Elon Musk Predicts ‘Mild Recession’ for 18 Months, Says Inflation Has Peaked

Tesla CEO made his comments at the auto maker’s annual shareholder meeting

Tesla Inc. Chief Executive Elon Musk said he expects the U.S. is headed for a mild recession and predicted that the rapid pace of inflation will begin to cool.

Inflation will quickly drop during the next few months, Mr. Musk said Thursday at the auto maker’s annual shareholder meeting, where shareholders approved a 3-for-1 stock split. It will take effect with trading starting Aug. 25 for shareholders of record on Aug. 17, the company said Friday.

At Thursday’s gathering, Mr. Musk said, “My guess is that we are past peak inflation and that…we will have a recession.” He added, “I think it will be a relatively mild recession. I’m just guessing here. This is total speculation, but I would guess it’s a mild recession for 18 months or something like that.”

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Mr. Musk said Tesla has started to see prices for commodities beginning to decline, indicating that the pace of inflation has begun to subside.

“We do get a fair bit of insight into where prices of things are going over time because when you’re making millions of cars, you have to purchase commodities many months in advance of when they’re needed,” he said.

Mr. Musk’s comments come amid slowing economic growth in the U.S. and a debate about whether the nation has entered into a recession.

On Friday, the Labor Department reported that the U.S. economy added 528,000 jobs and that the unemployment rate fell to 3.5%, a half-century low also seen just before the pandemic in early 2020. The data further complicates the nation’s economic forecast.

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The comments by Mr. Musk, the world’s richest person, are similar to what he said on Tesla’s earnings call last month, when he said inflation was likely to decline toward the end of the year.

He cautioned that economic conditions could change.

“Making macroeconomic prognostications is a recipe for disaster,” Mr. Musk said.