updated 6/25/2008 3:49:27 PM ET 2008-06-25T19:49:27

Billionaire investor Warren Buffett has already said he thinks the U.S. economy is in a recession, and now he says the economy is getting worse.

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Buffett told CNBC in a live interview that all the data he sees from Berkshire Hathaway Inc. subsidiaries shows the economy weakening.

"Everything connected with construction and with consumer, I see weakness, and if anything, it's accentuating a little bit."

Buffett also said he thinks inflation is picking up, especially in steel and oil, so it should be a concern for the Federal Reserve.

But Buffett said he would be surprised if the Federal Reserve were to announce a rate cut Wednesday afternoon.

"I think the Fed has to be careful not to do anything that signals that they regard inflation as a secondary goal and something they'll worry about later," he said.

Buffett also said he believes supply and demand, not market speculation, is what's driving oil prices to new heights.

Oil futures fell Wednesday after the Energy Department said the United States' stockpiles of fuel and oil were larger than expected last week, but prices remain above $130 a barrel.

Buffett said he disagrees with the idea that speculation was driving oil prices higher. At least nine bills proposing limits on that oil speculation have been introduced in Congress in recent weeks.

"In my adult lifetime, up until the last year or two, there's been a huge amount of excess supply available," Buffett said. "We don't have excess capacity in the world anymore, and that's why you're seeing these oil prices."

Buffett declined to take a position on the proposed takeover of Anheuser-Busch even though Buffett's company owns 35.6 million shares of Anheuser stock.

But Buffett also said he hasn't talked to Anheuser management or anyone else about the deal, despite media reports that he had.

Berkshire's holdings represent 5 percent of Anheuser's outstanding shares, so Buffett's company has a significant stake in Belgian brewer InBev SA's proposed takeover of Anheuser.

InBev offered to pay $65 per share, or about $46 billion, for Anheuser on June 11. But Anheuser has not formally responded yet.

Buffett was in New York to dine with the winners of a charity auction. Every year Buffett auctions off a lunch and donates the proceeds to the Glide Foundation, which provides social services to the poor and homeless in San Francisco.

The two investors Buffett was dining with Wednesday paid $650,100 last year for the chance to have lunch with the chairman and CEO of Berkshire Hathaway Inc.

A new lunch auction began Sunday and runs through Friday. The top bid on eBay Wednesday morning was $77,100, but that is almost certain to grow before the auction ends.

Berkshire Hathaway owns a variety of companies, including insurance, clothing, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

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