What Warren Buffett’s Major Stock Moves Mean About US Economy

Kent Sievers / shutterstock.com
Kent Sievers / shutterstock.com

Anyone with even a modicum of sense knows that to fully understand any given subject, the experts must be consulted. And what this “expert” says about the economy should speak volumes about where this nation is headed.

Enter Warren Buffett, a man known as one of the “greatest investors of all time,” according to Newsweek.

As such, you would imagine that when he does something, really anything, with his stock, there is good reason. And plenty of people wisely pay attention.

So what has he recently done that should warn us all?

Well, as Johns Hopkins University Professor of Applied Economics Steve H. Hanke (another expert in the field) points out, Buffett’s Berkshire Hathaway firm has officially sold off a whopping $28.7 billion in stock as of the end of the third quarter of 2023.

For Hanke, this is a major sign that Buffett is preparing for a severe decline in the economy.

As Hanke told Newsweek, more specifically, it means “a recession is right around the corner.”

The professor noted that the cause of Buffett’s recent stock moves is likely due to the very simple and staggering fact that the Federal Reserve has “contracted” the US “money supply” by as much as 3.3 percent since July of 2022.

Now, as just about everyone knows, July 2022 was when it became abundantly clear to the then-in-charge political left and Biden White House that the runaway inflation this administration has become known for was not doing the Democratic Party or their chances of a good 2022 midterm campaign season any favors.

And so the Federal Reserve did what it could to curb some of that inflation, hoping to save face a bit.

But, as you also know, their haste to do so has led to no small number of other economic problems. And as both Hanke and history attest to, they all lead to recession.

“The current monetary contraction is clearly going to lead to precisely what monetary contractions always lead to: A recession.”

And those like Buffett would only have to look at history to know that.

Hanke noted for time periods when US money supplies were contracted, 1920-21, 1929-33, 1937-38, and 1948-49. And each time this happened, a severe recession immediately followed.

Beginning in 1920, the US faced a severe post-World War I depression, with unemployment rates exploding.

The most notable period, 1929-33, as most of us know, saw us through the Great Depression, aptly named for a time of severe economic downturn and a whopping 25 percent unemployment rate.

Now, many would say this is when President Franklin D. Roosevelt and his New Deal shone, bringing us out of that into prosperity. Then again, it was only a mere five years later, in 1938, that the US saw another economic downturn, and unemployment once again surged to almost 20 percent.

Last but not least, 1949 also saw the US struggle financially, with unemployment again on the rise.

And as I already mentioned, each year of hardship was prefaced with a monetary contraction by the US government.

As Hanke said, “With the Fed putting the money supply in a nosedive the likes that we haven’t seen since 1933, Buffett is correctly anticipating that troubled economic waters are in the offing.”

Naturally, this should also mean that we begin anticipating such hard times ahead. Then again, with inflation having been on the rise for a while and the economy seemingly in the dumps despite what the White House claims, none of this should be any real surprise.

Let’s just hope that new leadership is soon installed and ones that can turn our economy around for the better.