Buffett's lieutenants see economy picking up

OMAHA Sat May 5, 2012 1:18am IST

Related Topics

Stocks

   

OMAHA (Reuters) - All signs point to slow but steady economic growth as consumers gradually increase their spending, senior executives of Warren Buffett's conglomerate Berkshire Hathaway said on Friday.

Nearly 40,000 Berkshire (BRKa.N) shareholders are gathering in Omaha this weekend for the company's annual meeting. While a good bit of Saturday's Q-and-A is expected to focus on Buffett's health and succession planning, the "Oracle of Omaha" will inevitably field a number of questions on the economy.

Two of his most consumer-oriented businesses, the confectioner See's Candy and the furniture rental business Cort, have seen something of a turn for the better.

"It's basically more of what we've seen the last couple of years, slow growth," See's Chief Executive Brad Kinstler said in an interview. "The consumer continues to spend just a little more than a year ago."

See's, which expects to grow store count by about 5 percent this year with an expansion in the Midwestern United States, is also expecting sales to grow around 5 percent this year, as mall traffic increases slightly.

Jeff Pederson, the president of Cort, said his company was also seeing things loosen up.

"Businesses are starting to use some of their capital," Pederson said, adding Cort was also having success in the niche of furniture rental to college students. "That part of our business has been very vibrant the last two years."

Their comments seem to echo the sentiment of their boss, who has been cautiously bullish of late.

"We're still seeing an economy that's improving, but it's not at a fast rate," Buffett told CNBC in comments aired Friday morning.

Buffett has said the biggest problem in the market is housing inventory -- new families need places to live, and as empty homes getting soaked up by that expansion, housing-related businesses (like Berkshire's own Acme Brick and Shaw Carpet) can start to rebound.

While he has admitted being wrong on the timing of that recovery, long-time Berkshire investors are still backing his strategy.

"We think that now is a wonderful time to be an optimist about the United States of America," said Bill Smead, chief investment officer of Smead Capital Management. "We're happy to be philosophically aligned with what he's doing."

(Reporting By Ben Berkowitz)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Jan Dhan Yojana

REUTERS SHOWCASE

Japan Trip

Japan Trip

Modi eyes breakthrough nuclear pact on Japan trip.  Full Article 

Chance For Reform

Chance For Reform

India's coal crunch - a chance to revamp, reallocate and revive.  Full Article 

E-Commerce

E-Commerce

Ratan Tata invests in online retailer Snapdeal.  Full Article 

Top Priority

Top Priority

Finance minister says food inflation is top priority.  Full Article 

Deal Talk

Deal Talk

Who wants to buy Snapchat? Microsoft, Google, Apple, Alibaba.  Video 

Fresh Funding

Fresh Funding

Tiger Global leads $65 million funding in Indian messaging app Hike.  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

Safety Net

Safety Net

SEBI revamps trading safety-net rules.  Full Article 

Fraud Investigation

Fraud Investigation

IMF's Lagarde put under investigation in French fraud case.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage