Warren Buffett to CNBC: U.S. Economy in Recession By "Common Sense Definition"

Dave Grogan

In a series of exclusive live appearances on CNBC's Squawk Box this morning, Warren Buffett told us that by a "common sense definition", the U.S. economy is already in a recession, even if it hasn't met the technical definition of two consecutive quarters of negative growth.

He's been saying for several months that the U.S. could easily fall into a recession.

CNBC has scheduled a one-hour special program on Buffett's unprecedented Squawk Box appearences.

It's called Warren Buffett - The Billionaire Next Door: Face to Face. It will be hosted by Becky Quick and airs tonight, Monday, March 3 at 9pm ET.

He restated, however, his view that over the long-run the U.S. economy will do fine and that each generation will live better than the one before it. Buffett also said current conditions are "nothing like" the downturn of 1973 and 1974, although he can't rule out the possibility that things will get worse.

Buffett noted that Federal Reserve Chairman Ben Bernanke has a tough "balancing act" and risks reigniting inflation with a series of rate cuts by the central bank.

Buffett also told CNBC's Becky Quick that while stocks are "not cheap" now, they're not extreme, either. He says he's waiting for when stocks become "very cheap." He does, however, "find more things to look at now than I did six months or a year ago." The best opportunities he sees right now are in bonds rather than stocks.

Buffett says his offer to guarantee $800 billion dollars in municipal bonds now backed by Ambac , MBIA and FGIC is "not on the table" any longer. "We tossed our hat into the ring, and they tossed it right back."

The big bond insurers soundly rejected the offer Buffett made first made public last month on Squawk Box, saying their prospects would be severly damaged if Buffett took over the relatively solid muni bond guarantees, while not also backing the other very risky investments that threaten the bond insurers' financial footing. Berkshire created its own bond insurance subsidiary late last year.

In response to an email question about why his annual letter to shareholders doesn't mention the bond insurance business, Buffett said he had already written the letter before getting into bond insurance. He expects to have something to say about it at Berkshire's annual meeting in early May.

In his letter to Berkshire shareholders on Friday, Buffett said he had identified four people who could take over making Berkshire's investment decisions, should he reluctantly give up that role.

Today he told Becky that none of those candidates are female, in part because not many women expressed interest in the job. Buffett's current role will be broken apart when he leaves Berkshire. The company had already identified candidates for Buffett's CEO role.

Buffett predicted that while agricultural commodities may not continue to rise, the price of oil will probably go higher because he sees supply as essentially finite while consumption continually grows. While alternative energy efforts will help, he says they are not the "big answer."

Buffett also repeated his long-held view that the U.S. dollar will continue to get weaker for as long as the nation maintains a large current account deficit.

In response to a question from Joe Kernen about why he bought stakes in the drug companies Glaxo and Sanofi-Aventis , Buffett said pharmaceuticals are one area where he doesn't usually try to predict how individual companies will do in the future. He acknowledged that he might end up with a stake in a domestic drug company, especially since they make a lot of their money overseas, getting a boost from the weak U.S. dollar.

Berkshire Hathaway current price:

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