Cardi B isn’t the only one worried about this. Some of the country’s most prominent companies have their chief executives worried about the economy.
Warnings of a recession are coming aEUR”, including from Tesla CEO Elon Tesla and JPMorgan Chase CEO Jamie Dimon aEUR”, reflect the uncertainty felt by the country’s executive officers as inflation reaches its highest annual rate for over 40 years.
On Tuesday, the Federal Reserve will begin its two-day meeting. Most analysts had expected the central bank to raise interest rates by half a percentage point for a second consecutive month, but a stronger-than-expected inflation report last week has markets believing an even bigger move could be coming.
The central bank will likely continue to raise interest rates quite aggressively in the coming months, as inflation continues its rapid rise.
The Fed is currently in a delicate dance which could lead to economic disaster.
The central bank is trying to slow down the U.S. economic growth just enough to reduce inflation, but not to cause a significant economic slowdown.
This is often easier said than done. Companies could reduce costs and staff as the cost of borrowing increases for everything from bank loans to mortgages. People could also start cutting back on their spending.
Dimon, the head of one of the largest banks in the world, stated that he sees an economic “hurricane” on the horizon.
During a recent conference on investment, he stated that “Everyone believes the Fed can handle it.”
“The hurricane is coming our way, right there, down the road. We don’t know if this is a superstorm Sandy or Andrew. And you better brace yourself.”
Musk is also worried.
After reportedly expressing a “super bad feeling about the economy” in an internal email, he announced that Tesla will reduce the number of salaried employees by 10%.
Musk and Dimon don’t have to be the only ones concerned.
Charles Scharf, CEO of Wells Fargo, says that there is no doubt the U.S. economy will be in decline.
He said that he believes it will be difficult to avoid some type of recession due to the scale of the slowing.
It’s not just for CEOs.
Cardi B, a rapper, made waves by tweeting her concerns about the economy.
“When do y’all think that they will announce that we are entering a recession?” The artist tweeted.
What time do yaEUR(tm?)all think they will announce that we are entering a recession
Chief executives do not have to be so pessimistic.
Although inflation is a concern, Americans still spend money on vacations, meals out, and the labor force is strong.
According to the most recent available data from the government, the unemployment rate is now 3.6%. This is close to its level before the pandemic.
A survey of business economists last month showed only about one in four economists anticipates a recession within next year, although that was before the latest inflation report showing stronger-than-expected price gains.
According to airline executives, the demand for travel is so strong that it is difficult to keep up with. They are optimistic about their future, despite higher fuel prices.
Scott Kirby, CEO of United Airlines, stated that they were in a long dark tunnel and had to pass through COVID. “We have come out of the tunnel. We are almost at 2019 profitability levels, even though fuel prices have risen $10 billion annually, you know that.
Dara Khosrowshahi, Uber CEO, is also in the glass half full camp.
Khosrowshahi said this month at a conference, “You know, you get a pretty pulse of what’s going on in the streets every day in the cities where we live.” “At the moment, we don’t see any sign of a recession.”
However, investors and consumers could be spooked into changing their minds.
The S&P 500 entered into a bear market Monday. This is when the index falls more than 20% from its highs due to inflation fears. Uber shares fell 9%, while United shares declined 10%
Top executives are worried about all the talk of recession.
Chuck Robbins is the CEO of Cisco. He expressed concern that the talk about a recession could become self-fulfilling.
Robbins stated to CNBC that he has a feeling that if we talk about recession so much, we might actually create it,” Robbins said in May.
Fears of a recession may cause CEOs and other leaders to hire less staff or reduce their workforce before the people respond with a reduction in spending.
As they try to address growing concerns, President Biden’s administration is trying to show more confidence in the economy.
Janet Yellen, Treasury Secretary, had just heard about Cardi B’s tweet.
When asked by Yellen at a conference if Cardi B was her favorite singer, Yellen replied “I don’t have that much time but I am alive.”
Yellen also emphasized the positive trends in consumer spending and downplayed concerns about the economy.
Yellen stated that “We have a strong economy.” “I understand that people are upset about inflation and it is, but there’s no evidence to suggest that a recession is imminent.”
