Mohamed El-Erian, Allianz chief economic adviser and a Newsmax Finance Insider, warns that lingering dismal economic growth could eventually push us all into yet another recession.
"We could easily see a situation where low growth becomes recession. Artificial stability becomes instability," El-Erian told CNBC.
"[But] if governments step up ... we can transition to a higher growth scenario that validates prices."
"We are in an artificial period that we'll come out of at some stage," he said, advising investors to build up cash.
El-Erian isn't alone in his warnings about the economy.
A respected U.S. central bank official and a team of economic strategists have warned that the nation is flirting with the brink of a recession. UBS Global Macro estimates a nearly one-in-three chance of a recession.
“UBS' credit model, designed to find the likelihood of a recession over the next few quarters, considers four corporate credit measures: interest coverage, leverage, loan performance, and bank lending standards with recessions,” Business Insider explained.
“Based on the historical relationship between those measures and ensuing recessions, the bank's model estimates the risk of a recession at 31% over the next year, from Q2'16 to Q2'17,” BI reported.
The U.S. economy last entered a recession — defined as two consecutive quarters of year-on-year economic contraction — in December 2007, after the housing bubble burst, leading to a global financial crisis. That recession, dubbed the Great Recession, ended in mid-2009, making it the longest U.S. recession since the end of World War II, CNBC reported.
(Newsmax wire services contributed to this report).
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