Buffett says US is in recession

‘If it walks like a duck, and quacks like a duck, then its a duck’. This simple logic probably best sums up Warren Buffett’s position on the current state of the US economy. ‘By any commonsense definition’, said Buffett yesterday, ‘the US is in recession’.
Buffett is the world’s leading investor. And key evidence from a chemical industry perspective supports his conclusion. US vehicle sales fell 10% in January, after a terrible 2007. Housing starts are 50% down on earlier peaks, and US house prices are falling nationally for the first time since the Depression. As Buffett added, ‘most people (are) experiencing recession’, and ‘their net worth (is) heading south’.
Buffett’s warning about the US$ was also worrying, with his belief that it ‘is going to get weaker over time’. Last year, the lower $ allowed US chemical companies to compensate via increased exports for slow domestic markets. But the $’s latest fall means that it is now challenging the ¥102 level, which has held for over a decade.
Equally, investors search for a reliable ‘store of value’ is causing them to chase commodity prices higher. Speculative long positions on NYMEX crude oil rose 50.4% last week, as financial players rushed to exit the US$. Many expect crude to hit the $110-$115/bbl level shortly.

2 thoughts on “Buffett says US is in recession”

  1. ‘Lies, damned lies, and statistics’

    Mark Twain’s famous quote rather sums up my current feelings about the state of the US economy. This is the most important single indicator of future chemical industry sales. And a couple of months ago, I aligned myself with Warren…

  2. US entered recession a year ago – official

    Last March, the blog applauded Warren Buffett’s statement that “by any commonsense definition, the US is in recession”. I also wrote an article for ICB in April, “Building your defences” to suggest how companies could develop contingency plans to deal…

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