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El-Erian: ‘New Normal Is a Stagnant Economy’

“The fiscal cliff standoff adds another negative to a weak economy, says Pimco CEO Mohamed El-Erian.

A plunge off the cliff “isn’t the end of the world, but it’s not a good thing” he tells CNBC. “Two things anyone comes away with are dysfunction and polarization.”

The fiscal cliff means that unless Congress and the White House reach a deal today, $607 billion of tax hikes and spending cuts begin Jan. 1.

As for the economy, “the new normal is a stagnant economy with an overlay of political polarization and dysfunction,” El-Erian says.

“The new normal is sluggish growth and persistently high unemployment and concerns about debt and deficits.”

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