Warren Buffett doesn't see the "green shoots" Ben Bernanke and other bullish investors have spoken of in recent months. In fact, the billionaire investor believes the economic picture will grow darker before things improve.Just to Accentuate Buffet's gloomy opinion, today's unemployment report is out:
"Everything I see about the economy is that we have had no bounce," Buffett told CNBC anchor Becky Quick in a televised interview Wednesday. "There were a lot of excesses to be wrung out and that process is still under way, and it looks to me that it will be under way for quite awhile. In the annual report, I said that the economy would be in shambles this year and probably well beyond, and I think that is true."
Unemployment, said Buffett, will continue to drag the economy down. He told Bloomberg news that unemployment is "very likely to go above 10%." About 9.4% of the population -- about 14.5 million people -- was unemployed in May, the last month for which statistics are available. High unemployment will continue to depress consumer demand for everything from energy to cars and homes, Buffett said.
Wednesday's news about new-home sales supported Buffett's argument. New-home sales fell 0.6% in May, dashing the hopes of many bullish investors who believed the economy and credit markets had turned around enough to fuel big ticket purchases.
The Labor Department on Thursday said initial claims for jobless benefits rose last week by 15,000 to a seasonally adjusted 627,000. Economists expected a drop to 600,000, according to Thomson Reuters. Several states reported more claims than expected from teachers, cafeteria workers and other school employees, a department analyst said.The economy will be held down by that unemployment as consumers fail to have the funds to increase buying. That's assuming they don't go all sensible on us and start saving a lot of what they don't have to spend.
The number of people continuing to receive unemployment insurance rose by 29,000 to 6.74 million, slightly above analysts' estimates of 6.7 million. The four-week average of claims, which smoothes out fluctuations, was largely unchanged, at 616,750.
But the Wall Street hucksters and their off-the-street relatives trying to boost sales will continue to spout the "...see shoots of recovery breaking through. We'll start recovering before the end of 2009" line. Sorry. They just want you to spend your money on their products, that's all that is. Warren Buffet sees it that same way.