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Berkshire Hathaway Chairman and CEO Warren Buffett says the U.S. housing slump has been a drag on his company's earnings.

Billionaire investor Warren Buffett says he's concerned about "stagflation," or slowing in the U.S. economy while inflation accelerates.

"We're right in the middle of it right now," said Buffett, chairman of Berkshire Hathaway Inc., based in Omaha, Neb., in an interview Wednesday on Bloomberg Television. "I think the 'flation' part will heat up, and I think the 'stag' part will get worse."

Buffett, the world's richest person, runs a company with a $72 billion stock portfolio and businesses ranging from candy to corporate jet leasing and insurance. He's said the U.S. housing slump has been a drag on Berkshire's earnings, adding Wednesday he's unsure when the economy will recover.

"It's not going to be tomorrow, it's not going to be next month and may not even be next year," said Buffett, 77.

The U.S. economy will expand 1.4 percent in 2008, the weakest performance since 2001, according to a survey by Bloomberg. The Federal Reserve on Wednesday left its benchmark interest rate at 2 percent, saying "uncertainty about the inflation outlook remains high." Consumer prices rose 4.2 percent in the 12 months ended in May, the fastest pace since January.

Federal regulators may not need to step in to help Lehman Brothers Holdings Inc., the securities firm that lost about 62 percent of its market value this year, Buffett said.

"The fact that they intervened on Bear Stearns prevents them from needing to intervene on other large investment banks," Buffett said. "The very act of the fire engine showing up when there was a fire means that other fires won't break out in this particular case."

The second-largest underwriter of mortgage debt last year, Bear Stearns Cos. sold itself after an exodus of clients and lenders threatened to plunge the company into bankruptcy. New York-based JPMorgan Chase & Co. agreed in March to buy Bear Stearns with backing from the Fed.

Buffett also praised Barack Obama, the Democratic senator from Illinois running for president against Republican John McCain, an Arizona senator.

Obama "will have more concern for the people who don't get the lucky breaks in life like I've gotten," said Buffett, ranked the richest man by Forbes magazine.

Buffett spoke before a scheduled lunch with two money managers who paid $650,100 last year for the privilege. The money goes to San Francisco's Glide Foundation, which provides food, medical care and other services to the poor.

The foundation "takes people who have hit bottom and brings them back," said Buffett.

The ninth-annual auction for lunch with Buffett began June 22 on eBay Inc. and runs through June 27. The high bid so far is $77,100.