Buffett Says Economy ‘More-or-Less Flat’ as Housing Gains
“The general economy in the United States has been more- or-less flat, and so the growth has tempered down,” he said today in an interview with the cable station from Sun Valley, Idaho. With residential housing, “we’re seeing a pickup, and it’s noticeable. It’s from a very low base and it doesn’t amount to a whole lot yet, but it’s getting better.”
Buffett’s remarks contrast with his comment a year ago to Bloomberg Television’s Betty Liu in Sun Valley that the economy and jobs will “come back big time” when residential construction recovers. U.S. unemployment has exceeded 8 percent for more than three years.
“I’ve got a little different story this time,” Buffett told CNBC today. “For a couple years I’ve been telling you that everything except residential housing was improving at a moderate rate, not crawling, but not galloping either, but that residential housing was flat-lining. And the last two months it’s been just sort of the opposite.”
Buffett uses results at his company’s more than 70 operating units to gauge the health of the economy. Omaha, Nebraska-based Berkshire owns a real estate brokerage, a maker of manufactured homes and units that construct roofs and sell bricks and carpet.
Spending in Europe has slowed as the region grapples with a debt crisis, causing businesses to “pull in their horns,” Buffett said.
“Europe is really, it’s headed downward in the last, I don’t know, six weeks or so,” Buffett said. “It wasn’t going that way before. It wasn’t doing that well, but it hadn’t really hit the skids.”
Buffett has said he believes in the long-term prospects of the U.S. and has called his 2010 purchase of railroad Burlington Northern Santa Fe an “all in wager” on the country’s economy.
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, reflecting the volatility of applications during the annual auto-plant retooling period. Applications for jobless benefits decreased by 26,000 in the week ended July 7 to 350,000, Labor Department figures showed today.
Buffett also commented on former Barclays Plc Chief Executive Officer Robert Diamond, saying he had to resign after the bank agreed to pay 290 million pounds ($448 million) to settle a probe into manipulation of the London interbank offered rate, or Libor.
“I don’t think he had any choice but to go,” Buffett, said today. “He wasn’t in charge of all of Barclays at that time, but, there are a lot of things that went on in that trading room that, who knows who was aware of what?”
Buffett reiterated his support for Jamie Dimon, CEO of JPMorgan Chase & Co. (JPM), which has come under scrutiny from lawmakers after the bank lost at least $2 billion on credit- derivative bets. Dimon is one of the best bankers, Buffett said.
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