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Fund Times

Fund Times: Bill Gross' Grim Economic Outlook

Plus, J.P. Morgan managers shun own funds, Michigan fights Big Tobacco, more.

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In his May 2006 investment outlook commentary, PIMCO managing director Bill Gross likens auto giant  General Motors (GM) to a canary in the coal mine of the U.S. economy. That is, the problems and struggles GM faces today, according to Gross, are ones the nation may be facing more broadly in the years to come.

Gross argues that General Motors and the U.S. economy share flaws that will lead them to similar fates. "They appear to be conjoined primarily by the uncompetitiveness of their existing labor cost structures and the onerous burden of their future healthcare and pension liabilities." At GM it is estimated that "$1,500 of every�car sold in dealer showrooms goes to pay for current and future health benefits of existing and retired workers, a sum totaling nearly $60 billion. The total future healthcare liability for all U.S. citizens can be measured in the tens of trillions."

Lawrence Jones does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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