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Tags: us | economy | Buffett | Welch | Soaring | Food | Gas

Buffett, Welch: Bin Laden's Death Won't End Terror, High Gas, Food Prices May Curb Economic Growth

Monday, 02 May 2011 09:45 AM EDT

Two icons of U.S. business — Warren Buffett and Jack Welch — said Monday the death of Osama bin Laden was a thrill but won't end the threat of terrorism, yet the economy is continuing to improve.

The two revered businessmen appeared together Monday on CNBC. Buffett's interview had been scheduled to discuss the economy and last weekend's Berkshire Hathaway shareholders meeting, but international relations became a prominent topic because of the bin Laden news.

Buffett said he felt good when he heard of bin Laden's death, but he still worries about terrorist attacks.

"The desire to do us harm exists in too many people around the world," Buffett said.

Buffett said the fact that the United States hasn't sustained another major terrorist attack since Sept. 11, 2001, shows that the government has likely done many things right. Buffett, whose company owns several major insurers, said he was expecting another attack in 2001.

"It's always been a mistake to bet against the United States since 1776," Buffett said.

Welch said seeing the video of Americans united at Ground Zero reciting the Pledge of Allegiance gave him chills. He said he hopes the news will revive the American spirit.

"I hope it's the beginnings of the kindling wood starting to burn in the American spirit," Welch said.

Over the weekend, Buffett met with roughly 40,000 Berkshire shareholders and spend hours answering their questions.

Buffett and Welch both said Monday the economy is improving, but that rising gas and food prices could limit economic growth by hurting consumer spending on other things.

Buffett said the reports he gets from Berkshire's 80-odd businesses show the economy is still improving slowly except for businesses related to the U.S. housing market.

Welch says the increase in gas prices sucked $100 billion out of the economy in the first quarter.

"There's no question that dollars have been sucked out of the economy," Welch said.

Buffett said an increase in gas prices affects the economy much like a tax increase except that the revenue goes to oil producing nations instead of the federal government.

"The economy is getting better. I think you will see major progress when U.S. housing picks up," Buffett said.

Both Welch and Buffett said they were looking forward to the end of the Federal Reserve's bond-buying program known as "quantitative easing" this summer.

"Free money in the hands of very smart people for too long is likely to create something unpleasant," Welch said.

Berkshire owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms, but its insurance and utility businesses typically account for more than half of the company's net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

Meanwhile, gasoline pump prices across the country have soared to within a dime of $4 a gallon, as weather-related refinery outages tightened supplies and pushed prices up.

The national average increased 2 cents Friday to nearly $3.91 a gallon for regular gasoline. It's the highest level since July 31, 2008, when pump prices were falling from a record $4.11 a gallon on July 17 of that year.

Drivers in nine states and the District of Columbia already pay $4 a gallon or more for gas. At the current rate of increase, the national average could reach $4 by May 8, Analysts expect it to start falling later in the month, as refineries return to full production and more gas becomes available.

The Commerce Department said Friday that personal incomes rose 0.5 percent and consumer spending rose 0.6 percent in March, but higher gas prices are taking a toll on consumers' wallets.

"The increase in ... spending was swallowed up by higher gasoline and food prices," said IHS Global Insight economist Chris Christopher.

Some economists think lower gas prices could encourage consumer spending in other areas, but the high unemployment rate will keep the economic recovery in low gear.

© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Two icons of U.S. business Warren Buffett and Jack Welch said Monday the death of Osama bin Laden was a thrill but won't end the threat of terrorism, yet the economy is continuing to improve. The two revered businessmen appeared together Monday on CNBC. Buffett's...
us,economy,Buffett,Welch,Soaring,Food,Gas,gasoline,oil,Prices,Hurt Economy
Monday, 02 May 2011 09:45 AM
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