Warren Buffett on Rail Shipments, Carpet Yardage Retracements (CNBC)

On 9/23/2010, Warren Buffett was interviewed by Becky Quick on CNBC and talked about the recession and small business data (specifically Berkshire data).

On the recession: "I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research (NBER) measures it, but I will tell you that, on any common sense definition, the average American is below where he was before, or his family, in terms of real income GDP. We're still in a recession and we're not going to be out of it for a while, but we will get out of it."

Railroad, carpet, brick and insulation business retracements and employment: "[rail] If you take the peak period per shipments and then you go all the way down to the bottom, we're 61% of the way back up". "Our carpet business, our brick business, our insulation business, they're not back 61% but they are moving back".

"If you take our carpet business, it fell from 13 million yards a week we'll say to 7 million yards a week. That cost 6,500 jobs. We're back up to maybe 9 million yards a week [33% retracement] but we haven't had to add yet. If we get to 10 million we'll start adding people, but it's lagging and it will continue to lag"

Look at the BRKA (Berkshire Hathaway A-Share) chart. It is trading just above the 61.8% retracement level as well, peak to trough. Nice v-shaped recovery for the stock and now it's 21% away from the 2007 high. Now what?

Chart courtesy of FreeStockCharts.com