Tags: warren buffett | pandemic | economy | impact

Warren Buffett Says COVID's Economic Impact 'Not Over'

warren buffet attends shareholders meeting
Warren Buffett, CEO of Berkshire Hathaway, attends the 2019 annual shareholders meeting in Omaha, Nebraska, May 3, 2019. (JOHANNES EISELE/AFP via Getty Images)

By    |   Wednesday, 30 June 2021 09:09 AM EDT

Warren Buffett told CNBC that the unpredictability of an uneven economic impact from the COVID-19 pandemic is far from over.

"Many hundreds of thousands or millions of small businesses have been hurt in a terrible way, but most of the big companies have overwhelmingly done fine," Berkshire Hathaway CEO Buffett said on CNBC's special "Buffett & Munger: A Wealth of Wisdom," which aired Tuesday.

After a $20 trillion economy was forced to shut down in March 2020 due to COVID-19, many small businesses gave way to online retailers. CNBC said the gross domestic product for the first quarter last year dropped 31.4%, unprecedented in post-Great Depression America.

"It's not over," Buffett said. "I mean, in terms of the unpredictability ... it's been very unpredictable, but it's worked out better than people anticipated for most people and most businesses. And it's just, for no fault of their own, it's just decimated all kinds of people and their hopes."

The 90-year-old Buffett said the pandemic taught him how ill-prepared the world can be for emergency situations bound to occur.

"I learned that people don’t know as much as they think they know," he said. "But the biggest thing you learn is that the pandemic was bound to occur, and this isn’t the worst one that’s imaginable at all. Society has a terrible time preparing for things that are remote but are possible and will occur sooner or later."

The COVID-19 delta variant now exists in at least 92 countries, and it’s doubling about every two weeks in the U.S., according to CNBC.

"There’ll be another pandemic, we know that," Buffett said. "We know there’s a nuclear, chemical, biological, and now cyber threat. Each one of those has terrible possibilities. And we do some things about it, but ... it's just not something that society seems particularly capable in fully coming to grips with."

Some businesses, however, thrived during the pandemic.

Charlie Munger, vice chairman of Berkshire and Buffett's longtime business partner, said some businesses, such as auto dealers, enjoyed windfall profits during the past year.

"It didn’t create just a return to normal, it created fabulous success they didn’t anticipate," Munger said. "The auto dealers are coining money that they wouldn’t have had except for the pandemic."

Automakers and dealers have experienced huge profits and even are even selling vehicles before they arrive at dealerships due to factory shutdowns and a global shortage of semiconductors, CNBC reported.  

Berkshire Hathaway Automotive, with more than 78 independently operated dealerships, ranks as one of the largest dealership groups in America. It also owns the BNSF Railway and NetJets, a private business jet charter and aircraft management company.

"All of the dealers … very sincerely felt that they were gonna have one hell of a problem in March and April," Buffett said. "Some might have wanted to go in for the assistance from the government, but we wouldn’t let them, because they had a rich parent ... we didn’t know what was gonna happen with NetJets in terms of the demand."

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StreetTalk
Warren Buffett told CNBC that the unpredictability of an uneven economic impact from the COVID-19 pandemic is far from over. "Many hundreds of thousands or millions of small businesses have been hurt...
warren buffett, pandemic, economy, impact
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2021-09-30
Wednesday, 30 June 2021 09:09 AM
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