The US economy has stagnated even as signs of recovery emerge in the residential housing sector, billionaire investor Warren Buffett said on Thursday.
In the last two months, there has been a discernible pickup in US housing sector, albeit from a low base, the chairman of Berkshire Hathaway Inc. told a television channel. “The rest of the economy is slowing. It’s not heading downward, but it is not growing at a rate it was earlier,” he added.
Buffett believes that the US economy is doing better than most other developed economies in the world, and reiterated that housing will be the key to its sustained recovery. “The little pickup in housing is not enough to offset what’s going on in the world generally,” he said.
There is not much that the Federal Reserve can do to prop up the world's largest economy when banks are sitting on tons of cash and interest rates are technically negative, according to Buffett.
Buffett also blamed the Congress for part of the problem confronting the US economy and urged politicians to stop squabbling. “People have a feeling that the Congress is inept and sort of paralyzed by the desire of each side to make the other side look bad. That has got to be a factor in general confidence," he said.
“Seeing your government not function is not the really the biggest spur to activity that you can imagine. It’s hard for the Fed to offset Congress in terms of changing public
opinion,” Buffett told the business news channel.
Buffett noted that the European economic situation has deteriorated further, particularly in the last one month. “Things have slipped pretty fast,” he said.