President Bush insists the US economy is in a “downturn,” but legendary investor Warren Buffett warned today that the US is in a recession — one that will be more severe than most people expect.

“This will not be short and shallow,” said Buffett on CNBC. “I think consumers are feeling gas and food prices and not feeling they’ve got a lot of money for other things.”

Speaking about the ongoing US credit crisis, Buffett said: “I think there will be rippling secondary, tertiary effects … It is really more an effect of the residential real estate bubble, which led to the credit crunch in some degree.”

Jean Claude Trichet, president of the European Central Bank, shares Buffett’s negative outlook about the health of the US economy. This from a BBC reporter who recently interviewed Trichet for a radio documentary:

What is the prognostication of the wily M Trichet, who has had a ringside seat at every international financial crisis since the mid-1980s? Well I pressed him and pressed him, and he pointedly refused to say that the point of maximum danger is behind us. All he would say is that we are experiencing an “ongoing, very significant market correction.”

Which, given his record of calling the credit crunch rather more astutely than the Fed or the Bank of England, isn’t conspicuously reassuring.

“We think that investors betting on a quick turnaround in the U.S. financial sector are setting themselves up for a massive hit. There is a lot more bad news to come,” says Manraaj Singh in Profit Watch.

“What we need to remember about the current financial crisis is its roots in the U.S. sub-prime debacle. Huge numbers of people bought houses that they couldn’t really afford with money that they didn’t actually have in the hope that house prices would just keep on rising. They didn’t.

“Simply put, the health of the US financial system is closely tied to the performance of the property market. And I believe that things are going to get a lot worse on that front, which rules out any quick and sustained recovery in the US financial markets.”