Mohamed El-Erian warns of a 'vicious' economic slowdown that can only be saved with more policy efforts
- Economist Mohamed El-Erian told Bloomberg TV on Friday that the economy is entering into a "vicious cycle" as coronavirus cases surge and economic activity slows.
- The only thing that will break that cycle, according to El-Erian? Policy efforts.
- "Unless we move on policy and health, you and I unfortunately will be talking about this vicious cycle," for quite some time, the Allianz chief economic adviser told Bloomberg.
- Visit Business Insider's homepage for more stories.
Economist Mohamed El-Erian told Bloomberg TV on Friday that the economy is entering into a "vicious cycle" as coronavirus cases surge and economic activity slows.
"We are looking at a high probability of a vicious cycle. Public health is deteriorating...policy is not doing anything. The economy is slowly going into recession in Europe and people are becoming more hesitant to interact socially and economically. We need to break that cycle," the President of Queens' College and Allianz chief economic adviser said.
The only thing that will break that cycle, according to El-Erian? Policy efforts.
"Unless we move on policy and health, you and I unfortunately will be talking about this vicious cycle," for quite some time, he told Bloomberg's Jonathan Ferro.
In a Bloomberg Op-Ed on Friday, El-Erian said that the ECB's expansion of its stimulus program and bond-buying was a "policy decision that is understandable but unlikely to bolster the economy much or attain its inflation objective."
On the fiscal policy front in the US, House Speaker Nancy Pelosi signaled stimulus negotiations could extend beyond Christmas, but it would be preferable to pass a bill before December 18, the new date Congress has set to pass a government spending bill. The delayed stimulus comes as 853,000 additional Americans file for unemployment.