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Buffett Warns Obama: Economic Recovery Still Has a Long Way to Go

Friday, 16 Jul 2010 03:46 PM

President Barack Obama heard a sobering message from Warren Buffett when he asked for the investment guru's views about the economic recovery, according to an interview the president gave NBC News on Thursday.

"I'll tell you exactly what Warren Buffett said. He said, 'We went through a wrenching recession. And so we have not fully recovered. We're about 40, 50 percent back. But we've still got a long way to go,'" Obama told NBC during a visit to Holland, Mich., to promote his job creation policies.

Obama chatted with Buffett in the Oval office on Wednesday as he sought ideas on how to translate higher U.S. growth into stronger hiring. This would help him deliver on an election year promise to tackle unemployment currently at 9.5 percent.

Buffett, who built an estimated $47 billion fortune running his insurance and investment company Berkshire Hathaway Inc., warned Obama the recession created a huge overhang of excess capacity in the economy that would simply take time to mop up.

Obama said Buffett specifically used the example of the U.S. housing market, noting 1.2 million new homes were built on average per year in the United States, according to historic trends. That number soared above 2 million during the property bubble, but construction activity has since collapsed.

"What Warren pointed out was, look, we're gonna get back to 1.2 (million). But right now we're soaking up a whole bunch of inventory. So a lot of the challenge is to work our way through this recession," Obama said.

High unemployment is another type of excess economic capacity. Obama's Democrats risk severe punishment by voters in midterm congressional elections on Nov. 2 if he fails to convince them stronger U.S. growth means better times ahead.

A series of polls this week showed that Americans are increasingly unhappy about Obama's handling of the economy.

To counter such perceptions, the administration on Wednesday trumpeted an analysis from the White House Council of Economic Advisers that said Obama's stimulus package had saved or created roughly 3 million jobs, and was on track to meet its goal of 3.5 million jobs by the end of this year.

"By making critical seed money available, we have attracted more than $280 billion dollars in investment from private companies and others," Obama said in Holland.

Obama was in Holland to tout the benefits of an $862 billion emergency program he signed last year. Government spending has contributed to worry among voters about the country's deficit, but Obama pointed to the benefits.

"We're leveraging nearly three private dollars for every public dollar. That's an incredible bang for our buck."

But, four months before congressional elections, White House spokesman Robert Gibbs has acknowledged that voters' economic frustrations could cost Democrats control of the House of Representatives. All 435 seats are at stake in November.

In a CBS News poll this week, only 40 percent of respondents approved of Obama's handling of the economy, while 52 percent felt he had spent too little time on the economy and too much time on healthcare reform.

© 2017 Thomson/Reuters. All rights reserved.

 
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President Barack Obama heard a sobering message from Warren Buffett when he asked for the investment guru's views about the economic recovery, according to an interview the president gave NBC News on Thursday. I'll tell you exactly what Warren Buffett said. He said, 'We...
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2010-46-16
Friday, 16 Jul 2010 03:46 PM
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