Mohamed El-Erian has warned the Fed's rate hikes may fail to squash inflation - but could tank the US economy and job market anyway

There is a chance of a worldwide economic disaster in the form of slowing growth, high inflation, and rising unemployment.

He said that lower US growth and a late Fed raising rates are consistent with global trends. I wouldn't be surprised to see more growth revisions.

Goldman Sachs trimmed its US GDP growth forecast last week from 1.6% to 1%). The Federal Reserve's benchmark interest rate will double by the end of the year, according to the investment bank.

Stagflation is a combination of stagnant economic growth, inflation, and joblessness. In El-Erian's opinion, the Fed's interest rate hikes could cause growth and unemployment to go up.

After the Financial Times reported that corporate insolvencies in England and Wales jumped in August, the former CEO and co-chief investor of PIMCO flagged the risk of Stagflation.

He said that such troubling news is likely to increase in the months ahead as some companies struggle to navigate the mix of high costs and falling demand.

In September, El-Erian warned that global growth has become more fragile due to Europe's energy crisis, China's continued lock ups, and the US's high inflation and waning demand. He argued that central banks are at greater risk of plunging their economies into recession.

This is not a good environment for central banks to be in. There is an increased risk of another policy mistake.

Market commentators have been issuing gloomy outlooks recently. According to Roubini, the Fed would have to double interest rates to 5% to beat inflation, which would tank growth, asset prices, and the job market.

"You have the worst shocks of the '70s in terms of supply, and you have the worst of the global financial crisis because of too much debt," Roubini said.

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