Elon Musk is making headlines once again for his salacious comments. He took to his social media platform X, formerly Twitter, to declare that “American is going bankrupt.”
His comments were in response to Billy Markus, the co-founder of Dogecoin, who made some sarcastic comments about the U.S. economy taking bit hits recently. But many people want to know how correct Elon is about his comments.
U.S. Growth Has Slowed
Although Musk has been known for spreading everything from half-truth to full blown lies, many people agreed with Musk that the economy in the United State’s ins’t doing that well.
In the first quarter of 2024, the GDP grew by just 1.4%, which is a drastic reduction from the last quarter of 2023 that saw 3.4% growth.
The Middle Class Is Falling Behind
Sky high prices for homes, gas, groceries, rent, and insurance have all meant that people just have less buying power these days.
With the median wage still stuck at $63,795, many families are struggle to keep up with regular expenses, let alone big ticket items that drive a country’s GDP.
Consumer Spending
Consumer spending and everyday purchases are a big part of the U.S. economy, it makes up for about 70% of all the items sold in the country.
However, lately, people have not been able to spend nearly as much. Big and small businesses alike are feeling the burn.
The Job Market
Even though the unemployment rate creeped up to 4.1% in June 2024, the market overall is quite strong.
Job openings have decreased in general but major economists think that the big banks holding off with inflation was a smart move to keep more people employed this year.
Will There Be a Recession This Year?
Musk’s comments seem to signify that he predicts a large economic recession or fall coming in the near future.
According to the Sahm rule, which predicts recessions based on rising unemployment, there aren’t any clear signals that a recession is coming. However, the 2024 presidential elections could be a determining factor in what happens with the economy. In the past, foreign investors have pulled out billions when a president they don’t trust enters the oval office.
Tesla Sales Are Down
There is a change that Musk is looking at the current performance metrics of his own companies when referring to the total U.S. economy. In Q2, profits fell about 45% for the once popular EV brand.
In the past year, his degrading comments about California have somewhat alienated his biggest base of customers and sales for Teslas have plummeted. His moves at X have also been unpopular as well, allowing for pornography and hate speech to be the norm on the site caused many advertisers to pull out, which dropped the company’s value significantly.
High Debt Levels
Another current concern in the U.S. economy is the outrageous level of national debt, currently sitting at $34 trillion which includes debt held by the public as well as the federal trust funds and government accounts.
Large amounts of government debt can lead to rising interest rates and higher taxes for residents, resulting in less spending power for regular people and a crushed economy.
What Does It Mean for an Economy To Fall?
An economic collapse occurs when a national crisis affects a majority of citizens to work and pay their bills.
There are a number of factors that go into an economic collapse and in the past, the big banks and the U.S. government have staved off recessions and economic falls by bailing out institutions and individuals.
If the Economy Falls, the Dollar Falls
One of the major issues of a failing economy is that the dollar of that country generally becomes less valuable on the world market.
In the instance of the American economy failing, the US dollar would also become relatively worthless, making it more difficult for people to exchange funds with other countries and find refuge in alternate places.
