Buffett sees recession
Reuters News Agency
Legendary investor and multibillionaire Warren Buffett says the United States is in a recession that probably is "relatively deep and extended."
Mr. Buffett's statement reinforces what many economists consider a foregone conclusion, namely that the U.S. economy is indeed entering a recession, defined as two consecutive quarters of negative growth. The fall-out of the Sept. 11 attacks — less spending and travel by consumers and businesses alike — worsened an already weak U.S. economy.
"I'm sure we are in a recession, probably a relatively deep and extended one, but they are part of business life and we are prepared," Mr. Buffett said in a Sept. 26 memo posted on the Web site of his holding company Berkshire Hathaway Inc.
A Berkshire spokeswoman was not available to elaborate.
The bearish comments by Mr. Buffett, whose financial prowess has earned him the nickname "The Oracle of Omaha," follow myriad signals of recessionary pressure in the U.S. economy, such as rising unemployment and declining corporate profits.
Mr. Buffett noted that Omaha, Neb.-based Berkshire has estimated $2.2-billion (U.S.) in losses related to the Sept. 11 attacks on the World Trade Center and Pentagon, but said its final insurance exposure is as yet unknown.
"We've labeled this (figure) a 'guess' because that's all it is," Mr. Buffett said in the statement. "It will be many years before we can tell the world within a narrow range what the true figure was."
But Mr. Buffett's memo also carried a reassuring tone. While admitting that Berkshire's "loss is huge," he said it is nevertheless "one Berkshire can easily bear."
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