Buffett: Economy better than presidential contenders say
OMAHA, Neb. — The U.S. economy is in better shape than the presidential candidates make it seem, investor Warren Buffett said Saturday, even though businesses like his still face challenges.
In his annual letter to Berkshire Hathaway shareholders, Buffett didn’t name specific candidates but said the negative drumbeat about the economy, health care overhaul and income inequality may get voters down about the future.
“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve),” he wrote.
“That view is dead wrong,” he added later. “The babies being born in America today are the luckiest crop in history.”
Buffett noted that there will still be economic troubles as business evolves but that the country needs to make sure it has a solid safety net to help people who lose jobs.
“The answer in such disruptions is not the restraining or outlawing of actions that increase productivity. Americans would not be living nearly as well as we do if we had mandated that 11 million people should forever be employed in farming,” he wrote.
Buffett said change also creates challenges for Berkshire’s businesses.
For instance, its BNSF Railway is certain to haul less coal in the future and its Geico insurance could be hurt by driverless cars.
He assured shareholders that Berkshire’s businesses will adapt just as the company did when its original Berkshire Hathaway textile operation failed.
The letter also noted that Berkshire shareholders will vote on a proposal requiring the company to prepare a report on the threat climate change poses for its insurance operation. Buffett said it’s reasonable to worry about climate change’s effect on the world, but it shouldn’t hurt insurance companies because policy prices are set annually based on that year’s risks.
Buffett said the book value of Berkshire’s businesses improved 6.4 percent last year even as its stock price fell 12.5 percent. When dividends are factored in, the Standard & Poor’s 500 index gained 1.4 percent by comparison. Buffett has warned that it will be increasingly hard for Berkshire to continue beating the market because the company is so large.