Famous economist sees 30% risk of U.S. recession by 2017

Famous economist Mohamed El-Erian said in an interview with CNBC he puts the risk of a recession in the United States at 25 percent to 30 percent.

"By 2017, we're going to tip only way or the other," he said noting that central banks cannot be relied upon any more, and they are not the only game in town when it comes to policy.

Mohamad El-Erian is the former Pimco co-CEO and is currently the chief economic adviser to Allianz and chair of President Barack Obama’s Global Development Council. He has recently warned on diverging policies of the ECB and the U.S. Fed as they pose threats for investors.

"People forget how exposed we are to financial instability in the rest of the world," said El-Erian, pointing to the August spike in the CBOE Volatility Index, known as the fear gauge, as the stock market dropped to its lowest levels of the year.

As the Fed seems prepared to tighten, the European Central Bank and China's central bank continue on a path of easy monetary policies, and they near-term threats are a stronger dollar, equity market volatility as well as a wider trading range for key interest rate differentials.

Late last month, the People's Bank of China cut interest rates for the sixth time since last November, and the ECB signaled it would consider firing up its massive bond-buying program well into 2016 and even beyond.

Last Wednesday, in another interview with CNBC, El-Erian used a traffic light analogy to explain what he believes the Fed was trying to signal in its policy statement following its two-day meeting.

The U.S. situation and international factors were flashing "yellow" and the Fed wanted to keep December "live," he said.

October meeting brought no interest rates lift-off, but officials left the door open for the first rate increase in nine years at their final meeting of the year, set for the middle of next month.

The global equity market entered historically bullish November on Monday, after traditionally bearish October appeared to be the best month for stocks in four years.