Warren Buffett’s Berkshire Hathaway Inc reported poor results in some of its major businesses. The fact reinforces the anxiety surrounding the United States’ economic future. Nevertheless, the billionaire investor remains hopeful.
In the fourth quarter, the corporation’s operating earnings declined by 14% to $6.7 billion. This was due to the increasing cost of materials and labor impacting the company’s transportation and insurance operations. Despite the damage, Buffett urged investors to maintain their faith in the American economy. Moreover, he praised Berkshire’s record profits of $30.8 billion.
Buffett has always viewed his conglomerate identity as a backbone for the US economy. Investors scrutinize financial data and his rare public appearances for any indications of tension. The future doesn’t seem so bright with increased inflation and Federal Reserve’s efforts to control it. Yet, the billionaire remains self-assured, even going as far as dismissing short-term economic and market predictions as “worse than useless.”
BNSF is a Berkshire Hathaway-owned railroad company. It reported operating earnings of $1.5 billion in the fourth quarter, down from $1.7 billion in the same quarter last year. Earnings from insurance underwriting decreased from $372 million to $244 million.
The hopeful outlook on the US economy has its reasons
Buffett has stayed away from controversy by focusing on more hopeful topics. These are the American economy’s promising future and its own businesses. However, this year he weighed in on a much-disputed topic concerning Berkshire: share buybacks.
The statement was made after President Joe Biden urged lawmakers to increase the tax on billionaires and quadruple the charge on corporate stock repurchases.
Democrats have supported this decision in the hopes that this would encourage companies to plow more money into the economy and raise salaries. These expectations seem unrealistic amid a split congress.
Because of increased prices in public markets, it has become difficult for Warren Buffett to pin down possible acquisitions. This has pushed Berkshire to focus on buybacks more frequently.
In the final three months of 2022, the business spent almost $2.6 billion repurchasing its own shares, bringing the year total to $7.9 billion. Warren Buffett emphasized that similar strategies were used by some of the businesses Berkshire has placed the biggest bets on. These are businesses like Apple Inc and American Express Inc.
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