Tags: Pimco | El-Erian | US | Economy

Pimco’s El-Erian: US Economy ‘Muddling Through’

Monday, 12 Mar 2012 08:32 AM

Pimco CEO and co-CIO Mohamed El-Erian says the economy is "muddling through" and that "one-off factors" have contributed to a recent stock market rally, the Market Oracle reports.

Even so, El-Erian says stocks will rally.

"We're looking at a growth rate just under 2 percent for the U.S.,” says El-Erian. “Within that, you will see a lot of differentiation. The key issues … is to be able to choose the different sectors and companies.”

Editor's Note: Wall Street Insider Exposes Death of Main Street America

“There are companies out there and our analysts and portfolio managers work very hard to identify them. Yes, you're going to get some companies doing really well and differentiation is going to be key."

El-Erian says the recent jobs report was “a good number — not just the headline but also the revisions,” as are the facts that the participation rate is going up and some of the structural elements are improving.

“Having said that, it's just indicative of the healing process,” says El-Erian. “We're not yet in a place where the labor market and consumers can push this economy forward."

El-Erian says markets have benefited enormously from liquidity. “Not just the ECB and the Fed, but the Swiss National Bank, the Bank of Japan, India, Brazil, everybody is easing monetary policy,” he says.

“Plus, we've had one-off factors. Do not forget the fall in the U.S. savings rate that has helped us. So, this rally is warranted. It is warranted by these temporary factors, but we now need to hand off to more permanent fact.”

Economic recovery will not come from the rest of the world, says El-Erian.

“They're slowing,” he says. “It's not going to be the government. It's not going to be the consumer. Could it be business? Yes.”

“But business has to have better assurances that demand will ultimately go up, otherwise they do not invest."

According to cfo.com, about 54 percent of CFOs responding to the recently released Duke/CFO Global Outlook Survey said they are more optimistic about the U.S. economy compared with their attitude last quarter, while 15.3 percent of them said they were less optimistic.

That’s a shift from the December 2011 survey, when 35 percent of CFOs were more optimistic and 32 percent less.

Editor's Note:
Wall Street Insider Exposes Death of Main Street America


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