Pimco’s Gross opines- 2013 U.S growth will plateau at 2 percent – ALV, PTT

Northern, WI 04/08/2013 (usastockreport) – The U.S economy has had one or two quarters of speedy growth, but according to Bill Gross, the manager of the biggest bond fund in the world, Pacific Investment Management Co, the economy of the country will not be able to rise more than 2 percent in the current year. In an interview he said that this is the most that can be expected. A report indicated that fewer people were hired than what had been forecasted for March. There had also been a downtrend in the labor force size which had pushed the unemployment rate further and it had now touched its lowest in four years. He said that though the sun has not set on the economy yet the element of dusk is one that cannot be refuted.

When the definition of “normal” changes

Gross said that the improvement in housing and energy will definitely boost the economy to a certain degree but this impact will not be a far-reaching and will be restricted only to a couple of quarters at the most. The term “new normal” had been coined by Pimco in 2009. This was meant to describe an age of lower returns and one that was governed by increased government regulation. In addition to this, it is also indicative of the post 2007-2009 financial crises and the subsequent dip in America’s “power” quotient in the world economic landscape. The fiscal policy tightening by the government will be the main cause of the economy plateauing that will happen.

 Uncertainty prevails

It will not move beyond a modest 1.5 percent to 2 percent over the course of the next year. Gross said that the country as a whole has faltered on its investments. The private sector is shying from investing in an environment which is uncertain and where there is an overall lack of global aggregate demand. Pimco is a unit of Allianz SE (FRA:ALV) (current: 105.69 EUR, down by 1.04%) and as of Dec 31 had managed $2 trillion worth of assets. Gross heads the $289 million PIMCO Total Return Fund Institutional Class (MUTF:PTT) (Current: $11.30, Up by 0.90%)

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