Warren Buffet: unemployment to hit 11%
Warren Buffet, the legendary investor and CEO of Berkshire Hathaway (BRK-B), has publicly said that he would not be suprised for unemployment to hit 11%. As we exited June 2009, the unemployment rate was at 9. 5%. “We’re not in a freefall, but we’re not in a recovery either,” Buffett says. What will take us out of this funk is a second stimulus package, which the Obama Administration has not planned to put in effect. We at the Wealth Alchemist agree that unemployment is certainly headed towards double digit. We will likely not see unemployment starting to drop until mid-2010 and even at that point the drop will be insignificant. We as a nation and as an economy will have to deal with the large group of out-of-work population and deal with the negative consequences generated by the inefficiency created. Consumption will drop as disposable income decreases, slowing down and weakening any sort of recovery as Buffett has suggested. If unemployment hits 11% and stays there for a prolonged period of time, we will clearly be looking at a Depression and not just a recession. What we need to do as a population is garner the proper personal finance skills to weather this storm and emerge smarter and debt-free. For tips on how to do this, check out the 5 must-read books during this recession, Personal Finance 101 page and our Investment 101 page. Our 15 stock picks for 2009 has also done well. All in all, Buffett does offer an uplifting message at the end of the day: “We’re going to come out of this better than ever, the best days of America lie ahead but [just] not next week or next month. ”
