Tesla shares fell 12.2% on Tuesday, after the electric car company failed to meet expectations on fourth-quarter deliveries. The companys shares have fallen 72.7% in the past year. 

Teslas market capitalization is now just $339 billion, putting it behind companies like Walmart, Nvidia, and Eli Lilly. 

The share price plunge also puts Tesla behind LVMH Moët Hennessy Louis Vuitton, the worlds largest luxury goods group. As of Wednesday, LVMHs market capitalization is $389 billion. Unlike Tesla, shares in LVMH have largely held steady, with only a 2.5% drop in the past year after recovering from a slump over the summer.

In October 2021, Tesla became one of a few U.S. companies with a market valuation over $1 trillion, alongside companies like Apple, Microsoft, Alphabet and Amazon. (Amazon has since also slipped from the $1 trillion club). 

Tesla faces softer demand for its electric vehicles in markets like the U.S. and China, and is reportedly slowing production at its factories. Tesla investors also blame Musks simultaneous leadership of Twitter for the fall in share price. Musk, for his part, blames interest rate policy from the U.S. Federal Reserve for Teslas share troubles. 

Arnault vs. Musk

LVMH co-founder and CEO Arnault replaced Tesla CEO Musk as the worlds richest person in mid-December. The change in rankings was due to the massive slide in Teslas shares, which makes up a sizable share of Musks net worth.

As of Wednesday, Arnault has a fortune of around $169 billion, compared to Musks $128 billion, estimates Bloomberg. 

Musks fortune, at its peak in November 2021, was worth $338 billion. Arnault, at the time, was worth $172 billion. 

The Tesla CEOs fortune keeps on dropping, shrinking by just over $9 billion on Tuesday alone. (Indias Gautam Adani, currently the worlds third-richest person, has a fortune of $119 billion, according to Bloomberg)

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But while nobody knows exactly how much of a decline the country is in for, fears of a historic recession may be overblown.

Bank CEOs including J.P. Morgan Chases Jamie Dimon as well as top economists ranging from NYUs Nouriel Roubini and Mohamed El-Erian, president of Queens College at Cambridge, have forecasted economic doom and gloom for the U.S. in the year ahead, in response to the Feds dramatic cycle of interest rate hikes that began last year.

Dimon has even warned about a potential economic hurricane while El-Erian went as far as predicting a profound economic and financial shift as the global economy sits on the brink of an epochal transformation.

But for all the foreboding forecasts, not every economist is convinced the U.S. will spin out into a severe recession in 2023, or even that it will enter one at all.

The most likely scenario could be something more akin to a slowcession, according to Mark Zandi, chief economist at Moodys Analytics and a leading voice and presidential adviser in U.S. economics.

Zandi was one of the first economists to predict the 2008 financial crash and his research directed the federal governments response to the crisis. 

In 2023, U.S. unemployment may rise and growth could come grinding to a halt, Zandi wrote in a report released Tuesday, but may still be able to skate past an outright recession. Zandi and Moodys baseline outlook for the year is that the Feds interest rate hikes will bring down inflation without triggering a recession, a so-called soft landing for the economy.

[The Fed] will be able to raise rates high enough, fast enough to sufficiently quell the wage and price pressures, but not so high and fast that it knocks the wind out of the economy, Zandi wrote. This is a scenario that we might well call a slowcessiongrowth that comes to a near standstill but that never slips into reverse.

The slowcession economy

Zandi conceded that all is not well in the U.S. economy in 2023.

Recession risks are uncomfortably high due to the rapid rate of Fed rate increasesseven last year and more planned for this yearand runaway inflation. Under almost any scenario, the economy is set to have a difficult 2023, he wrote.

But at the same time, the slowdown in growth and economic activity may not be as severe as many observers fear as the economy has so far shown few signs typical of a looming recession.

The first factor boosting the chances of a slowcession are low oil prices, Zandi wrote.

Prices for oil surged to a 10-year high of $120 a barrel early last year after the Russian invasion of Ukraine, contributing to energy inflation in the U.S. and $5 a gallon gasoline across the country.

But prices have leveled off dramatically since then, partly due to releases from the U.S. Strategic Petroleum Reserve.

Zandi said oil prices are now leveling at near $80 a barrel, slightly higher than Moodys equilibrium estimate for oil prices. Oil prices are likely to remain volatile throughout the year depending on energy demand in China and potential supply cuts in Russia, Zandi added, but noted the global oil market is so far adjusting admirably to disruptions and expects it to continue doing so for the rest of the year.

Inflation overall is set to finally fade away this year, Zandi wrote, as supply chain bottlenecks ease up and China reopens to the world.

In December China lifted its strict zero-COVID policy that contributed to the supply shortages and price rises that afflicted the global economy throughout the pandemic, and while its economy may take some time to get back to full speed, Zandi predicted global supply chains to resettle by this summer once the current wave of COVID-19 infections in the country passes.

Zandi also cited recent evidence of slowing wage and job growth in the U.S., more signs that inflation is past its peak.

Finally, Zandi noted the financial health of American consumers, banks, and businesses as an indicator that a slowcession is more likely than a recession.

Zandi wrote that few of the typical imbalances commonly seen in the buildup to a recession, such as overextended credit lines or overbuilt real estate, are manifesting in todays economy, boosting the chances of a soft landing when growth starts slowing down.

The most encouraging sign, according to Zandi, is the relative health of consumers and shoppers, which he referred to as the firewall protecting the U.S. economy from a severe recession. Consumer spending in the U.S. has shown recent signs of slowing slightly, but still remains strong despite rising inflation and recession anxiety. 

Shoppers are the firewall between an economy in recession and an economy that skirts a downturn. While the firewall is sure to come under pressure, particularly as financially hard-pressed low-income households struggle, it should continue to hold, Zandi wrote.

Recession still a very real risk

While Zandi is leaning towards a slowcession as the most likely outcome for the economy, he acknowledged a number of serious threats make a recession a very real risk, and the Fed will have to be careful in 2023 to make sure the U.S. avoids an unnecessarily steep and prolonged economic contraction.

Most significant is the prospect of the Fed making an error in setting monetary policy, sparking a recession that would have been unnecessary to achieve its inflation target, he wrote.

Zandi cautioned the Fed not to raise its funds rate past 5% in its efforts to bring inflation back down, lest it triggers an unnecessary recession. The federal funds rate currently sits at a target range of 4.25% to 4.5% after Decembers rate hike.

The Fed signaled late last year it would reconsider the size and frequency of rate hikes in 2023 depending on inflation data, although indicated pausing increases is off the table for now.

But while the risks are real, Zandi cautioned against pessimism and warned bad feelings about a recession could become a self-fulfilling prophecy if left unchecked, urging consumers and businesses not to lose faith in the economy.

It is important not to be Pollyannish, but it is also important not to convince ourselves that a recession is inevitable. It is not, he wrote.

Parents desire to protect kids from failure is so common, in fact, that the English lexicon has added a whole set of catchy labels to describe it, says David Anderson, a clinical psychologist at the Child Mind Institute.

From helicopter parenting to snowplow parenting, these terms tend to relate to parents who want to either plow the land in front of their kid to ensure they dont hit bumps or obstacles or want to remain engaged in so much oversight that they can manage situations for their kid before they become really challenging, he says.

Studies have drawn links between helicopter parenting and anxiety and depression in kids. The idea is that by swooping in to cushion kids from blows, parents send the message that they arent capable of overcoming struggles on their own. 

The truth is, not only can kids deal with failure, they need to experience it in order to develop the determination that will serve them throughout life, where success isnt guaranteed. 

Cultivating a growth mindset

Parenting styles that center on removing difficulties from kids lives are in direct opposition to a field of literature in psychology that focuses on the concept of a growth mindset, which is directly related to qualities like grit and resilience. The idea behind a growth mindset is that your abilities arent innate. Instead, you can always improve yourself through effort, learning, and persistence. 

Its the idea that failure is a stepping stone to success, says David Schwartz, a licensed marriage and family therapist in Los Angeles. Educators and people who are in contact with kids talk about the value of kids facing challenges, so they begin to create their own solutions. That kind of perseverance is an incredibly valuable character trait to develop for relationships, for careers, and for just in general facing the challenges of life.

Scripts for setbacks

Next time your kid is faced with a flop, try these strategies to nurture their motivation to get back up and keep trying:

Be less reactive and more curious. When your child comes home with an F on a paper, take a moment to ground yourself so youre not leading with your first reaction. Instead of immediate punishment, or expressions of how their failure makes you feel, focus on their thought process so you can foster the resilience that may already be happening there.

Sit in that space with them for a moment, and say, Talk to me about how youre thinking about this situation, Anderson says. 

One study on how parents views of failure predict kids mindset showed that focusing on how your child performed instead of what their failure might teach them leads to a fixed mindset. In other words, when parents react as if failure is devastating, kids takeaway is that they need to avoid failure instead of learning from it.

Avoid the blame game. Its tempting to foist a failure on someone or something else in an attempt to mute hurt feelings, but keep the focus on whats next, says Anderson.

How we talk through failure matters, he says. If our tendency is to say that their setback is because that coach has something against my kid or some system was unfair, youre telling your child theyre powerless to change a situation in the future.

Dont step in to relieve struggle. At the heart of several schools of thought such as Montessori or RIE is the creation of a yes space, or a place where kids can try to solve problems in a safe way without someone else telling them how to do it. 

If you see your child having difficulty with a project, or even opening a package, just observe from a distance. As long as theyre able to keep a clear (if frustrated) head, the hard work will pay off later.

Thats really kind of the key for younger kids is if you can see that you can keep them at a level of distress that isnt completely disorganizing, says Anderson. It can be really helpful to try to take a couple of moments a day to let them work through solutions to problems and see if they can solve it on their own.

Remind them that failure is a moment. Differentiation is key. Remember that your child is not defined by the action they took (or didnt take) that failed. They may not have been successful, but thats not who they are. The same goes for when they succeed. Celebrate, but dont turn it into a personality trait.

Resilience is about learning that success is a process, not a birthright, says Schwartz. Instead of teaching kids that theyre so wonderful that everything they touch will turn to gold, cultivate the message that theyre the kind of person who pursues their goals, continuing to work toward them even when they dont come immediately or easily.

Be available. Its hard to watch your kid struggle or fail. But while its difficult to witness, it also creates a beautiful opportunity for connection, says Anderson.

Its in those moments where we can say to somebody, I may not be able to fix it, but Im sitting with you right now.

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