Joachim Fels: Why US economy is torn right now

A torn US economy

The U.S. economy is being pulled in opposite directions by two factors: a strong domestic economy and a teetering global economy, Joachim Fels said Wednesday.

"The consumer's doing pretty well and is benefiting from lower oil prices and a strong labor market, [and] you have a pretty strong market, so domestic demand is doing well," Pimco's global economic advisor said in a CNBC "Squawk on the Street" interview.

Fels made his remarks as Chinese growth concerns had recently weighed on the broader financial markets and after the Canadian economy contracted for the second-straight quarter.

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Statistics Canada said Tuesday that Canada's GDP fell at an annualized rate of 0.5 percent in the second quarter after falling 0.8 percent in the first.

"Overall, we're in an environment where U.S. growth is about 2.5 percent in the current quarter and that's a little bit more than the average we had in the first half of the year," Fels added.

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"But I think the global impact is not so much on growth; it is very much on inflation, which is below target and this is something the Fed has to factor in," he said.

The Federal Reserve is expected to release its latest edition of the Beige Book, a survey of economic conditions, and investors are likely to search for hints about when the central bank could raise interest rates.