What's Eating Bill Gross (And What's Not)

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Part 5
What's Eating Bill Gross (And What's Not) PART 5 OF 6

Gross on Trump: Does Growth of 3%–4% Seem Steep?

US economic indicators are improving

In the past five months, we’ve been watching the various economic indicators in the US (QQQ) (SPY) (IVV) reflect improvements, such as the following:

  • The labor market is showing improvement, which is boosting consumer demand in the economy.
  • Consumer spending is also improving, and in the third and the fourth quarter US GDP growth, we saw how consumer spending has been playing an important role in the economy.
  • Manufacturing and services PMIs (purchasing managers’ indexes) are also improving gradually.

Gross on Trump: Does Growth of 3%–4% Seem Steep?

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Gross on Trump

These economic indicators are showing higher investor confidence in the US economy (SPY) (VFINX) (IWM). In an interview with Bloomberg Television on February 3, 2017, Gross said that he is skeptical about real US economic (VFINX) (VOO) growth and whether or not it could actually rise by 3%–4% in coming years.

Gross believes the US economy is now running at a full capacity, and so further expansion of this capacity will be challenging. According to Gross, Trump’s proposed changes in regulations, such as the corporate tax restructures,  deregulation, and the higher fiscal stimulus, have all encouraged risk. Gross advised investors this way: “Don’t be allured by the Trump mirage of 3%–4% growth and the magical benefits of tax cuts and deregulation.”

In the next and final part of this series, we’ll analyze Gross’s view of the Fed’s recent rate hike.


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