The U.S. economy suffers from stagflation that’s going to get worse and may not end this year or even next, says investment icon Warren Buffett.

“We’re right in the middle of it right now,” the chairman of Berkshire Hathaway told Bloomberg Television recently.

“I think the ‘flation’ part will heat up, and I think the ‘stag’ part will get worse.”

While Buffett didn’t cite the reasons for his pessimism, he has said elsewhere that the housing meltdown and sagging retail sales are dragging the economy down.

On other topics, Buffett says the Federal Reserve is unlikely to have to bail out Lehman Brothers like it did Bear Stearns.

“The fact that they intervened on Bear Stearns prevents them from needing to intervene on other large investment banks,” he says.

“The very act of the fire engine showing up when there was a fire means that other fires won’t break out in this particular case.”

That doesn’t mean that Wall Street investment banks won’t lose a lot of money, Buffett points out. “But in terms of a threat to the system,” that has passed, Buffett says.

“I think the Fed did absolutely the right thing. If they hadn’t done what they did on Sunday [bailing out Bear Stearns], they would have had to do something else on Monday, and it would have been a lot worse.”

Berkshire is the second biggest shareholder of Anheuser-Busch, which has received a $46.3 billion takeover offer from Belgium’s InBev.

Buffett was mum on how he views the offer.

“I may have an opinion, but I haven’t commented to anyone,” he says. “I’ve been reported to be in St. Louis, I’ve been reported to be at dinner with August Busch IV,” the company’s CEO.

“There must be some guy in St. Louis that looks a lot like me, because I have not been in St. Louis since this started,” Buffett says.

Buffett says the government should be helping those who are suffering most from the economy’s troubles. “We have a very prosperous economy, with $47,000 in GDP per person,” Buffett notes.

“We can take care of people with safety nets. We can do more and will do more to help people on the short end of the stick.”

Buffett supports Barack Obama for president because of the Democrat’s advocacy for the poor.

“He will have more concern for the people who don’t get the lucky breaks in life like I’ve gotten,” says Buffett who’s ranked by Forbes magazine as among the richest men in the world.

“Some 20 percent of U.S. households, almost 60 million people, are living on $21,000 per year in income. I invite anyone to live on that. I think Barack Obama is more concerned about that than the present administration.”