Warren Buffett is bracing for a slowdown in the economy this year, and his top managers are acting accordingly.
“It is a different climate than it was six months ago,” Buffett told a packed house in Omaha, Nebraska, at the Berkshire Hathaway (BRK-A, BRK-B) annual meeting on Saturday.
Buffett added his managers “were surprised” by the economic conditions. As a result, many Berkshire companies will be employing sales to move excess inventory, Buffett suggested.
“In the general economy, the feedback we get is that perhaps the majority of our businesses will actually report lower earnings this year than last year,” Buffett added.
Berkshire posted a $35.5 billion first quarter profit on Saturday. The results reflect gains on stocks such as Apple (AAPL).
Higher investment income also benefited the bottom line, and the company repurchased some $4.4 billion in stock.
Some Berkshire-owned companies told Yahoo Finance Live on the ground they are seeing a more cautious consumer, but nothing alarming.
“I think we’re all cautious,” Brooks Running CEO Jim Weber told Yahoo Finance. “And there’s anxiety. There’s apprehension. But we’ve seen in the past that running often can kind of transcend a recession.”
Weber said he has seen record sales at Brooks from inside the Berkshire exhibition center this weekend.
“So we’re pretty confident, cautiously, that running is going to be fine through this,” Weber added. “But I don’t think anyone knows. Retail is really hard to judge for fall. We think the consumers— their employment is good. You know, households are still in good, healthy shape. So I’m optimistic. But hard to know.”
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
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