, is at stake. the US Fed rates will be announced on December 14.

Struggling to contain inflation, the Federal Reserve announced a fourth consecutive rate hike of 0.75 percentage points in November last month.

Because successive rate hikes discourage borrowing, many economists think a recession is more likely in 2023.

According to a Bloomberg survey, 42 economists predict that the probability of a recession in the coming year is now 60%.

Yesterday, wholesale prices in the United States rose 7.4% in November from a year earlier.

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The cost of goods rose just 0.1% from October to November, while wholesale gas prices fell 6%. (Food prices were an exception: they rose 3.3% last month, fueled by more expensive vegetables, eggs and chicken.)

By contrast, services prices rose more, with an increase of 0.4%, mainly due to more expensive financial services.

Next week, the US government will release its most notable inflation figure, the consumer price index. The most recent CPI report, for October, showed a moderation in inflation, with prices 7.7% higher than a year earlier. While still high, that was the lowest year-on-year figure since January.

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