Buffett says general economy slowing this summer
OMAHA, Neb. — Billionaire investor Warren Buffett said Thursday that U.S. economic growth has slowed in the last two months as fears about Europe’s debt woes mounted.
Buffett’s comments during an interview Thursday on the cable TV network CNBC contrast with what he has been saying for a couple years. Buffett has said the economy was gradually improving since the fall of 2009 in every area except businesses related to housing.
Buffett said the U.S. economy has not turned negative, but business in Europe has dropped off quickly in the past two months. Berkshire Hathaway’s chairman and CEO draws insight into the economy from the reports he gets from the Omaha-based company’s subsidiaries and investments which range from railroads and power companies to insurance, carpet and soft drinks.
“The general economy has been pretty much flat,” said Buffett, who was in Sun Valley, Idaho, attending the annual conference hosted by investment banker Allen & Co. that attracts Wall Street and media moguls.
He said one bright spot is that businesses tied to residential housing are improving a bit.
“The little pickup in housing has not been enough to offset what has been going on in the rest of the world,” Buffett said.
Buffett said he’s not sure why the overall economy has been slowing.
Buffett was also asked about JPMorgan Chase CEO Jamie Dimon, a day before the bank is set to report its latest earnings results and shed more light on its loss on a bad trade.
Buffett reiterated his confidence in Dimon even though JPMorgan has said it may lose $2 billion or more on a bad trade. Dimon has apologized to shareholders, and days after the loss was disclosed, Chief Investment Officer Ina Drew, who oversaw the trading group responsible for the trade, left the company.
“I think Jamie Dimon is one of the best bankers in the world. He understands banking and risk,” said Buffett, who invested in the bank in his personal portfolio and often suggests investors read Dimon’s letters to shareholders.
JPMorgan’s loss has heightened concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis in the fall of 2008.
Buffett was also asked about recent troubles at the British bank Barclays, which has been fined $453 million by U.S. and British authorities for supplying false data which went into calculations of the London interbank offered rate, LIBOR, a key global interest rate.
Buffett said he understood why Bob Diamond subsequently resigned as CEO of Barclay’s.
“I don’t think he had any choice but to go,” Buffett said.
Diamond agreed to terms for a final settlement, which includes forfeiting up to $31 million in bonuses and incentives, on Tuesday.
Berkshire owns roughly 80 subsidiaries, including railroad, clothing, furniture and jewelry firms, but its insurance and utility businesses typically account for more than half of the company’s net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.