Top economist Mohamed El-Erian sounds recession alarms and warns of stagflation after slew of bank failures last month
Mohamed El-Erian said the US economy is facing increasing odds of a recession and stagflation after turmoil snarled the global banking sector for the past month.
"Instead, red has become a flashing yellow due to the slower-moving economic contagion whose main transmission channel, that of curtailed credit extension to the economy, increases the risk not just of recession but also of stagflation." Meanwhile, the bank sector's ability to pass on higher borrowing costs and larger fees will be limited by other interest-paying products for customers. For example, Americans have beenand parking their cash in money market funds that offer higher yields as the Federal Reserve continues to raise interest rates.
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