Tesla CEO Elon Musk wants to slash 10% of jobs at the company due to his “super bad feeling” about the economy, according to a Friday report from Reuters.
The United States economy shrank at a 1.5% annualized rate in the first quarter of 2022, according to the Bureau of Economic Analysis, which associates recessions with two consecutive quarters of negative growth.
In a Thursday email to executives seen by Reuters, Musk instructed Tesla to “pause all hiring worldwide” and said that the company needs to cut 10% of jobs. Tesla currently has more than 99,000 employees, The New York Times reported.
Before the most recent news on economic activity, the U.S. had been recovering from COVID-19 and the lockdown-induced recession — growing at a strong 5.7% in 2021 after contracting 3.4% in 2020. The economy, however, has also been troubled by numerous phenomena — including persistent inflation, high gas prices, and the Russian invasion of Ukraine.
The message comes two days after Musk said in another email that “remote work is no longer” acceptable at Tesla.
“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he noted, adding that the workplace “must be a main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office in another state.”
Replying to a Twitter commenter asking for a response to people who believe “coming into work is an antiquated concept,” Musk said: “They should pretend to work somewhere else.”
Musk is not the only business leader worried about economic calamity. JPMorgan Chase CEO Jamie Dimon said on Wednesday that his company is bracing itself for a looming economic “hurricane.”
“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.” He added that no one knows if the hurricane is “a minor one or Superstorm Sandy” and said the investment bank would be “very conservative” with its balance sheet.
Many executives believe that inflation poses a salient risk to economic futures. Bridgewater Associates co-CIO Bob Prince, for example, said the economy is “on the cusp of” stagflation during an interview last week at the World Economic Forum.
“The markets are under-discounting the inflation picture,” Prince explained. “The sustainability, the self-reinforcing of the inflation is not discounted. The degree of tightening over time is not discounted.”
Also last week, Pershing Square Capital Management CEO Bill Ackman argued that there are two ways the U.S. can escape soaring inflation — the Federal Reserve taking a hardline stance on price levels or an economic collapse.
“The only way to stop today’s raging inflation is with aggressive monetary tightening or with a collapse in the economy,” Ackman said. “There is no prospect for a material reduction in inflation unless the Fed aggressively raises rates, or the stock market crashes, catalyzing an economic collapse and demand destruction.”
Consumer confidence — a fundamental statistic for the direction of the United States economy — has been trending downward since the summer of 2021, according to the University of Michigan’s Survey of Consumers. Polls indicate that inflation and gas prices are giving consumers pause as they plan for summer spending. When Echelon Insights, for example, asked consumers whether the higher prices have induced a change of plans or cancellation of family trips, 51% answered positively.