The US may be nearing a long period of limited growth with the risk of deflation that would bring the nation’s economy very close to that of Japan during the 1990s, according to investment-management firm PIMCO. In a research note Monday, Scott Mather, PIMCO’s head of global portfolio management said if “a Japan-like deflationary scenario becomes the baseline for the US, it would have profound implications for asset prices.” Mather, who is also a managing director at PIMCO headquarters in Newport Beach, Calif., said the fundamental causes of the crisis are similar in both cases and “growth that allows debts to be serviced and reduced in an orderly way is the only realistic way for the US to truncate the Japanese-style outcome.” Both economies experienced rapid growth in debt, fueling bubbles in real estate and  equity markets, according to PIMCO. But income didn’t grow fast enough to repay the expanding debt resulting in more delinquency and defaults and falling asset prices exacerbated the problem, the firm said. This toxic mix kick-started banks failing and began the economic turmoil in both countries. PIMCO also said that although the US probably doesn’t want its economy to mirror that of Japan’s of the ’90s, “it is far from the worst outcome.” “Despite having lost its economic vibrancy decades ago, Japan has managed to maintain positive real growth, though lower than other countries,” Mather said. And while the US lost more jobs and at a faster rate than Japan, the US government moved quicker and with greater force in changing policy than its Japanese counterparts did, according to PIMCO. The firm anticipates the Fed will have to keep its zero interest rate policy (ZIRP) in place “for a very long period” or possibly “specify a longer extended period or commit to capping rates at a very low level until a certain level of inflation is reached” which is what happened in Japan with limited success. “Ultimately, more experimental monetary policy may be called for. As a first step this might involve more purchases of Treasuries by the central bank, as suggested recently by Federal Reserve Bank of St. Louis President James Bullard,” PIMCO said. Write to Jason Philyaw.