FRANKFURT (Reuters) – Tesla Chief Executive Elon Musk told top managers he had a “super bad feeling” about the economy and that the electric carmaker needed to cut staff by about 10%, according to an internal email seen by Reuters.
The email, titled “pause all hiring worldwide”, was sent to Tesla executives on Thursday, and underscored an increasingly gloomy economic outlook for the globe, as prices soar and war in Ukraine passes its 100th day.
The message from Musk came shortly after Jamie Dimon, Chairman and Chief Executive of JPMorgan Chase, described the challenges facing the U.S. economy as akin to a “hurricane”.
Here is reaction to the comments:
LORENZO CODOGNO, HEAD OF LC MACRO ADVISERS AND FORMER CHIEF ECONOMIST AT THE ITALIAN TREASURY:
“It is clear that rising prices will weaken consumption. That is something we’ll need to face.”
“If the inflation flare-up … starts fading at the beginning of next year … we will probably not see as dramatic an impact on the global economy as Musk seems to indicate.”
“And If the shock is temporary, companies will probably have an interest in … not losing human capital.”
DANIEL IVES, MANAGING DIRECTOR AND SENIOR TECH ANALYST, WEDBUSH SECURITIES (ON TWITTER):
“Street will clearly read this message negatively at first blush.”
“Elephant in the room now remains the radio silence on Twitter deal. Musk more negative on economy, what’s next in Twitter saga.”
CARSTEN BRZESKI, GLOBAL HEAD OF MACROECONOMIC RESEARCH, ING
“Musk’s bad feeling is shared by many people,” said Carsten Brzeski, global head of macroeconomic research at Dutch bank ING.
“We’re talking about stagnation and a global economy which has to go through significant structural change, such as decarbonisation, deglobalisation and adjusting to older societies.”
“But we are not talking about global recession. We expect a cooling of the global economy towards the end of the year. The U.S. will cool off, while China and Europe are not going to rebound.”
“Laying off workers, however, is not the best reaction. We will need skilled workers more than ever in the future. This could turn into firing and then hiring,” he said.
FRANCOIS SAVARY, CHIEF INVESTMENT OFFICER, PRIME PARTNERS
“At the end of the day it’s easy to make such comments. Everyone has fears but there is no sign yet to justify such a negative outlook.”
“There is a risk of recession yes … but … you need to see numbers heading in that direction and so far there are none.”
“It will depend a lot on what happens in the labour market. If we have a significant deterioration of U.S. labour markets over the summer, then … there is a risk of recession next year.”
(Reporting by John O’Donnell in Frankfurt, Sujata Rao in London, Chavi Mehta in Bangalore and Elvira Pollina in Milan; Editing by Mark Potter and Carmel Crimmins)