El-Erian Says Trump Loses Capital by Tackling Health Care First

U.S. employers added 235,000 jobs in February, the first full month under Trump’s administration, a Labor Department report showed Friday. Still, El-Erian said that globalization and technology have been stunting wage growth, with that figure reaching 2.8 percent compared with the same period last year. Robust gains in jobs should eventually push that higher, he said.

Wage Pressure

“You cannot create so many jobs and not end up pushing wages higher,” said El-Erian, who is also a Bloomberg View columnist. “It’s just taking a lot longer than what history would’ve suggested.”

Federal Reserve Chair Janet Yellen signaled in a speech last week that the central bank may have to raise interest rates at a meeting next week, and even spurred speculation that this year’s increase might be bigger than policy makers have been forecasting. El-Erian said that officials had been talking up the potential for a rate boost to ensure that there’s no disruption to markets if the central bank has to tighten.

“This report means that we definitely get a hike next week, but it doesn’t mean we get more than three hikes for 2017, not yet at least,” he said. “That’s why the market likes it, because the market expected a hike next week. The only thing it was worried about is, ‘Do we get even a higher path of future rates?’ And this report suggests that we don’t.”

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