Associated Press

OMAHA, Nebraska (AP) -- Billionaire Warren Buffett said Monday the U.S. economy has begun to show real strength over the last couple months, and consumers who can afford to are spending more.

Buffett conducted a couple television interviews Monday after the weekend's Berkshire Hathaway shareholder meeting. About 37,000 people attended Saturday's meeting to hear Buffett and his business partner Charlie Munger answer questions.

Buffett, Berkshire's chairman and CEO, said he has seen the most strength in his company's businesses that supply other companies like Iscar tool making and MiTek electronics.

"The best jobs program in the world is demand, and demand is coming back," Buffett said on CNBC.

Berkshire's retail businesses, like Fruit of the Loom and The Pampered Chef, haven't picked up as much as its manufacturing ones. But Buffett said luxury goods sales have improved some, and over the past week, the Nebraska Furniture Mart sold $35 million worth of goods during the annual shareholder discount period.

"Consumers, the ones that can handle it, like to spend," Buffett said.

Berkshire owns clothing, insurance, furniture, utility, jewelry and corporate jet companies, which give Buffett insight into the health of the overall economy. Berkshire also has big investments in companies including Coca-Cola Co. and Wells Fargo & Co.

Buffett also reiterated comments he made over the weekend in support of Goldman Sachs. Buffett says he still feels good about the investment bank Berkshire invested $5 billion in nearly two years ago, and he doesn't see evidence of fraud in the government's lawsuit against Goldman.

The government has charged that Goldman misled investors about a deal involving complex mortgage-related investments that later plunged in value because it failed to disclose important information. Buffett said he's studied the charges against the investment bank and has no problem with the transaction.

Buffett said he has done business with Goldman regularly over the past 44 years, and he has confidence in the firm and its CEO Lloyd Blankfein.

"I'd rather have him running it than anybody else," Buffett said.

But Buffett told the Fox Business Network that he wouldn't be willing to play an active role at Goldman by serving on the investment bank's board because he's busy enough with Berkshire Hathaway.

"Not too long ago, I was a director of five, and it just takes too much time away from Berkshire, which is my first love," Buffett said.

After Buffett's comments, Goldman shares gained $4.85, or more than 3 percent, to $150.05 in afternoon trading Monday. But Goldman's stock is remains nearly 20 percent lower than it was before the SEC filed its lawsuit on April 16.

Munger, Berkshire's vice chairman, and Bill Gates, who serves on Berkshire's board, joined Buffett for the Fox Business interview. The men discussed the financial overhaul package working through Congress and the possibility of government regulations of derivatives.

Buffett said there are legitimate business uses for derivative contracts, and he has entered into about 250 of them at Berkshire over the past couple years. But he said Congress should restrict the riskier ones that promote casino-like gambling on things like the way the stock market moves. Derivatives are complex investments that have been blamed in part for the 2008 financial crisis and the recession.

Banks lost billions of dollars on derivatives, and that and the recession led the government to bail out hundreds of financial companies.

"I can say that socially, derivatives have the potential for being financial weapons of mass destruction and they've proven it, but they exist as securities and if they're mispriced, we buy them. I have no problem with that at all," Buffett said.

Munger is more critical of derivatives than Buffett because of the risks and troubles and phony accounting they create.

"I don't think this massive derivative trading, net, has a social advantage to our civilization," Munger said.

Buffett said he doesn't believe Congress will be able to eliminate companies that are "too big to fail" in the financial overhaul because of the interconnected transactions that take place between large institutions in American society.

"I would like to make it too painful to fail for the people who run these places," Buffett said. "And the CEOs of the places that turned out to be too big to fail and their boards -- none of them have really gotten killed by what's happened. The shareholders have gotten killed."


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