Elon Musk is at it again. This time, he took to Twitter, or X, to drop a bombshell about the U.S. economy. In response to a tweet by Billy Markus, the co-founder of Dogecoin, Elon declared that:
“America is going bankrupt.”
Billy had sarcastically commented about his tax dollars funding government mishaps. The growth of the U.S. economy has taken a hit. We all know that. Right?
By the way, Elon’s company Tesla didn’t sell a cent of their $640,866,000 in Bitcoin in the second quarter.
In the first quarter of 2024, GDP growth was just 1.4%, a big drop from 3.4% in the last quarter of 2023. Predictions for the third quarter aren’t too bright either, with growth expected to slow to around 1%.
Elon Musk predicting the collapse of USD. Source: X.com
High prices and high interest rates are making people spend less, which is dragging things down. But some analysts are hopeful that things might pick up later in the year, potentially hitting a 2% growth rate if inflation eases up and interest rates go down.
But Jay Powell doesn’t seem all that eager to cut rates, so…
See consumer spending is a huge part of the U.S. economy—around 70%. But lately, it’s cooling off. People burned through their pandemic savings and are now looking for cheaper options.
This is hitting businesses that rely on discretionary spending. However, not all the news is bad; retail sales have shown some surprising strength, so not everyone is cutting back just yet.
The job market is still holding up, even though the unemployment rate has inched up to 4.1% as of June 2024. Job openings have decreased, but it’s not all doom and gloom.
Powell described the labor market as stabilizing. He thinks the Federal Reserve’s efforts to manage inflation are paying off, and hasn’t completely ruled out the possibility of a September rate cut.
I think.
There’s a lot of talk about a recession, but many top economists, including those at Vanguard and the Conference Board, don’t think it will happen. Not in 2024 at least.
Joe Biden. Credits: Reuters
The Sahm rule, which predicts recessions based on rising unemployment, isn’t showing a clear signal right now due to mixed data from the labor market.
The 2024 elections are adding to the uncertainty. Changes in economic policies could affect the growth if Donald Trump wins.
The IMF is concerned about how the U.S. will manage its high debt levels and potential trade tensions amid funding Ukraine and Israel. These things affect the economy both domestically and globally.
