Elon Musk does it again. This time, he turned to Twitter, or X, to drop a bombshell about the American economy. In response to a tweet by Dogecoin co-founder Billy Marcus, Elon announced the following:

“America is about to go bankrupt.”

Billy had commented sarcastically on the mishaps of government financed by tax money. The growth of the US economy has taken a huge hit. We all know that. right?

Incidentally, Elon's Tesla did not sell a single cent of its $640,866,000 worth of Bitcoin in the second quarter.

In the first quarter of 2024, GDP growth was just 1.4%, a significant decline from 3.4% in the last quarter of 2023. The outlook for the third quarter is not very bright either, with growth expected to slow to around 1%.

Elon Musk predicts the collapse of the dollar. Source: X.com

High prices and high interest rates make people spend less, which keeps things down. But some analysts are hopeful that things will improve later in the year, with growth possibly hitting 2% if inflation eases and interest rates fall.

But Jay Powell doesn't seem keen on cutting rates, so...

Consider that consumer spending makes up a huge chunk of the U.S. economy — about 70%. But lately, it’s been cooling off. People have exhausted their savings during the pandemic and are now looking for cheaper options.

This is affecting businesses that rely on discretionary spending. However, it’s not all bad news; retail sales have shown some surprisingly strong results, so not everyone is cutting back just yet.

The labor market remains resilient, although the unemployment rate has risen to 4.1% as of June 2024. Job opportunities have declined, but it's not all doom and gloom.

Powell described the labor market as stabilizing. He believes the Fed's efforts to manage inflation are paying off, and he did not completely rule out the possibility of a September interest rate cut.

I think.

There’s a lot of talk about a recession, but many top economists, including those at Vanguard and the Conference Board, don’t think it’s coming. Not until 2024 at least.

Joe Biden. Credits: Reuters

The Arrow rule, which predicts a recession based on rising unemployment rates, is not showing a clear signal at the moment due to mixed data from the labor market.

The 2024 election adds to the uncertainty. Changes in economic policy could impact growth if Donald Trump wins.

The IMF is concerned about how the United States is managing its high debt levels and potential trade tensions amid funding for Ukraine and Israel. These issues affect the economy domestically and globally.