Warren Buffett Says Economy has "Fallen Off a Cliff"

Uh oh. That’s the first reaction when one hears that Warren Buffett, genius investor, one of the richest men in the world and unofficial advisor to the U.S. government uses metaphors in offering his opinion of the economy. Buffett is also typically an optimist in good economic times and bad – a luxury afforded him by his billionaire status to be sure, but also a natural trait of the elder statesman of U.S. investing. Said Buffett recently, "It’s [the economy] fallen off a cliff. Not only has the economy slowed down a lot, but people have really changed their habits like I haven’t seen."

Buffett, who heads Berkshire Hathaway, Inc., notes that his own jewelry companies have suffered tremendously, but that Geico, another of his holdings, is doing quite well as people seek any means possible to save some money. Buffett predicted that unemployment, already standing at 8.1% nationwide, will go up quite a bit more before this recession is over, though he remains optimistic about the long-term health of the U.S. economy, noting, "Everything will be all right. We do have the greatest economic machine that man has ever created." Buffett’s Berkshire Hathaway posted fourth quarter (2008) net income that was down 96% from the fourth quarter the year earlier.

Buffett also noted that it was crucial for Americans and leaders in Congress to get on board with President Barack Obama’s plans to aid the economy. "What is required is a commander in chief that's looked at like a commander in chief in a time of war," Buffett said.