OMAHA, Neb. – Billionaire Warren Buffett remains confident that America’s best days are ahead, but he says the nation likely will face higher unemployment and eventually inflation because of the economic crisis.

Buffett said the nation’s leaders need to emphasize a consistent message, and they should support President Barack Obama’s efforts to repair the economy because fear is dominating Americans’ behavior.

Buffett said the economy has basically followed the worst-case scenario he envisioned six months ago.

“It’s fallen off a cliff,” Buffett said Monday during a live appearance on cable network CNBC. “Not only has the economy slowed down a lot, but people have really changed their habits like I haven’t seen.”

Buffett said the changes are reflected in the results of Berkshire Hathaway Inc.’s subsidiaries. He said Berkshire’s jewelry companies have suffered, but more people have been willing to switch to Geico to save money on car insurance. The three-hour-long interview aired from another Berkshire subsidiary that has been hampered by the economy, the Nebraska Furniture Mart store in Omaha.

He predicted that unemployment will climb a lot higher before the recession is done, but he also reiterated his optimistic long-term view: “Everything will be all right. We do have the greatest economic machine that man has ever created.”

Fear and confusion have been driving consumer and investor behavior in recent months, Buffett said.

The nation’s leaders need to clear up the confusion before anyone will become more confident, and he said Congress should stop the partisan bickering about solutions.

“We ought to defer most of the things that get people riled up,” Buffett said.

Buffett said he believes patriotic Republicans and Democrats will realize the nation is engaged in an economic war.

“What is required is a commander in chief that’s looked at like a commander in chief in a time of war,” Buffett said.

Whatever the government does to help the economy will likely benefit some who made poor financial decisions, but he said Americans should realize that everyone is in the same boat.

“The people that behaved well are no doubt going to find themselves taking care of the people who didn’t,” Buffett said.

The efforts to help revive the economy are likely to produce inflation that could be worse than what the country suffered in the late 1970s, Buffett said.

But even though the nation will have to pay for current policies with future inflation, Buffett said, the U.S. government still needs to act.

Maintaining faith in the nation’s banking system will be important to restoring the economy’s health, Buffett added. He said President Barack Obama needs to make it very clear that consumers won’t lose money in banks even if more fail.

“If you don’t trust where you have your money, the world stops,” Buffett said.

Most banks are in good shape, Buffett said, and even some of the troubled banks will be able to remedy their problems over time by reducing dividends and collecting the difference between interest payments they receive on loans and the interest they pay on deposits.

“The banking system largely will cure itself,” Buffett said.

A little over a week ago, Buffett released his annual letter to shareholders describing the worst of his 44 years at the helm of Berkshire. The Omaha, Neb.-based company reported sharply lower profit because of its largely unrealized $7.5 billion investment and derivative losses.

Buffett said he doesn’t regret investing $8 billion of Berkshire’s money in investment bank Goldman Sachs Group Inc. and conglomerate General Electric Co. last fall.

He also stands by his overall advice that owning stocks over time will profit people greater than so-called safe investments.

“Overall, equities are going to do far better than U.S. government bonds at these prices,” he said.

Buffett said he doesn’t regret investing $8 billion of Berkshire’s money in investment bank Goldman Sachs Group Inc. and conglomerate General Electric Co. last fall. Both companies gave Berkshire preferred shares paying 10 percent interest that Buffett said he doesn’t think he could get now.