Coronavirus V-shaped recovery 'uncertain': El-Erian
Economist says reopening will depend on a vaccine, restoring consumer confidence, and coordination among states
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Allianz chief economic adviser Mohamed El-Erian told "Fox News Sunday" host Chris Wallace that the chances the U.S. has a V-shaped recovery from the coronavirus pandemic is "uncertain."
"It's uncertain because both the journey to next year and what next year looks like are uncertain," El-Erian said.
He believes the U.S. economy's recovery will likely be W-shaped rather than V-shaped, comparing it to a swinging pendulum.
"It's not going to be a neat V, it's going to be more like a series of Ws," El-Erian said. "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."
El-Erian believes that pandemic has created "the biggest shock we've had for generations" and that reopening the economy will be an uphill battle.
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Until a coronavirus vaccine is readily available, he believes it will take a long time for people to trust that those around them are healthy.
"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," El-Erian said.
Another problem is that the pandemic has "shaken consumer confidence," so it will take time for an economy that "isn't wired for social distancing" to adjust. It also is unclear how to restart businesses when "different states are 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. "We hope so, but I think we should buckle our seatbelt that it's going to get bumpy still."
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El-Erian's comments come as more than 2.98 million Americans filed for unemployment in the last week as a result of the pandemic. In addition, U.S. retail sales plunged to a record low of 16.4 percent last month while industrial production dropped more than 11 percent.
There are more than 1.4 million confirmed coronavirus cases and more than 88,000 deaths in the United States, according to the latest update from Johns Hopkins University.