Economist El-Erian says no ‘quick recovery’ without public trust on health

Mohamed El-Erian, chief economic adviser for the financial services company Allianz, said Sunday that all sectors of the economy may not recover quickly if there are still public health concerns over coronavirus outbreaks. 

Asked on CBS’s “Face the Nation” about Federal Reserve Chairman Jerome Powell’s suggestion in a recent NPR interview that future job gains may be harder to revive with COVID-19 still active, El-Erian said he’s “absolutely right.” 

“The Federal Reserve chairman, Jerome Powell, in an interview with NPR said that, or suggested anyway, that the future job gains were in industries and sectors of the economy that might be harder to revive because with COVID still around, those industries are- they require people to participate in them and people just aren’t ready yet. How do you read that of what’s left out there to be gained on the economy?” CBS’s John Dickerson asked. 

“He’s absolutely right,” El-Erian responded. 

“In order for us to engage in economic activity, I have to trust that you’re healthy. You have to trust that I’m healthy. And until we have a clear way of doing that, people are going to pull back. So we’re not going to see the quick recovery in all sectors,” El-Erian added. 

“And that comes at a time of increasing inequality, not just of income and wealth, but of opportunity. So, as I said earlier, it’s a long road ahead. The good news is we have the policies to accelerate it. The bad news is that the political system doesn’t enable that.”

Businesses have responded to varying degrees across the U.S. after mass shutdowns put in place to mitigate the spread of the coronavirus. 

The virus has infected more than 6 million people in the U.S. and killed more than 188,000, according to data compiled by Johns Hopkins University.