Pimco's Mohamed El-Erian said the unemployment rate is headed toward 6 percent, as the year-long global financial market turmoil continues to have a growing effect on the U.S. economy as a whole.
Photo: Oliver P. Quillia for CNBC.com
Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co.
El-Erian, co-chief executive officer of Pacific Investment Management Co, which oversees $750 billion in assets, told Reuters in an interview the credit crisis has "morphed into a deepening economic weakness. This weakness will accelerate."
"Unfortunately, we are heading to 6 percent on the unemployment rate," El-Erian said in an interview.
The U.S. unemployment rate last hit 6 percent in October 2003.
A government report on Friday said the U.S. unemployment rate climbed to 5.7 percent in July, its highest in more than four years, as employers cut payrolls for a seventh month in a row, though less severely than predicted.
The Labor Department said 51,000 non-farm jobs were eliminated in July, bringing losses for the year to 463,000.
Analysts polled by Reuters had expected the 75,000 jobs to be cut last month but had forecast the unemployment rate would rise only to 5.6 percent.
The unemployment rate in June was 5.5 percent.
El-Erian said the U.S. economy faces severe headwinds all around.
"We now have three balance sheets all coming under pressure at the same time: housing, consumers, and the financial sector," he said.