As workers struggle to find jobs and the federal government becomes more aggressive on regulation, the US economic recovery will defy trends and make choices more difficult for investors, Pimco's Bill Gross told CNBC.
Speaking just after the government said January saw the loss of another 20,000 jobseven as the unemployment rate fell to 9.7 percent, the Pimco co-CIO said the jobs weakness will make for a difficult transition to prosperity.
"We think that it's substantially different this time, based upon the fact that instead of levering we're delevering and instead of deregulating we're regulating," Gross said. "Both of those conditions in combination produce a very weak economy, very slow growth and ultimately have effects on asset markets that depend on asset appreciation."
As the government is clamping down on big banks it also is backing off its liquidity programs such as the buying of mortgages, which will end in March.
The government stimulus also is fading, Gross said, meaning a key engine driving the upward movement of key economic metrics will be taken away.
"The growth has been really based on a check not only by the US government but many sovereign governments," he said. "The minute that check disappears the private market is standing very lonesome and on its own legs."
Pimco officials for months have been warning of a "new normal" that will entail a prolonged period of slower growth.
Gross said Friday's unemployment numbers are another example of an economy that will take a long time to return to normalcy.
"Four percent growth in the first quarter is probably a reasonable expectation," he said. "But the unemployment is a long-term structural problem."