Elon Musk's Potential Layoffs Could Be A Terrifying Sign

Elon Musk has again stirred a hot debate, and this time it is market analysts and economy experts duking it out over the Tesla chief's fears about an impending recession and downward economic spiral. Earlier this month, Musk sent a letter to employees that outlined his plans for a 10% layoff for salaried employees and a halt to worldwide hiring. Musk later did a U-turn, sort of, tweeting that the total headcount at Tesla will go up despite earlier raising concern about overstaffing, subsequently adding that figures for "salaried should be fairly flat."

Musk's "super bad feeling" for the economy has elicited polarizing responses from experts. Talking to Fox Business, CoinDesk chief of staff Pete Pachal likened the situation to "one of the worst announcements of layoffs in history." Pachal partly attributed the impending layoffs to the hiring boom at Tesla over the past few quarters, back when the company's stock was trading at sky-high figures.

JP Morgan analyst Adam Jonas remarked that Musk has "uniquely informed insights into the global economy" and that his financial vision for the future carries a significant amount of weight. Jonas wrote in a research note that Tesla wasn't "your average canary in the coal mine," and warned that if the world's biggest EV maker has an unfavorable forecast about jobs and the economy, investors should pay heed. The firm's head, Jamie Dimon, also raised alarms about a looming recession and warned about a "hurricane" headed toward the American economy.

Chief economist at Moody's Analysts, Mark Zandi, is of the opinion that the job market has to slow down its growth or risk accelerating inflation. NordLB analyst Frank Schwope also added that Musk's moves are nothing short of a forewarning and a precautionary step for what is about to unfold. However, there's also another side to the debate that has a far less gloomy outlook about the U. S. economy than Elon Musk. Speaking to the Los Angeles Times, Leo Feler, an economist at UCLA Anderson Forecast, highlighted the strong activity in the tech sector's hiring trends and manufacturing.

Megan Green, the Kroll Institute's global chief economist, dismissed the concerns about the American economy and an impending global recession as premature in her interaction with Fortune and Bloomberg. Even President Joe Biden appears to have a different opinion about the economy than Musk. When a reporter mentioned Musk and Dimon's worrying predictions about the economy at a press conference, Biden cited the jump in hiring at Tesla rivals like Ford and Stellantis as positive signs.