Top economist says supply chain issues could 'contaminate' demand | TheHill - The Hill

Mohamed El-Erian, chief economic advisor for the Allianz financial services company, said on Sunday that the main cause for concern in the U.S. economy should be supply chain issues, warning that continued problems could "contaminate" demand for products.

"Fox News Sunday" guest host Trace Gallagher noted that initial reports appeared to indicate that Black Friday sales were not particularly strong, and asked the economist if this was simply because shoppers were told to buy earlier this year in anticipation of supply chain disruptions.

"People were worried about supplies in the last two months. We saw a big jump in retail sales that came earlier than a lot of people expected, so I think quite a few people accelerated [those] purchases," said El-Erian.

"I don't think we have an issue with demand. I think incomes are strong. Retail sales are strong. Companies have lots of money. The problem is the supply side," he continued. "And unless we fix the supply side, it will contaminate the demand side. So that's why it's really important to focus on the two big issues that we have: supply disruptions and inflation."

Touching on inflation, El-Erian shot back at remarks from government officials who have characterized inflation as being "transitory."

"I think it's time for a change in policy at the Fed. And I was of the view that this may be easier with someone who hasn't repeated over and over again that inflation is transitory, don't worry about it, it's going away," El-Erian said, referring to Federal Reserve Chair Jerome Powell, who was nominated for a second term by President BidenJoe BidenGOP eyes booting Democrats from seats if House flips Five House members meet with Taiwanese president despite Chinese objections Sunday shows preview: New COVID-19 variant emerges; supply chain issues and inflation persist MORE last week.

"Inflation is not transitory and it's really important for the Fed to realize this because the worst thing that can happen is that in addition to the supply disruptions, we can't do anything about, in addition to the labor shortages, they destabilize our expectations and we change behavior even faster," he added.

Adblock test (Why?)

Top economist says supply chain issues could 'contaminate' demand | TheHill - The Hill
Read More