WARREN BUFFETT: Well, my experience is that they, they, they really, the business has reasonable equity, reasonable prospects. Now, you, if you want to start a business and have no equity, you can try and borrow the whole thing, you shouldn't get the money. I mean, it, it, so, a lot of dumb loans were made three, four, and five years ago. And not only in real estate, but, but in, commercial businesses.
But the banks I know are dying to get the money out. Right now, there's over a trillion dollars of the banks, and they only have deposits of $7 or $8 trillion, there's over a trillion dollars on deposit with the Federal Reserve, earning a quarter of one percent. You go broke with a bank earning a quarter of one percent on your money, even if it doesn't cost you anything. Your operating expenses will eat up. So, you want to get it out in loans. And, there is, there is, there is money available.
BECKY QUICK: So, how are small businesses faring right now, if you had to look overall? Obviously, everyone's in a different position. But overall, how do you think they're doing?
BUFFETT: I think they're doing about like the economy is. That they, they've been through, a terrible period. And I know some in Omaha, and Omaha hasn't been as hard hit as many others, but all businesses went through a terrible period. And, and basically, the government did the right thing in terms of getting the economy going again. It can't do it overnight or anything of the sort. I think most small businesses have come back somewhat. But they've, they, they're nowhere near their peaks.
BECKY: The NBER said this week that the recession officially ended back in June of last year.
BUFFETT: Well, they define it differently. (Laughs.) But I, I mean, I define it, I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any, on any common sense definition, the average American is below where he was before, or his family, in terms of real income, GDP. We're still in a recession. And, and we're not gonna be out of it for awhile, but we will get out of it.
BECKY: We're not gonna be out of it for awhile meaning, you can see what? A quarter, two quarters, a year down the road? Just from your businesses are telling you?
BUFFETT: Our businesses are coming back, on average, we've got 70-some businesses. But most of them, the great majority are coming back slowly. If you take our railroad business (Burlington Northern Santa Fe), and our railroad business is typical of the other railroads in the company. If you take the peak period for shipments and then you go all the way down to the bottom, we're 61 percent of the way back up. That's better, I think, than most businesses are in the country. I don't think most businesses are 61 percent, our carpet business, our brick business, our insulation business, they're not back 61 percent, but they are moving back.
BECKY: What about from an employment perspective. We still have nine and a half percent unemployment in the country. What are your businesses doing right now in terms of hiring?
BUFFETT: Adding, very few people. But the, the, the railroad will have added a fair number of people, because if you've come back 61 percent, you've come back a fair amount unemployment. But if you take our carpet business, it fell from 13 million yards a week, we'll say, to seven million yards a week. And with that cost 6,500 jobs. We're back up to maybe nine million yards a week. But we haven't had to add yet. If we get to ten million, we'll start adding people. But it, it's lagging and it'll continue to lag.
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