Warren Buffett has declared that America will not suffer a double-dip recession, in a bullish assessment of economic prospects across the US.
The legendary investor, who celebrated his 80th birthday two weeks ago, said last night that he saw no sign that the economic recovery was petering out. Buffett said his own companies were hiring more people than earlier in the year.
“I am a huge bull on this country. We are not going to have a double-dip recession at all,” Buffett told the Montana Economic Development Summit. “I see our businesses coming back across the board.”
Buffett’s Berkshire Hathaway conglomerate has interests in insurance, transport, retail, utilities and manufacturing. He acknowledged that sentiment about the US economy had turned “sour” recently, but insisted that “this country works … The best is yet to come.”
Recent data has painted a mixed picture of the US economy. GDP grew by 1.6% in the second quarter of this year, on an annualised basis, slower than in the first three months of 2010. The latest trade and employment statistics have provided some optimism. However, last week the OECD revised down its forecast for economic growth among the G7.
In the UK, businesses have suffered a sharp decline in confidence in recent months which makes a double-dip recession here more likely, a report released yesterday said.
US Treasury secretary Timothy Geithner struck a cautious tone on Monday, saying that the American economy was not growing fast enough. Geithner said Congress needed to quickly approve a new lending package for small businesses, and extra funding for infrastructure across America.
“We are going to have to keep at it until we get Americans back to work, to extend economic growth and opportunity to all communities across the nation,” Geithner said.
Buffett, though, is adamant that the dark days of the downturn have passed and that banks are happy to lend again.
“It’s night and day from a year, year and a half ago,” he said.
In March 2009 Buffett described the crisis as an “economic Pearl Harbor”, admitting that it had cost him £3bn personally. But two years ago he took a surprisingly upbeat tone and urged investors to buy shares – saying it was a great time to “buy a slice of America’s future at a marked-down price”.
At that point in October 2008, a few weeks after Lehman Brothers collapsed, the Dow Jones index had fallen to below 9,000 points. By March 2009 slumping share prices had pushed the Dow down to 6,626, but it then recovered and closed at 10,544 yesterday.
Microsoft chief executive Steve Ballmer also told the summit that he was optimistic about America’s economic prospects.
“I am very enthusiastic what the future holds for our industry and what our industry will mean for growth in other industries,” said Ballmer.
Earlier today global stock markets hit their highest level in four months, as measured by the MSCI All-Country World Index.