The economy is weakening, but not weak, says El-Erian

Thursday morning, we learned that gross domestic product for the first quarter of the year was lower than previously reported, in part because consumers pulled back on their spending. Tomorrow we’ll learn more about the state of the macroeconomy, with new data on consumer sentiment, as well as the latest measure of the Federal Reserve’s preferred inflation gauge.

In the meantime, “Marketplace” host Kai Ryssdal spoke with Mohamed El-Erian to make sense of where this economy stands right now. El-Erian is the president of Queens’ College, Cambridge, economic advisor at Allianz, and former CEO of PIMCO.

“We have a weakening, not a weak, a weakening economy, with inflation staying high,” El-Erian said. “We’re seeing both the ability and the willingness to spend under pressure.”

On the American role in the global economy, El-Erian said he was surprised that the dollar hardly appreciated from the Israel-Iran conflict.

“What that tells you is that the role of the dollar is starting to be questioned,” he said. “That’s a real concern for the U.S. because the U.S. gets incredible, exorbitant privileges by having its currency as the reserve currency.”

Use the audio player above to hear their full conversation.