Buffett: I Think We're In A Recession

On CNBC's "Squawk Box" this morning Warren Buffett told Joe Kernen, Becky Quick, Carl Quintanilla and Steve Liesman that he thought the country was in a recession, even if economists weren't quite ready to label it as such:

QUICK: WE'VE BEEN TALKING ABOUT THIS MORNING WHETHER OR NOT WE'RE IN A RECESSION AT THIS POINT. THE SAID IT LOOKED BY ANY SORT OF RELEVANT MANNER A COUPLE OF MONTHS AGO IF YOU WERE TRYING TO MEASURE THIS LIKE WE WERE IN A RECESSION. THERE ARE SOME SAYING, YEAH, IT DOESN'T LOOK LIKE A RECESSION. DO YOU STILL STAND BY THAT IDEA WE'RE IN A RECESSION?

BUFFETT: YEAH, I THINK WE'RE IN A RECESSION. IT IS DEFINED IN A CERTAIN WAY BY THE NATIONAL BUREAU OF ECONOMIC RESEARCH. BUT I THINK IT'S DEFINED BY THE MAN IN THE STREET DIFFERENTLY THAN WHETHER THERE HAVE BEEN TWO QUARTERS OF REPORTED GDP GROWTH. INCIDENTALLY, WHEN GROWTH IS BELOW 1% A YEAR, IT'S REALLY FALLING ON A PER CAPITA BASIS BECAUSE OUR POPULATION INCREASES ABOUT 1%. EVEN THOUGH THE NATIONAL BUREAU USES AN ABSOLUTE FIGURE, IF IT'S UP .1, THEY DON'T COUNT THAT AS A RECESSIONARY QUARTER. BUT THE PER CAPITA HAS GONE DOWN IN A QUARTER WHEN THE GAIN IS A HALF A PERCENT OR SOMETHING OF THE SORT. WE ARE IN A RECESSION UNLESS YOU WANT TO STICK STRICTLY TO THE TECHNICAL DEFINITION WHICH I DON'T THINK HAS MUCH MEANING TO THE FELLOW WHO'S LOST HIS JOB OR WHO'S FACING A MONEY MARKET FUND THAT ISN'T PAYING HIM OUT OR WHATEVER IT MAY BE.

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Comments

[vandegrasse]

Duh, Warren!

[rikkirighteous]

There's a reason that the Nation Bureau of Economic Research defines a recession differently that the "man on the street."

If the man on the street is a liberal or out of work (usually one in the same), then they're world is always falling apart, the sky is always falling, the country is always in a recession.

A recession is defined by those who know as SIX consecutive months of negative grown in the GDP.

So far we've had.......none.

[WIpatriot]

"Re-shesh-y-a-shun" Damn, still can't say it.

"The Ministry of Lying Statistics is doing a heck of a job, though."

[GerryS]

y'all bag on Mr Buffet, but he's a down to earth guy, he's just good at investing.

he still lives in the 10 room house he bought in Omaha, Neb, 40 YEARS AGO-

show me one other rich a$$ who can say that-

[957]

No shit it taks some zillionair to tell us out here in red neck land what we already knew a year ago?

[ghostofgrrrl]

Depressing!
(no pun intended)

[LammertMacroeconomics]

New Century gained 10 percent on 28 April 2008 rising 1/5 of a penny to 2.1 pennies ... and perhaps a fractal saturation growth finale at 14/35/35 days.

[Blurp]

He thinks? He's supposed to be some super-smart hot shot investor... and he "thinks?" My six-year-old nephew can tell you we're in a recession.

[Sumocat]

Thinking is what super-smart people do. Believing is what people like George W. Bush do.

[NoSillyName]

Brilliant deductions such as this are why he gets the big bucks!

[SpinCycleRadio]

Buffet is fundamentally saying that what makes people say 'things are really crappy' are not the things that cause the economists to way 'we have been in a recession for the last six months'

First of all there is the two successive quarters thing. It makes absolutely no difference how bad things are now, if next quarter manages even a tiny positive GDP growth not only won't we be in a recession we never were.

Then there is all that money being lost in home values. None of it affects the GDP, which is the value of all NEW goods and services produced. But the decline in home prices and trouble making home payment sure is big in the mind of people.

Then there is gas prices...except that a fair deal of our crude is still domestically produced and much of the price of a gallon of gas is created at the refinery. So a leap in gas prices actually IMPROVES the GDP!

And if you feel that you can't afford to buy stuff at your favorite big-box retailer? But most of that stuff was made in China (and thus part of China's GDP, not ours) so only the retail markup goes to GDP.

So the fact that so much of your paycheck is going to groceries and gas that you can't spend anything on consumer goods is making you feel pinched actually may be helping the statistic that will say that we AREN'T having a recession!

[Vyvjala]

No sh#t sherlock.....................and the check is in the mail...................

[outnow]

Buffet is saying that the recession will be deeper than the others.

Wilbur Ross is saying that medium sized banks will fail (March 10, 2008).

Ben Bernake said that smaller regional banks that invested heavily in real estate could go under (February 28,2008).

Sound like bonfire of the vanities.

[ghostofgrrrl]

it's truly frightening

[findingthetruth]

Ummm!! How long did it take for Buffett to come up with is brilliant analysis?

[cfreedom]

Yeah, Buffet's a dumb guy. Your name could not be more ridiculous.

[WIpatriot]

See? Buffett keeps agreeing with me...told ya.

[peachfuzz]

Holy Balls Batman!

That's not even news!

He must mean The Rich Peoples' Recession,
because The Little Peoples' Recession started awhile back.

[Mike169]

Don't tell Bush!

[WIpatriot]

"Re-shesh-y-a-shun" Damn!