Weekend Economists Mark D Day, 2014 June 6-8, 2014

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17. Gross Says U.S. Job Growth Remains Stuck in New Normal Scenario

http://www.bloomberg.com/news/2014-06-06/gross-says-u-s-job-growth-remains-stuck-in-new-normal-scenario.html

Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said the pace of jobs gains last month remains in line with “new normal” growth that is below historic averages.

The payroll data “certainly explains the ‘new normal’ in terms of a 2 to 3 percent real growth rate,” Gross said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Mike McKee. “The ‘new neutral’ is still up for grabs in terms of what it is and what it is going to be.”

Employers added 217,000 jobs in May to push U.S. payrolls past their pre-recession peak and the jobless rate held at an almost six-year low of 6.3 percent as the economy gained traction, figures from the Labor Department showed. May marked the fourth straight month payrolls have increased at least 200,000, the first time that’s happened since September 1999 to January 2000.

Pimco, which popularized the term “new normal” to describe an era of below-average economic growth following the financial crisis, has said this quarter that the period is gradually entering a new phase. Economic growth globally will be converging toward lower, yet more stable top speeds and central bank interest rates will remain stuck below their pre-crisis equilibrium in a “new neutral,” which will include a long term Federal Reserve neutral policy rate of 2 percent in nominal terms and zero percent when adjusted for inflation.