In 2009, Pimco, the world’s biggest bond investor headed by Bill Gross, coined the phrase ‘the new normal’ to describe the post-crisis backdrop.
The phrase implied that a rapid bounce-back to pre-crisis growth rates wasn’t going to happen. Pimco’s latest five-year outlook returns to – and extends – this theme. We are now in ‘the new neutral’.
Since the crisis, the private sector has worked off some of its borrowings, but governments have rapidly grown their debt piles. The risk is that the world “will be unable to grow and generate inflation at pre-crisis levels for many years to come” [...]
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