Egypt Daily News – The economist Mohamed El-Erian believes that the likelihood of a U.S. economic recession has become a cause for concern, after being largely dismissed just a few months ago.
In an article for Bloomberg, the Queens’ College, Cambridge president stated that a combination of factors—such as political uncertainty and financial market fragility—is coming together to threaten the world’s largest economy.
He explained that several warning signs have emerged recently, including a 70-basis-point drop in 10-year U.S. bond yields within weeks and oil prices falling below $70 per barrel.
These developments coincide with a string of disappointing economic data, reflecting growing concerns about the direct consequences of President Donald Trump’s policies on trade and public sector reforms.
El-Erian noted that uncertainty surrounding the current administration’s policies has weakened business and household confidence, creating economic ambiguity.
He identified three key indicators of U.S. economic weakness:
- Low-income households struggling with rising debt burdens.
- Businesses adopting a cautious stance amid heightened political rhetoric.
- An escalating risk of a trade war between Washington and other nations.
Additionally, El-Erian highlighted the lack of significant progress in curbing inflation, warning that this raises the risk of the U.S. economy slipping into stagflation—a mix of stagnation and persistent inflation.
