Investors 'Should Get Used to 1-2% Growth': Pimco’s Gross
Investors should get used to one to two percent economic growth for the foreseeable future, Pimco's Bill Gross told CNBC's "Street Signs" on Tuesday.
"We think that the United States is in a one to two percent growth environment going forward and investors should get used to it" as structural challenges keep growth in check, the Pimco co-founder and co-chief investment officer said.
Earlier Tuesday, Gross released his final investment letter for 2012, where he continued to warn about slower economic growth due to ongoing structural challenges such as high debt levels, a slower growing China and an aging workforce.
These factors could mean economic growth will remain below 2 percent for developed economies worldwide and that returns for stocks and bonds will also be lower than their historical average.
But Gross expects the U.S. economy to benefit from an upswing in the housing market and cheap natural gas.
(Read More: Countries With Aging Populations.)
"Growth has been challenged because much of the rest of the world has taken much of that growth from us in terms of job creation," Gross said. "We need to have policies that basically fight back."
He suggested policies that either devalue the dollar so that exports and manufacturing become more competitive or rebuild aging infrastructure to improve productivity.
In this "new normal" environment, Gross said that investors looking for growth and risk should look to equities in developing economies. "That's where the growth is and where the underdeveloped fiscal and balance sheets are," he said, "and that's where investors are going to experience higher returns."
He recommends investors seeking safer assets look at Treasury Inflation-Protected Securities and high-quality municipal debt in the U.S.