Warren Buffett Calls Recession (BRK.A, BRK.B)

April 28, 2008 by Douglas A. McIntyre

Warren Buffett of Berkshire Hathaway (NYSE: BRK.A, BRK.B) has been on CNBC this morning discussing his Wrigley’s bid this morning.  Interestingly enough this interview was more of a general discussion about the current economic climate and strategy since he said, "We are in a recession." 

The call in the last few minutes also noted that the classic definition of a recession being negative GDP for two consecutive quarters and a 0.1% growth may keep the classic definition from being there.  He also noted that the National Bureau of Economic Research is the one who officially calls the classic recession, and that definition is far different "from the man in the streets."

He also noted that the current trade policies will weaken the dollar, although he noted how he was also surprised that inflation hasn’t been higher from commodity costs. Warren Buffett also said he thinks this will deeper and longer than many people think.

We have been in "recession mode" according to our own internal readings for the entire part of 2008.  Whether or not GDP will show a true negative number or not is immaterial.  Things started heading south ahead of Christmas, and the wings were ripped off the plane mid-flight starting in January to February.

The Fed interventions and actions to save the financial institutions have done more than the rate cuts, and we’ve noted that the FOMC should maybe take that throttle off of rate cuts now.  The rates get advertised in the windows for lower rates, but you can’t qualify.

Berkshire Hathaway’s holdings for the end of Q1 are not yet out, but here is a partial list of his most recent holdings as of the last filing date.

Jon C. Ogg
April 28, 2008