Warren Buffett says the pandemic has had a ‘very uneven’ impact and isn’t over yet

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Warren Buffett at Berkshire Hathaway’s annual meeting in Los Angeles, California. May 1, 2021.

Gerard Miller | CNBC

Legendary investor Warren Buffett said the economic consequences of the pandemic are falling disproportionately on small businesses and that the unpredictability of Covid-19 is far from over.

The CEO of Berkshire Hathaway said during this period: “The economic impact has been this very uneven thing where … hundreds of thousands or millions of small businesses have been affected in a terrible way, but most of the big ones have been doing well.” Interview with Becky Quick on CNBC’s “Buffett & Munger: A Wealth of Wisdom,” which aired Tuesday.

In March 2020, the pandemic cut a killer swath across America, shutting down a $20 trillion economy in full swing. Thousands of small businesses were forced to close their doors while large retailers and e-commerce giants took in these customers. GDP for the first quarter of last year fell by 31.4%, which is unprecedented in America’s post-Great Depression.

“It’s not over,” said the 90-year-old investor. “I mean, in terms of unpredictability… it was very unexpected, but it worked out better than expected for most people and most companies. And it just, through no fault of their own, decimated all kinds of people and their hopes.”

Covid is a huge success

For some companies such as car dealers, the pandemic has brought windfall profits, said Charlie Munger, a Berkshire vice president and longtime business partner of Buffett.

“Not only did it create a comeback to normal, it was an incredible success that they didn’t expect,” Munger said. “Car dealers spend money they only had the epidemic.”

Due to factory closures and a global shortage of semiconductors, automakers and dealers have seen profits expanded, if not registered, and even selling vehicles before they reach dealerships.

Berkshire Hathaway Automotive is one of the largest dealership groups in America, with more than 78 dealerships operating independently. The group also owns the BNSF Railroad and NetJets, a private business jet charter and aircraft management company.

“All of the dealers we have partners with at every agency, they honestly felt like they were going to have a hell of a problem in March and April,” Buffett said. “Maybe some wanted to go get help from the government, but we wouldn’t let them, because they had a rich father… We didn’t know what was going to happen with NetJets in terms of demand.”

Biggest lesson

Buffett said the biggest lesson he’s learned from the unprecedented pandemic is how poorly the world is prepared for emergencies that are bound to happen.

“I’ve learned that people don’t know as much as they think they know,” Buffett said. “But the most important thing you learn is that a pandemic was bound to happen, and it’s not the worst that could ever be imagined.” “Society has a terrible time preparing for things that are remote but possible and will happen sooner or later.”

More than 600,000 people have died from Covid in the United States, and countries are grappling with new variables amid the release of vaccines. The delta variant, now present in at least 92 countries, including the United States, is expected to become the dominant variant of the disease worldwide. In the United States, the strain’s prevalence doubles approximately every two weeks.

“There’s going to be another pandemic, we know that,” Buffett said. “We know there’s a nuclear, chemical, biological and now cyber threat. Every one of those has terrible prospects.” “And we do some things about it, but … it’s not something that society seems particularly capable of fully handling.”

The steady increase in sweeping cyber attacks this year has directly affected Americans and impeded logistics and services in the United States. In May, a ransomware attack on Colonial Pipeline forced the US company to shut down nearly 5,500 miles of pipeline.

“Charlie and I have been lucky in many ways,” Buffett said. “But the most fortunate thing is being in this time and place.” “How do we actually do this so that the human race, 50, 100, 200 years from now, will have an incredibly better life that can be enjoyed without spoiling it?”

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