Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said the U.S. economy won’t expand more than 2% this year even with one or two quarters of faster growth.
“A 2% ‘new normal’ economy is the best we can expect,” Gross said in a radio interview with Tom Keene after a report showed employers hired fewer workers than forecast in March and a decline in the size of the labor force pushed the jobless rate down to a four-year low. “The sun isn’t going down, but there’s certainly an element of dusk to it.”
The U.S. economy may benefit from improved prospects for energy and housing, although the impact of those industries will be limited to one or two quarters at best, Gross said.
Pimco, based in Newport Beach, California, in 2009 coined the term “new normal” to describe an era of lower returns, heightened government regulation and shrinking U.S. clout in the world economy following the 2007-2009 financial crisis. In a March report, Pimco said U.S. growth will be 1.5% to 2% for the full year because of slower expansion in the first half of 2013 triggered by fiscal policy tightening.
“We haven’t invested in what we should have invested in,” Gross said in today’s interview. The private sector isn’t willing to invest in an uncertain environment where global aggregate demand is lacking, he said.
Pimco, a unit of Munich-based insurer Allianz SE, managed $2 trillion in assets as of Dec. 31. Gross runs the $289 billion Pimco Total Return Fund.