Economist Mohamed El-Erian: Inflation Will Be ‘Sticky’ Around Double Target Rate, ‘Parts of Manufacturing Are Already in Recession’

On Tuesday’s broadcast of CNN’s “The Lead,” economist and President of Queens’ College Dr. Mohamed El-Erian predicted that inflation will be “sticky” at around 4%, twice the 2% target rate the Federal Reserve has and stated that some parts of the U.S. manufacturing sector “are already in recession.”

El-Erian stated, “I think by the end of 2023, inflation will be even lower than what it is today. Which is good news, because 7% is still too high. Normal is a different concept to different people. I suspect we’re going to get down to the 4s and then inflation risks getting pretty sticky at around 4%.”

He added, “Manufacturing is contracting. Parts of manufacturing are already in recession. Services are doing just fine. And United is doing just fine, because people are wanting to travel. So, the consumption of services is still healthy. But the consumption of certain goods is under pressure, and you see that in inflation. The high inflation’s happening in the service sector and the low inflation is happening in the goods sector.”

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