Buffett Says U.S. May Need a Second Stimulus Package

[Bear and Bull]

June 24 (Bloomberg) -- Billionaire investor Warren Buffett said the U.S. may need a second economic stimulus package as unemployment is poised to continue rising.

It looks like were going to need more medicine, not less, Buffett said today in a Bloomberg Television interview. Were going to have more unemployment. The recovery really hasnt got going. Buffett is chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc.

President Barack Obama signed a $787 billion stimulus bill in February, which included tax cuts and spending on infrastructure projects intended to save or create 3.5 million jobs. The Federal Reserve, under Chairman Ben S. Bernanke, has doubled its balance sheet to help thaw credit markets. In the first quarter, the U.S. gross domestic product plunged, and Berkshire reported its first loss since 2001.

The economic rebound will be a slow process, said Buffett, who predicted the joblessness rate will exceed 10 percent. The economy hasnt turned yet. Theres no telling how long it will take. It will happen.

Buffett praised Bernankes handling of the slide in confidence that caused banks to curb lending after the bankruptcy of Lehman Brothers Holdings Inc. in September. Bernanke is the right man to lead the central bank and should be given a second term, Buffett said.

The economy has lost about 6 million jobs since the recession began in December 2007. The U.S. unemployment rate jumped to 9.4 percent in May, the highest level in more than 25 years, and Obama predicted yesterday the jobless figure will exceed 10 percent by year-end.

Leverage

Investors and consumers went crazy on leverage and will need time to reduce their debt before a recovery can take shape, Buffett said.