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Issue Number One

Six Straight Months of Job Losses; Tips for the Unemployed; Price of Crude Oil Hits Another Plateau; High Gas and Food Prices Cause Americans to Change How They Live; Record Gas Prices Affecting the Boating Industry

Aired July 03, 2008 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

GERRI WILLIS, CO-HOST: The June jobs report is in and it is worse than expected. What it means to you.
Dating in the workplace: the ethics, the do's, the don'ts.

Oil hits a new high, and the surprising silver lining of $4 gas.

Plus, closing shop after not making a profit, selling gas, of all things.

Issue #1 is your economy. ISSUE #1 starts right now.

Up front this hour, jobs and oil lead the headlines and continue to drag on an already sluggish U.S. economy. Today's job report from the Labor Department shows six straight months of job losses.

And the number of folks signing up for unemployment benefits rising sharply last week. That is the steepest increase since March. A year ago, jobless claims hovered around 320,000. Today, we're just around 438,000.

More on that in a moment.

The hits keep coming from the turbulent world of the oil market with the price of crude reaching yet another plateau this morning. Just short of $146 a barrel. It could go even higher as the value of the U.S. dollar diminishes and concerns grow over fuel stockpiles.

The good news, well, the good news is stocks are higher. The market closes at the top of the next hour for the holiday weekend.

From the ISSUE #1 one headquarters to the CNNMoney.com news room, we are all over the stories that matter to you.

And the big story today, of course, the jobs report. And that is where we begin, with the painful one-two punch of a slumping economy and a slowing job market.

Sarah Needleman joins me now. She's a reporter for "The Wall Street Journal."

Welcome, Sarah. Good to see you.

SARAH NEEDLEMAN, REPORTER, "WALL STREET JOURNAL": Hi. Thanks for having me.

WILLIS: Let's get down and look at some of these numbers though first before we get to the conversation.

Just in June, 62,000 jobs lost, a total of 438,000 lost for the year. If you drill down into that report, take a look at the sectors where losses are the steepest, we see that business and professional services losing some 51,000 jobs. Manufacturing, construction, coming in behind that.

Job gains, there were some job gains, largely in government, education, and health services, and leisure and hospitality.

What does this report say to you, Sarah, about what's going on in the job market right now?

NEEDLEMAN: Well, basically it says that some sectors are healthier than others, and that workers need to be strategic in thinking about where their skills are best applied.

WILLIS: All right. So some areas doing good. Some areas doing poorly.

What sectors do you think though have momentum to gain jobs for the rest of the year, if any at all?

NEEDLEMAN: Well, absolutely health care. That's an area that's always been growing.

The aging baby boomer population has to do with that, and the fact that folks are just living longer and need longer health care treatment. So that's an area.

And you have to bear in mind that it's not just doctors and nurses that are in demand. Hospitals, outpatient clinics are also looking for administrators, technicians, human resources folks, public relations help. So there's opportunities in a wide range of areas at those types of organizations.

WILLIS: Now, there are critical moves you need to make if you think you might lose your job. Maybe you still have your job and you're thinking, my job could be on the chopping block here. What are the one, two, three steps I do to try to protect myself?

NEEDLEMAN: Well, the first thing you want to do is seek out ways that you can help the company in terms of the bottom line. That's about boosting sales, retaining customers and adding new customers. That's what matters most to companies. So you want to ask if there's anything you can do to help out.

Similarly, there may be some layoffs that have already happened and some work needs to get done. This may be some less glamorous roles than what you're used to, but if you lend a helping hand, your employer's going to appreciate that and remember that when times get tougher.

WILLIS: So step into the breach a little bit.

Anything else you'd recommend for folks out there that are just really worried that tomorrow they may not have a job?

NEEDLEMAN: Sure. There's two things you can do.

First of all, start networking now, and do that both internally and externally. So you want to network with people in other departments at your company, because if your area's getting cut, you may find that there's room elsewhere at the company for more critical areas. And they're certainly going to consider you over an outsider first. So you want to network with department heads in other areas and see if there might be room for you to transition over there.

And you also want to network externally. If you belong to your industry association, there are luncheons, conferences, seminars. And if you don't already belong, now's the time to sign up, because those are ideal places for making connections with the people in your field.

WILLIS: Well, Sarah Needleman, great advice. We appreciate your help today. Thank you.

NEEDLEMAN: Thanks for having me.

WILLIS: All right. This show is all about you. So it's time for you to get involved and weigh in our "Quick Vote."

Here's today's question: "How secure do you feel in your job, very secure, not at all, somewhat, or are you unemployed?"

We'll bring you the results later in the show. But be sure to vote at cnnmoney.com.

Economic growth or protecting the environment? What matters more to you?

Bill Schneider joins us now from Washington with what might be a surprising answer.

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I think it is surprising, Gerri. It's -- the question was asked, "What do you give higher priority to, protecting the environment, even at the risk of curbing economic growth, or economic growth even if the environment suffers?"

And here's the rather surprising answer. Very, very close.

Forty-nine percent say protecting the environment should be the higher priority, 44 percent, almost as many, say economic growth. The environment getting that much emphasis at a time when the economy really is issue #1. People do care about the environment.

This question has been asked by the Gallup organization for almost 25 years now. And consistently, the polling has shown that people give higher priority to the economy -- I'm sorry to the environment than they do to economic growth. But when the economy turns bad, as it is right now, the two goals become competitive, which is where they are right now.

There are, however, limits. When the polling now asks people, "Do you favor increased drilling in offshore oil areas, in offshore coastal areas of the United States for oil and gas?" three-quarters of Americans nearly, 73 percent, say they favor it. Just about a quarter, 27 percent, say they oppose increased offshore oil drilling.

So even though the environment is a very high priority at a time of real crunch when people are facing these skyrocketing gasoline prices, they are willing to take some risks.

WILLIS: Well, I guess so.

Bill, tell me, where did all of those environmentalists go who wanted to protect the environment but they also want to drill offshore? It seems like those two things are in conflict.

SCHNEIDER: Well, certainly drilling offshore involves some increased risks. Remember, however, a lot of Americans don't live in areas that would be affected by offshore oil drilling, though they do want to protect the environment.

I think it's a matter of their saying, you know, we think we can take some risks to the environment if we're going to somehow protect the economy. But policymakers need to keep in mind that the environment remains a very high priority to Americans. And when they're asked to balance the two, right now they're almost evenly balanced.

WILLIS: Well, Bill Schneider, part of the best political team in television, thank you for that.

SCHNEIDER: Sure.

WILLIS: Hitting the road this Fourth of July weekend? We'll let you know if record gas prices are keeping folks at home.

Plus, pain at the pump, and not just for drivers. Gas station owners are not the ones profiting the big profits. Some are even losing money and going out of business.

And what if you could beat the odds and won the lottery but your prize had already been given away? One state has just such a game. We're all over it.

ISSUE #1: THE ECONOMY, it continues here right on CNN.

(COMMERCIAL BREAK)

WILLIS: As family budgets gets pinched by high gas, rising food prices, it's changing the way some Americans live and vacation.

Rusty Dornin is live at Stone Mountain in Georgia.

Hi there, Rusty. RUSTY DORNIN, CNN CORRESPONDENT: Well, Gerri, Stone Mountain is sort of a destination spot, 50 miles southeast of Georgia. And of course, the 441 campgrounds here are full for the Fourth of July weekend.

Now, even with rising gas prices and that sort of thing, a lot of people here had to book in advance. But once people get here, they can cook out, they don't have to pay for the hotel. But, of course, they do have to pay for the gas to get here.

And of course, the record gas prices once again today, almost $4.10 a gallon. And I think one of the most amazing things is there are still 34 million people on the road this weekend, according to the AAA. And that's only a half-million fewer people than last year.

Now, a little later this hour, we're going to visit with the Greer family. They drove from Kentucky this morning, a seven-hour drive. We'll talk to them how they budgeted for this trip, how much gas -- how much they're going to spend for gas, how much they're going to spend for food. And they're also going to Florida from here.

So we're going to find out just how they decided to hit the road despite the fact that prices are skyrocketing -- Gerri.

WILLIS: Rusty, looks great out there. Can't wait to hear more. We'll talk to you a little later in the show.

The Fourth of July is synonymous with road travel and family celebrations. But with gas at $4.10, are people hitting the road this holiday weekend?

Let's check in with Sandra Endo. She is live at a rest stop in Laurel, Maryland.

Sandra, how are you?

SANDRA ENDO, CNN CORRESPONDENT: Good, Gerri. How are you doing?

Actually here, this is going to be the first time in more than a decade that there'll be fewer travelers heading outside for this Fourth of July weekend. And as you can see behind me, I-95 is moving very fast, there are fewer drivers out on the road. And the drivers we did speak to here say they're only driving out of necessity, not for any fun.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We decided against it because of fuel. But someone we know is home from Iraq visiting us in Connecticut, so we have to go up there and see him.

ENDO: Otherwise you would just stay home?

UNIDENTIFIED FEMALE: Yes, definitely.

UNIDENTIFIED MALE: I'm not -- I don't have a bank account like I used to have. Behind in my mortgage. It's no good at all.

UNIDENTIFIED FEMALE: Definitely changing my habits. My neighbor and I have a thing going now where we're doing our grocery shopping by carpool and picking our kids up from school by walking or riding the bike, or anything we can do not to use our cars as often.

(END VIDEO CLIP)

ENDO: The thing people are using are mass transit. And actually, commuter rails are seeing increasing in ridership at about 11 percent. And this weekend, Amtrak is fully sold out from D.C. to New York and New York to Boston.

So that's where you'll see the crowds -- Gerri.

WILLIS: Wow, Sandra. That's amazing stuff.

Sandra Endo for us, reporting on people's plans for the holiday weekend.

Still ahead, you think everyone in the gas business is making a good buck right now, but that's not the case.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think the small businesses in the gas business are going to be dinosaurs.

(END VIDEO CLIP)

WILLIS: We'll introduce you to one man who pumped his final gallons just this week.

Then it's time for some good old-fashioned office politics. Just how ethical are you? The do's and don'ts, the taboos in the workplace. We'll check your moral compass.

That's coming straight ahead on ISSUE #1.

(COMMERCIAL BREAK)

WILLIS: Well, this $4 gas got you down? Well, we're here to give you some reasons why it might actually be a good thing.

Susan Lisovicz has our "Energy Fix" from the New York Stock Exchange.

Susan, I would leave it to you to find a silver lining in almost any story.

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, Gerri, you know, I'm going to look at it as the glass half full, or maybe the gallon half full, as opposed to the glass half empty.

I certainly can't say $4-a-gallon gas is a good thing for most Americans, but there are some positive side-effects that you might not have thought about. This comes from a story in our sister publication, "TIME" magazine.

It points out there may actually be a positive feedback for jobs, despite today's lousy jobs report. In recent years, as many of us know, many jobs have been outsourced on the back of cheap fuel. It allowed manufacturers to ship goods around the world with little regard for transportation costs, while U.S. executives visited plants around the world on cheap airfares. But "TIME" says rising fuel costs may start to change that dynamic, and some outsourced jobs may return to U.S. soil.

By the way, the nationwide average for gas hit a new record today, just a hair below $4.10 per gallon. Right in time for the Fourth of July holiday -- Gerri.

WILLIS: Exactly. Just spiking right now.

But you know, I'm glad to hear that maybe more jobs might be coming. That's good news.

What's the other good news?

LISOVICZ: Well, "TIME" has a list of 10, to be exact.

As people drive less, we're seeing less traffic. A new report on traffic right here in New York City backs that up. And "TIME" believes with less traffic and people driving slower, we'll also see fewer fatal traffic accidents.

And then there's less suburban sprawl as people live closer to the city center. More four-day work weeks. Less pollution. Cheaper auto insurance.

Will it be enough to offset the pain many of us are feeling? Probably not.

Oil today hit a record, above $145 per barrel. But now it's just fractionally higher.

CNNMoney.com is following the "Energy Fix" story from every angle. Log on to our Web site for all of the latest news there.

Gerri, back to you. Have a great holiday, by the way.

WILLIS: I certainly will. And you, as well. Let's lobby for those four-day workweeks.

LISOVICZ: Yes. That would be great.

WILLIS: Thank you, Susan.

Rising gas prices are pinching family budgets across the country, and it's having an affect on how they vacation.

Let's check back in with Rusty Dornin. She is live right now at Stone Mountain, Georgia, with some budget-conscious campers.

Hi there, Rusty.

DORNIN: Well, Gerri, the campgrounds are full here, 441 campers here trying to save a little money. Many of them booked far in advance, way before the gas prices went up. But we're here with one family who did that. They booked actually in January, the Greer family.

Gary Greer here. They left from Crestwood, Kentucky, right?

GARRY GREER, VACATIONING ON A BUDGET: That's right.

DORNIN: And that's 450 miles or so?

GREER: That's correct, yes.

DORNIN: OK. So how much have you spent so far on gasoline?

GREER: We've spent about $300 so far.

DORNIN: And you're going on to Florida after this, right?

GREER: We're going to St. George Island, yes we are.

DORNIN: And so you're going to be spending -- all together, how much do you think you're going to be spending for gas?

GREER: Probably about $600 to $800 worth of gas.

DORNIN: Wow. And normally you would have spent what, do you think, for all this?

GREER: Maybe $400 or $500.

DORNIN: Wow. OK. So a significant jump here.

GREER: Yes.

DORNIN: We're going to go over and we're going to go over and join your wife, Ginger...

GREER: OK.

DORNIN: ... as she's getting lunch ready for the family, because Ginger's really the one who has been budgeting all of this, figuring out how much to spend on food and that sort of thing.

And Ginger, tell us how did you budget for this trip? I mean, did you think a lot about how you were going to spend money on this trip, more than most vacations?

GINGER GREER, VACATIONING ON A BUDGET : More than most vacations, yes. We planned that when we left home, that we are not eating out the 10 days that we're going to be gone, except for maybe one time.

DORNIN: So how much did you spend on food?

G. GREER: We spent approximately $125 for 10 days.

DORNIN: That's amazing.

G. GREER: That includes steaks -- I mean, nice, you know, steaks, baked potatoes, salads, sandwiches, breakfast foods. That's everything inclusive.

DORNIN: Now, also for the gasoline, you also really shopped around for that as well, right?

G. GREER: Yes, we did. On Sunday afternoon we got on the Internet and looked at all the different gas buddies and different things, and saw that gas on the average is $3.83. And it's all six cents higher than any place we looked on Sunday.

DORNIN: Now, coming to Stone Mountain, this is sort of a destination in itself, right?

G. GREER: Yes, it is.

DORNIN: I mean, we're close to Atlanta, people can go to Atlanta. But are you going to have to drive very much once you're here for the weekend?

G. GREER: We don't plan on leaving until we leave.

DORNIN: And what are you going to be doing here?

G. GREER: Well, we're really not sure. It's been a long time since I've been to the park, and my family and the families traveling with us have never been here. So I know there's some new adventures to try out. So we plan on taking it all in.

DORNIN: And are you thinking that maybe this is going to be the last vacation for a while because of the gas prices? I know you planned this in January.

G. GREER: We did plan this in January. In January, we paid for the Stone Mountain trip and the trip on to Florida. So that expense is gone. So right now the major expense is gasoline.

DORNIN: What do you think your total amount that you're going to spend for this trip, a little more than a week, how much do you think you're going to end up spending, do you think, for gas and food?

G. GREER: For gas and food, probably $1,000.

DORNIN: That's pretty good for a family of three. Your daughter Molly here.

G. GREER: Right, yes.

DORNIN: So you're doing pretty well for that.

G. GREER: We're trying very hard, and the majority of it is gas.

DORNIN: How much would it have cost you to fly to Florida, do you think, in retrospect?

G. GREER: Oh, probably that much without any hotel expense or, you know, food.

DORNIN: So it's still cheaper, actually...

G. GREER: Still cheaper.

DORNIN: ... for you to be able to drive here.

G. GREER: Exactly. And we travel with dogs, and so there's no kennel costs. They're with us. And -- so it's awesome.

DORNIN: OK, great. Thanks so much...

G. GREER: Thank you.

DORNIN: ... for joining us.

Ginger Greer.

And we've been looking at some of the license plates around the campground. Some folks actually drove down from Canada, and some people across the way from California. So, Gerri, you can only imagine how much they spent so far.

But as I said earlier, the amazing thing is, even with gas prices this high, there's only a half million fewer people, according to AAA, on the road than last year for this weekend. So people are still carrying out their plans. The question is, is it because many of them booked so far in advance?

Gerri.

WILLIS: Well, you know, I've got to tell you, I'm so impressed with what the Greers did, paying for that vacation before they even took it. That's really the way to do it.

But I want to ask you, did you have a chance to ask Ginger what they did last year, Rusty?

DORNIN: Well, I did. I talked to Ginger and Gary about last year, and the funny thing is they felt it was so expensive last year, they skipped their vacation last year. That's why they were so determined this year that, despite the fact that it's going to cost them a lot more, they were determined that they were going to hit the road.

WILLIS: Yes, I would do the same thing. And it's beautiful there. I want to go camping. You've got me thinking about going camping now.

Rusty, thank you so much for that.

Coming up, you think anyone in the oil or gas business right now is turning a profit, but guess what? Not so. We'll introduce you to one gas station owner who is closing up shop.

And record-high gas prices keep voters at bay in Florida. We're going to take you there next.

You're watching ISSUE #1. Stay with us.

(COMMERCIAL BREAK)

WILLIS: On a sunny day in south Florida, you would expect to look out on the water and see boats everywhere. But not anymore. Record gas prices are dropping anchor on the boating industry.

Here's CNN's John Zarrella.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice over): Richard Velasco needed a new rod before his Fourth of July weekend fishing trip. Five bucks a gallon fuel isn't keeping him out of the water, but he's changed his habits.

RICHARD VELASCO, BOATER: It makes you think, you know, if you really -- how far you want to go, how many days you're going to stay out there.

ZARRELLA: With marine fuel running a dollar more than unleaded regular, boaters say they are slowing down, taking shorter trips, and only going out when the seas are calm. All ways to burn less fuel.

It still costs Oliver Muybonet (ph) -- listen to this -- nearly $800 to fill up.

UNIDENTIFIED MALE: That's why the fish is very expensive.

ZARRELLA: At the Bass Pro Shops, GM Chuck Stevens has seen a big shift in sales.

CHUCK STEVENS, BASS PRO SHOPS GM: This is a 212 here behind us. Customers that used to run 27-and-28-foot boats that are now going down to the 23, 22-foot boats.

ZARRELLA (on camera): If you've got to have that fix, and you just can't afford it any longer, you can always come to the Fishing Hall of Fame and virtual fish. It may not taste as good, but you won't have to clean it either.

(voice over): In some cases, boaters will do whatever it takes.

BILL LAWLER, LAUDERDALE MARINA ASST. DOCKMASTER: We're starting to notice more people with two credit cards coming inside to pay for their fuel.

ZARRELLA: And manufacturers are moving quickly to plug the leaks in their sales.

CHRIS BAILEY, BOATINGBAY.COM: You're going to see a lot of innovations, both in innovations being better fuel economy and engines, innovations in engine technology, as you've seen already.

ZARRELLA: Like electricity. This electric boat putts along at five miles per hour, but it only costs $2 to run it for eight hours. Solar panels to keep it charged are optional. The boating industry will have to adjust, experts say, if it hopes to stay afloat.

(on camera): Of course it's the average boater who suffers the most. As one dock master put it, people who own boats like that one don't worry about the price of fuel.

John Zarrella, CNN, Ft. Lauderdale.

(END VIDEOTAPE)

WILLIS: Virtual fishing, who knew?

Well, with gas prices at records, you'd think profits would be too for gas station owners, but surprisingly, some of them are going out of business.

We'll tell you why next, but first let's get you up to speed on the latest headline. Don Lemon is in the "CNN NEWSROOM."

(NEWSBREAK)

DON LEMON, CNN CORRESPONDENT: By the Colombian military. She had been held for more than six years.

A Bush administration official says the White House was aware of the Colombia rescue operation in its planning stages. President Bush telephoned Colombian President Alvaro Uribe to congratulate him on the operation. A National Security Council spokesman says the president is very pleased the hostages were rescued and are safe.

An autopsy is being done today on the body of a Vermont girl. Her uncle has been charged with her kidnapping. Michael Jacques has been in custody since Sunday. He's also charged with sexually assaulting another child. The body of 12-year-old Brooke Bennett was found near Jacques's home. Now Jacques could face more charges if Bennett's death is ruled a homicide.

Let's talk about a suspect in a week-long killing spree has been moved to a western Illinois jail. He's expected to make a court appearance this afternoon and face more charges. Authorities say Nicholas Sheley killed eight people in Illinois and Missouri. And investigators say they haven't got a motive. They describe him as a meth addict with a history of arrests and fighting with police.

Wildfires are on the move today in California. This is Malibu -- take a look at it -- where one house has been destroyed and two others have been damaged. The fire also forced the Pacific Coast Highway to close for several hours with no injuries to report. That's good news.

And in Big Sur, a mandatory evacuation is in place. Eight hundred and fifty residents told to get out. Officials in Big Sur say fires there could burn through the end of July. Wow. I'm back in the "Newsroom" at the top of the hour with a list of good things -- good things -- about $4 a gallon gas. Yes, there are apparently some bright sides to all of this. Now back to Gerri Willis and ISSUE NUMBER ONE.

Gerri, I'm sure you guys -- that would be great for your show, wouldn't it?

GERRI WILLIS, CNN ANCHOR: Yes. In fact, I think we just talked about it.

LEMON: Did you?

WILLIS: It's very interesting to find those creative solutions out there.

Don, thank you for that.

High gas prices are squeezing drivers at the pump and squeezing small business owners as well. Even, in some cases, those businesses selling gas. Allan Chernoff found a gas station owner in New Jersey who pumped his final gallon this week.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT, (voice over): Ray Netschert is out. Out of the gas station business after 30 years.

RAY NETSCHERT, RETIRING GAS STATION OWNER: Emotionally, for me, I'm giving up my life dream, which was to always have a service station and work with people and fix their cars.

CHERNOFF: High gas prices are squeezing drivers at the pump and squeezing small business owners as well. But Ray never dreamed he'd be selling gas at more than $4 a gallon. And the higher the prices climbed, Ray says, the more it shaved his profits.

NETSCHERT: People are watching their pennies. I think things are getting very tight.

CHERNOFF: And that was hitting you?

NETSCHERT: It was hitting us because the gas volume was decreasing and we have to make a certain amount of profit to stay in business.

CHERNOFF: Ray knows a thing or two about business. He's an MBA. He quit working as a financial analyst to buy his own station. The financials of selling gas, he says, are now stacked against the independent station owner. Including big up front expenses, $35,000 to fill his tanks, and rising credit card fees.

When Ray opened this station in the summer of 1978, he was charging 60 cents a gallon. He sold his final gallons on Thursday at $4.09. Ray says he made about 10 cents a gallon profit. Most customers, he says, don't blame him for soaring prices, they point to the oil giants.

NETSCHERT: I think the oil companies are getting such excess profits. I mean when you see the billions of dollars they're making in profit, it just -- even as a financial person -- it just boggles my mind that they can get away with it.

CHERNOFF: Truth is, the money isn't in selling gas at retail anymore. Ray says he earned most of his money repairing cars.

NETSCHERT: The repairs was our livelihood, yes. Gasoline was just something you had to have.

CHERNOFF: So when a neighboring medical practice offered to buy his property, Ray knew it was a no-brainer. He had to sell, even though he's only 63 and in good health.

NETSCHERT: I think the small businesses in the gas business are going to be dinosaurs.

CHERNOFF: The right offer came at the right time for Ray, who now plans to enjoy retirement with his wife, Carol, and keep his driving to a minimum.

Allan Chernoff, CNN, Short Hills, New Jersey.

(END VIDEOTAPE)

WILLIS: Wow, a tough spot there.

Well, the Fourth of July is synonymous with fireworks and family celebrations, but will the tough economy put a damper on festivities this year? Leigh Gallagher is a senior editor at "Fortune" magazine.

Leigh, welcome.

LEIGH GALLAGHER, SENIOR EDITOR, "FORTUNE": Thank you.

WILLIS: Now we've seen some problems in leisure and entertainment profits. Is it affecting fireworks?

GALLAGHER: It's funny. So far it's not. Sales of fireworks were about 930 million last year. Granted that was before a lot of the trouble with the economy, especially this year, started to happen. But, overall, the business is up. That's about 52 percent an increase over 2000. So business has been growing steadily for the past several years.

WILLIS: That's not growing steadily, that's leaps and bounds. That's really amazing.

GALLAGHER: People like their fireworks.

WILLIS: You know, I've read about some fires in Chinese warehouses, the fireworks, they always make the headlines because they blow up so spectacularly.

GALLAGHER: Absolutely.

WILLIS: Is that impacting prices?

GALLAGHER: It is, sort of. I mean, prices have increased and that's a big reason why the overall sales figure is up. But where we're going to see an affect of that explosion, which was back in February, is actually next year's fireworks because the supply chain is so sort of well planned out and well sort of orchestrated that even in February, most of the July fireworks were already ordered. They were already here in this country. But next year, you know, the major port for fireworks has been shut down because of that explosion because of concerns about safety. So that's going to have an impact.

WILLIS: And we're seeing right now the list of some states where they banned fireworks for probably the same reason, worries about problems there. But I want to ask you, you know, you hear about some of these big budget fireworks displays being, you know, scaled back a little bit. Do you think that towns across the country are not going to do this this year just because of the budget issues?

GALLAGHER: Well, it's funny, some municipalities are scaling back a little bit. But probably not as much as you think. I mean, this is a very important sort of thing to do in small towns. It's important, a lot of people, the backyard fireworks business is really booming. A lot of people like to do this themselves. And actually several states have rolled back bans, so more people are allowed to do this. But, you know, this is really important. So I think, if anything, the budgets are scaled back a little bit but probably not anything that people are going to notice.

WILLIS: How much do they spend on those big fireworks? The Macy's -- like the Macy's day fireworks are huge and they're broadcast all over the country.

GALLAGHER: Sure. Sure. Major productions like that can cost anywhere up to $1 million or even more. In fact, the fireworks around the Olympics in Beijing later this year are said to be the biggest production ever.

WILLIS: Wow.

GALLAGHER: So big ones like that, that's going to be the multi- million dollar level.

WILLIS: That's about technology, right? I mean, I'm just astonished at what they can do now the way they're coordinated, all the different kinds of fireworks.

GALLAGHER: Yes, it's interesting.

WILLIS: Is technology just changing that business dramatically?

GALLAGHER: It's changed it a lot. You know, it's no longer -- for the big productions, it's no longer lighting a fuse manually. A lot of the fireworks are really planned by -- they use computer software to detonate the firework.

WILLIS: Wow.

GALLAGHER: And by doing that, they can actually set them off as precise as .01 of a second apart. So that allows them to sort of better coordinate it to music and all that sort of thing to create the big spectacle that we're all used to.

WILLIS: Well, Leigh, great story. Thanks for bringing it to us. We appreciate it.

GALLAGHER: Sure. Thanks for having me.

WILLIS: What if you're attracted to someone at work and you think they're attracted to you? What do you do? The ethics of working it in the workplace ahead.

And we're going to open up the Help Desk. Log on and keep those e-mails coming. The address issue1@cnn.com. Stay with us.

(COMMERCIAL BREAK)

WILLIS: Welcome back to ISSUE NUMBER ONE.

Big changes are ahead for United Health. The group's CEO says a top to bottom review of the company is underway as they look to restructure operations and shed some 4,000 jobs. Now that's approximately 5 percent of its workforce. The company cites lower revenue and higher costs as reasons behind the retooling. United Health has also announced it reached settlements in two high-profile lawsuits, both of which will cost United more than $900 million.

All right. Well, ethics. You've heard of that, right? We all have them. Or at least we think we do. But when it comes to the workplace, what do you say or what you do could have a major impact on your career. Here to put your business ethics to the test is Bruce Weinstein. He is ethics columnist for BusinessWeek Online and he had some great questions for us.

Bruce, great to see you.

BRUCE WEINSTIEN, ETHICS COLUMIST, BUSINESSWEEK ONLINE: You too, Gerri.

WILLIS: All right. I'm going to read the question. I'm going to tell you what I think and then you can tell many where I don't have ethics, OK?

WEINSTEIN: You maybe got them all right. Who knows.

WILLIS: All right. Number one. Someone you just hired seems to be attracted to you and you're attracted to them. Both of you are single. Would you, a: Ask them out on a date? B: Have only a professional relationship? C: Ask the person if your intuition is correct and if it is, discreetly pursue a romantic relationship? OK. So, first I have to tell you, everybody dates people in the workplace. But everything's different, I think, if it's your boss or someone who's working for you.

WEINSTEIN: Well, just because everyone does it, does it make it right?

WILLIS: Well, wait a minute before you go there. I think the choice that I would make is not even in those choices. I would say wait it out. If it's that important to you, maybe you change places in the organization so that you can date that person.

WEINSTEIN: That probably is the best way to go. Of the three choices, though, the right one to do is B: Have a professional relationship only. Because, let's face it, most relationships don't work out. How many people do you know who are married or in a relationship to the very first person they ever dated? No. So when this relationship fizzles at work, you're going to feel uncomfortable, the other person is going to feel uncomfortable, and one or both of you may have to go because the company is -- their reputation is at risk and your obligation to clients may be hurt.

WILLIS: Well, and especially because it's employee-employer, the direct report relationship, that makes it more complicated.

WEINSTEIN: Well, and it also opens the door to sexual harassment if there's an imbalance of power.

WILLIS: Maybe a lot (ph) too.

WEINSTEIN: So there are legal, as well as ethical issues potentially.

WILLIS: All right. Number two. At a family dinner out you used your corporate card because you forgot your personal one. When it comes time to do your expenses you, A: Put in a client's name who's account has plenty of cash in it? B: Mark it as a personal expense and reimburse your employer? Or C: Ask your boss to approve it because with all the late night you work, you've missed a lot of meals with your family?

OK, Bruce, my answer is C if you do work late nights. I mean, come on, maybe it makes sense to see if you can't expense it, but I would disclose.

WEINSTEIN: Not the best of the three because there are two ethical concepts . . .

WILLIS: I'm wrong?

WEINSTEIN: Well in this, unfortunately, yes, because there are two ethical concepts at stake here -- honesty and fairness. And you're being honest by being up front with the boss, but other coworkers presumably worked long and hard and if they don't get the perk, it's unfair to them. How are they going to feel?

WILLIS: Well, what I if negotiate my own perk, Bruce, does that -- I mean . . .

WEINSTEIN: But, again, you have to think about or at least the person who's authorizing this has to think about how this will affect the morale of everyone and also really what's fair. You have to treat like cases alike, unlike cases unalike.

WILLIS: All right. So you just have to pay for the dinner yourself.

All right. Number three. In a public restaurant you overhear colleagues discussing confidential client information and mention the client by name. Would you, A: Ignore it? B: Talk with your colleagues about your concerns and leave it at that? Or, C: Report them to your supervisor?

This is tricky.

WEINSTEIN: Yes, it is.

WILLIS: I think the problem is, that the problem -- it's already happened. It's out there.

WEINSTEIN: Yes.

WILLIS: You can't correct it. I don't want to go to the boss because I don't want to tell on them.

WEINSTEIN: But can't you prevent future occurrences if these folks were to have such a . . .

WILLIS: I would talk with them.

WEINSTEIN: That's right. Talk with them and leave it at that. Because if you do nothing, as Edmund Burke said, all that is necessary for evil to flourish is for good people to do nothing. So it allows a problematic situation to continue. And if you blow the whistle, that's probably too harsh a response, unless your company requires you to inform them. Talking with them, in most cases, will take care of the problem. Just bringing it to their attention is enough to put an end to it.

WILLIS: Are there any basic rules of thumb you will tell people in the workplace? Ways of making these decisions without having to consult someone else?

WEINSTEIN: Yes. There are five basic principles -- do no harm, make things better, respect others, be fair, and be compassionate. And these are principles that apply not just in business, but in every relationship and every social context. And these are the principles that apply in medicine and law, as well. So these are five basic rules. And, by the way, we put this quiz on the "AC360" blog so viewers can go to that, take the quick and there are a couple of other questions too..

WILLIS: Bruce, thanks for you help today. We really appreciate it. WEINSTEIN: Thanks, Gerri.

WILLIS: Coming up, what if you bought a lottery ticket and found out there's no way you can win the big prize? It's already happening in a lot of states. Details ahead. Stay with us.

(COMMERCIAL BREAK)

WILLIS: All right, you all have questions about your money. That's where the Help Desk comes in. Answers to your e-mails you sent to issue1@cnn.com. That's issue1@cnn.com if you missed it.

Let's get right down to it. Stephanie Auwerter is the editor of smartmoney.com, Greg McBride is with bankrate.com, and Stephanie Elam is the CNN business correspondent.

Welcome all. Good to see you guys. Stephanie, Stephanie.

All right. Let's get to Victor's question. "I filed for bankruptcy in 2003, but a few months later my lawyer withdrew the filing and the judge honored our request. Still, this record is on my credit report, even though I never went through bankruptcy. What can I do?"

Weigh in on this one, Greg, because I think this is an interesting question. So many problems with credit reports. This is just one of them.

GREG MCBRIDE, SENIOR FINANCIAL ANALYST, BANKRATE.COM: Well, first of all, it really highlights the importance of checking your credit reports every year. I mean, you don't know if there are errors on there unless you check it. Everybody's entitled to a free copy from each of the three major bureaus.

If there is a mistake, whether it's in this case, a bankruptcy filing that wasn't, or a trade line from a creditor, dispute it. There is a dispute form that comes with your credit report in the mail. Fill that out. Send it back. What the credit bureau does is they then go to the party that is reporting that, makes them justify. They have 30 days to do so. If they don't, it's resolved in your favor.

Keep in mind, if something is on there and it is legitimate, you may get it removed once, but it will come back on there and it will belong there.

WILLIS: This is a real problem, though, guys, because I know so many people, they have credit records, they get a hold of them, they start reading them and they think, this can't be me. I've never seen half of this stuff on there.

Stephanie, talk a little bit about the importance of these credit scores and credit reporting because it really is your financial DNA.

STEPHANIE AUWERTER, EDITOR, SMARTMONEY.COM: And one thing that is so frustrating is that mistakes are so common. And a lot of those mistakes really can hurt your credit score. Another strategy in addition to contacting the credit bureaus, and they will take off inaccurate information, is to contact the lender. In some cases, even if the information is inaccurate, the lender may be willing to work with you. They can work on their end and then it will stop being reported to the credit bureaus.

WILLIS: Yes. You've got to be careful doing that because some of these collection agencies, they just want to get any information they can on you. You have to be careful while chatting with them.

AUWERTER: That's right. You want to talk with the lender itself.

WILLIS: OK. Let's go to the next question. D.J. asks," I have a small TIA-CREF account. What is the best way to allocate it?"

All right. So this is, you know, a retirement account that this person has. Let's talk about how you invest your money in retirement.

Stephanie.

AUWERTER: Well, you do want that right combination of stocks, bonds, and cash. And it's going to be different for everybody. It's going to depend on your risk tolerance. It's going to depend on your age. So what you want to do is find a really good asset allocator. They are all over the web. Any of the no load fund families can help you out with this. And you want to make sure that even within that stock component, that you are well diversified. You want small caps, you want large caps, and you want to be investing also in different areas of the globe.

WILLIS: I would just do index funds and leave it at that.

Stephanie, what do you think?

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Well, I think the word that she said that everyone needs to focus on is diversification because that's where people usually get into trouble is that they think they're diversifying when they're really not. And so you've got to spread it out, spread the love, so that your money's growing in a whole bunch of different sectors so that way you're a little bit safer.

WILLIS: I like that idea. All right. Well, let's go to the next e-mail.

Pamela asks, "how are bonds tied in with mortgage rates?"

All right. This is one of those complex kinds of things.

Greg, why don't you take this one on.

MCBRIDE: Well, the reason that bonds are connected with mortgage rates is that mortgages are very often packaged together and then sold to investors as bonds. Now, everything in the bond universe is priced at a spread over risk-free treasury. WILLIS: Whoa, whoa, whoa, whoa, whoa, slow down for me here. So bonds are priced how?

MCBRIDE: Bonds are priced at a spread over Treasuries. Treasuries are risk-free debt. So the government isn't going to default on that obligation. But any other debt instrument, any other form of bond that has a risk of default, is going to carry a higher interest rate to compensate investors for that risk. Mortgage rates are dictated based on movements in bond yields, Treasury bond yields specifically, because of that relationship between mortgage bonds and Treasuries.

WILLIS: And we should just say here, you know, bonds are simply IOUs. It's just debt out there. Whether the government issues it or a private company issues it, or a public company issues it, it's just money that they're borrowing essentially from you and they're paying if for the privilege. We love that.

ELAM: And, you know, the other thing is, people hear about the Fed Funds Rate, the short-term interest rate, and they think that's going to really affect their mortgage rate. It's not the same number. It's a different number. So that's one thing to keep in mind because I know people hear that and say, why didn't it affect me.

WILLIS: Very good point.

MCBRIDE: I get that question all the time.

WILLIS: They travel two different tracks, absolutely.

Another question from Kimberly in North Carolina. "I'm considering buying a place of my own, but I have some student loan debt. Would it be better to pay the minimum on the student loans or to pay most of them down and have less for a down payment?"

This is what people do all the time. I have a lot of money, Stephanie, do I put more into the house? Do I put more into my student loans?

AUWERTER: Well, in this case, because student loan debt is generally cheaper debt, it's often tax deductible debt, I wouldn't let that debt prevent you from buying a home, which is really part of the American dream. It's a really good thing to do.

That said, this person doesn't want to get in over their head. They need to make sure that they can still afford their mortgage and afford those student loan bills and continue to live a life where they're comfortable. So if they can afford those payments, I would go for the house.

WILLIS: Go for the house. Anybody else want to vote?

MCBRIDE: Well, there's also a difference between federal student loans and private student loans. And while federal student loans often come with very low interest rates and they have forbearance options so that you can defer payments if you run into financial difficulties, private student loans don't have that same flexibility. They also come with much higher interest rates very often. So in terms of prioritizing the debt repayment, focus on paying down the private student loans. Don't necessarily make a priority to pay off those federal student loans and build that (INAUDIBLE).

WILLIS: Leave Uncle Sam on the hook. I love that. OK. I'm going to say thank you to the panel. We have two Stephanies -- Stephanie Auwerter, Stephanie Elam -- and, of course, Greg McBride. Thanks all. Appreciate your help.

Don't go anywhere. More ISSUE NUMBER ONE is coming up next.

(COMMERCIAL BREAK)

WILLIS: How secure do you feel in your job? That's today's Quick Vote question. And here's how you voted. Thirty-six percent of you feel somewhat secure. Thirty-three percent of you say very secure. Twenty percent say not at all. And 11 percent of you are currently without a job, which beats the national statistics.

All right. Well some scratch-off lottery games offer you the chance to win big. Sometimes thousands. Other times millions. And while the odds of striking it rich are very long indeed, in some states they may be impossible. CNN's Jason Carroll has the story.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT, (voice over): Chances are you've seen the slogans.

UNIDENTIFIED MALE, TELEVISION AD: Add millions to your jackpot.

CARROLL: In New Jersey, for every dream, there's a jackpot. Problem is, the pot may not be quite as big as advertised. That's because some states are selling scratch off lottery tickets for top prizes even after those prizes have already been won.

UNIDENTIFIED FEMALE: Oh, really? I wasn't aware of that.

UNIDENTIFIED FEMALE: I think that's terrible. That's not right.

CARROLL: Scott Hoover thinks it's wrong too.

SCOTT HOOVER, SUING VIRGINIA LOTTERY: I got duped into buying these things.

CARROLL: Last August, the business professor bought a $5 scratch-off ticket for a Virginia game called Beginner's Luck. The grand prize, $75,000. He lost. Curious, he researched the odds of winning. Public records show someone had already won the top prize one month before he played.

HOOVER: We discovered that what the lottery was doing was leaving stale tickets on the shelves after the last grand prize winners had been claimed.

CARROLL: So he's suing the Virginia State Lottery.

JOHN FISHWICK, HOOVER'S LAWYER: You know, it's one thing to say it's a long shot to win the $75,000, but it's another thing to say that you have no shot to win it.

CARROLL: "USA Today" estimates about half of the 42 states that have lotteries keep selling tickets after top prizes are claimed. Lotto officials for some states say the practice is fair because lesser prizes are still available. And, they say, tickets and lotto web sites make that clear. But it wasn't clear to some New Jersey lottery players who paid $20 a ticket, trying to win the $1 million explosion game. That top prize is gone. The most they can win, $10,000.

UNIDENTIFIED MALE: Almost like false advertisement. You know, people are expecting to win one thing and in reality they're going to be presented, if they win, with something else.

CARROLL: A spokesman for the New Jersey lotto told CNN, the information on winning tickets is readily available on their web site, but they're looking at how to improve their procedures.

As for Virginia, that state's executive lottery director told CNN, it is no longer possible to "buy a ticket in Virginia where the top prize is already gone." She also said that the state stands by its practices.

Jason Carroll, CNN, New York.

(END VIDEOTAPE)

WILLIS: Well, for more ideas, strategies and tips to save you money and protect your house, watch "Open House" Saturday at 9:30 a.m. Eastern right here on CNN. And for more on how the news of the week affects your bottom line, turn in to "Your Money" Saturday's at 1:00 p.m. Eastern and Sunday's at 3:00 right here on CNN.

The economy is issue number one, and we here at CNN, we are committed to covering it for you. ISSUE #1 will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.

Time now to get you up to speed on other stories making headlines. CNN "NEWSROOM" with Don Lemon and Veronica De la Cruz starts right now.