NEW YORK — Billionaire Warren Buffett says that while his businesses have bottomed after the worst financial crisis in decades, he sees few up-ticks and rules out a buoyant holiday season.
Consumer demand would recover and it was likely the economy would come back in two years rather than in one, he said in a interview at the weekend.
Last month, preliminary government data showed the US economy expanded in the third quarter, the first three- month period of growth since the second quarter of last year. Nonetheless, the US unemployment rate reached 10,2% last month, the first double-digit reading in 26 years.
Buffett last week made a big bet on the US economy when his Berkshire Hathaway agreed to pay about 26,4bn for the 77% of railroad company Burlington Northern Santa Fe Corporation that it did not already own.
Buffett estimated that the dollar would depreciate as the US government prints more dollars.
“The question is how much it depreciates in value,” he said.
The dollar has declined about 15% against a basket of six major currencies from highs set in March, and is down more than 37% from a peak in 2001.
Buffett estimated Congress would have to raise taxes and close the budget gap, which hit a record 1,4-trillion in the fiscal year ended September.
“In the end, Congress is the one that determines the value of the dollar over time. If they follow policies that require us printing too much of it, monetising debt and all that sort of thing, dollars will become worth a lot less,” he said.
“They’ve got to raise taxes now that income will go up as the recession ends anyway, but they’re going to have to close the gap between expenditures.”
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