The New Neutral

We see the world’s economies likely converging to modest trend growth rates over the next few years. This New Neutral reflects global aggregate demand that is still insufficient to absorb bountiful aggregate supply, five years after the financial crisis and despite extraordinary monetary policies. Such is our conclusion from the PIMCO 2014 Secular Forum, during which investment professionals from our 13 global offices gathered for an examination of critical factors affecting economies and markets over the next three to five years. In this year’s Secular Outlook essay detailing that and other conclusions from the Forum, Richard Clarida shares our long-term global outlook and Bill Gross distills the investment implications. In defining the New Neutral, a few key points from the essay are: