Warren Buffett says the pandemic has had “extraordinarily uneven” results and isn’t over but

Warren Buffett at the Berkshire Hathaway Annual Meeting in Los Angeles, California. 05/01/2021.

Gerard Miller | CNBC

Legendary investor Warren Buffett said the economic fallout from the pandemic is hitting small businesses disproportionately and the unpredictability of Covid-19 is far from over.

“The economic impact has been so extremely uneven, where … many hundreds of thousands or millions of small businesses have been badly hurt, but most large companies have done mostly well,” said Berkshire Hathaway CEO during an interview with Becky Quick on CNBC- Special “Buffett & Munger: A Wealth of Wisdom” which aired on Tuesday.

In March 2020, the pandemic dragged a deadly swath across America, resulting in the shutdown of a $ 20 trillion economy in full swing. Thousands of small businesses had to close their doors while large retailers and e-commerce giants took on these customers. Gross domestic product fell 31.4% in the first quarter of last year, which was unprecedented in America after the Great Depression.

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

Covid ensured “fabulous success”

For some companies, such as car dealers, the pandemic has even brought unexpected profits, said Charlie Munger, Berkshire vice chairman and Buffett’s longtime business partner.

“It has not only brought about a return to normal, but a fabulous success that they did not expect,” said Munger. “The car dealers are creating money that they would not have had without the pandemic.”

Due to factory closures and a global semiconductor shortage, automakers and dealers have made bigger, if not record, profits and even sales of vehicles before they get to dealerships.

Berkshire Hathaway Automotive is one of the largest dealer groups in America with over 78 independently operated dealers. The conglomerate also owns the BNSF Railway and NetJets, a privately held corporate jet charter and aircraft management company.

“All of the dealerships that we have partners in every dealership have very sincerely believed that they would have one hell of a problem in March and April,” said Buffett. “Some might want government support, but we didn’t let them because they had wealthy parents … we didn’t know what would happen to NetJets in terms of demand.”

The greatest lesson

Buffett said the biggest lesson he learned from the unprecedented pandemic was how ill-prepared the world can be for emergency situations that are about to arise.

“I’ve learned that people don’t know as much as they think. But the most important thing to learn is that the pandemic was bound to happen, and this isn’t the worst one can imagine, “Buffett said. “Society is having a terrible time preparing for things that are distant but possible and sooner or later will happen.”

More than 600,000 people have died of Covid in the U.S. and countries are grappling with new varieties of vaccine adoption. 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 US, the prevalence of the strain doubles roughly every two weeks.

“There will be another pandemic, we know that. We know there is a nuclear, chemical, biological and now cyber threat. Each of them has terrible possibilities, ”said Buffett. “And we’re doing a few things about it, but … it’s just not something that society can’t handle very well.”

A steady increase in widespread cyberattacks this year has directly impacted Americans, hampering logistics and services in the United States. In May, a ransomware attack on the Colonial Pipeline forced the US company to shut down a pipeline roughly 5,500 miles long.

“Charlie and I have been ungodly lucky in many ways. But the greatest happiness was being here at this time and in this place, ”Buffett said. “How do we actually do this so that in 50 and 100 and 200 years mankind can enjoy the incredibly better life that can be enjoyed without screwing it up?”

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