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Issue Number One
Food Prices; Investing in Your Kids; Finding a Fuel-Efficient Car; Presidential Election Nearly in Full Swing
Aired August 15, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CO-HOST: The campaign for the White House is about to kick into full swing.
Important news about the price you pay for food at the grocery store.
How to find a more fuel-efficient car that will save you money, and how to start investing for your kids.
Issue #1 is your economy. ISSUE #1 starts right now.
From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we're all over the stories that matter to you.
Hello and welcome to ISSUE #1. I'm Ali Velshi. Gerri Willis is off today.
There is some interesting and positive news out about manufacturing in this country.
We'll take you to an airport and show you a new way to save a ton of time when going through security.
And why the electric car could soon become a reality on the mass market.
Christine Romans is with me, though.
And one of the big stories today, Christine, is the race for the White House.
CHRISTINE ROMANS, CO-HOST: That's right. And the race for the White House is all about politics, right, and policies and issues? But in many ways they're all about money. John McCain has released his fund-raising totals for last month.
Let's go straight to Ed Henry in Washington.
How did McCain do, Ed?
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: He's doing very well. He spent the last couple of days in Aspen, Colorado, talking about the economy, taxes, also energy this morning. But as you know, a lot of wealthy people vacation this time of year in Aspen, and John McCain held several fund-raisers, and his campaign announced this morning they had their best month of fund-raising in July, the best month since he got the Republican nomination. In fact, $27 million raised in July.
Now, it's important to remember, he's still being outraised by the Democrat, Barack Obama, about 3 to 1. But the Republican Party as a whole is far outraising the Democratic Party.
So, McCain is really making up a lot of ground. And why that's important is that gives him the fuel to run a lot of these TV ads, for example, do his travel, et cetera. And he's got a tough new TV ad out this morning on the issue of the economy, really taking the bark off and ripping into Barack Obama on taxes.
Take a listen.
(BEGIN VIDEO CLIP)
NARRATOR: Celebrity, yes. Ready to lead? No.
Obama's new taxes could break your family budget. The press warns the tax man cometh. Obama's taxes mean higher prices at the pump. Obama's taxes, a recipe for economic disaster.
Higher taxes, higher gas prices, economic disaster. That's the real Obama.
(END VIDEO CLIP)
HENRY: Now, McCain is zeroing in mostly there on the fact that Barack Obama has talked about raising taxes, essentially, on people making over $250,000 a year. Essentially rolling back some of the Bush tax cuts.
Obama, as you know, he's been on a vacation in Hawaii, but his campaign is not standing for any of this. They're pushing back hard, insisting McCain is distorting his record and noting that Obama also wants to help individual workers with tax cuts, $500 for individual workers, $100 for working couples. And so, we're going to hear taxes as one of those substantive issues. They're going to be finding out a lot in the next few weeks -- Christine.
ROMANS: And Ed, we're going to be seeing both these candidates together this weekend, right?
HENRY: That's right, in California. They'll both be making their way there over the next 24 hours, sitting down with Pastor Rick Warren.
What's fascinating, it's going to be live on CNN Saturday night at 8:00 Eastern. And what's fascinating is that this is really going to be the first time since they've both gotten essentially their nominations that they're going to be on the same stage, at least for a brief moment there.
They're going to get an hour back-to-back to be asked by Pastor Rick Warren a whole range of issues. It's a faith forum, but it's not only going to be about that. They're going to be asked about international issues, they're going to be asked about the economy. So it's going to be interesting to hear them back-to-back in the same venue. You know, a lot of substantive issues can really come up there -- Christine.
ROMANS: All right. Ed Henry.
Thanks, Ed.
VELSHI: Well, the Democratic convention starts in little more than a week. Our Bill Schneider and the Election Express are on their way, but they made a pit stop. They're at the Iowa State Fair.
Bill, you cannot even contain yourself. The smile on your face -- you've been on our air for many years, but you are very, very interested to be at the Iowa State Fair right now.
What's going on over there? What are people saying?
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, we talked to a number of people here in Iowa. We asked them about the candidates and the economy, issue #1. It is issue #1.
They didn't see huge difference business between Obama and McCain, and some people are just not sure what the differences are. But they know one big thing. They know that McCain is a Republican, that the Republicans have been in charge for eight years, that the economy is a mess. And they're looking for change, and they associate Barack Obama with change.
But they often are puzzled, and they say, what kind of change is it going to be? Not sure, we don't know. But the one thing we do know is we need change, and that's why they say Obama is leading here in Iowa.
VELSHI: Bill, that's an interesting philosophy that you -- and you followed this for a long time. Barack Obama has succeeded then in convincing people that, if you need change, and that change is a good thing, he represents that, without -- in some cases, without specifics.
SCHNEIDER: That's right. And that often happens in American elections. When people are unhappy, they vote for something different even if they're not sure what it is and even if they're not confident that it's the right thing. They know they want something new. And that's what we're hearing from people here in Iowa at the state fair.
VELSHI: Speaking of change, I know you usually stick to a very disciplined diet. But that bus can take you off of the normal plan. Now you're at the Iowa State Fair. What was it, a fried Twinkie or salad on a stick? What have you been having?
SCHNEIDER: They have many, many culinary delights. There's bratwurst and turkey legs, corn dogs over there. But I think we're going to settle here on one of the local specialties.
This is a fried Twinkie. A very delicious thing. They make it here, and I can tell you something, it's a secret, Ali, just between you and me. A fried Twinkie is really a doughnut. How about that?
(LAUGHTER)
VELSHI: Fantastic. I've never said no to a doughnut.
Bill, enjoy yourself on the bus. It's always fun.
SCHNEIDER: Thanks.
VELSHI: If Bill Schneider were traveling by plane, however, Christine, he'd have other things to worry about. That's why I so enjoyed -- as you recall, I so enjoyed being on that bus. You could just leave when you wanted and your luggage got there with you.
ROMANS: That's right. If he were traveling by plane, Ali, he'd have to pay to check his luggage, even might not even get a blanket or a pillow, unless maybe he forked over 5, 6 or 7 bucks. And that all leads very nicely to our "Quick Vote," where you get to weigh in.
CNNMoney.com's Poppy Harlow is here with today's question.
Hi, Poppy.
POPPY HARLOW, CNNMONEY.COM: Flying is a pain. Flying is a pain lately.
ROMANS: Yes. A hundred percent of our viewers say flying is a pain.
HARLOW: I would agree with that one.
You know, if you've flown lately, you've probably seen a lot more people carrying on their bags. Now that some airlines are charging you for the first checked bag, are you one of those people trying to stuff your entire closet into your carry-on? I know I am.
Here is our question for you today. We really want to know -- "Added baggage fees have led me to travel less, travel lighter, change airlines, or wear multiple layers."
Weigh in on CNNMoney.com. We'll bring you the results later in the show.
ROMANS: All right. Can't wait.
Thanks, Poppy.
HARLOW: Sure.
VELSHI: I warned everybody of these multiple layers. People are going to have those cameraman vests and pants where you just carry everything you can on you.
All right. Coming up next, why summer is the best time to think about home heating oil. What? And a faster way to get through airport security. By the way, if you are one of those people who still carrying a laptop, you are seriously going to love this next story after the break.
And the right car that will help you get the best mileage. We're going to help you find that, too.
We are all over the issues that matter to you.
ISSUE #1, right here on CNN, we're coming right back.
(COMMERCIAL BREAK)
ROMANS: We have some positive economic signs today. The dollar is at a two-year high against the British pound. Oil prices, believe it or not, are down. And manufacturing is doing better than expected.
What does this mean for the stock market?
(STOCK MARKET REPORT)
VELSHI: All right. It's August 15th. It is probably pretty hot where you are. It's actually a little bit cooler in New York, and that's the -- you know, when we're in the middle of summer, the last thing you have on your mind is your home heating oil bill for the winter, but it should be on your mind.
CNNMoney's Poppy Harlow is here with our "Energy Fix."
Hey, Poppy.
HARLOW: Hey. Well, when it gets to be...
VELSHI: By the way, it's great. By the way, while we're enjoying summer, please come in and rain on our parade about home heating oil prices.
HARLOW: That's what we're here to do at the "Energy Fix."
VELSHI: Yes.
HARLOW: We're trying to fix your problems out there.
Before you crank up the thermostat this winter, consider this: Consumers are expected to pay an average of $1,100 to heat their homes this year. That's 20 percent higher than last year.
For those of us here in the Northeast, even worse. Heating costs in this area expected to near $3,000 this year.
There are some government programs out there to help people lower their bill. There's a low-income energy assistance program, also the weatherization assistance program. You should check them out. They help low-income families make their homes more efficient. It really can matter when you're paying thousands of dollars. VELSHI: Yes. What I always think is that these things fluctuate, the price of oil. But if you were just make your home more efficient, it might be a more permanent way to reduce your bills.
HARLOW: Do you caulk your windows? They say that helps.
VELSHI: I don't. I read about these things.
HARLOW: OK. Ali doesn't save energy, but you can.
You can do your own home energy audit. The Department of Energy's Web site shows you how to do it yourself. You don't even have to bring a professional in.
The audit really pinpoints where your home is losing energy, evaluates the efficiency also of your heating system. Old furnaces, get this, they're only about 60 percent efficient, which means 40 percent of the energy is really escaping your home. Modern heating systems can be as much as 97 percent efficient.
Of course, though, Ali, upgrading means it's going to cost you some money on the front end. But you might save more on the back end.
VELSHI: And what do we need to know about water heating?
HARLOW: Water heating. I didn't even know about this until we read this. It's cool.
The government says the cost you pay for heating your water, it can be about a quarter of your energy bill. Consider lowering the water temperature in your home. A 10 degree reduction will cut your bill by about 5 percent.
As for the water heater tank, if it's warm to the touch consider insulating it. You can get a precut jacket or blanket -- I am not kidding -- it costs about $20. You can even get it for free from some energy companies. This is going to help you save some money, too.
Cool.
VELSHI: In my mind...
(CROSSTALK)
HARLOW: A water tank blanket.
VELSHI: ... that idea, the jacket and the blanket, it just sounds very cozy.
Poppy, thanks very much.
HARLOW: You're welcome.
ROMANS: All right. The Midwest floods not only washed away homes and uprooted families, it also wiped out entire farms and their crops, leaving experts to project corn prices to rise as a result. But the damage may not be as bad as expected. That's according to a report by the Department of Agriculture.
So, how much will you pay at the grocery store? What does it mean for your grocery bill?
Kevin Kerr is an editor and analyst for "Global Commodities Alert," a trader newsletter on natural resources.
So, we had this horrific flooding, incredible pictures of devastation of so many farms in the Midwest. Yet, the Department of Agriculture says we're going to have the second biggest corn crop on record?
KEVIN KERR, EDITOR & ANALYST, "GLOBAL COMMODITIES ALERT": Yes, it sounds great, doesn't it? Yes, record floods. These aren't like typical floods, these are record floods.
So we've had a lot of damage, and I think this report is overly optimistic. I mean, it says we're going to have the highest yield probably ever.
ROMANS: How could that be?
KERR: I really don't know, but it's like many other government numbers. We question them when we look at them. And I think when yields come out and we harvest this crop in the fall, we will really have the answer then.
ROMANS: If we did have a bumper crop, what would it mean for the prices I pay at the grocery store? Does it mean my cereal is going to stop going up in price, that some of the things that are corn-based or soybean-based are not going to be so expensive?
KERR: Yes, I don't think so. Again, I think it's overly optimistic.
I think those prices will come down a lot slower than they went up. It's typically like this, just like with gasoline. Gasoline prices ratchet up when crude goes up. Grain prices, our consumer goods, go up as well very quickly.
ROMANS: It has been a six-year boom for some of these commodities, everything from silver to gold, to these soft commodities, as they call them, the things that we ultimately eat or that go into so many of the things that we use every day. And now the most recent trend has been a pullback. The markets have cooled off.
Is that, you know, a reversal of the six years? Are we going to see natural resources not so expensive going forward?
KERR: You know, again, I think it's overly optimistic. It's based on the dollar rally.
The dollar is at a big part of this. When the dollar is falling, commodities tend to go up. And we've seen the dollar coming back here. As it pulled back, we saw commodities go up. As we see the dollar going up, we see commodities pull back. It's very normal. We're seeing a correction. I do not think this is an overall trend though, so we should be very cautious.
ROMANS: So, are we in a new reality of just incredible demand for the things that come out of the ground, that we grow and that are already there?
KERR: It is. A lot of the key commodities that we've taken for granted for a long time.
ROMANS: Right.
KERR: The grains, the soft commodities. Now these prices are ratcheting up, and they're going to continue ratcheting up. We have a bigger global community. We have to realize, China, India, these are huge communities that want the soft commodities.
ROMANS: What does it mean for my personal inflation?
KERR: It means it's going up, unfortunately. And the CPI numbers reflect that, the other inflationary numbers reflect that. You know, in Europe, as well. So we're going to see...
ROMANS: So the price of food we can expect is going to continue to rise. I wonder if we're going to have to rethink sort of the way -- our food comes from all over the world, the pieces of it.
KERR: That's right.
ROMANS: I wonder if we'll have to start rethinking what we buy and the way we buy to keep prices...
KERR: You know, the average fruit to our markets takes 1,500 miles to get there, whether it comes from California to New York, or wherever. I mean, that's an incredible amount of miles. We definitely have to rethink how we get our food to the supermarket.
ROMANS: All right.
Kevin Kerr, "Global Commodities Alert."
Thank you, Kevin.
KERR: Thank you.
VELSHI: Well, a big new airline deal could change the landscape of the airline industry. We're going right to the top to hear what it's all about.
And a faster way to get you through airport security. Why one type of bag could make a big difference and save you a lot of time.
You're watching ISSUE #1.
(COMMERCIAL BREAK) VELSHI: So, American Airlines, British Airways and the Spanish carrier Iberia announced a revenue-sharing deal, a code-sharing deal, as it were, that some critics are calling a monopoly in the making. Now, what are they hoping to do and, more importantly, what does it mean to the consumer?
We went right to the top of one of those airlines. I spoke with Willie Walsh, the CEO of British Airways.
(BEGIN VIDEOTAPE)
VELSHI: Mr. Walsh, thank you for being with us.
For those of us who have not perhaps -- or those of our viewers who have not followed the happenings between American Airlines and British Airways over the years, tell me how this business deal changes things for the flyer, for the consumer?
WILLIE WALSH, CEO, BRITISH AIRWAYS: I think this is a great news story for the consumer. I think as a result of this agreement, subject to approval by the competition regulators, we'll be able to offer much greater choice, a wider network, much better flight schedules. I think a very significant development is we'll be able to combine fares for our consumers, so the consumer can buy a fare on American Airlines, on one flight, and combine it with a fare on the BA flight.
And for frequent flyers, putting our frequent flyer programs together will be a much greater choice. So I think a much more rewarding frequent flyer program, as well.
VELSHI: And yet, some of your competitors, including, particularly, Virgin Atlantic, have made a very strong case to U.S. regulators and to the two presidential candidates here that this is going to be harmful to the consumer.
What do you think they're getting at that you're not seeing? Why do they feel this would be harmful to the consumer?
WALSH: I think you've got to be honest. This is not about it being harmful to the consumer.
I think Virgin are concerned about our ability to be much more attractive to the consumer. This is a good story for the consumer. It might not be a good story for Richard Branson, but it's a good story for the consumer.
And quite honestly, I haven't heard him come up with any new ideas, any new arguments to the ones that he trotted out year in, year out. So this is a good story for consumers, and I'm delighted to have reached agreement with American. And I believe we'll be able to demonstrate to the regulators that this is pro-consumer.
VELSHI: Your industry around the world has lost so much money over the last year, and so much of that is because of fuel prices. What did these business deals do for you? How does it guarantee to the consumer that the airlines that they fly on are going to be viable and continue to be there?
WALSH: Well, I think that's a very good question. Our industry is challenged, and significantly challenged by the price of oil.
Just to put it into context, the fuel bill for British Airways last year was $4 billion. This year, despite the fact that we have very significant fuel hedging in place, we're looking at a $6 billion fuel bill, a $2 billion increase in our fuel bill.
Now, that's a massive increase in our cost base. So we've got to take whatever steps we can to ensure that we can offset that increase. And I think some of the things we're doing as part of this agreement will help us.
There are some cost benefits that we'll gain through this joint business agreement. We'll look to some joint -- purchasing joint procurement. We'll look at benefits for combing our IT platforms. So anything that I think can keep down the costs has to be in the interest of the consumer, particularly in this current economic environment.
VELSHI: Willie Walsh, good to talk to you. Thank you for joining us.
WALSH: Good to talk to you. Thank you.
ROMANS: All right. You all know the drill at the airport: liquids and gels go into a Ziploc bag, three ounces, please, no more. Shoes come off, laptops have to be taken out of the case when they go through security.
As a result of all these rules, there are longer lines and grumpy travelers. But now a new bag for your laptop could get you through airport security just a little faster.
CNN Homeland Security Correspondent Jeanne Meserve has the story.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): If you travel, you know the drill. Laptops out at the security checkpoint.
UNIDENTIFIED MALE: It definitely slows you down.
MESERVE: Well, all that's about to change.
(on camera): This looks like a standard computer case, but big difference. A zipper goes like this, and it opens up like a clam shell. Computer on one side, wire on the others. You can just put it right through the x-ray machine.
(voice-over): It lies flat, giving screeners an unobstructed view of anything suspicious, like an improvised explosive device. In addition to security, speed. ELLEN HOWE, TSA: If they can get a clean look at the laptop while it's still in the bag, that's less time spent putting things in the bin and putting things back in the bag at the other end. So it may help move the process along.
MESERVE: A possible added bonus, fewer computers accidentally abandoned by their owners after screening.
UNIDENTIFIED MALE: They grab their bags and they forget their laptops.
MESERVE: Travelers we talked to loved the new cases.
UNIDENTIFIED MALE: It may make it easier getting through here. It's a positive.
UNIDENTIFIED MALE: Sign me up.
MESERVE (on camera): Starting Saturday, the TSA will let you bring your laptop through the checkpoint in specially designed case like this. There are many different manufacturers and styles. They cost about the same as any high-end laptop case. This one runs about $100.
Jeanne Meserve, CNN, Reagan National Airport.
(END VIDEOTAPE)
VELSHI: I have got to get one of those laptop bags. It would save me time.
Listen, buy the right car for you that will get better mileage and will save you a lot of money. We're going to help you figure it out coming up.
And the electric car sounds like some sort of myth, but not for long. Could it be part of your driving future? We're going to check it out.
You're watching ISSUE #1, right here on CNN.
(COMMERCIAL BREAK)
ROMANS: All right. Gas prices may be down some 29 days in a row now, but $3.77 a gallon is still pretty high.
You can find a car out there though that will get you better mileage and save you money. This month, "Money" has a special look at how to the to cure the gas mileage obsession and get the fuel- efficient car that's right for you.
CNNMoney.com auto writer Peter Valdes contributed to the article.
OK. So, call it a month. Call it a month, gas prices are down. But, you know, they're still a buck higher than they were last year, and it's got a lot of people talking about fuel efficiency. I want to go out there and get a conventional car that's the best car for me that is fuel efficient. What do I do?
PETER VALDES-DAPENA, SR. WRITER, CNNMONEY.COM: Well, pretty much right now, fuel-efficient cars are still in demand. The one thing we know from -- in the auto market is that people respond more to gas price movement than actual gas prices. And now that gas prices are on the way down, some of that pressure people feel to, you know, run out now and buy a fuel efficient car is probably tapering off a little bit. Things might start to soften up. It might get a little bit easier to get that high-fuel efficiency car that it was a few weeks ago when people were knocking down the doors.
But, still, you've got to use all the car shopping strategy you have to really try to get the best prices. Demand is still out there. Look for, first of all, cars that aren't the ones that everyone else is looking at. Don't look at just the typical Toyotas and Hondas. There are other cars out there that get good fuel economy. Look at the actual numbers, not just brand reputation.
ROMANS: Any names for us?
VALDES-DAPENA: For example, you know, Chevy's got a new Cobalt XFE that has very good fuel economy. The Ford Focus is another car that's actually pretty darn good, that also gets very good fuel economy. And again, those aren't brands people tend to go to. So you might be able to find some there. Negotiate hard on the price. Go to a web site like carsdirect.com.
ROMANS: Carsdirect.com.
VALDES-DAPENA: Right. They have actual pre-negotiable buyable prices. Don't just necessarily buy at that price. Take that as your starting point. Your opening bid. Once you've selected your vehicle, then phone call, go around, e-mail dealers. Get their quotes on it and see how much they can beat that by.
ROMANS: What about a used car? There's some pitfalls there in getting the right used car that's fuel efficient.
VALDES-DAPENA: Right. Some of the same advice too. If you go to the typical cars that everyone else is looking at -- the Honda Civic's a great car, but a lot of people out there want to buy Honda Civics right now. So you're going to pay more for that. Look for the hidden gem cars. These are ones that get good fuel economy but don't have high resale value.
For example, again, a used Ford Focus is a good one. If you're locking at a Toyota Matrix, for example, you're thinking about getting a Toyota Matrix wagon, look at the Pontiac Vibe instead because it's exactly the same car. Different grill, different taillight, everything else is the same. But because it's got a GM name on it, the resale value, the asking price for that car is going to be a little bit lower. You can save some serious money there.
ROMANS: People can't stop talking about the hybrids. But, you know, it's hard to get them in some places. I mean, I think it's easier to get them in the Midwest. But on the coast and in Texas, it's hard to get them. You can't get the kind you want with the right color. you know, I mean, is now the time to be looking at a hybrid if you're worried about gas prices or put it off?
VALDES-DAPENA: I would put that one off right now. Again, hybrids are in high demand. You probably -- if you're looking at hybrids, also look at conventional vehicles that might fit your needs and get good fuel economy but that maybe aren't quite in such strong demand right now.
ROMANS: Would you say that some used hybrids are even more expensive than the new ones because you can't get a new one and people want one so badly.
VALDES-DAPENA: Yes. Right. The Toyota Prius. Exactly. If you go to a Toyota dealer right now, they might have a used Prius for us and they would charge you more than you would get for a new one because it's there and you can't find the new ones. You've got to wait for them. Well, here's one I don't have to wait for. I'll pay you even more for it.
ROMANS: We talk about the big gas guzzler SUV that's in the garage right now. Is it time to sell it?
VALDES-DAPENA: No.
ROMANS: No, not time to sell it. Hold on to it for now.
VALDES-DAPENA: Hold on to it, yes. Bad time -- the same reason you don't want it, nobody else wants it either. And right now the values of that type of vehicle are so low that . . .
ROMANS: Well if somebody wants one, you can get a new one with all the -- I mean they're throwing incentives at them.
VALDES-DAPENA: Yes, throwing huge incentives out there because right now they're having troubles moving these. Chrysler is putting big incentives on theirs. So are GM and Ford, trying to get these big SUVs out there. In the case of GM, even the hybrid GM Tahoe has some incentives on it now. So, you know, and that's a relatively fuel efficient vehicle for that kind (ph).
ROMANS: It's a great piece. "Money" magazine's Peter Valdes- Dapena. Thanks, Peter.
VALDES-DAPENA: All right. Thanks a lot.
VELSHI: All right. The electrical car. Sounds magical. We're going to check it out and see when you can get your hands on one.
But first, let's get you up to speed on the latest headlines. Don Lemon joins us now from the "CNN NEWSROOM."
Hello, Don.
DON LEMON, CNN ANCHOR: Hey, Ali.
What do you think I can send my 1994 Fleetwood Sedan Deville for.
VELSHI: It's a sweet ride. Hang on to that one.
LEMON: We'll hang on to it.
All right, Ali, we've got to catch you up with some very serious news we'll be following at the top of the hour here in the CNN "Newsroom."
A new cease-fire in the former Soviet Republic of Georgia. Just last hour, Georgia's president announced that he has accepted new terms of a cease-fire deal with Russia. It comes nine days after Russia's invasion. The new pact was announced after a five-hour meeting between Mikheil Saakashvili and Secretary of State Condoleezza Rice. Now she says Russian troops should leave Georgia at once.
We'll turn now to the weather. Chad Myers tracking some troubles in the tropics for us -- Chad.
CHAD MYERS, CNN METEOROLOGIST: The storm with no name, Don. The storm that refuses to get a center, so they can't even call it a tropical depression yet, but certainly looks like a hurricane on the satellite. It isn't. There are still wind in there 25, maybe 30 miles per hour. But they can't find a defined center. A defined eye.
It's trying to get one here in the pass between Puerto Rico and the DR. But right now it's going to be running over the Dominican Republic and also in Haiti and that's going to cause it to fall apart again. Because you don't like to have the storm over land, it falls apart. Storms want to be over water. That's where they get their energy.
So, so far, so good. All the computer models are still taking it close to Florida by the end of the weekend, the beginning of next week. Maybe turning it out into the ocean. We'll see. Although the U.S. still has to pay attention to this storm -- Don.
LEMON: All right, Chad Myers, we'll check back with you in just a little bit.
A horrible accident to tell you about. A pregnant New York traffic officer hit by a van and then a bus. Look at that accident scene. Heroic actions by bystanders ended up saving the baby's life. We'll have full details on that story next hour. You don't want to miss that.
I'm back in the "NEWSROOM" at the top of the hour, along with Chad Myers and Brianna Keilar. Now let's throw it back to New York and Ali Velshi.
Ali, have a great weekend.
VELSHI: And you, Don. We'll talk to you on the other side. Well, it wasn't that long ago that electric cars didn't exist. Now most major auto makers are competing to get theirs on the market. CNN's Deborah Feyerick has more on the race to the future.
(BEGIN VIDEOTAPE)
DEBORAH FEYERICK, CNN CORRESPONDENT, (voice-over): This is not just a car, it's perhaps the future.
MICHAEL SIMCOE, GM NORTH AMERICA DESIGN: The design that's below these colors is absolutely the design that we've taken to the marketplace. And I'll give you a little sneak peek.
FEYERICK: While much about GM's electric car is under wraps, the creator's enthusiasm certainly is not.
So you can't show the interior of the car, but how's the driving experience different from a normal car?
TIM GREIG, VOLT DESIGN MANAGER: Oh, it's totally different. In fact, I tell people, I got religion when I drove an electric vehicle for the first time.
UNIDENTIFIED FEMALE: Ladies and gentlemen, the 2007 Chevrolet Volt Concept.
FEYERICK: Chevrolet unveiled its demo, called the Volt, last year with the promise the car would be ready by 2010. The competition for electrical cars supremacy is so intense, Chevrolet has taken the unusual step of designing the car based on a battery still being developed.
This has to last a very long time for this car to succeed.
DENISE GRAY, DIRECTOR, GM BATTERY ENGINEERING: Absolutely. And it's one of the parameters when it comes to looking at (INAUDIBLE) is the life of a battery. Can it withstand recycling being used going from empty to full, from full to empty. Can it handle all the temperatures. Hot temperatures down in Phoenix, Arizona. Cold temperatures up in the northern Canada (ph).
FEYERICK: Back in the '90s, GM tried and failed with its EV1 electric car. Technology, they say, wasn't a good enough. The new lithium ion batteries is a third the size of the EV1. It's expected to get 40 miles a charge, plus there's a gas tank to charge the battery for longer drives.
TONY PASAWATZ, VOLT ENGINEER: So we can go hundreds of miles on a charge and with your back-up gas tank system.
FEYERICK: GM says every curb, every corner has been shaved to improve air flow so the car goes farther.
SIMCOE: Even down to, you know, one or two millimeters can affect the range of the vehicle. FEYERICK: The Chevrolet Volt takes approximately six hours to charge and can be plugged in at night when electricity is relatively cheap. Instead of roughly $4 per a gallon, it will cost about 50 cents to drive the same distance.
GM has a lot riding on this. The company's in trouble and they need this car to be successful. Really the potential deal breaker is the battery. GM wants a warranty of 10 years or 150,000 miles. So they're testing the battery 24/7 to make sure they get it right.
Deborah Feyerick, CNN, New York.
(END VIDEOTAPE)
ROMANS: Some good news for all those dollar bills in your pocket. They're starting to gain momentum.
And get ready to save. How to save for your children at every age, from a newborn to 10th grade. ISSUE #1 rolls on next.
(COMMERCIAL BREAK)
VELSHI: Welcome back.
The U.S. dollar bucking the trend of some foreign currencies that are currently on the slide. Today the dollar ascending to a near two- year high against the British pound. It's making some inroads against the euro and the Japanese yen, too. Part of the reason, economic slowdown hitting the rest of the world. Places like Europe, which saw its economy shrink for the second quarter of this year -- Christine.
ROMANS: All right. Saving money is important and something you just can't let go. And there's a way you can help your kids get off on the right financial foot. Just a little bit of planning. To help break it down for you, I spoke to Lynnette Khalfani-Cox, personal finance expert and author of "Investing Success."
(BEGIN VIDEOTAPE)
ROMANS: OK. Let's talk about investing at any age. You've got a newborn.
LYNNETTE KHALFANI-COX, AUTHOR, "ZERO DEBT": I have a newborn.
ROMANS: You have a newborn.
KHALFANI-COX: You need to know this.
ROMAN: I do need to know this. What do I do?
KHALFANI-COX: Well, you've got to think about college costs right off the bat. You know, one of the biggest mistakes that a lot of parents make is procrastination. If you've got that newborn, start socking away money for your kid's college education as soon as possible. I don't care if you can only save $25 a week. Do something right now and don't procrastinate. ROMANS: And this is so important for people, I think, that even if you've only got $25 a week, you've got to start doing something now because you're always going to have these hurdles to investing or to saving and you've got to just get over them and start doing it because time is your friend.
KHALFANI-COX: Right. You have 18 years until your kid has to go away to college. The power of compounded interest will help you. Even if you're only socking away a modest amount of money. So the first and foremost step is to take action. Is to avoid against sort of that feeling of inertia and I'll get to it later.
ROMANS: OK. Your little darling's going to kindergarten. It's time to have a 529. You need to be working on that.
KHALFANI-COX: Absolutely. Listen, let's say your kid is five years old and is going to kindergarten. If you haven't already started saving when you had a newborn, now is definitely the time to put aside money. And you can do so in a neat little plan called a 529 college savings plan. These are the best thing going when it comes to planning for their education.
ROMANS: The savings accrue tax free. And some states even give you a tax benefit for investing.
KHALFANI-COX: Exactly. Even grandparents can get a tax deduction for contributing to their grandkids college education. So I tell families -- tell people, listen, don't give junior all the toys and, you know, goodies.
ROMANS: I agree.
KHALFANI-COX: Put some money into that 529 college saving program. And savingforcollege.com is a great place to get more information on those 529 plans.
ROMANS: Right. OK. Now at some point you need to start teaching your child about money because instead of putting money away for them, the real gift is giving them the right skills.
KHALFANI-COX: You couldn't have put it more beautifully. Finance literacy is something we don't stress enough in this country, unfortunately. And we need to start teaching kids about money at an earlier age. If you've got a child who say is 10, 11, 12 years old, maybe in about sixth grade, teach your kids one basic rule about money. Mainly that you have four choices with what you can do with that money. You can save it, you can spend it, you can donate it or you can invest it.
Too many kids in our society only know one thing, which is, of course, spend, spend, spend. Oh, mommy, I want an iPod or I want the latest video. I want this gadget or that. Teach your kids to divvy up their money by putting into one of those four buckets -- saving, spending, donating or investing.
ROMANS: Tell me about the parents of tenth graders. What do they need to know besides irrationality and Clearasil? What is important?
KHALFANI-COX: Well, first, I think you've got to teach those tenth graders to be credit smart. You need to let you children know that once they get to college, and probably even when they're in high school, a lot of companies are going to start targeting them for credit cards. So you have to tell your kids, listen, your credit rating is important to maintain and protect at all times. Don't get into an exorbitant amount of debt. Your credit is important to get a new job later, to get an apartment, a student loan, et cetera. So that's one good thing.
ROMANS: I think those lessons are so important before a kids even out of your house. I mean you've got a chance to plant these seeds, to make them, you know, responsible, good with money and that is, after all, you know, the oil in the gears of life. You know, you've got to teach them how to use it.
KHALFANI-COX: Absolutely.
ROMANS: All right. Lynnette Khalfani-Cox, thank you so much for joining us.
KHALFANI-COX: Thank you.
(END VIDEOTAPE)
VELSHI: All right. We're going to talk jobs in America. High gas prices. Housing. We're discussing the biggest stories of the week with some of the smartest people around. We are all over issue #1 right here on CNN. Stay with us.
(COMMERCIAL BREAK)
ROMANS: Welcome back to ISSUE #1.
More head butting between American Airlines and the FAA. American Airlines officials contesting a proposed $7 million plus fine for maintenance violations and lingering deficiency in the airline's drug and alcohol testing programs. The FAA calls the fine appropriate, saying American intentionally flew planes that they knew needed maintenance. American says they want to talk to the FAA to review the agency's findings.
VELSHI: I'm thinking, Christine, if you're American Airlines, you might want to just not bring a whole lot of attention to that one. I might pay the fine and move on.
All right, jobs in America. Obviously a concern with the unemployment rate standing at 5.7 percent. For more on what to expect on jobs and the other big stories of the week, Kevin Kerr is back from Global Commodities Alert, Poppy Harlow with CNNMoney.com and our friend Lak Achuthan with the Economic Cycle Research Institute.
Welcome to all of you.
Hey, Lakshman, I mean, sometimes we even think the unemployment rate itself is not the best way to measure this. We have been losing jobs. More than 400,000 jobs now since the beginning of the year. That still remains a concern. So while you're looking at the rest of the economy, housing, energy prices, which are a bargain at about $112 a barrel for oil. The job's picture is still not looking great.
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, yes, this is a key coincident indicator of where you are in the business cycle and it is telling you emphatically, if you're willing to listen, that we're in a mild recession. We've had months on end of job losses. You can't have -- you've never had more than four months in a row outside a recession.
VELSHI: Wow.
ACHUTHAN: You've never had more of a rise than 0.5 percent in the unemployment rate outside of a recession. We've blown through those numbers. We're in a recession. The other numbers, I think, will settle in there. And what that tells us is kind of what's going on. Demand is being hurt. Anything that's not discretionary. If you don't have to have it.
VELSHI: Right.
ACHUTHAN: You have to have food and energy. So those prices have been moving up.
VELSHI: Sure, 5.6 percent inflation year over year now.
ACHUTHAN: Right.
VELSHI: That's a big number . . .
ACHUTHAN: That's a big number.
VELSHI: Because you didn't get a 5.6 percent raise. Your investments didn't get you 5.6 percent.
ACHUTHAN: So where's it going to come from? It's going to come from nondiscretionary spending. Anything you can put off, that you don't have to have right now, there's not much pricing power there. And some companies can handle that, like a Wal-Mart, where they actually cut prices on cereal and shampoo to make more money. To pull in people. Other companies can't handle that very easily and they're going to have profits declines. That's a problem because profits is a forward-looking driver of the economy. So if that growth settles, then, you know, your outlook, your forecast gets a little weaker. Part of the reason may be energy prices are starting to slip.
VELSHI: Well, OK. So you've got energy prices, which are high. You have home prices, which remain low. You've got credit that's hard to come by. And you have inflation, some of which, by the way, is energy and the other sum of which is commodities. We're seeing increases in the price of foods, dramatic increases. We've sort of started to see that tap down a little bit.
You were talking to Christine earlier about it. Do we think we might see some relief on the food side?
KERR: We may see a little, but I wouldn't get overly optimistic. You know, we've seen some reports from the government that some of these food prices are going to pull back. I think it's a little premature to predict that. You know, harvest time is when we really find out how much of these grains we're going to have in the ground, what we're going to reap. And the bottom line is, with all the flooding, with the late plant that farmers had, we could have a lot lower crop. And these government numbers look a little suspicious to me.
VELSHI: Poppy, one of the things some of us reporters have become experts on every kind of energy out there while energy prices have been so high. There are some people very worried that as these prices come down and our back is not against the wall in terms of finding energy alternatives, the momentum there might slip.
HARLOW: In terms of, you know, looking for alternatives other than offshore drilling? Exactly. And in terms of the American consumer. Are they going it go back to SUVs, just like we saw in the '70s going back to the big cars? I think there is a lot of concern there, but Democrats are sort of jumping on board a little bit now saying, OK a little bit of offshore drilling if you put a lot more into alternatives, as well. I think they're hoping not to lose the momentum that they've gained.
VELSHI: Now the other thing that overhangs all of this is housing. We heard from Alan Greenspan. We didn't, but "The Wall Street Journal" did, saying he thinks -- what did he say? He said maybe around the middle of next year or later we're going to start to see -- like that's, you know, I didn't think you had to be an economist for that one.
ACHUTHAN: Well, here's what he's saying. He's a big believer in the business cycle. So he's saying, hey, it's going to turn, but I don't know when. That's what he was saying.
VELSHI: Right. Which, by the way, (INAUDIBLE). And that's the beauty for people who think that . . .
(CROSSTALK)
VELSHI: Right. Exactly. But the business cycle does turn. It is a cycle.
ACHUTHAN: Absolutely. It will.
VELSHI: Markets come back up. It will come back, but guessing where and managing until then is the issue.
HARLOW: But we also need to focus on outside of the U.S. What we heard about the contraption in the GDP for the euro zone. We haven't seen something like that since the 1990s. So the question now is, what we're feeling spreading around the world unfolding. We see good growth in China and India, but are they the next shoe to fall. ACHUTHAN: Well, you know, we look at these forward indicators across the globe and you have a global, a pervasive downturn in growth that's punctuated by recession in the U.S. We went in first. Southern Europe is in there. Maybe Japan even. And you're having slowdowns already in India and China. But they're slowing from like white hot growth to red hot growth.
VELSHI: To just regular (ph) price. And their consumption of energy and commodity food continues to grow at a healthy take.
KERR: Absolutely. Let's put this in perspective. You know, we had oil prices reached 146. Now we're back to 116, 114.
VELSHI: Back up the truck.
KERR: Yes. Yes. We're still above 100, which a year ago was phenomenal numbers. So let's keep it in perspective.
VELSHI: Right. And I remember as we followed oil, I remember being on the floor of the New York Mercantile Exchange when it crossed 100 and we couldn't believe it. I mean that -- the speed with which it was going up. And now we are -- we almost feel like we can relax that it's at $112.
ACHUTHAN: Well, you're right. So these inflation -- rate of -- inflation is the rate of change of the prices. So those will actually start to drop. But the fact is that the price is higher. It's well over 100, like you said. Your wages didn't go up. In fact, you may have -- someone may have lost their job or you're afraid of losing your job and your home price went down, so you're kind of household assets don't feel so good. All of that is going to weigh on things for the foreseeable future.
KERR: Yes. And what's been alluded to, I mean, the bottom line is, we didn't even start talking about offshore drilling until we got to 146. So now we're back down to 112. Is that conversation going to continue or is that the end of it? And, really, now we need to get aggressive.
VELSHI: And that's what the experts are saying, make sure the conversation continues through this campaign, even if the voter starts to see a bit of a pullback and starts to thinks a sigh of relief, we should be OK.
Well, a real pleasure to see you all. Kevin, Poppy, Lakshman, pleasure to talk to you.
And we'll continue, obviously, to cover all these things and on CNNMoney.com where you can get your updates on every bit of the news that affects you -- Christine.
ROMANS: All right. Thanks, Ali.
Attention all couch potatoes, we have an update to the Netflix delivery problem you may have heard about. And it's not too late to weigh in on our Quick Vote. Have added baggage fees changed the way you travel? Log on to CNNMoney.com. Let us know. The results are next. You're watching ISSUE #1.
(COMMERCIAL BREAK)
VELSHI: Airlines have passed the fuel bill on to consumers into various ways. Some even charge you to check your first bag now. And has that changed the way you travel? That's today's Quick Vote question. CNNMoney.com's Poppy Harlow is back with the results.
What do they say?
HARLOW: Thirty-eight percent of you said you are now traveling less as a result. Thirty-five percent travel lighter. Good for you. Twenty percent of you have changed airlines. Really? That's interesting.
VELSHI: And 7 percent of you are like Poppy.
HARLOW: And 7 percent of you are like me, Ali, who's steeling the thunder, you're wearing multiple layers.
VELSHI: She's not right now. It's just when she was . . .
HARLOW: On the plane last week. Five winter coats this winter. That's what we're going to see.
VELSHI: I'm going to have to stop talking about this, Poppy.
HARLOW: All right. Those are your results.
Ali, back to you.
VELSHI: I don't know about the not traveling thing. Isn't it easier just to change your habits then to say, oh, I'm just not traveling.
HARLOW: Well, you don't believe our viewers?
VELSHI: No, I think maybe they're not traveling for different reasons. Maybe because of the fare, the fees and things like that.
HARLOW: Maybe. And the euro.
VELSHI: And the prices, yes.
ROMANS: You want to copy the tape where Ali just said, I'm just going to stop talking. I want that one.
All right, guys, thanks.
For those who prefer to go to the mailbox instead of the movie theater, good news. Netflix says it's back up and good to go. The pioneer and online DVD rental suffered a technical glitch earlier this week which meant a stoppage of roughly a third of Netflix's 8 million customers. They've since resumed shipping and are working through that mailing backlog. It's the second such technical issue to hit Netflix this year. Though the company says the matter did not interfere with video streaming on its web site.
VELSHI: I've never done the video streaming. I get Netflix.
ROMANS: Are you a Netflix customer?
VELSHI: Yes, but I'm just not interesting in watching a movie on my laptop. And I didn't need a video. But that's your stock and trade, that's a tough problem to run into. Like it doesn't sound like a big deal. Some people can afford to take a few days without being able to . . .
ROMANS: I have two kids under two. I won't watch a movie for the next 15 years.
VELSHI: There you go. I'll tell you about all the movies I see.
ROMANS: Yes, thanks.
All right. For more ideas, strategies and tips to save you money, protect your house, watch "Open House" Saturday at 9:30 a.m. Eastern right here on CNN.
VELSHI: And for more on how the news of the week affects your bottom line, tune in to "Your Money" Saturday's at 1:00 p.m. Eastern and Sundays at 3:00 p.m. right here on CNN.
ROMANS: The economy is issue #1 and we here at CNN are committed to covering it for you. ISSUE #1 will be back here next week, same time, 12:00 p.m. Eastern, right here on CNN.
VELSHI: Yes, it's time now to get you up to speed on other stories making headlines.
"CNN NEWSROOM" with Don Lemon and Brianna Keilar starts right now.
