In so small part, Elon Musk and Jamie Dimon are worried about what’s coming for the US economy because the labour market and consumer spending remain so robust.
It’s not easy interpreting the utterances of Elon Musk. The world’s richest person has decided to cut, apparently telling top executives at the company he has a “super bad feeling” about how the economy is tracking.
Citigroup boss Jane Fraser said on Friday it won’t be easy for the US to avoid a recession, and BlackRock co-founder Larry Fink expects inflation to remain elevated for several years.What’s creating the sense that we’re headed for something “super bad” is that fact the US economy continues to do super well.
Of course, this robustness isn’t good for the Federal Reserve, which needs to cool financial conditions to get inflation down from four-decade highs. The challenge is that petrol and fuel prices surged in May and are unlikely to drop away quickly given the ructions created by the war in Ukraine. Headline inflation will drop in the second half of the year, but the question is how quickly it gets back within the 2 per cent to 3 per cent band the Fed is looking for.
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