Janet Yellen, Elon Musk Sound Alarm On 2023 Recession: High-Interest Rates To Blame?
The cryptocurrency had a difficult year in 2022, and it looks like 2023 won’t be any better. There are numerous well-known analysts and leaders issuing recessionary warnings. Here are the people who have recently raised the alarm.
Let’s see what they have to say about it.
Yelena sees a recession coming despite improving inflation
Treasury Secretary Janet Yellen expressed optimism about recent US inflation and job numbers but acknowledged that the economy is at risk of recession due to rising interest rates. She explained in an interview with Bloomberg News that while she is largely satisfied with the data she has so far received, she doesn’t want to discount the possibility of a recession. Yellen stated that the Federal Reserve is “slowing down the economy.”
The US Q4 GDP figure came in at 2.9%, vs the projected 2.6%, indicating a drop in recession worries and cooling inflation. However, December saw a decline in consumer and company spending as a result of rising interest rates that have an effect on purchasing power.
She contends that preserving a rigid labour market and lowering inflation point to a slowing in economic expansion.
Musk also had warned of a recession
Elon Musk has been warning the Federal Reserve about the rising chances of a recession while the central bank has been raising rates aggressively. Following four consecutive 75 bps rate increases, the Fed announced a 50 bps rate increase at the most recent FOMC meeting.
Despite a positive Q4 earnings report, Musk intends to cut costs across the board at Tesla in order to weather the economic downturn. He thinks that because interest rates are so high, businesses will continue to cut costs and lay off employees.
Recession impact on Crypto
During a recession, the value of cryptocurrencies could decline. Investor confidence has been damaged by the recent layoffs at cryptocurrency startups. Cryptocurrencies like Bitcoin and Ethereum (ETH) are becoming more widely used, but they continue to be the most volatile, and traders expect further price declines in cryptocurrencies.
Ethereum’s price is $1,592 and Bitcoin is trading at $23,000. Prior to the Fed’s decision to raise interest rates on February 1, both main cryptocurrencies are trading sideways.
Other prominent people warning about recession
Yelena and Musk are not the only ones who warn about a recession. IMF chief Kristalina Georgieva warns that the 2023 recession will hit a third of the world. Billionaire investor Warren Buffet has also warned of a recession and has provided advice on investing. Even JPMorgan’s Jamie Dimon has warned that the U.S. is likely to tip into recession in 6 to 9 months.