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Gross Says U.S. Economy Suffering From ’Structural’ Unemployment

PIMCO Co-chief Investment Officer Bill Gross
Bill Gross, co-chief investment officer of Pacific Investment Management Co. Photographer: Andrew Harrer/Bloomberg

Bill Gross, manager of the world’s largest mutual fund, said U.S. unemployment is now a structural, and not cyclical, problem stemming from technology advances and the lack of retraining.

“Jobs are being structurally destroyed,” Gross said in an interview today with Ken Prewitt and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance.” Employment figures released today reflect “the inability of the U.S. economy to provide jobs.”

Employers in the U.S. added 115,000 jobs in April, fewer than forecast and the smallest gain in six months, Labor Department figures showed in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance. The jobless rate fell to a three-year low of 8.1 percent.

Gross, co-chief investment officer at Newport Beach, California-based Pacific Investment Management Co., said the government had exhausted traditional fiscal and monetary responses in its attempt to spark higher growth.

“They have to start looking elsewhere,” he said.

Washington should consider changes to trade and currency policies, as governments in Brazil, China and Europe have done, Gross said. A depreciation of the dollar would increase the competitiveness of U.S. manufacturing abroad, he said.

Gross runs Pimco’s Total Return Bond Fund, which attracted $2.7 billion in investor deposits in April, bringing assets to a record $258.7 billion. The fund has returned 4.7 percent this year, beating 99 percent of its peers, according to data compiled by Bloomberg. Investors piled into bonds in April, seeking a haven from slowing U.S. economic growth and Europe’s debt crisis.

Gross said he had recovered from poor performance in 2011 partly by focusing on mortgages.

“We assumed from late last year that the market wouldn’t change,” Gross said. “We followed the policy of taking a safe spread.”

Download: Gross Says Job Data Should Force Reevaluation


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