June 8 (Bloomberg) -- Pacific Investment Management Co. market strategist Tony Crescenzi said that the U.S. recovery scenario is weak because the economy can’t grow now without support from the government and Federal Reserve.

“The economy can’t reach a self-sustaining condition without this support,” Crescenzi said in an interview on Bloomberg Television from Newport Beach, California. “We’re basically at a ‘what now?’ phase.”

Employers in the U.S. cut more jobs than forecast in June and the unemployment rate rose to the highest in almost 26 years, offering scant evidence the Obama administration’s $787 billion stimulus package is putting Americans back to work. Borrowing by U.S. consumers dropped in May for the fourth straight month and accessing loans remained difficult, government reports today showed.

“There’s nothing to suggest we’ve moved from a vicious cycle of economic activity to a virtuous one,” Crescenzi said. “There was feeling when these things first surfaced, when the ISM for example, began to turn, that perhaps it would all take hold and become much more substantive.”

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 42.9 from 40.1 in December compared with a consensus forecast of 39, signaling to some investors the economy might have reached bottom.

Corporates, Munis

Pimco finds so-called spread products such as corporate bonds and asset-backed securities more attractive than Treasuries, Crescenzi said. Municipal bonds are also attractive for individuals, he said.

Crescenzi, 45, was hired by Pimco last month from Miller Tabak & Co. in New York. He reports to Steve Rodosky, portfolio manager and head of Pimco’s Treasury desk. Crescenzi joined Miller Tabak in 1986, following positions at Lehman Brothers Holdings Inc. and Prudential Securities. He is the author of three books, including his latest, “Investing from the Top Down: A Macro Approach to Capital Markets,” which was published in September.

Pimco is the world’s biggest bond-fund manager, overseeing about $756 billion in fixed-income assets.

To contact the reporter on this story: Daniel Kruger in New York at dkkruger1@bloomberg.net

Last Updated: July 8, 2009 15:37 EDT