Warren Buffett is predicting that the United States economy will not go through a double dip recession. This will come as a surprise to a lot of economists that are calling for a double dip recession. Buffett boldly predicted a lot of cheery economic news that if it occurs will lead to a full fledged recovery. Buffett discussed his predictions in a full length interview with Bloomberg this past weekend.
Buffett told Bloomberg that he is seeing in demand a lot of different industries in Berkshire’s businesses. The only industry that he sees that is lagging is the construction industry. He believes that things are a lot better economically than the doom and gloom scenario being painted by so many. Buffett sees the start of a recovery in the housing industry in the next year or so. He stated that “we will come back big time on employment when residential construction comes back and that the unemployment rate will drop to 6 percent within a few years .”
Better Economic Days Ahead
I found Buffett’s comments about the housing market to be the most interesting. I think that it is impossible to pick a market bottom but it is clear that the housing market is somewhere near the bottom. The signs that indicate this to me is how bearish everyone is on the housing market. Nobody wants to invest in real estate now. Pessimism is normally a good sign for a rebound because it washes everyone out and then the market can rebound.
I didn’t buy real estate after 2001 because there were too many people flocking to it. People were quitting their jobs to flip homes and everyone thought it was a get rich quick venture. That was a clear sign that a market correction was coming. Now the exact opposite is occurring. When prosperity is abounding, analysts predict the bullish market will continue forever. When a market has crashed, analysts predict a bear market forever. The best bet is to go against the sentiment of the general public. They are usually wrong.
It is clear that Buffett is incredibly optimistic about the economy and thinks that the best is yet to come.
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