A professor and former Department of Labor economist is warning that unelected White House advisor and multi-hyphenate billionaire Elon Musk is sending the United States headlong into a huge recession.
In a post on Bluesky, Jesse Rothstein, a University of California, Berkeley public policy professor who was the DOL’s chief economist at the start of the Obama administration, addressed the dire situation we could soon be facing.
“It seems almost unavoidable at this point,” Rothstein wrote, “that we are headed for a deep, deep recession.”
Between the hundreds of thousands of government jobs on the chopping block and the cancellations of countless federal contracts, the economist noted that upcoming employment reports are looking quite scary indeed.
“The March employment report (to be released April 4) seems certain to show bigger job losses than any month ever outside of a few in 2008-9 and 2020,” the professor wrote in his multi-post thread. “Add on to that enormous private market uncertainty — how could you hire in these conditions? — and this is going to be very, very bad.”
The basic idea is that higher unemployment leads to drops in consumer spending, which can slow economic activity and growth, which in turn leads to fewer hires, closing the recession circle.
But there remains some uncertainty when it comes to what Musk’s newfound role as federal spending slasher might mean for the economy. That’s in large part due to the chaos Musk’s so-called Department of Government Efficiency has wrought.
As Rothstein points out, “I worry that [the US Office of Personnel Management] itself doesn’t yet know how many workers were fired. It may be some time before it can report accurately to the [Bureau of Labor Statistics].”
But the ripple effects of major hiring freezes could be “very large,” he argued. “Universities and others are already instituting hiring freezes.”
Where the major job losses will leave the fate of the US economy in the short term remains to be seen. But chances are, it won’t be pretty, even according to Musk himself.
The billionaire said during a campaign stop for Trump just ahead of the election that America would likely be in for some financial “hardship” the exact should he begin trimming the fat, as he saw it.
“We have to reduce spending to live within our means,” Musk said, seemingly using the royal we to refer to the hoi polloi despite being a billionaire himself. “And, you know, that necessarily involves some temporary hardship, but it will ensure long-term prosperity.”
