Economy to Stay Weak 'For a Number of Years': Gross - Economy * US * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.
Smartphone Guide
Here's a need-to-know guide to nine devices, based on features, price, network and platform.
Wines for the Holidays
Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES

How Well Do You Know Your Bird?
Let's talk turkey. Test your turkey knowledge and perhaps pick up a bit of trivia to trot out at your holiday meal.
A Healthier & Wealthier You
Take the following quiz and find out how much you know about the impact of obesity on the health of the U.S. economy.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

Economy to Stay Weak 'For a Number of Years': Gross

By: CNBC.com | 02 Jul 2009 | 10:01 AM ET

Text Size

The slide in employment is representative of what the U.S. economy faces for years to come, Pimco co-chief investment officer Bill Gross told CNBC.

A slow-growth scenario continues to play out as consumers who are losing their jobs or are in fear of facing unemployment cut spending and inhibit economic growth, said Gross, who helps manage the world's largest bond fund at Pacific Investment Management.

He spoke after a government report showed the economy lost 467,000 jobs in June and the unemployment rate moved to 9.5 percent.

"Much like we saw with the Depression, attitudes change, and so consumers and investors will now become conservative savers as opposed to spenders," Gross said in a live interview. "Spending as driven by asset appreciation in terms of houses ... that game stops, that game has stopped and we must now move in another direction."

Keeping with his recent forecasts, Gross said real gross domestic product likely will grow at just 1 to 2 percent annually for the next generation or so.

In that type of situation, government will have no choice but to keep up its deficit spending programs to keep the economy moving.

"The question becomes, can we maintain that level of spending?" Gross said. "I think it's necessary over the next year or two simply because the consumer provides a void in terms of the economic hand and so, yes, the government must continue to spend, must continue to provide new forms of stimulus whether it's in the form of low interest rates and monetary policy or fiscal policy going forward."

Yet the government also will have to confront the reality of a weakening currency and the problems that will lead to in terms of global investors willing to put money into the U.S.