PIMCO’s CEO Mohamed El-Erian reacted to Fridays’ jobs report, noting that a disparity exists between households that generally feel better, and the business sector, which does not. He said that disparity will be resolved first with headwinds and then with tailwinds.
“Overall, the economic data has been improving and that’s pointing to a growth rate of about 2%,” El-Erian (left) told Bloomberg Television Friday morning. “But within that, you’re getting segmentation between a household sector that feels better, because of housing and consumer confidence, and a business sector that still feels uncertain because of the political situation in Washington. So yes, overall the economic data is improving, but keep an eye on this segmentation that is quite significant.”
When queried about what can be done, outside of government policy, he said the U.S. overnment needs to do two things over the next few months.
“First, we move the headwinds, and here we are talking about the fiscal cliff and more generally the bickering coming out of Washington,” he explained. “Second, we need to produce tailwinds.”