Now Gross sees 'new normal minus'

San Francisco--With extreme volatility, a global debt crisis and clouds of political uncertainty consuming the economic environment for the foreseeable future, the "New Normal" appears to be continuously re-defining itself. And very little clarity appears to be on the horizon, keeping clients, advisers - and even some of the best minds in the investment business - cautiously conservative about the future. Pimco's Bill Gross, who coined the term "New Normal", and Charles Schwab Corp.'s Liz Ann Sonders, addressed the outlook for the U.S. and global economies in a detailed keynote session here at Schwab's 2011 Impact conference in San Francisco. Both Mr. Gross and Ms. Sonders predict GDP growth rates of 2% over the next year or so, but acknowledged that there are a number of headwinds - namely the Euro Debt crisis and the U.S. deficit - that will impact economic growth and market returns. The U.S., for one, will experience a "relatively toxic political environment for the next year," Ms. Sonders told advisers at Impact, adding that the U.S. will be "hard-pressed to get more than 2%" during the time period. Mr. Gross, who referred to the 2011 economic environment as the "New Normal Minus", also pegged future growth at 2%. He addressed his own performance woes this year, noting that "we expected the New Normal - and got something less." While the short-term picture, occupied by U.S. and global debt issues, is cloudy, one thing seems to be clear for now: Volatility is here to stay. Normal "cyclical headwinds" will not be governing markets Mr. Gross stated. Rather, "structural headwinds" will shape market movements, much like they have in recent weeks - and days- based on activity in the major developed economies. "The ideal way out of this [debt mess] is to grow," said Mr. Gross, noting that the U.S. would likely need to grow at a rate of 4% a year to make a meaningful dent in the deficit.