Economist: Biden’s supply chain crisis, inflation here to stay

NEW YORK, N.Y. – APRIL 29: Mohamed El-Erian, Chief Economic Adviser of Allianz appears on a segment of “Mornings With Maria” with Maria Bartiromo on the FOX Business Network at FOX Studios on April 29, 2016 in New York City. 

 

A top economist has warned Joe Biden’s supply chain crisis will be the main concern for the U.S. economy moving forward.

During an interview on Sunday, Allianz Financial Group economist Mohamed El-Erian said supply chain disruptions will “contaminate” consumer demand in the U.S. He added inflation isn’t transitory, contrary to claims by Biden’s officials, while labor shortages continue to make things worse.

Meanwhile, U.S. inflation rose 6.2 percent last month, marking the highest since 1990. Separately, El-Erian said inflation may eventually suppress consumer confidence in the U.S.

“But if you look at what’s happening on the demand side, there you get some questions. Demand is robust today, but will it be robust in six months time? And there’s really big questions, both in terms of demand destruction, people buying less because prices are higher, and in terms of whether policy becomes contractionary or not,” said El-Erian.

El-Erian also stressed the Federal Reserve must tackle the inflation sooner rather than later, before it does more damage to consumer expectations.