Buffett adds to bullish U.S. economic recovery signals

Sat Feb 25, 2012 6:08pm EST
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By Ben Berkowitz

(Reuters) - Anyone looking for more evidence of a strengthening U.S. economic recovery need only consider conglomerate Berkshire Hathaway (BRKa.N: Quote), where businesses ranging from railroads and electric utilities to furniture and candy stores are racking up record profits.

Even though Berkshire's Warren Buffett says with emphasis that the housing market is still in a depression, he was as upbeat as ever this weekend on the rest of the dozens of businesses he owns.

"Though housing-related businesses remain in the emergency room, most other businesses have left the hospital with their health fully restored," Buffett said on Saturday in his closely watched annual letter to shareholders.

Berkshire's five largest non-insurance businesses, all of them industrial in some way, posted record profits last year and should do the same this year, he said, surpassing $10 billion in combined earnings.

That being the case, Berkshire broke its own records for capital spending in 2011 by a wide margin and expects to do so again in 2012 - almost all of it domestically, even with the company's global footprint.

"About 95 percent of these outlays were made in the U.S., a fact that may surprise those who believe our country lacks investment opportunities. We welcome projects abroad, but expect the overwhelming majority of Berkshire's future capital commitments to be in America."

There are other big investments on tap, too. Buffett said his home-furnishings retailer, Nebraska Furniture Mart, bought a 433-acre (175-hectare) parcel north of Dallas and will construct what it expects to be the highest volume store of its kind anywhere. He also forecast billions of dollars in spending on solar and wind energy projects.

Investors who have been with Buffett over the long term expected his optimism.   Continued...