Warren Buffett Predicts Housing Starts Will Jump-Start Employment.

by Christophe Choo on January 24, 2012

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  • pinit preview none Warren Buffett Predicts Housing Starts Will Jump Start Employment.
  • pinit preview none Warren Buffett Predicts Housing Starts Will Jump Start Employment.

buffett 225x300 Warren Buffett Predicts Housing Starts Will Jump Start Employment.

The Oracle of Omaha has finally made it to the cover of Time magazine. It’s a first, which seems long overdue, considering Warren Buffett’s investment wizardry and, increasingly, his outspoken willingness to talk straight about everything, including the future of the American economy.

On that note, the profile of Buffett — an excellent read titled “Warren Buffett is on a Radical Track” — contains the octogenarian’s thoughts on the U.S. housing market. It is a succinct analysis of what Buffett believes is the intricately linked relationship between housing starts and employment.

Once we get back to a million housing starts per year”– the current tally is 685,000 — “I think pundits will be surprised just how fast unemployment will come down in this country,” he says. “There are 4 million people hitting age 22 every year in this country. Sure, you can double up on households for a while, but at some point, hormones kick in, and living with your in-laws loses its allure.” Buffett notes that nearly every one of his major non-housing businesses has had several strong quarters, and Berkshire companies are making a record number of investments, the vast majority of which are in the U.S. “I am 100% sure that people in this country will be doing more business 10 years from now than they are today.”

You heard it from the Oracle of Omaha. Anyone eager to bet against him?

The author of the article, Time assistant managing editor Rana Foroohar, lends some context to Buffett’s perspective.

It’s easier to have a bullish view on America from Omaha, where unemployment is only 4%, family-owned businesses abound, and the economy in general was never as bifurcated as in many coastal or Rust Belt areas. But Buffett insists his optimism isn’t emotional but quantitative: he focuses not on media headlines about America’s inevitable decline or cheerleading about innovation and education but on the underlying data. Basic demographics favor the U.S. over nearly every other rich country in the world. And with corporate America so lean and inventories so low, the growth engine, in his view, has to kick in soon.

Not a bad line of reasoning for eager Americans to hear as they wonder whether there’s way out of this long, hard economic slog.

Warren Buffett Predicts Housing Starts Will Jump-Start Employment.
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