After spending the last few weeks traveling around America, DoubleLine CEO Jeffrey Gundlach saw one economic trend that was pervasive. Signing bonuses appeared attached to Help Wanted signs across the land.

These were among the most noticeable “distortions brought on by the lockdown and stimulus,” Gundlach said on a webcast yesterday. He wondered whether it might be possible for aspiring workers to collect multiple signing bonuses this summer hopping to different jobs from one desperate employer to the next.

GDP is booming as the nation emerges from lockdown. With inflation acceleration, Gundlach said some economists are projecting nominal GDP growth of 10.4% this year.

But Gundlach questioned the cost of multiple stimulus bills and their ramifications. Deficit spending, he noted, is running at about 16.2%, a level not seen since World War II. Factoring in all spending measures, including some omitted from official government calculations, the real number exceeds 20%, he said.

Could stimulus be extended yet again, he asked. The true picture of a stimulus-free economy is not a pretty one. “If we took the deficit to zero, GDP growth would be minus 10%,” he said. Government continues to spend 35% to 40% of total GDP, he estimates. That’s a level approaching public sector-heavy European economies.

Even as unfilled new job openings set new records, Americans collectively are rolling in the stimulus bucks, in his view. Loan-to-deposit ratios “have collapsed” largely because bank deposits have soared.

China’s economy is a major beneficiary, Gundlach added. That’s because a lot of spending “has gone to goods from China imported by Amazon.” The trade deficit, which tumbled from 6% to 2% following the Great Financial Crisis, “appears” to be the widest since 1997.

When it comes to inflation, consumer expectations are critical and many Americans are concerned. DoubleLine’s model shows inflation running in the high 4% area, while other models have it exceeding 5%.

The strong cash positions of consumers raise the prospect of the runaway inflation seen in the Jimmy Carter era, when people rushed to buy goods in anticipation their prices would be much higher in a year, Gundlach said. Officials at the Fed have said they expect inflation to be “transitory,” but “no one knows,” he said.

Official government figures understate inflation because of the “contrived” way they measure shelter prices, he said. If they were to replace their methodology with actual housing prices, the Consumer Price Index would be running at about 8.8%, not the stated 4.2% level.

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