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PIMCO’s El-Erian Calls U.S. Economy ‘Terrifying’

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In the wake of failed congressional “supercommittee” negotiations, Pacific Investment Management Co.’s CEO Mohamed El-Erian (below) appears to be upping his rhetoric, telling Bloomberg Television on Tuesday that U.S. economic conditions are “terrifying” given that the nation is coming out of recession.

The odds of the U.S. returning to recession are one-third to half, El-Erian told Bloomberg’s Betty Liu.

Mohamed El-ErianAs Bloomberg notes, the economy in the U.S. expanded less than previously estimated in the third quarter, reflecting a drop in inventories that points to a pickup in growth as 2011 comes to a close.

“Gross domestic product climbed at a 2% annual rate from July through September, less than projected and down from a 2.5% prior estimate, revised Commerce Department figures showed today in Washington,” according to Bloomberg. “The median forecast of 81 economists surveyed by Bloomberg News called for no revision. Excluding stockpiles, so-called final sales climbed 3.6%, the most since last year’s fourth quarter.

PIMCO’s $244 billion Total Return Fund, the world’s largest mutual fund, has returned 2.3% in the past year, lagging behind 79% of its peers, according to data compiled by Bloomberg. Over the past five years, the bond fund has returned 7.7% on average, topping 97% of rival funds.