NEWPORT BEACH, Calif., May 22, 2001 (PRIMEZONE) -- PIMCO, one of the world's leading fixed income managers, expects the U.S. economy to continue growing, but just barely, for the next three to five years, according to the company's new economic forecast.
PIMCO investment professionals from around the world, who recently gathered in Newport Beach for the company's annual "Secular Economic Forum," concluded that the U.S. gross domestic product is likely to grow about 2 percent a year, neither falling into a long-term recession nor rebounding with 1990s-style vigor.
The next upturn in the economy is "almost certain to be less exuberant than the last," said Bill Gross, who as founder, Chief Investment Officer and Managing Director of PIMCO presides over the annual forum. Productivity improvements, which were often cited to justify the booming stock market of the 1990s, may prove to be largely illusory. Meanwhile, "private consumer and corporate debt are at historically high levels," and investors have been shaken out of their belief that stock investments are "a one-way winning lottery ticket," Gross said.
The annual meeting forms the foundation of PIMCO's investment strategies and plays a critical role in determining how best to invest client assets -- a total that now exceeds $220 billion. At last year's forum, for instance, PIMCO determined that despite the economic boom Americans were then enjoying, a downturn was likely in the near future and began shifting assets accordingly.
The company's performance during the economic downturn was cited by Morningstar, the Chicago-based fund analyst, which earlier this year made PIMCO its first-ever two-time "Fund Manager of the Year" award winner.
In other conclusions reached at the forum, PIMCO determined that:
-- Inflation will not be a major concern, because of sub-par growth
in the United States and much of the world.
-- Stock and bond investors will be fortunate to see six percent
annual returns, and there is some chance that many stock investors
will actually continue to lose money on an annual basis.
-- Europe's economy will do as well as, or slightly better than, that
of the United States. In fact, Europe will become the world's
largest buyer of information technology in the next three-to-four
years.
-- Sub-par economic growth means subdued corporate profit growth in
the United States and Europe, which means that credit spreads are
likely to widen in coming months. However, opportunities for high
yield and corporate bonds will be better in 2002 and beyond.
-- The emerging market outlook will continue to improve -- with
certain exceptions.
More details can be learned about the firm's outlook by visiting its Web site at www.pimco.com and reading the various newsletters published by PIMCO's investment professionals.
Founded in 1971 and based in Newport Beach, Calif., PIMCO is majority owned by Munich-based Allianz Group, a leading global insurance company with nearly $670 billion in assets and represented in 70 countries around the globe.
Except for the historical information and discussions contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Form Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.