Recession predictions are too complacent, and there isn't enough evidence that a coming downturn will be short and shallow, Mohamed El-Erian says

• There's not enough evidence an incoming recession will be short and shallow, Mohamed El-Erian warned.
• El-Erian noted that mild recession calls were similar to the ways people dismissed rising inflation last year.

Predictions for a coming recession are too complacent, and there's isn't enough evidence that a coming downturn will be short and shallow, top economist Mohamed El-Erian warned.

"People are rushing to say, 'don't worry. If we end up in a recession it will be short and shallow.' I say keep an open mind," the chief economic advisor of Allianz said in an interview with CNBC on Monday.

El-Erian pointed to the similarities between calls for a mild recession and the insistence from some observers, including the Federal Reserve, that rising inflation was a "transitory" phenomenon. That description has since been retired by the Fed officials, and inflation reached a 41-year-high in June amid what critics have said was a slow policy response by the central bank. El-Erian suggested the current views on a recession may be making a similar mistake.

"I hope we don't end up in a recession, but if we do, there isn't enough evidence to suggest it's short and shallow," El-Erian warned.

Other experts though have pointed that strong economic fundamentals could bolster the US against a painful downturn. Despite the Fed's aggressive rate hikes, the labor market is still strong and household and private sector balance sheets remain on solid footing. Some economists, such as Wharton Professor Jeremy Siegel, noted that inflation often lags behind the official statistics, meaning high prices are likely already well under the reported figures.

But strong fundamentals aren't necessarily "deterministic," El-Erian said. In an op-ed for the Financial Times on Monday, he warned that the insistence that a downturn would be mild was in response to "unsettling" economic conditions. He recently warned that the US was already headed into a stagflation problem, predicting that inflation would get stuck around 4% due to ongoing supply-chain issues and changes in globalization of the economy. US bonds are also showing signs of dysfunction, which could create stability issues in the financial system and spur "unsettling volatility," he added.

While he believes a recession was not unavoidable and wouldn't be as bad as 2008, he urged markets to prepare for a number of possible scenarios.

"Scenario planning for a wider range of possible outcomes is hard work and takes time, and much of it will eventually prove redundant. Betting on a shaky consensus forecast, however, could prove much more damaging," he said.