The most important thing Warren Buffett said Saturday, and it isn’t good news for the economy

OMAHA,
Neb.
—
Warren
Buffett,
whose
conglomerate
is
viewed
as
a
barometer
of
U.S.
economic
health
because
of
the
range
of
businesses
it
owns,
said
something
that
doesn’t
bode
well
for
those
believing
we
will
skirt
a
recession.

The
“Oracle
of
Omaha”
believes
that
the
“extraordinary
period”
of
excessive
spending
on
the
back
of

Covid
pandemic
stimulus
is
over,
and
now
many
of
his
businesses
are
faced
with
an
inventory
build-up
that
they’ll
need
to
get
rid
of
by
having
sales,
he
told
about
40,000
shareholders
who
gathered
in
Omaha
at


Berkshire
Hathaway‘s
annual
meeting
Saturday.

related
investing
news

6
hours
ago

“It
is
a
different
climate
than
it
was
six
months
ago.
And
a
number
of
our
managers
were
surprised,”

Buffett
said
Saturday.
“Some
of
them
had
too
much
inventory
on
order,
and
then
all
of
a
sudden
it
got
delivered,
and
people
weren’t
in
the
same
frame
of
mind
as
earlier.
Now
we
will
start
having
sales
when
we
didn’t
need
to
have
sales
before.”

Berkshire
owns
a
diverse
group
of
subsidiaries,
from
Borsheims Fine
Jewelry
and
sportswear
Brooks
Running,
to
Duracell,
See’s
Candies,
Dairy
Queen,
apparel
company
Fruit
of
the
Loom,
as
well
as
Nebraska
Furniture
Mart.
Investors
always
look
to
Buffett
for
economic
insights
as
his
myriad
businesses
are
closely
tied
to
broader
spending
and
overall
demand.
Then
there’s
his
ownership
of
BNSF
Railway,
which
gives
him
a
broad
view
of
goods
being
shipped
around
the
country,
and
his
significant
energy
operations,
which
can
also
give
clues
to
the
level
of
economic
activity.

‘Extreme’
time
is
over

Buffett
said
his
businesses
had
experienced
an
“extreme”
period
where
consumers
splurged,
which
led
to
many
managers
at
his
subsidiaries
overestimating
demand
for
certain
products.

“It
was
just
a
question
of
getting
goods
to
deliver.
People
bought,
and
they
didn’t
wait
for
sales.
If
you
couldn’t
sell
them
one
thing,
they
would
put
another
thing
in
their
backlog,”
Buffett
said.

The
92-year-old
investing
icon
said
he
expects
to
see
an
earnings
decline
for
many
of
his
businesses
in
light
of
an
economic
slowdown.

“In
the
general
economy,
the
feedback
we
get
is
that,
I
would
say,
perhaps
the
majority
of
our
businesses
will
actually
report
lower
earnings
this
year
than
last
year,”
he
said.

Still,
Buffett
thinks
Berkshire
is
positioned
well
in
terms
of
its
investment
income
as
higher
interest
rates
are
earning
the
conglomerate
a
substantial
return.
Berkshire
owned
about
$130
billion
in
cash
and
Treasury
bills
at
the
end
of
the
first
quarter.

Berkshire
has
fared
well
so
far
despite
a
challenging
macro
environment
with
operating
earnings
jumping 12.6%
in
the
first
quarter.
The
solid
performance
was
driven
by
a
rebound
in
the
conglomerate’s
insurance
business.
Overall
earnings
also
rose
sharply
thanks
in
part
to
gains
its
equity
portfolio,
led
by Apple. 

“Nothing
is
sure
tomorrow,
nothing
is
sure
next
year,
and
nothing
is
ever
sure,
either
in
markets
or
in
business
forecasts,
or
in
anything
else,”
Buffett
said.