Legendary investor Warren Buffett said the economic consequences of the pandemic are falling disproportionately on small businesses and the unpredictability of Covid-19 is far from over.<\/p>\n
"The economic impact has been this extremely uneven thing where… many hundreds of thousands or millions of small businesses have been hurt in a terrible way, but most of the big companies have overwhelmingly have done fine," the Berkshire Hathaway CEO said during an interview with Becky Quick on CNBC's special "Buffett & Munger: A Wealth of Wisdom," which aired on Tuesday.<\/p>\n
In March 2020, the pandemic cut a deadly swath across America, which led to a shutdown of a $20 trillion economy in full swing. Thousands of small businesses were forced to close their doors while big-box retailers and e-commerce giants took in those customers. Gross domestic product for the first quarter last year dropped 31.4%, which was unprecedented in post-Great Depression America.<\/p>\n
"It's not over," the 90-year-old investor said. "I mean, in terms of the unpredictability…it's been very unpredictable, but it's worked out better than people anticipated for most people and most businesses. And it's just, for no fault of their own, it's just decimated all kinds of people and their hopes."<\/p>\n
For some businesses like auto dealers, the pandemic even brought on windfall profits, said Charlie Munger, vice chairman of\u00a0Berkshire and Buffett's longtime business partner.<\/p>\n
"It didn't create just a return to normal; it created fabulous success they didn't anticipate," Munger said. "The auto dealers are coining money that they wouldn't have had except for the pandemic."<\/p>\n
Due to factory shutdowns and a global shortage of semiconductors, automakers and dealers have experienced wider, if not record, profits and even selling vehicles before they arrive at dealerships.<\/p>\n
Berkshire Hathaway Automotive\u00a0is one of the largest\u00a0dealership\u00a0groups in America, with over 78 independently operated\u00a0dealerships. The conglomerate also owns the BNSF Railway and NetJets, a private business jet charter and aircraft management company.<\/p>\n
"All of the dealers that we have partners in each dealership, they very sincerely felt that they were gonna have one hell of a problem in March and April," Buffett said. "Some might have wanted to go in for the assistance from the government, but we wouldn't let them, because they had a rich parent … we didn't know what was gonna happen with NetJets in terms of the demand."<\/p>\n
Buffett said the biggest lesson he learned from the unprecedented pandemic is how ill-prepared the world can be for emergency situations that are bound to happen.<\/p>\n
"I learned that people don't know as much as they think they know. But the biggest thing you learn is that the pandemic was bound to occur, and this isn't the worst one that's imaginable at all," Buffett said. "Society has a terrible time preparing for things that are remote but are possible and will occur sooner or later."<\/p>\n
More than 600,000 people have died of Covid in the U.S., and countries are grappling with new variants amid vaccine rollouts. The delta variant, now in at least 92 countries, including the United States, is expected to become the dominant variant of the disease worldwide. In the U.S., the prevalence of the strain is doubling about every two weeks.<\/p>\n
"There'll be another pandemic, we know that. We know there's a nuclear, chemical, biological, and now cyber threat. Each one of those has terrible possibilities," Buffett said.\u00a0"And we do some things about it, but … it's just not something that society seems particularly capable in fully coming to grips with."<\/p>\n
A steady uptick in sweeping cyberattacks this year has directly impacted Americans and hampered logistics and services in the United States. In May, a ransomware attack on Colonial Pipeline forced the U.S. company to shut down approximately 5,500 miles of pipeline.<\/p>\n
"Charlie and I have been ungodly lucky in many ways. But the luckiest thing was actually being around at this time and place," Buffett said. "How do we actually do this so that mankind, 50 and 100 and 200 years from now, should enjoy the incredibly better life that could be enjoyed while not screwing it up?"<\/p>\n