The U.S. economy is poised for growth that’s better than the International Monetary Fund projects, and there’s nothing on the domestic front that could knock it into a recession, according to one of the world’s most closely followed economists.
Mohamed El-Erian, chief economic advisor for Allianz, told CNBC on Tuesday that the U.S. economy is “in a good place in terms of growth, the U.S. economy is in a good place in terms of attracting capital.”
That stood in some contrast to the IMF, which maintained its prediction of 2.9 percent growth for the U.S. this year, but reduced its 2019 American growth prediction from 2.7 percent to 2.5 percent in its World Economic Outlook published on Tuesday.
For his part, El-Erian said the IMF “is too pessimistic” about the world’s largest economy.
“We’ve got three drivers of domestic demand all hitting at the same time: government spending — which is going to get stronger not weaker — household spending, and business investment,” he told CNBC’s Nancy Hungerford at the Barclays Asia Forum in Singapore. “That takes the U.S. through the next couple of years at least, so it wouldn’t surprise me if we get 3 percent growth for this year and next year.”
El-Erian said that any disturbances to U.S. economic growth were likely to come from beyond its borders.
“We get to a recession if there are spillbacks from the rest of the world. The U.S. on its own need not have a recession,” he said.
“Yes, this has been a very long expansion, but it’s been a very slow expansion, so this is qualitatively different from what we’ve seen in the past. I think the concern is about the rest of the world,” the chief economic advisor added.
The concern, according to El-Erian, “is about whether the U.S. gets spillbacks, either through its own action because it triggers a trade war — as opposed to trade skirmishes — or because we get major disruptions in Europe and in the emerging world.”
