By Krishna Guha in Washington
Published: March 4 2008 02:00 | Last updated: March 4 2008 02:00
The US is in recession by "any common sense definition" of the word, billionaire investor Warren Buffett said yesterday, as the US dollar fell to an all-time low against the euro and oil surged to a fresh high.
Mr Buffett told CNBC that while the US might not have met the formal tests of recession, "most people's situation - certainly their net worth - has been heading south for a while now".
Meanwhile, Alan Greenspan, the former Federal Reserve chairman, told the Financial Times that "the rate of growth in economic activity is effectively zero".
Their comments came as gold and oil hit record highs and the dollar suffered early losses, before all three moderated on profit-taking.
The dollar touched $1.5275 to the euro and fell to a three-year low against the yen of Y102.62 before rebounding later as investors found some comfort in slightly better-than-expected US manufacturing data.
Jean-Claude Trichet, ECB president, signalled rising European concern about the euro's strength by reiterating the US's interest in a strong dollar. His comments in Brussels echoed similar verbal intervention by him last year as the euro pushed through the $1.40 barrier.
Mr Buffett said stocks were "not cheap". He said the financial markets were experiencing "waves of deleveraging" and warned the dollar would continue to decline. He said Ben Bernanke, the Fed chairman, had a difficult task balancing the risks to growth and inflation, but said "it is nothing like 1973, 1974 yet".
While several other highprofile figures also argue that the US is now in recession, the economic debate remains open.
The hard economic data suggest the US economy stalled in December and January - neither expanding nor shrinking.
Mr Greenspan said he was still not prepared to call a recession, although he said "the probability that we will experience some negative growth is better than 50:50". He said he would define a recession as "the onset of a significant set of discontinuities" in an economy.
"We are beginning to see signs of that in the US, but it is not yet fully conclusive," he said.
The price of oil, meanwhile, reached $103.95 a barrel, exceeding the 1980 inflation-adjusted record high, according to some measures.
Gold, seen as a haven and a hedge against inflation, rose as high as $989.30 an ounce.
Copyright The Financial Times Limited 2008