The idea that the U.S. economy could slow down just enough to skirt a recession is so strong that it doesn't make sense to go against it, according to Mohamed El-Erian.
"You cannot get in the way right now of the soft-landing narrative — that narrative is building momentum," the chief economic adviser at Allianz SE and a Bloomberg Opinion columnist said Friday. "Everything we've seen so far this week — CPI, PPI, the banks — has all been about a soft-landing narrative."
Recession calls have been getting pushed back all year as economic data continues to show strength, particularly in the labor market. And U.S. inflation sharply cooled off in June when the consumer price index increased 3%, the smallest advance in more than two years, while producer prices barely budged.
"We are definitely in a good window for inflation data," El-Erian said on Bloomberg Television. "It will last into September."
El-Erian doesn't see a recession around the corner.
"I've been pushing back over and over again — there's nothing automatic about a recession," he said. Though, he added, should the Federal Reserve over tighten — which is possible — then an economic downturn could happen.
