Allianz chief economic adviser and noted economist Mohamed El-Erian believes it is important to keep an open mind on the probability of a recession in the U.S. as well as its characteristics if it materializes.

El-Erian cited his opinion piece in the Financial Times, where he expressed his worries over a repeat of the analytical and behavioral traps featured in last year’s ill-fated inflation call.

Also Read: Investing For Beginners

The economist pointed out that consensus forecasters are still predicting a “short and shallow” recession despite the chastening received after they projected that the inflation will be transitory.

El-Erian said analytical and behavioral factors indicate "we should be cautious about the 'short and shallow' consensus call."

Companies, governments, households and equity investors should plan for a range of possible outcomes, with no single one dominating as a baseline, he said, adding that such fluidity needs safeguarding against policy errors, corporate missteps and market accidents.

Federal Reserve Chair Jerome Powell is due to deliver a speech at an event on Wednesday hosted by the Brookings Institution in Washington, which is nominally focused on the labor market. However, he is expected to cement expectations that the central bank will slow its pace of interest-rates hikes next month, while asserting its fight against inflation will run into 2023.

Investors and traders are also eyeing the personal consumption expenditures and payrolls data scheduled to be released later this week. The SPDR S&P 500 ETF Trust (NYSE: SPY) closed 1.6% lower on Monday, while the Vanguard Total Bond Market Index Fund ETF (NASDAQ: BND) closed 0.12% lower.

Impact On Growth: El-Erian argued that what is true for the economy as a whole may not be the case for the whole population. He said the most vulnerable people and companies have already used up their savings, have more limited income opportunities and less access to low-cost credit. El-Erian noted that this detrimental impact on growth is not easily offset by the better-off part of the population.

Read Next: Tesla, Apple, Anavex, Axsome, Pinduoduo: Why These 5 Stocks Are Drawing Investors' Attention Today

Photo by World Economic Forum on Wikimedia