Billionaire Warren Buffett said Monday that while the U.S. economy still looks healthy, it isn’t as robust as it was even half a year ago thanks to headwinds like the Trump administration’s trade war and the burgeoning coronavirus.
“It’s strong, but a little softer than it was six months ago, but that’s over a broad range,” Buffett told CNBC’s Becky Quick in a “Squawk Box” interview. “You look at car holdings —rail-car holdings, moving goods around. And there again, that was affected by the tariffs, too, because people front-ended purchases, all kinds of things.”
“Business is down but it’s down from a very good level,” added the chairman and CEO of Berkshire Hathaway, speaking from the conglomerate’s headquarters in Omaha, Nebraska.
The “Oracle of Omaha” said that the Trump administration’s tit-for-tat trade war and, increasingly, the coronavirus threaten corporate America’s bottom line.
“Tariffs — the tariff situation was a big question mark for all kinds of companies. And still is to some degree. But that was front and center for a while. Now, coronavirus is front and center,” he said.
During the interview, Buffett pointed to several macroeconomic headwinds that when combined, appear to have weighed on U.S. growth over the last year.
Fourth-quarter GDP growth in the U.S. was 2.1% and 2.3% for 2019, the slowest year of growth in three. That number is expected to slump further in the first quarter of 2020 due to the impact of Boeing’s 737 Max crisis and the impact of the novel coronavirus.
Buffett said several Berkshire businesses were feeling an impact from the deadly virus, which has now spread beyond China and threatens to disrupt the global economy.
“We have maybe 1,000 Dairy Queen franchises in China … [and] a great number of them are closed. But the ones that are open aren’t doing any business to speak of,” Buffett said. “I’ll guarantee you that a very significant percentage of our businesses one way are affected by it. But they’re being affected by a lot of other things, too.”
“I mean our much bigger holding is Apple. We own 5.6% of Apple and the company came out and said that [the virus is] affecting not only its stores but all kinds of things, supply chains,” he added. “I find that a certain number of our companies have supply chain arrangements that are being affected by this.”
Buffett’s comments on Monday came amid reports that the coronavirus outbreak in countries outside China has worsened, especially South Korea and Italy, which reported a spike in the number of confirmed cases in recent days. South Korea raised its coronavirus alert to the “highest level” over the weekend, with the latest spike in numbers bringing the total infected there to more than 750.
Despite these worries, Buffett did say that he was a net buyer of stocks for the moment and that he still recommends buying equities over the long term.