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Bill Gross Likens Trump’s Policy-by-Twitter to Mussolini

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The Labor Department Friday released its latest jobs report, counting a solid if unexciting 156,000 nonfarm jobs created in December, putting the unemployment rate at a “little changed” 4.7% from the 4.6% jobless rate in November and the 7.5 million  unemployed people in the country. Beyond those headline numbers, the bigger news might be the definitely healthy 2.9% growth in wages since December 2015.

Commenting on the report on Bloomberg radio and TV right after its release at 8:30 a.m. Eastern time, Bill Gross, who manages the Janus Global Unconstrained Bond Fund, called the 156,000 new jobs “a decent number” that “suggests GDP is moving along” at a 2% growth rate, though he argued that for “a really healthy economy, you need 3% real growth and 5% nominal growth.” He did point out that “U6 is relatively high,” referring to the 9.2% of the workforce that is unemployed, underemployed and discouraged, and which Gross said needs to be further reduced to signal a healthier economy (U6 was at 9.9% in December 2015.)

He also gave President Barack Obama a backhanded compliment on employment during his term in office, saying Obama has “done a fine job from where he started.”

Then Gross, in response to a question on President-elect Donald Trump’s economic policies, said that Trump’s penchant for “cajoling companies to move production back into the United States” reminded him of another leader’s policies from the past.

“It reminds me to some extent of policies in Italy long ago associated with Mussolini and government control of corporate interests,” he said. However, Gross said of Trump’s Twitter posts on the plans of companies like Ford or Toyota that “I don’t want it to go too far,” noting that Mussolini’s policies were meant to “keep the trains running on time” but that they “eventually stopped running.”

As for the President-elect’s stated intent to devote government resources to infrastructure improvements, Gross said “we don’t know what the (Trump stimulus) will be.” He acknowledged that such stimulus plans “might boost growth” but cautioned that “what’s critical is the productivity factor; you can’t just throw resources at the economy” and expect it to improve.

— Check out Gross Warns That Trump Rally Built on False Promise of Growth on ThinkAdvisor.