Buffett: U.S. economy is making a comebackOctober 5, 2010: 10:53 AM ET
The Oracle of Omaha is optimistic about the American economy.
By Nin-Hai Tseng, reporter
While many corporate executives complain that America appears to be losing its competitive edge, billionaire investor Warren Buffett paints a resilient picture of the U.S. economy, which he says is filled with a level of innovation that's hard to find in other parts of the world.
In an interview with Fortune's Carol Loomis Tuesday at Fortune's Most Powerful Women summit in Washington DC, Buffett said "the economy is coming back" following a financial crisis that nearly destroyed the nation's banking system. Buffett, CEO of the conglomerate holding company Berkshire Hathaway, said the country has been through economic turmoil in the past but have managed to emerge out of its troubles.
The latest recession, while deeply nerve-wracking, will prove the same. There are many strengths of the American economy, but one of the key components is perhaps less tangible and comes in the innovative spirit seen in Henry Ford and Bill Gates, Buffett said.
His remarks come as economic indicators provide a snapshot of an economy looking pretty weak: Unemployment his hovering at an uncomfortable 9.6%. Consumer confidence is low. And many companies still aren't hiring many workers, even though executives are holding high levels of cash balances.
It also comes as Carlyle Group co-founder David Rubenstein said last week that the U.S. economy is losing its competitive edge to emerging economies -- echoing some of the same concerns that a recent World Economic Forum survey gave about the country's deficit and government debt.
Buffett says that while economic growth depends heavily on an uptick in demand, the U.S. marketplace is slowly recovering. "It doesn't happen where you can spot it right away. What I do know is when we meet two to three years from now unemployment will be far less and the economy will be humming."
And Europe is poised to make a comeback, too, the investor told the audience of women business leaders. However, unlike the U.S., Europe is tied to the monetary policies of 16 other nations in the Eurozone.
"In Greece if they could print their own currency you'd have ... inflation but you wouldn't go bankrupt."
For all the strengths of the U.S. and European economies, Buffett says he's amazed by China's marketplace. The investor recently wrapped up a trip to the country visiting Chinese carmaker BYD Co., a Berkshire investment that has expanded substantially in recent years.
"It just blows my mind away," he says, citing the country's government, which is cooperative and eager to build businesses. "When you get government, management and labor all working with a common goal with a sense of urgency miracles happen."