The "new normal" may be ending soon, predicts Mohamed El-Erian, CEO and co-chief investment officer of fund giant Pimco.
El-Erian coined the term in 2009 to describe a long-lasting period of slow economic growth, high unemployment and credit and debt problems.
Although that period may be soon concluding, the economy still faces numerous risks, he told CNBC, citing Europe, the Middle East and the U.S. political squabbling.
Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible
Short-term threats in the United States involve Congress refusing to raise the debt ceiling, automatic spending cuts imposed by sequester and the possibility of a government shut down, El-Erian said.
"As investors, it's not just about top-line revenue growth. It's not just about the economy. It's also about political risk and policy risk."
When he first used the term in 2009, he predicted the new normal would last three to five years, he said. "The ‘new normal’ allowed time for the corporate sector to heal, for the housing sector to heal, and that's positive."
However, although the corporate and housing sectors have begun to heal, global and domestic politics have become more complicated.
El-Erian predicted that instead of reaching a grand bargain, U.S. political leaders, after much brinkmanship, would make a "micro-deal that simply kicks the can down the road."
He urged political leaders to step back to look at the picture and pursue economic growth, he urged.
"If you get growth then both Democrats and Republicans can deliver to their constituents."
New economic data, including lower unemployment claims and more home building, support El-Erian's claim that the new normal may be concluding.
The Department of Labor reported initial claims for unemployment benefits for the week ending Jan. 12 fell 37,000 to 335,000.
The figure was much lower than the 370,000 claims economists had expected.
"It's clearly positive news," Yelena Shulyatyeva, an economist at BNP Paribas, told CNNMoney. "We have to take this with a grain of salt, because it's only one week of decline in the data. We'll have to see how this evolves going forward."
Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible
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