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Warren Buffett Sun Valley Transcript, July 12, 2012

Warren Buffett Sun Valley Transcript, July 12, 2012

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Published by CNBC
This is a transcript of Warren Buffett's Sun Valley live interview on CNBC's Squawk Box, July 12, 2012, from 7:30am to 8:00am ET.

In his conversation with Becky Quick, Buffett says he now sees U.S. economic growth slowing, but residential housing is picking up slightly.

He also says Europe has "been slipping pretty fast" over the past six weeks.
This is a transcript of Warren Buffett's Sun Valley live interview on CNBC's Squawk Box, July 12, 2012, from 7:30am to 8:00am ET.

In his conversation with Becky Quick, Buffett says he now sees U.S. economic growth slowing, but residential housing is picking up slightly.

He also says Europe has "been slipping pretty fast" over the past six weeks.

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Categories:Types, Business/Law
Published by: CNBC on May 08, 2013
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CNBC SQUAWK BOX TRANSCRIPT: July 12, 2012PAGE 1
 
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This is a transcript of Warren Buffett's Sun Valley live interview on CNBC's Squawk Box, July 12, 2012, from 7:30am to 8:00amET. In his conversation with Becky Quick, Buffett says he now seesU.S. economic growth slowing, but residential housing is picking up slightly.He also says Europe has "been slipping pretty fast" over the past six weeks.
BECKY QUICK
: Mr. Buffett, thank you for joining us this morning.
WARREN BUFFETT:
It's good to be here.
BECKY
: It's great to see you. And we couldn't think of a better time tohave you on because there are so many questions about what's beengoing on with the economy, what's been going on with the jobspicture. Why don't you tell us what you're seeing right now in yourbusinesses?
BUFFETT
: Well, I've got a little different story this time. (Laughs.) Fora couple years I've been telling you everything except residentialhousing was improving at a moderate rate
not crawling, but notgalloping either
but that residential housing was flatlining. And thelast two months it's been just sort of the opposite. The generaleconomy in the United States has been more or less flat, and so thegrowth has tempered down. But the residential housing, we're seeinga pickup. It's noticeable. It's from a very low base. It doesn't amountto a whole lot yet, but it's getting better. So you've got a kind of flip-flop on that.
BECKY
: What happened? When we talked in the past you had saidthat when housing turned that would be when the U.S. economy wouldturn. What happened?
BUFFETT
: Well, it hasn't changed all that much yet. But it is pickingup. But at the same time the rest of the economy is slowing down. It'snot heading downward but it's not growing at the rate that it was
 
 
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earlier. And then, it's kind of interesting in Europe. For a year or so, inmost places, forget about Greece for the moment, but generally inEurope you didn't have a big slowdown. You had a lot of worry and allthat. But in the last couple months in Europe, particularly in the pastmonth, it's pretty much across Europe, things have really started toslip pretty fast.
BECKY
: We've heard this from a lot of CEOs who joined us in the lastseveral weeks. But what business lines in particular do you look at andyou see these things popping up?
BUFFETT
: All of the businesses that we have, and then I talk topeople in other businesses. It's pretty clear that's what's going on rightnow. There are certain figures I can't tell you where I get them.Europe is really
it's headed downward in the last, I don't know, sixweeks or so. And it wasn't going that way before. It wasn't doing thatwell, but it wasn't
and then it hit the skids.
BECKY
: Is that because of consumers or because of businesses,confidence really slowing down and spending slowing down?
BUFFETT
: Yeah, well, spending is slowing down and when spendingslows down business reacts. They're not seeing the same kind of spending so they pull in their horns some.
BECKY
: What, of the things you can talk about, the numbers that youdo see, concern you the most?
BUFFETT
: Well, it's pretty general, Becky. Like I say, it has not turneddown yet in the United States. Our freight car loadings are up week-by-week. I normally get them today but I'm not home, so
but lastweek they're up
the eastern railroads were down moderately, but alot of that's coal. But nevertheless, just across the board, when you'relooking at our retail sales, jewelry or furniture or you name it
yardsof carpet are down, our carpet business is better. But on the otherhand, if you look at
we're the largest home builder in the country,Clayton Homes, and that's up, brick is picking up, but these are fromlow levels. But you are seeing
in our real estate brokerage firm,
 
 
CNBC SQUAWK BOX TRANSCRIPT: July 12, 2012PAGE 3
 
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which is the second largest in the country, pending sales are up by areasonable amount but from a very low base.
BECKY
: Well with everything else
not a reversal, a slowdown in thegrowth, what happened? What happened six weeks ago to spookpeople, to spook businesses?
BUFFETT
: I don't know the answer to that. I know the result. Youcould argue in Europe, why it was delayed so long? Because Europehas really been
you could see this coming for two
it was twoyears ago we saw a lot of our Spanish and Italian and even Frenchbonds. We were overly cautious probably. But that was two years ago.Europe, with all that's going on, it probably kept it from having anykind of gains but it didn't really seem to sink in. But I would say thelast, well I know the last couple months, with some acceleration, it'sbeen hitting over there.
BECKY
: We've watched the jobs picture and the last employmentnumbers at 8.2 percent from that government report last Friday. Isthat a chicken and egg cycle? Are people watching the jobs numberand getting spooked by it, or is the jobs number kind of 
 
BUFFETT
: Well, you're right. There is some circularity in it. I don'tknow the answer to exactly why it's happening. And I don't know whatit will be three months from now or six months from now becausethree months ago I didn't know what it would be today. The U.S.economy is doing better than virtually any big economy around theworld. This economy has come back a long way, with the exception of housing, from where it was a few years ago. And you can see it incorporate profits. I thought it would take housing
I still think itwould take housing coming back to move us generally, significantly,upward and I still think that's true. But so far the little pickup inhousing has not been near enough to offset whatever is going on inthe world generally.
BECKY
: The Fed came out with their minutes yesterday. Obviouslythey're concerned about the economy. They say that they could step in

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