KW: Money printing illusions amidst record unemployment and bankruptcies about to hit this quarter.
Mohamed El-Erian does not see a smooth, V-shaped recovery from the coronavirus pandemic in the cards – and instead says that it will probably look more like a series of Ws.. “Think of a pendulum swinging, and we don’t know the magnitude of the swings, and we don’t know the duration of the swings or the settling point. So it really is an uncertain outlook,” he told Fox News‘ Chris Wallace in a Friday interview which aired on “Fox News Sunday. “We should not forget how bad this picture is. With the additional three million [unemployed], that is 36 million people who have signed up for jobless claims in 8 weeks. That’s one quarter of our labor force. So it’s an enormous shock,” he added.
El-Erian also says that reopening the economy will be an uphill battle, and that until a vaccine is readily available, it will take time for people to resume normal activities.
“It’s very difficult for me to convince you I’m healthy and for you to convince me I’m healthy until we get a vaccine,” he said, while noting that the pandemic has “shaken consumer confidence,” and that it will take a while before a public that “isn’t wired for social distancing” to adjust to the new normal.
Another variable is that states are reopening on different timelines, and that it’s unclear how businesses will resume operations with “different states doing different things.”
“We have these three massive uncertainties all in play at the same time, and it’s very hard to say, oh everything’s going to be resolved overnight,” El-Erian added (via Fox Business). “We hope so, but I think we should buckle our seatbelt that it’s going to get bumpy still.”
“I mean, that really got out of hand fast…”