Strong US consumer is proof recession won't happen: El-Erian

Allianz chief economic adviser Mohamed El-Erian discusses Trump's imposition of steel and aluminum tariffs on Brazil and Argentina, trade tensions, market outlooks, consumer strength, recession fears, and the drag the rest of the world is placing in the U.S. economy.

Don't throw in the towel on the U.S. economy just yet.

Black Friday sales are the latest sign that the U.S. consumer, which makes up about 70 percent of the economy, is alive and well.

"All this talk of recession, and you know I thought that was ridiculous talk, it's not going to happen," Mohamed El-Erian, chief economic adviser at Allianz Global Investors, told FOX Business’ Maria Bartiromo on Monday. "The U.S. consumer is in a really good place and the U.S. consumer is the main driver of this economy."

Spending figures from the Black Friday weekend showed online shoppers spent a record $7.4 billion, almost as much as the $7.9 billion they spent during last year's Cyber Monday. That’s in addition to the $4.2 billion they spent online on Thanksgiving Day, which was 14.5 percent higher than last year's spending.

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Brick-and-mortar sales were down 6.2 percent on Black Friday, but up 2.3 percent on Thanksgiving Day, according to ShopperTrack data.

The National Retail Federation expects sales in November and December to hit up to $730.7 billion, a nearly 4.2 percent increase from 2018.

The solid start to the holiday shopping season comes after retail sales rebounded in October, climbing 3.1 percent from last year and 0.3 percent from the prior month. They fell in September for the first time in seven months.

The strength of the consumer has been a key driver in the economic expansion, which at 125 months, is the longest on record.

"The United States has outperformed the rest of the world in an eye-popping fashion. I don't think we've seen numbers like that," El-Erian said.

He expects the U.S. economy to continue to grow at a 1.5 percent to 2 percent pace, which he says would be higher if the rest of the world “gets its act together.”

The only thing that would weaken the consumer, in El-Erian's view, is a "big policy mistake" like a government shutdown. As long as that doesn’t happen, he thinks the labor market will continue to "produce new jobs and wage growth."

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El-Erian recommends investors stick with the U.S., but go "up in quality." He also suggests keeping cash on hand to buy overseas names at cheaper prices.