Warren Buffett was on CNBC earlier today for the first time since his cancer treatments to speak to Becky Quick. As we see global US companies cut earnings forecasts during this earnings season, it is clear that the global economy continues to slow. In Buffett’s view, the US is like the one eyed king in land of the blind when it comes to growth. Yes, the US recovery is now painfully slow. But, he sees the US residential housing market starting to pick up. By contrast, elsewhere in the developed world, Buffett sees major problems, especially in Europe. And even in Asia, where growth rates are higher, Buffett stressed that the decline in those growth rates has been more severe. The comment that summed it up best was that the US economy “is not tanking”, whereupon he immediately contrasted this positively to Asia and Europe.
While Buffett never answered Becky Quick’s answer as to when he began to see this decline, I can tell you that I started to chronicle it a year ago. See predictions from this December 2011 post.
So this is not a new thing. It has been ongoing for a while now. There’s a lot more from Buffett in the videos below. I do want to call out his remarks on banks. His view – and I think this is important – is that banks will be earning less money for the foreseeable future, because leverage is lower. He actually says the 25% return on tangible equity banks were earning was a “crazy number” and suggests that it is not coming back anytime soon.