After the January split of class B shares for Warren Buffet’s Berkshire Hathaway (BRK.B) stock, there were about 65,000 new recipients of the company’s annual shareholder letter this weekend. The Oracle of Omaha referred to the message as more of a “freshman orientation” thanks to all the new folks in the fold
If Buffett’s populist shareholder letter was meant as an orientation for new shareholders, then his latest commentary in interviews appears to be a 400-level economics class on the complicated nature of our current jobless recovery.
In frank terms, Buffett admitted that jobs will be “slow to come back” in a CNBC interview this morning. But he used the example of Berkshire component Shaw Industries, the world’s largest carpet manufacturer, as a sign that growth is still happening even without more people on the payrolls.
“If you take our carpet business, we’re going to sell a lot of carpet over the years, but our employment from the peak is down 6,500 people. Now that’s a lot on a base of around 30,000 or a little larger,” Buffett told CNBC today. “We’re dying to hire people, but we’re not going to hire people to stand around. So jobs will respond to demand, and that’s why, in effect, the government in typical Keynesian fashion feels you have to kick-start demand.”
So that means Buffett is on board with Washington’s efforts to get the labor market back on track, right? Not necessarily.
“You can have various jobs programs and offer me a tax credit of $1,000 or forgive payroll taxes or something of the sort, but that’s not really a good reason to hire somebody. The reason to hire somebody is because you have a customer out there that needs that somebody.”
OK, so that means the government is misguided … right? Actually, not completely.
In characteristically blunt terms, Buffett told CNBC he’s in favor of the measures even if they don’t pack as much punch as we need right now.
“We don’t have anything better to go with, but we should not expect miracles,” Buffett said.
Buffett made clear that when it comes to the complicated nature of today’s market, with anemic consumer spending and high unemployment right alongside improving GDP and industrial output, there are no easy answers. But that won’t stop news outlets and inestors alike from asking the questions all the same. (You can check out the full CNBC transcript online here.)
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