Expectations are building the Federal Reserve will stimulate the economy via monetary easing measures, a sign the economy is taking a turn for the worse.

Retail-sales data, consumer-sentiment figures and monthly jobs reports have disappointed recently, coming in at dismal levels at times, fueling talk the Fed will roll out a third round of quantitative easing, where the U.S. central bank buys bonds from banks, pumping the economy with liquidity to spur recovery and hiring.

The Fed has rolled out two such rounds so far, and a third round won't do much, Mohamed El-Erian, CEO of Pimco, manager of the world's largest bond fund, said Tuesday.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

"Most people recognize today that the benefits to this unusual activism on the part of the Fed are declining and the costs and the risks are increasing. If you look at a cost/benefit equation, there's a limit to what the Fed can do, and there's certainly a limit to what the Fed can deliver," El-Erian told CNBC.

As a side effect to quantitative easing, the dollar weakens and inflationary fears build, while stock prices tend to rise.

The first two rounds of quantitative easing, known as QE1 and QE2, saw the Fed inject $2.3 trillion into the economy by buying Treasury instruments and mortgage-backed securities held by banks.

The time now is for Congress to act by narrowing deficits.

"It's wrong to shift the emphasis from where things need to happen," El-Erian said.

"We need action on the fiscal front, a mix of stimulus and long-term reforms, we need action on the housing front, on the credit side, on the infrastructure side," El-Erian said.

"Bernanke cannot address all that, so I would hope that Congress would step up to its responsibilities rather than kick the ball back to the Fed."

So far, inflation rates have remained within comfort zones, but that could change down the road, as even a small gain in consumer prices could really sting an economy flying near stall speed, El-Erian said.

"We are not getting the real economy to react. Look at the data of the last 24 hours — horrible retail sales data, really horrible, and inflation is contained. However, nothing's being done to promote the real economy and that's a real issue."

Retail sales contracted 0.5 percent in June, well below market hopes for a gain of 0.2 percent.

The U.S. consumer price index was unchanged in June from May, and rose just 0.2 percent when stripped of volatile food and energy prices, the Commerce Department reported earlier Tuesday.

Some economists see the economy running on autopilot for the rest of the year.

Unemployment rates, which currently stand at 8.2 percent, will dip only to around 8 percent.

"The economy on Election Day will feel pretty much like it feels today," Mark Zandi, chief economist of Moody's Analytics, said recently on CBS's "Face the Nation."

"The benchmark is the unemployment rate, and the unemployment rate today is 8.2 percent nationwide. If you told me it's 8 percent on election day, I'd say that sounds about right."

For many households, however, high unemployment rates make it feel like the country remains mired in the recession, which hampers recovery.

"They feel the numbers. They sense that the economy isn't fully engaged," Zandi says, adding the economy created an average 75,000 jobs during the last three months, which isn't enough to instill confidence in the country and is too low to fuel more sustained economic recovery.

"They know we are growing but that doesn't feel very good and that's certainly not enough to get the unemployment rate down."

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did