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Warren Buffett Isn't 100% Convinced The Economy Grew 3%

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Warren Buffett Isn't 100% Convinced The Economy Grew 3%

The U.S. economy grew by 3 percent in the second quarter, which not only marks a major improvement from the original 2.6 percent growth figure last month, but represents the fastest pace of growth seen in two years.

But billionaire investor Warren Buffett isn't 100 percent convinced this figure is accurate.

In an interview with CNBC's Becky Quick Wednesday, Buffett said that GDP growth has stagnated around 2 percent since 2009 and the second quarter didn't quite feel like a period of outperformance.

The reason for this may be due to how the quarterly GDP figures are calculated, Buffett explained. The government takes data for a specific quarter and then multiplies it by four to derive an annualized rate as opposed to a year-over-year comparison. But if a current quarter's GDP reading is off by just 0.1 percent, then the annualized rate by default will be off by 0.4 percent.

There are also seasonal adjustments in each quarter, which implies investors shouldn't "take to seriously," Buffett said. In fact, he believes the economy's growth rate hasn't changed from the 2 percent level.

"Every now and then we think it's accelerating and every now and then we think maybe there is a double dip or something," he said.

Bottom line, a 2 percent growth rate is "not bad" and if the rate continues unchanged for 25 years it will result in a $19,000 GDP gain per person in the U.S.

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Posted-In: Becky Quick CNBC Economy GDP GDP Growth Warren BuffettEconomics Media Best of Benzinga

 

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