Musk Eyes Tesla Layoffs, Retail Group Says Economy ‘Being Rebalanced,’ US Adds 390,000 Jobs
Musk Eyes Tesla Layoffs
Tesla CEO Elon Musk is looking to cut about 10% of the electric vehicle maker’s workforce, after joining other high-profile corporate leaders expressing what the world's richest man described as a “super bad feeling” about the economy’s tilt toward a potential recession.
According to internal corporate emails detailed June 3 by Reuters, Musk told Tesla staff to “pause all hiring worldwide” just two days after ordering its approximately 100,000 workers back to Tesla’s offices full time. Austin, Texas-based Tesla, which has several subsidiaries tied to automaking and renewable energy, did not respond to a request from CoStar News to comment.
Musk’s emails said Tesla has become “overstaffed in many areas,” but “hourly headcount will increase,” according to Reuters. “Note, this does not apply to anyone actually building cars, battery packs or installing solar,” Musk wrote.
Other analysts and economists have cautioned over the past few weeks that a recession is possible in the coming year, though there is no consensus on its severity if it indeed happens. During the same week as Musk’s comments, Goldman Sachs President John Waldron cited an unprecedented confluence of shocks now hitting the global economy, and JPMorgan Chase CEO Jamie Dimon warned that a “hurricane is right out there down the road coming our way.”
“We just don’t know if it’s a minor one or Superstorm Sandy,” Dimon said during a financial conference, citing the potential combined effects of inflation, the Ukraine war and rising interest rates. “You better brace yourself.”
Retail Group Says Economy ‘Being Rebalanced’
The top economist for a prominent retail trade group is countering predictions of dire times ahead, predicting U.S. employment growth and wage gains will help soften the fallout from a lingering mix of inflation and global uncertainties.
“With changes underway that focus on taming inflation without splintering the economy, the nation’s economic system is in the process of being rebalanced in ways that are testing its resilience,” said Jack Kleinhenz, chief economist for the Washington, D.C.-based National Retail Federation, in a June 1 statement.
Waving off predictions of a looming recession, Kleinhenz pointed to the trade group’s survey of national economists that found U.S. gross domestic product is expected to climb 2.6% this year and another 2.1% in 2023. Wage gains, job growth and consumer spending on non-essentials are running well ahead of levels seen in the early months of the pandemic, he said.
“Though many people fear an extreme cooling off of the economy, there is not an overwhelming amount of evidence to support such predictions,” Kleinhenz said. “In general, the data suggests that we remain in an ongoing expansion.”
The assessment comes after several major retailers, including Walmart and Target, saw inflation eat into their latest quarterly profits as consumer skittishness contributed to overall sales that fell short of expectations, even as sales for most of the big chains were up from year-earlier levels.
US Adds 390,000 Jobs
Nonfarm jobs rose by 390,000 in May from the prior month, as the nation’s unemployment rate remained at a historically low 3.6% for the third consecutive month, the Labor Department reported June 3.
Hotel and restaurant operators, along with their landlords, saw good news in May’s 84,000-job increase from the prior month for the leisure and hospitality category, with more than half of that gain within food and drinking places. However, retail jobs declined by more than 60,000.
In a potential sign of healing for a battered and short-staffed supply chain, transportation and warehousing added 47,000 jobs from the prior month, including a 13,000-job boost for truck transportation and a rise of 6,000 for air transportation. The Labor Department said May’s transportation and warehousing employment was up by 709,000 from February 2020, just before the start of the pandemic.
Construction jobs rose by 36,000 and manufacturing jobs rose by18,000 in May from the prior month.