Economy in Recession, Buffett Says

San Bernardino business writer Matt Wrye has a blog called The Bizz where he writes about Inland Empire business issues.

Wrye had a post yesterday about billionaire investor Warren Buffet comments that the U.S. economy is in recession. Buffett also said that the recession is going to be longer and deeper than people are expecting right now.

So, with California already facing a projected budget deficit of over $15 billion, and cities across the state, including Claremont, having similar budget problems, elected officials are having to deal with a sea of red with no prospect for relief in the immediate future.

At the state level, Governor Arnold Schwarzenegger is proposing to borrow against California Lottery revenues while simultaneously cutting back on health and social services. Here in Claremont, the Claremont City Council and its various commissions and committees continues to spend like drunken sailors as City Manager Jeff Parker wrestles with a possible loss of $3.5 million or more in sales tax and state money. Claremont receives approximately 57% of its sales tax revenue from the Claremont Auto Center, whose sales are down because of the rise in gas prices and the downturn in the economy.

And other local businesses are suffering as well. PFF Bancorp (NYSE: PFB) has continued to plummet in value, going from a peak market capitalization of over $900 million to $30.31 million as of Friday's market close. PFF's fall has been tied to the housing market's problems and to loans made to home builders.

If Warren Buffett is correct, then we all have some more belt-tightening to do before things improve.