ALL BUSINESS: Buffett says economic and credit woes linger

That, however, glosses over some land mines in the report -which Merrill Lynch chief North American economist David Rosenberg says are indicative of a "recession beneath the veneer." He points to the 0.4 percent annual decline in real final sales of domestic purchasers, which is considered a solid measure of economic health since it is essentially real GDP without inventories or net foreign trade. It dropped from a 1.3 percent annual growth rate in the fourth quarter and a 2.5 percent pace in the third quarter of last year.

The latest figures on the job market released Friday also came in above expectations. Instead of falling by 75,000 as economists had estimated, payroll employment dropped just 20,000, according to the Labor Department. The unemployment rate fell to 5 percent from 5.1 percent.

But as economists at Goldman Sachs point out, that is hardly good news for an economy that needs at least 125,000 new jobs per month to keep pace with labor force growth. It warned clients in a new report to dig beneath the "not-so-dire headline data" to find out where the continued contraction in the housing market is eating away at the economy.

"We are suspicious of the idea that the economy and markets have entered a fundamental healing process," Goldman Sachs chief economist Jan Hatzius said. "In our view, the most important prerequisite for an end to the macroeconomic malaise is an end to the home price downturn, and the news in this area has been not just bad but considerably worse than even we have anticipated."

That echoed warnings from CreditSights, which told its clients to keep watch for any new signs of "systematic risk" that could result in a "second wave of the financial tsunami."

While subprime loans -those to borrowers with risky credit profiles -were what fed the first leg of this mess, the next could be caused by a deterioration in prime lending. CreditSights advises to keep tabs on prime default rates, especially on those tied to second homes. In addition, patterns in consumer consumption and indebtedness should be closely watched.

Clearly, others are sounding the same warnings as Buffett. But his often are the ones that are heard.

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Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org