Billionaire Elon Musk, who previously predicted an economic recession, has claimed that it is actually a good thing, a necessary "rude awakening" after a lax attitude from the COVID-19 pandemic.
The Tesla CEO was responding to users on Twitter when he said that "some bankruptcies need to happen".
The Twitter user Zack on Friday asked Mr Musk, “Do you still think we're approaching a recession?”
In response, the SpaceX chief said, "Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen. Also, all the Covid stay-at-home stuff has tricked people into thinking that you don't actually need to work hard. Rude awakening inbound!”
Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.— Elon Musk (@elonmusk) May 27, 2022
Also, all the Covid stay-at-home stuff has tricked people into thinking that you don't actually need to work hard. Rude awakening inbound!
"How long do you believe this recession will persist Elon? You called it!! Just curious could this one last year(s)??" another user asked the industrialist.
"Based on past experience, about 12 to 18 months. Companies that are inherently negative cash flow (ie value destroyers) need to die, so that they stop consuming resources," said Mr Musk.
According to New York Post, analysts have recently stated that the US economy is more likely to enter a recession as a result of persistently high inflation rates and supply chain disruptions caused by COVID.
As per figures issued by the US government on Thursday, the gross domestic product (GDP), which is the broadest measure of goods and services generated across the country, decreased by 1.5 per cent in the first quarter of 2022.
The 1.5 per cent decrease contrasted sharply with the 6.9 per cent rise in GDP recorded in the fourth quarter of 2021.
The result, according to analysts, was attributable to strong US consumer spending on imports, which outstripped expenditure on exports, the post further reported.