Billionaire investor Warren Buffett said he believes the Federal Reserve won't be in any hurry to increase interest rates—in part because of the softer U.S. economy at the start of the year, but more so due to what's going on in European bond markets.
As for the aggravating factor of weaker economic growth, Buffett said he does see some bright spots. "Things like autos are very strong; things like housing are a little better." He continued, "In our rail car holdings, you see that it isn't that strong but on the other hand it's not going backwards at all."
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The government on Wednesday reported that first-quarter gross domestic product grew at a lower-than-expected 0.2 percent. The economy grew 2.2 percent in the fourth quarter and 5 percent in the third quarter of 2014.
Many economists are expecting a pickup in growth in the second half of the year, and even the Fed in its policy statement after its April meeting on Wednesday downplayed the GDP print for the first three months of the year.
In fact, according to an analysis by CNBC earlier this month, three decades of government GDP data suggests a longstanding trend of lackluster first-quarter growth. It's unclear what's caused the trend, but Buffett said, "You wonder about seasonal adjustments."
But all things considered, the U.S. is "doing well," even under a longer-term growth rate of around 2 percent, he argued. "We might like to see more growth … [but] 1 percent inflation means that in a generation things improved 20 percent per capita, and that's another $10,000 of GDP per capita in one generation. That's fabulous."
Whether it's the U.S. economy or negative yields in Europe or some other factor, Wall Street continues to play the guessing-game over when the Fed might raise rates for the first time in nearly 10 years. The Fed policy statement also removed all calendar guidance. Earlier this year, June was favored by economists as the likely start. But now, September has emerged as the best bet for liftoff.
Buffett will be presiding over Berkshire Hathaway's annual meeting Saturday in Omaha, Nebraska. The 50th anniversary celebration of the company is expected to draw a larger than usual crowd of 40,000 people.