Bill Gross: It’s all about jobs and growth in the US
Bill Gross was on CNBC yesterday talking about the debt ceiling deal. His first thoughts were about jobs. Asked, “you’re not impressed by this bill, why?”, Gross replied “I’’m impressed by the slower economic growth which I think is behind most of this. It’s behind the decline in stocks for eight straight day, It’s behind the tremendous decline in yields. The consumer in the united states basically has disappeared. There are no jobs in terms of growth. There are no wages in terms of increase… This is a classic de-levering cycle.”
Gross was not impressed by the deal in particular because he believes you don’t promote economic growth in the short-term by cutting. “Obama and company” should have been focused on jobs, he says. Gross adds that slower economic growth will increase the deficit more than this package decreases it. He expects 9-10% deficit to GDP numbers and suggests an S&P ratings cut would be the outcome. Moreover, in his view, the bill shows that Congress is not serious about deficits since all of the cuts are back end loaded.
UPDATE 930ET: Also see Bill Gross on Bloomberg as well. He says spending cuts alone don’t get you there. You need tax hikes and need to look at the $60 trillion in unfunded entitlements too. Gross also says that Obama caved and that the package was a “Republican/tea party victory”. Video below