Elon Musk Has ‘Super Bad Feeling’ About Economy, Calls to Cut 10 Percent of Tesla Staff

Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, on March 22, 2022. Patrick Pleul/Pool via Reuters

Tesla CEO Elon Musk said in an internal company email viewed and reported on by Reuters that he had a “super bad feeling” about the economy and that the electric car giant needed to slash employment by around 10 percent.

The email, which was reportedly titled “pause all hiring worldwide,” was sent on June 2 to Tesla’s top managers.

The Epoch Times has reached out to Tesla to verify the authenticity of the email but received no response by publication.

The message comes after Musk took the work-from-home phenomenon into his crosshairs, telling Tesla executives to get back to the office for a full 40-hour workweek or face the prospect of dismissal.

Musk’s Thursday email expressing reservations about the economy also comes amid signs of cooling in economies around the world, as soaring inflation is driving central banks to course correct away from pandemic-era easy money policies.

The Federal Reserve has laid out a case for hiking interest rates by 50 basis points at each of its next two meetings in June and July, though there’s less clarity on the path of policy normalization after that.

ECB officials, too, have made a case for ending asset purchases and embarking on a path of raising interest rates. Christine Lagarde, head of the ECB, recently suggested that quarter-point hikes in July and then September were likely.

The rapid central bank shift towards policy tightening has driven speculation about the likelihood that the economy might tip into a recession.

“Some officials want the Fed to continue with 50 [basis point] hikes to ensure inflation is brought under control, but this risks moving policy deeply into restrictive territory and heightening the chances of a recession,” ING analysts wrote in a recent note.

“Others argue that there is already evidence of the growth outlook weakening and inflation pressures tentatively softening, which could justify a pause in September,” they added.

Soft Landing?

Federal Reserve Chair Jerome Powell said recently that the prospect of high inflation sticking around for longer is a bigger threat to the economy than Fed rate hikes potentially sparking a recession.

Powell was asked in an interview on NPR’s “Marketplace” what he thought about the likelihood of a so-called “soft landing” for the economy, or an outcome where monetary conditions remain accommodative enough not to drive a recession.

“It will be challenging, it won’t be easy,” Powell replied, admitting that it “would have been better” to have started raising rates earlier than in March.

Calling price stability the “bedrock” on which the economy rests, Powell insisted in the interview that the Fed’s key objective is to tame runaway prices, saying that “nothing in the economy works” unless inflation is reined in.

U.S. consumer price inflation, as reflected in the headline Consumer Price Index (CPI) data released earlier in May, showed prices climbing at a slightly slower 8.3 percent over-the-year pace in April compared to an 8.5 percent peak in March.

On a month-over-month basis, the pace of inflation came in 0.3 percent in April, down from the recent March peak of 1.2 percent, prompting some analysts to suggest that inflation had peaked and would now start to soften.

But so-called core consumer price inflation, which strips out food and energy and is considered a better gauge of underlying inflationary pressures, accelerated in April, both on a year-over-year and on a month-over-month basis.

In particular, the monthly core inflation reading was twice as high as the 0.3 percent pace notched in March.

Bankrate Chief Financial Analyst Greg McBride told The Epoch Times in an emailed statement that he sees inflation as becoming more broad-based, while cautioning against interpreting the decline in headline CPI data as meaning that the inflationary peak is in.

Excluding a decline in energy prices—which appears outdated by this point—the increases remain widespread,” McBride said. “With the annual rate ticking down from 8.5 percent to 8.3 percent, it can be tempting to say we’ve seen the peak, but we’ve also been head-faked before as was the case last August.”