A recent analysis by economist Jesse Rothstein raises alarms about the potential for a significant economic downturn in the United States, largely attributed to the actions of Elon Musk. Rothstein, a public policy professor at the University of California, Berkeley, who previously served as chief economist at the Department of Labor, suggests that the nation may be on the brink of a deep recession.
According to Rothstein, the impending job cuts and cancellations of federal contracts could drastically affect employment rates. He predicts that upcoming employment reports will likely reveal substantial job losses, comparable to those seen during the financial crises of 2008-2009 and 2020.
The economist highlights the interconnectedness of unemployment and consumer spending, stating that rising joblessness often leads to decreased spending, which in turn slows economic activity and growth. This cycle can create a challenging environment for hiring.
Rothstein notes that the uncertainty surrounding Musk’s approach to federal spending could amplify these effects. The chaos stemming from Musk’s initiatives, particularly his so-called Department of Government Efficiency, raises concerns about the accuracy of employment data reported by the U.S. Office of Personnel Management.
Hiring freezes are already being implemented by universities and other organizations, further complicating the economic landscape. Rothstein warns that the repercussions of these measures could be significant, affecting not just federal productivity but also the overall quality of public services.
The future of the U.S. economy remains uncertain, with many analysts predicting challenging times ahead. For more details, you can read the full article here.