Transcript: Mohamed El-Erian on "Face the Nation with Margaret Brennan," Nov. 3, 2024

The pursuing is simply a transcript of an question and reply pinch Mohamed El-Erian, main Economic Adviser astatine Allianz, connected "Face nan Nation pinch Margaret Brennan" that aired connected Nov. 3, 2024.

MARGARET BRENNAN: To dissect immoderate of nan caller economical indicators we've been seeing, we're joined by Mohammed El-Erian. He is nan Chief Economic Advisor astatine Allianz. Welcome backmost to nan program.

MOHAMED EL-ERIAN: Thanks for having me.

MARGARET BRENNAN: You know, we saw connected Friday this jobs study that indicated occupation creation stalled a spot successful October. There were immoderate complicating factors, for illustration hurricanes and a onslaught astatine Boeing. But what's your position connected what this indicates for nan adjacent President of nan United States?

MOHAMED EL-ERIAN: So astir of nan report, arsenic you pointed out, was distorted successful a really important manner, by nan strikes, by nan hurricanes. The bottommost line, Margaret, is, we person an system that has been increasing robustly. Inflation is coming down, and nan main situation for nan adjacent management is not conscionable to support what is called economical exceptionalism, because we are outperforming each different precocious economies, but besides to proceed to reposition it for nan engines of tomorrow's prosperity. And that's perfectly critical.

MARGARET BRENNAN: Well, we cognize nan Federal Reserve is gathering later this week, whitethorn move connected liking rates again, since ostentation is astir aliases getting adjacent to that 2% target, but for mean people, they spot lodging prices are high. They spot market prices are still high. Where's nan script wherever those prices really travel down?

MOHAMED EL-ERIAN: Yeah, and that's what everybody's expecting, but it's not going to happen. Look, nan bully news is, liking rates will proceed to travel down. The bully news is, inflation, which is nan complaint of summation of nan costs of living, will travel down. But it's very difficult to bring down prices, and that's 1 governmental problem, is erstwhile you show group ostentation is coming down, successful their head, they deliberation prices are coming down, not nan complaint of summation of prices. So it's a misunderstanding, unfortunately, but you've sewage to beryllium observant what you wish for, because if prices travel down significantly, we are past successful thing overmuch worse economically.

MARGARET BRENNAN: And that misunderstanding being utilized rather a batch connected nan run trail, Mohamed, arsenic you know. I cognize nan banal marketplace is not an parameter of what's happening pinch nan economy, but it is guardant looking. This week, what should we beryllium expecting arsenic a guidance to nan result of this election?

MOHAMED EL-ERIAN: So judge it aliases not, a batch of investors are conscionable connected nan sideline. They spot truthful galore possibilities, beryllium it for nan statesmanlike race, beryllium it for Congress, aliases moreover nan grade to which what is promised by statesmanlike candidates will go policy, location stands to beryllium a large spread betwixt nan two. So rather a fewer investors person said, you cognize what? There's measurement excessively overmuch uncertainty. I'm conscionable opinionated connected nan sideline and waiting to spot what emerges.

MARGARET BRENNAN: A spread betwixt what's promised and what's delivered is simply a very negotiated measurement of putting campaigning there, Mohamed, but neither campaigner is moreover making a motion towards reducing nan indebtedness load successful this country. And successful position of what's being promised, nan scheme that nan Vice President has put guardant is estimated by this Committee For a Responsible Budget to summation nan national indebtedness by astir $4 trillion done 2035. Donald Trump's plans would summation it by astir $8 trillion. Congress, arsenic you- you suggested there, they tin put nan brakes connected thing here. But does this- proceed committedness of spending and nary committedness of reducing it interest you?

MOHAMED EL-ERIAN: It does. It does successful a large way. Look, it was unthinkable that we would person almost 30 months of unemployment astatine 4% aliases below, and we'd tally fiscal deficits of 6 to 8%. Remember, John Kennedy said, erstwhile nan sun is shining, you hole nan roof. Instead, nan sun has been sparkling successful our economy, and we created much roofs. Our indebtedness to GDP is 120%- of that is 120% of GDP. Look some candidates, whether they for illustration it aliases not, are going to person to find a measurement to mean deficits and indebtedness and critically, Margaret, to create operational elasticity successful nan budget. The fund is becoming much and much rigid, which intends that it's harder to respond to unanticipated shocks.

MARGARET BRENNAN: Unanticipated shocks. In position of 1 of nan things we person heard from nan Trump run rather a lot, is this promise to usage tariffs to create income for nan authorities somehow, that's really Donald Trump suggests utilizing them. Do you position tariffs arsenic a regressive taxation that will wounded mediocre group by raising prices for them? Or do you position them as, somehow, you know, a rising tide that floats each boats?

MOHAMED EL-ERIAN: So, tariffs are a vulnerable tool. They person constricted use, but if they are overused, they go counterproductive. It is- it is not a bully thought to committedness nan usage of tariff to present each sorts of things, beryllium it a little deficit, beryllium it protecting home producers, beryllium it putting pressure, leveraging power connected different countries. Tariffs person a domiciled to play, but not to nan extent- and akin for nan different side, business argumentation and regulation, they some person a domiciled to play, right, but beryllium observant of overreach.

MARGARET BRENNAN: Right. Fair point. Mohamed El-Erian, convey you very overmuch for your analysis. The economy, consistently nan number 1 rumor for American voters successful this election. We'll beryllium backmost successful a moment.