Top economist issues dire warning about the US economy as he tears into the Fed for huge 'policy blunder' that could send country spiraling into RECESSION: 'I really do worry'

A starring economist has issued a dire informing astir nan US economy - tearing into nan Federal Reserve for a 'policy blunder' that could nonstop nan state into recession.

Mohamed El-Erian, nan main economical advisor astatine Allianz, said connected Sunday he fears nan system whitethorn beryllium spiraling pursuing a dismal unemployment report last week.

He places nan blasted connected nan Fed for keeping its main liking complaint astatine a two-decade precocious since 2022 successful its zeal to stifle inflation.

Those hikes are now hitting nan system hard, he said, suggesting nan Fed should person lowered rates earlier.

'I really do interest that we whitethorn suffer US economical exceptionalism because of a argumentation mistake,' he told Bloomberg TV, arsenic worldwide markets continued to plummet.

Following nan jobs report, which showed unemployment successful July roseate to nan highest level since October 2021, markets worldwide went into a tailspin amid fears that nan US system is sputtering.

A astir 19 percent diminution in Intel's shares in aftermarket trading deepened nan gloom. 

Economists astatine Goldman Sachs person since raised nan likelihood of nan US slipping into a recession wrong nan adjacent twelvemonth from 15 percent to 25 percent, while analysts astatine JP Morgan put nan chances of a recession astatine 50 percent.

To thief prevention nan economy, experts opportunity nan Federal Reserve must trim liking rates overmuch much quickly than planned to debar a immense recession. 

A complaint trim would make it easier for U.S. households and companies to get money and boost nan economy, but it could return months to a twelvemonth for nan afloat effects to select through. 

The Goldman Sachs analysts said they expect nan Fed will trim rates by 25 ground points, but noted that if nan August employment study is arsenic anemic arsenic July's was, they could opt for a larger cut.

JP Morgan analysts, though, wrote successful a memo that because 'the Fed looks to beryllium materially down nan curve, we expect a 50 [basis point] trim astatine nan September meeting, followed by different 50 [basis point] trim successful November.'

Yet nan Fed left benchmark borrowing costs unchanged at a 23-year precocious astatine its latest gathering past week.

The marketplace is now 'wondering if nan Fed is excessively precocious successful transitioning monetary policy,' Quincy Krosby, main world strategist astatine LPL Financial told CNBC.  

As nan markets opened successful Asia and Australia early Monday, NASDAQ futures dropped 2.27 percent, while S&P 500 futures dropped 1.41 percent.

The business was not overmuch amended internationally, pinch EUROSTOXX 50 futures down 0.6 percent, and Japan's Nikkei shedding a staggering 5.5 percent to deed a seven-month debased - marking its biggest three-session nonaccomplishment since 2011.

The losses followed nan inclination that began connected Friday, erstwhile Japan's marketplace retreated to wherever it was trading successful January earlier it surged to an all-time precocious past period of 42,000.

Elsewhere successful Asia connected Friday, Hang Seng successful Hong Kong dropped 2.1 percent to 16,945.51, while nan Shanghai Composite scale saw a much humble loss, of 0.9 percent to 2,905.34.

Chinese shares person extended losses arsenic investors registered disappointment pinch nan government's latest efforts to spur maturation done various piecemeal measures, alternatively of hoped-for infusions of broader stimulus.

The Kospi successful Seoul dropped 3.7 percent to 2,676.19 and Taiwan's Taiex sank 4.4 percent. Both markets thin to beryllium deed difficult by weakness successful exertion shares.

Meanwhile, Australia's S&P/ASX gave up 2.1 percent to 7,943.20 and nan Sensex successful India was down 1.1 percent. Bangkok's SET fell 0.7 percent.

Japanese shares besides suffered aft nan cardinal slope raised its benchmark liking rate on Wednesday, to 0.25 percent from 0.1 percent. 

That pushed nan worth of nan Japanese yen higher against nan US dollar, perchance hurting overseas net of awesome manufacturers and deflating a roar successful tourism.

Investors now judge that different awesome cardinal banks will travel nan Fed's lead and easiness rates much aggressively, pinch nan European Central Bank believed to beryllium cutting rates by 67 ground points by Christmas.