Tags: Pimco | Bill | Gross | Jobless | Rate

Pimco's Gross: Long-Term Jobless Rate Is 7 Percent

Monday, 16 Aug 2010 08:09 AM

Unemployment in the United States isn’t going away anytime soon, says Pimco co-CEO Bill Gross.

At its lowest, Gross says the new “normal” unemployment rate will be 7 percent instead of 4 percent.

“The old normal was a 4 percent unemployment rate,” Gross told Bloomberg. “We expect we may go down if we reflate successfully, but that 7 percent will be the bottom.”

Gross says it’s time for the government to spend tens of billions on new infrastructure projects to put people to work and stimulate demand.

“Current policies have specifically promoted consumption as opposed to investment,” he notes. “We need some type of government-oriented policy that promotes infrastructure, that promotes re-education, that promotes the green energy that is specifically directed as opposed to pushing money into the consumption hole.”

“I’d like to see (politicians) not hem and haw and basically be divided and wait for an election … they simply can’t produce a coherent policy in any direction other than promoting consumption and extending unemployment benefits.”

“What they really need to do … is hearken back to something like the CCC or the Reconstruction Finance Corporation, something that sounds so old ut isn’t applicable to the modern era but really would put people back to work in a specifically directed area.”

About 1.4 million people have been jobless for more than 99 weeks, the point at which unemployment benefits run out.

“The situation is devastating,” Robert Gordon, an economics professor at Northwestern and an expert on the labor market,” told The New York Times.

“We are legitimately beginning to draw analogies to the Great Depression, in the sense that there is a growing hopelessness among job seekers.”

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Unemployment in the United States isn t going away anytime soon, says Pimco co-CEO Bill Gross. At its lowest, Gross says the new normal unemployment rate will be 7 percent instead of 4 percent. The old normal was a 4 percent unemployment rate, Gross told Bloomberg. ...
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2010-09-16
Monday, 16 Aug 2010 08:09 AM
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