Warren Buffett Weighs In

Equities Editors Desk  |

Last year, Warren Buffett’s Berkshire Hathway Inc. (NYSE: BRK.A), boasted its largest profit since 2007, prompting Buffett to declare the U.S. economy is “getting better month by month.”  Berkshire reported $13 billion of 2010 profit on Feb. 26. Simultaneously, Buffett announced a $9 billion deal to purchase engine-additive maker Lubrizol Corp. (NYSE: LZ)

Buffet expressed a renewed enthusiasm for capitalism and recognized the role of government aid in the economic recovery at a press conference in Bangalore today.

The U.S. economy grew by 2.8 percent in 2010, marking the most significant improvement since 2005. Unemployment in the U.S. fell to 8.9 percent in February from 9.8 percent in November.

Since mid-2009, Buffett said, “The U.S. economy has been improving fairly steadily, but not at a great rate.”

Buffett’s faith in the economy was tested last year when the 80-year-old billionaire endeavored on the largest takeover of his career, with the $26.5 billion deal for railroad Burlington Northern Sante Fe. The success of the acquisition was highly reliant on the U.S. economic recovery. Bloomberg quotes Buffett, describing it as an “all-in-wager,” on the economy.

So far, despite obstacles the economy has improved with the Standard & Poor’s 500 Index gaining 3.2 percent in 2011 and shoot up 13 percent in 2010. The index still has a long way to go to return to 2007 levels.

Beyond affirmation of his confidence in the U.S. economy, Buffett discussed Japan, the world’s third largest economy and how the earthquake will affect the market there and internationally. He insisted the quake was unlikely to stop the growth of the global economy. He believes Japan is prime for investment as the nation works to rebuild the affected area. In the hours since the announcement the Nikkei index has surged. 4.4 percent today.

 

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