US economy ‘has not turned up’: Buffett

CARLSBAD, California -
The US economy has not begun to climb out of the worst recession since the Great Depression, but the ‘terror’ that followed last year’s near-collapse of the financial system is gone, due in part to government intervention, Warren Buffett told Reuters on Tuesday.

Buffett maintained a positive outlook on the government’s much criticized Troubled Asset Relief Programme (TARP) for banks, saying it may ultimately turn a profit for the government.’At the moment we don’t see (the economy) getting better or worse, but that’s better than you could say six months ago,’ said the billionaire known as The Sage of Omaha for his long history of successful investments. ‘The terror of last year is gone and that’s thanks in part to the government.’Buffett spoke to Reuters in a brief interview at the Fortune Most Powerful Women conference in Carlsbad, California.US President Barack Obama said on Tuesday that measures undertaken by his administration to rescue the economy – including a US$787 billion stimulus package – were working, but warned a complete recovery would take ‘some time’.Federal Reserve Chairman Ben Bernanke also gave a fairly upbeat view, saying the longest and deepest recession since the 1930s was likely over, but added it would ‘feel like a very weak economy for some time.’Data released on Tuesday showed US retail sales rose in August at the fastest pace in 3½ years and a gauge of New York State manufacturing hit a near two-year high.Economists generally agree that the US economy is in the early phase of recovery but many remain worried about lackluster consumer demand, with rising unemployment crimping incomes.’The economy has not turned up but it will turn up … I just don’t know when,’ Buffett said.’It could be tomorrow,’ he added.He said the Obama administration was ‘making progress with TARP and may end up making a profit. It certainly won’t be a disaster.’Some of the largest US banks will remain in the government’s financial bailout programme for months, as officials do not expect to grant the next wave of exit approvals until near the end of the year, according to a source familiar with the matter. Ten banks received approvals in June to repay US$68 billion in federal bailout funds, but there have been few clues about when the other large banks would be allowed to exit the program.Banks such as Citigroup Inc and Bank of America Corp have been chafing under the government’s reins and want out of the programme, which delivered capital infusions to banks along with limits on pay, share repurchases and dividends. ‘The banks want to get out of TARP … they will all get out of TARP,’ Buffett said, adding that the time frame for exiting the programme ‘is not a crucial factor.’- Nampa-Reuters