Did Buffett just flip-flop on his recession view?
In a CNBC interview broadcast Thursday, billionaire investor Warren Buffett said the economy still hasn’t emerged from recession, despite the official declaration by the National Bureau of Economic Research this week that the downturn ended in June 2009.
“We're still in a recession. And we're not gonna be out of it for a while, but we will get out of it,” Buffett told CNBC’s Becky Quick.
But hold on a minute: Just last week he told participants at a Montana economic forum that they could stop worrying about the economy falling back into recession.
“We will not have a double-dip recession at all. I see our businesses coming back almost across the board,” Buffett told the group, referring to the dozens of companies owned by his conglomerate, Berkshire Hathaway Inc.
On CNBC, Buffett said he defined “recession” differently from the NBER.
“I mean, I define it -- I think we're in a recession until real per capita GDP gets back up to where it was before,” he said. “That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any -- on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.”
So for CNBC, the nation’s second-wealthiest man may have been trying to identify with the average American who doesn’t believe the NBER data or the government’s official GDP figures (which have shown positive growth for the last four quarters).
And for the Montanans, maybe Buffett was implying that the official GDP figures won’t go negative again, even if it still feels like a recession to the average Joe.
It would have been nice if he had clarified as much, given how widely his bullish tone last week was disseminated.
Meanwhile, Buffett reiterated to CNBC that the highest-income earners should be willing to see their tax rates rise on Jan. 1 for the good of the country.
“The way the tax system has gotten tilted toward guys like me over the last 20 years is -- as opposed to the middle class, you know, in my view, is a little obscene,” he said. “I just think that -- when a country needs more income and we do . . . they should get it from the people that have it.”
Asked by Quick if he thought it was OK to raise taxes “when the economy’s uncertain,” Buffett said:
“I think -- sure. On some people. Yeah. I don't want to raise 'em on 90 -- you know, 98 percent of the people, but . . . I think the inequities that have gone into the tax code in the last 20 or 30 years compared to the situation that existed when this country was very prosperous in 1960, 1970, 1980 and so on, I think it's -- I just think it's been tilted toward the rich.”
-- Tom Petruno
Photo: Warren Buffett. Credit: Nati Harnik / Associated Press