Warren Buffett remains bullish on the US
The European economy, however, is a different story.
Billionaire investor Warren Buffett, perhaps the greatest investor in history, says the glass is half full when it comes to the U.S., though Europe is another story.
Speaking on CNBC Thursday morning, the Oracle of Omaha argued that "the U.S. economy is faring better than virtually any big economy throughout the world," in part because of the "noticeable" pickup in the residential housing market. Europe, he notes, is in much worse shape as evidenced by growing concerns about Italy and Spain. Of course, the CEO of Berkshire Hathaway (BRK.B) is right.
A recent forecast from the OECD (Organization for Economic Co-operation and Development) is projecting real GDP growth -- which is adjusted for inflation -- in the U.S. of 2.4% in 2012 and 2.6% in 2013.
Also, data released from RealtyTrac shows an 11% decline in the number of properties with foreclosure filings in the first half of the year compared to a year earlier. Fewer U.S. homeowners have underwater mortgages, according to CoreLogic.
The U.S. economy, though, is far from robust. Unemployment remains stubbornly high at 8.2%, which threatens the re-election prospects of President Barack Obama.
In Europe, the picture is far more depressing. The OECD is calling for the economy in the eurozone to contract 0.1% this year and to rebound by a whopping 0.9% next year. Even Japan, which has been ravaged by tsunamis and nuclear disasters, is doing better and is projected to post growth of 2% this year and 1.5% in 2013. Some experts, as well as Buffett, are seeing reasons for optimism in Europe, though their enthusiasm is hardly palpable.
"We believe that growth may be returning in some parts of the Eurozone but, in many economies, the contraction seems set to continue into 2013; with overall Eurozone growth staying below 2% in the next few years," according to Ernst & Young.
Investor should remember that Buffett's view is skewed by the fact that as one of the world's wealthiest persons he can afford to take a much longer time horizon than most investors, for whom it can seem infinite. The Obama campaign also needs a better argument for the reelection of the president than "hey, at least we are not Europe."
Indeed, worries about Europe continue to be a drag on U.S. stocks. Investors are also clamoring for the Federal Reserve to take additional steps to stimulate the economy. A good stiff economic headwind, such as a collapse in China, could imperil the tepid growth experts are forecasting for the U.S. and cause even more havoc in Europe.
It bears repeating that the U.S. is not Europe. Some countries in the eurozone can't afford to pay their bills. The U.S. can pay its debts, though in moments of fiscal insanity, such as the fight over the debt ceiling, it threatens not to.
Follow Jonathan Berr on Twitter @jdberr
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