Feel better yet?
Last week, we learned that the recession had ended, and on Tuesday, Warren Buffett doubled down on America. They're two signs that better days are ahead.
The worst may not be over for the economy — just review the unemployment rate and consumer confidence — but for a while, Buffett is changing the narrative.
The world's most respected investor isn't merely bargain hunting in Fort Worth. In spending $34 billion for Burlington Northern Santa Fe, he says he's putting his money on the capital of capitalism.
"It's an all-in wager on the economic future of the United States," Buffett said.
He elaborated on the theme during an interview on CNBC.
"I believe this country will prosper, and you'll have more people, moving more goods — 10, 20, 30 years from now, and the rails should benefit," he said.
It's inspiring that Buffett, who'll be 80 next year, continues to take the long view. And it should be instructive for investors, who've been flocking to bonds and hoarding cash while Buffett has been touting equities for the past year.
That's how he became the world's second-richest man — by investing when others are fearful.
But investment strategies are on the back burner for a lot of people today. They're worried about the short term: landing a job, getting a raise or just surviving the next six months.
They may take some comfort in Buffett's long-range faith in the U.S. economy. They may be glad to have heard last week that the gross domestic product grew 3.5 percent in the third quarter. That's the first growth spurt in more than a year, which technically means that the long recession has ended.
But until companies start hiring and paychecks get a bump, it won't feel like recovery in America.
Millions have lost jobs and taken pay cuts, and many are struggling to pay mortgages and credit card bills. Buffett's big buyout has no effect on them at all.
Nationwide, the unemployment rate hit 9.8 percent in September, the highest level in 26 years. Most economists believe the number will rise and remain high for a while. Texas, which has weathered the downturn better than most states, lost 44,700 jobs in September and had an unemployment rate of 8.2 percent. The Fort Worth-Arlington area, traditionally a job-generating machine, had 10,400 fewer jobs than a year ago.
Growth in jobs and wages is crucial to confidence, and confidence drives consumer spending, which accounts for two-thirds of the economy. No surprise that consumer confidence remains low. It was worse nine months ago, and after recovering in the summer, it has fallen again.
In October, the Conference Board's Present Situation Index, which measures the current view of the economy, was the lowest since February 1983. According to the board’s survey, 47 percent of people described business conditions as "bad," while just 7.7 percent said they were "good."
More and more consumers also have a negative outlook on the job market. And they "remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays," said Lynn Franco, director of the Conference Board’s Consumer Research Center.
In the Texas region, the labor market remained weak and slow retail sales were tracking national trends, according to the Federal Reserve’s Beige Book, released two weeks ago. Even value-based retailers noted "unexpected weakness," the report said.
Berkshire Hathaway's biggest businesses, insurance and utilities, tend to be more recession-resistant. But Buffett said that most of Berkshire's other companies are still feeling "severe effects," although they’re stabilizing.
BNSF has been hurt by the recession, but Buffett is looking down the road and banking on American ingenuity to revive rail shipments. Somehow, the U.S. will solve its problems, he said, and the economy will come back.
Last week's GDP numbers didn't help perception much, in part because investors worry that government spending produced the rise. If that continues, deep deficits will follow, and higher taxes may be inevitable.
Buffett, who has said that the rich don’t pay enough in taxes, doesn't seem concerned.
On CNBC, he said that he’d been successful in the 1960s, when the top personal income tax rate was 70 percent, when capital gains were taxed at almost 40 percent, and when corporate taxes were 52 percent.
"People paid a lot higher taxes in the past, and the economy has done just fine," he said.
In the early 1980s, Japan and Germany were the darlings of the global economy, and people imagined that everyone would be working service jobs here, he said. Instead, tens of millions of good jobs were created, and businesses like software and aerospace emerged as major industries.
"Our system works," Buffett said. "It unleashes human potential."
BNSF is an example of how a company and an industry keep improving. In the past decade, rail became increasingly efficient in moving coal to electric plants and transporting consumer goods from the West Coast.
Buffett said he didn't notice the significant gains for about five years.
It's an impressive record: From 2000 to 2008, BNSF doubled its revenue and doubled its net income. Over the same time, the work force grew just 1 percent.
That makes for a great investment, but it doesn’t dent the employment problem.