Investment guru Warren Buffett has issued a warning on the US and European economies, saying growth has slowed in the last six weeks, with the gloom from Europe the main culprit.
While Buffett said the various divisions of his conglomerate Berkshire Hathaway are seeing something of a pick-up in the US housing market in the last two months, “the rest of the economy is slowing down”.
“For a couple years I’ve been telling you everything except residential housing was improving at a moderate rate — not crawling, but not galloping either — but that residential housing was flat lining,” Buffett told CNBC overnight.
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“And the last two months it’s been just sort of the opposite. The general economy in the United States has been more or less flat, and so the growth has tempered down.”
Buffet said things were even worse in Europe, where a steady stream of bad news was taking its toll.
“It’s kind of interesting in Europe. For a year or so, in most places, forget about Greece for the moment, but generally in Europe you didn’t have a big slowdown. You had a lot of worry and all that.
“But in the last couple months in Europe, particularly in the past month, it’s pretty much across Europe; things have really started to slip pretty fast.
“It’s headed downward in the last, I don’t know, six weeks or so. And it wasn’t going that way before.”
Buffett said it is difficult to see how Europe’s debt crisis could be fixed and said a lack of a single point of leadership across the continent made a solution harder to find.
“Henry Kissinger said a long time ago, you know, ‘If I want to call Europe, what number do I dial?’ And essentially, that’s the problem. When we had our crisis in 2008, everybody knew the responsibility was on [Federal Reserve chief Ben] Bernanke and [then US Treasury secretary Hank] Paulson, with the president behind ’em. And as long as they knew where they were going, they had the will and the ability to do things that were needed to do.
“But exactly who has the ability [in Europe]…it’s a different animal.”
But despite Buffett’s concern about the recent deterioration in economic growth, the man known as the Oracle of Omaha, tried to put a positive spin on the overall progress of the US economy.
“The US economy is doing better than virtually any big economy around the world. This economy has come back a long way, with the exception of housing, from where it was a few years ago. And you can see it in corporate profits.
“But so far the little pickup in housing has not been near enough to offset whatever is going on in the world generally.”