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QUEST MEANS BUSINESS
The U.S. And German Economies Suffered Their Biggest Drops In History; Three Former U.S. Presidents Pay Tribute To John Lewis; Germany's GDP Contracts Record 10.1 Percent In Q2 2020; Airbus CEO: We Are Calibrating To Pace Of Recovery; Zimbabwe's Govt. To Compensate White Farmers $3.5B. Aired 3:20-4p ET
Aired July 30, 2020 - 15:20 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN HOST: Stocks are off the lows, yet they are still firmly in the red. The Dow is down about 200 points or so after some dismal
economic numbers here in the U.S.
Those are the markets, and these are the reasons why.
The U.S. and German economies suffered their biggest drops in history. The Airbus CEO tells us it may be five years before things get completely back
to normal for his company.
And Zimbabwe's Finance Minister tells us about the country's multibillion dollar settlement with evicted white farmers.
Coming to you live from New York, it is Thursday, July 30th. I'm Zain Asher, and this is QUEST MEANS BUSINESS.
All right. Welcome, everybody. Tonight, the numbers are in, and it is truly a remarkable moment in terms of U.S. economic history, the world's largest
economy has suffered its worst GDP drop on record that is in history, and now it is in recession.
A staggering contraction of 32.9 percent from April through June puts the toll of coronavirus in stark perspective. The pandemic wiped out the last
five years of economic growth in just a matter of weeks.
The GDP figure is compounded by even more bad news and that is initial unemployment claims went up for the second week in a row, another 1.5
million Americans lost their jobs. These economic figures are lagging indicators. They are a delayed response to the pandemic in the United
This, we can actually track in real time and coronavirus cases are breaking record after record.
Julia Chatterley joins me now. So, Julia, these numbers, these GDP numbers, while they are certainly abysmal, they are indeed a lagging indicator. When
you look at the initial unemployment claims, 1.5 million Americans filing unemployment. That shows this recovery is stalling. How worrying is that?
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: It is incredibly worrying. Let's be clear. That number that you just showed was an
annualized number so we can compare apples with apples compared to what we've got with Germany today.
We are talking about a quarterly decline of around 9.5 percent for GDP here in the United States. Remember, it would have been far worse if we hadn't
seen states like South Carolina, Georgia, Florida reopening in May and June. The price for that, of course is the rising COVID cases now that we
are seeing all around the country, and the costs are clear.
And to your point exactly, Zain, we are seeing it in the numbers, a rise in the number of people that are asking for first-time benefits. We've still
got almost 17 million people getting benefits, actually getting their hands on the cash, and remember that bump up in unemployment runs out this week.
For me, I can tell you, I'm incredibly worried for both of those reasons, and if we look towards what Congress is doing or not doing, quite frankly,
now is not the time to be withdrawing financial support, and that's the key takeaway from today, I think.
ASHER: Yes, it is important to remember those millions of Americans that are relying on that unemployment insurance running out this week, as you
So, walk us through why the Dow hasn't reacted more to these numbers. It was initially down a lot more. Now, if we can show it guys on the screen,
it is down about 200 points or so. So, not very much. Is it because investors are simply focused much more on the stimulus as opposed to a
lagging indicator like the GDP numbers?
CHATTERLEY: You've answered it twice, and you're completely correct. One this is backward looking, where are we now? Well, the economic recovery is
struggling, but we are in a world where bad news is arguably good news because as Jay Powell said yesterday, we will keep the cash coming.
So, not only is Jay Powell there to support the financial markets, if not the real economy but Congress will hopefully come up with the goods, too.
Investors win. Shame we can't do the same for the real economy and that just takes time.
ASHER: As you said, it does take time. Julia Chatterley live for us there. Thank you so much.
The pandemic well and truly pushed the economy off a cliff in the second quarter, at 33 percent, this GDP fall is roughly four times -- four times
worse than the peak of the Great Financial Crisis in 2008, even going back to the great depression.
The U.S. economy only contracted 13 percent in 1932. Those downturns were devastating because of how long they lasted. Just how much pain is ahead
will certainly depend on the speed of the recovery.
Thomas Philipson served three years as acting Chairman of Donald Trump's Council of Economic Advisers before stepping down in June. He joins us live
now from Fort Lauderdale, Florida.
Thomas, thank you for being with us. So, what do you make of these GDP numbers? Is the worst over yet, do you think?
THOMAS PHILIPSON, FORMER ACTING CHAIRMAN OF DONALD TRUMP'S COUNCIL OF ECONOMIC ADVISERS: Well, it is a huge number, obviously. It is three times
the worst we have seen in 1958. It is about four times what we saw in the Great Recession.
The thing that people miss, I think in this number, in this report -- the number that stood out most to me was that disposable income has gone up 45
percent in this environment in the last quarter. That's a pretty remarkable thing.
So people have actually gotten richer due to not their private income, but obviously, the transfer payments from the government. I think that's a
clear indication and I would disagree respectfully with your previous speaker who said now is not the time to cut back.
I think that's a clear indication we overreacted in our fiscal response. We basically made people richer through fiscal policy in the second quarter.
You know, there is a role for government insurance for these big shocks that affects everyone, but this is like having a car insurance where your
Hyundai gets replaced by a Ferrari once it gets hit, and I think that's kind of indicative in this number.
It is also the insurance where your kids are paying the premium, but that's a different story we have to deal with in the future.
ASHER: So you talked about obviously the unemployment insurance the government has been paying out and that affected people's disposable
That money runs out this week. So what do you make of -- you know, what Senate Republicans have proposed in terms of stimulus? And what more do you
think the government should be doing to stave off further economic declines?
PHILIPSON: So there is basically -- on the unemployment insurance, it is not only the unemployment insurance that has led to the disposable income.
We also had cash payments, and then we had payments to companies to retain their workers.
So, it is a combination of everything that's gone out. It is not only the unemployment insurance.
But in the U.S., it is currently, that unemployment insurance piece of that served a great purpose in the COVID pandemic when it started. Essentially,
it paid people not to work, which was kind of an effective thing to do because we wanted to essentially de-stimulate the economy to de-stimulate
It was successful for doing that, but estimates indicate about two thirds of workers are better off on the government program than they are working
before. So, that's a little excessive when you want to have the economy take off again.
I think it is going to be interesting to see in August now whether the unemployment insurance basically that people insured is about 17 million of
them right now are actually going to be dropping because people now have a larger incentive to go back to work.
It has been very hard for small companies to retain their workers when they are getting paid more to stay home.
ASHER: So, just in terms of the recovery, a lot of people, you know, a month ago or two months ago, we're talking about the possibility -- I
believe Larry Kudlow was one of them about a V-shaped recovery. That clearly is not the case. What sort of recovery are we going to see going
forward, do you think? And is there anything you think the White House should now be doing to really help economic growth in this country?
TOMAS PHILIPSON, FORMER CHAIRMAN, PRESIDENT TRUMP'S COUNCIL OF ECONOMIC ADVISERS: So, there's a couple of things here. One is that there's way too
much attention, I believe, in my opinion, being paid to the government's role in this. This is really the private sector driving this pandemic in
the U.S. And you saw that in March, where, you know, people stopped going to restaurants way before their governments banned restaurant attendance,
et cetera. And they were not as quick out when the government lifted things; they were not quick out. They kind of sort of gradually went back.
So, it's not just government policy.
Again, you see this in Washington and California in the U.S. very strict in policies, but they still have these surges of cases coming back. That's
actually a very typical response to infectious diseases. It's not just COVID, but you know, that you have a sort of a self-limiting effect or a
cycling going on. As soon as the --
ASHER: Tomas, unfortunately, I have to leave it there because we do have to squeeze in a break. I'm so sorry. But it was great to have you on the
program. I appreciate you joining us. Thank you.
ASHER: It's not just in the United States, German stocks tumbled after the country broke its own economic records. We'll be live in Berlin, next.
ASHER: Hello, I'm Zain Asher. There's more QUEST MEANS BUSINESS in a moment when we'll be live in Germany, which has just suffered its worst economic
contraction in almost 50 years. And the CEO of Airbus tells CNN air travel might not return to pre-pandemic levels until 2025. Before that, though,
these are the headlines for you at this hour.
Three former U.S. presidents paid tribute in person to civil rights legend, Congressman John Lewis at his funeral in Atlanta today. A motorcade is
taking Lewis to his final resting place this hour. Barack Obama urged Americans to honor him by carrying on his work for racial justice and
equality for all.
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BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: He is much as anyone in our history brought this country a little bit closer to our highest
ideas. And someday when we do finish that long journey towards freedom, when we do form a more perfect union, whether it's years from now or
decades, or even if it takes another two centuries, John Lewis will be a founding father of that fuller, fairer, better America.
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ASHER: Rejecting President Trump's controversial tweet about delaying the election, his suggestion appeared in a Twitter thread that claimed there
will be mail-in voting fraud. The President has no constitutional authority to change an election date. Former Republican presidential candidate Herman
Cain has died after weeks long battle with the coronavirus. It's unknown whether the 74-year-old contracted the virus. His last public appearance
was in June at a Tulsa, Oklahoma rally to support President Donald Trump.
A Swiss special prosecutor is opening criminal proceedings against the president of FIFA, Gianni Infantino. Undocumented meetings between
Infantino and the Swiss Attorney General are under fresh scrutiny. Infantino notably vowed to root out corruption in football when he took
over its governing body in 2016.
Germany's economy saw record contractions last quarter. The country's GDP shrunk by more than 10 percent. That is roughly double its contraction at
the height of the 2009 financial crisis. Fred Pleitgen joins us live now from Berlin. So, Fred, the E.U. actually has approved an $860-billion
recovery fund, you know, making up of credit guarantees, low interest loans, that sort of thing. Is that going to be enough to save European wide
economies here, do you think?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's certainly going to be difficult, at least in the -- in the short to medium
term. And the Germans today have said that they believe that any sort of recovery, Zain, is probably going to take at least two years. But, of
course, there is still a lot of uncertainty in that, as well. It was quite interesting today to hear some of the German economic experts, also the
ministry is here in Berlin. They're saying that they believe that there might be a silver lining on the horizon, that they might actually see some
economic growth in the next quarter. Of course, coming from a very low-base level now after this contraction.
But of course, especially with the German economies, other European economies, as well, the big issue that they have right now is they can
start producing, again, as long as they have the pandemic somewhat under control. But the big question for them is, who's going to buy their
products? And it's something that I've been talking to German officials, too, for a while. And there is a lot of uncertainty in that, especially an
exporting nation like Germany with big industrial goods.
Talk about automobiles, for instance, today, we also had numbers coming in from Volkswagen, and they're in the red by about 1.4 billion. And I was at
a Volkswagen plant, say a little over a month, maybe two months ago, when they were starting up production again, and they thought that they could
get things going fairly quickly. But so far, that simply hasn't materialized. Because there's very few people in the world right now who
have money and who have confidence to buy an automobile. Same is true, for instance, for Deutsche Bahn. They're also deep in the red today, announcing
So, the Germans do have some very, very big problems, some other European nations, as well And whether or not that recovery fund is going to be
enough, there is still a lot of uncertainty around that, but still, of course, they are saying it is an unprecedented large measure that they are
trying to do to try and somehow shore up the economy here -- or the economies here on the continent.
ASHER: Right. Yes. But you mentioned Germany's export market certainly having challenges. I do want to talk about the number of rising cases, not
just in Germany, but obviously, France, Spain, as well, but particularly in Germany, where you are, what sort of impact is that going to have on the
potential recovery? And also, just given this record contraction in this quarter, what's going to happen next quarter?
PLEITGEN: Yes, yes. So, again, the Germans believe that there might be some economic growth in the -- in the next quarter, but you're obviously hitting
the nail on the head; all of that depends on where the coronavirus pandemic goes. And they are very, very concerned here in Germany. About a rise in
cases, so far, might not seem like very much. They're saying, look, before this, we had about 500 new cases every day. And now, the last couple of
days, it was about 800. Today, it was actually over 900 new cases.
And so, the Germans are saying, look, if there is going to be another lockdown, at some point, it's going to be impossible to keep the economy
open. And that, of course, is going to make any sort of recovery even more difficult. Now, at this point in time, the Germans, they believe in
science, they believe that they can do this. They believe that if people stick to the measures and continue to more strictly adhere to the measures
that have already been in place, that they are going to be able to keep this under control and get this under control. Again, of course, one of the
big things they're doing, Zain, it's going to be a huge undertaking, is that anybody who's traveled from abroad and you're coming back to Germany
from what they call high-risk areas, is going to be forced to take a Coronavirus test, and people who are coming from non-high risk areas like,
for instance, European Union countries, are also going to be able to Coronavirus tests which are going to be free of charge.
So, essentially, the Germans want to ramp up their testing even more than they have already done. That was a big number that they threw out here
yesterday, where they said they currently have the capacities to do about 1.2 million tests every week. They say, right now, they're only using about
half that capacity. So even if they test everybody who's been abroad, which, of course, is very important for business travel within the European
Union, they're still going to be able to manage that. But they do certainly say, and that's why it's such a very important point, the pandemic needs to
remain under control for the economy to have a chance to somewhat recover.
ASHER: All right. Fred Pleitgen live for us there. Thank you so much. Ahead, CNN sits down with the CEO of Airbus to explain why he thinks the
company is still in pole position going forward.
ASHER: The CEO of Airbus tells CNN air travel might not return to pre- pandemic levels until 2025. That's one of the most pessimistic outlooks we've heard from an industry leader, so far. Earlier this week, the
International Air Travel Association pushed its estimate back to 2024. The CEO of Airbus says his company is well-positioned for the long term. Our
Richard Quest asked him if the company would have to make more cuts.
GUILLAUME FAURY, CEO, AIRBUS GROUP: We think what we've done which we framed in the second quarter of the year, fits with our two days
understanding of a situation moving forward, OK? Now, there is uncertainty, there is volatility, and we have to stay very on board about what will
really happen, but with the scenario of a slow recovery, better recovery of the passenger traffic earlier on domestic flights than on long distance
fights. Would this happen? We think we are appropriately calibrated.
RICHARD QUEST, CNN INTERNATIONAL HOST: I hate that phrase, going back to normal, because you know, and I know there will be no going back to normal
per se. But when do you think you will be starting to look at increasing production? And when you think traffic will be back to what we had seen
FAURY: Yes. So, very important questions. We took a view entering into the pandemic that we think we thought and we still think was rather prudent.
And therefore, the traffic figures that we see in July, are not inconsistent with the assumptions we made at that time. That's why our
rates remained stable because we think the scenario that we see unfolding is not far from what we had -- we had assessed so far.
QUEST: What year? What year?
FAURY: So -- yes. So, what we think is that the 2019 traffic, we think we'll see it again in APKs between 2023 and 2025. But we think there's a
big difference between the domestic flights and the long range for many reasons. We could go into it if you wish. And we know, as well, that's an
observation, that there was a very different market structure on single island. Before pandemic than on the widebodies that was already with some
other uncertainty --
QUEST: Right. OK.
FAURY: Remember that our competitor was already taking the rates down entering into the pandemic. So, to be more specific, we think that is very
likely, or it's reasonably likely that we would start considering ramping up again, the production rates of the 320 family in 2022. And we think on
the widebodies, it will be as well somewhere between 23 to 25. There is more uncertainty at this point in time on the widebodies than what we see
on the singular.
QUEST: Let's talk wider about the travel experience. From do you -- this is crystal ball stuff, I understand. And but what do you envisage? If we
accept, it can be -- it makes sense, that the length of travel is not going to go away. The wanderlust to go out and see as the manufacturer of
aircraft, how do you now take this crisis? Factor it into your future, and what do you expect the future of travel to look like now?
FAURY: You know, it's important to remember what happened after September 11. We thought we would never travel again in the same way; passenger
experience would be damaged forever. And actually, we have adapted to the new situation, to the new security systems and measures, and they've come
more efficient moving forward. So, I think we went, in addition from safety, to safety and security. And now, we go to safety, security, health.
And we're making progress. And I think we will learn a lot from COVID-19. We'll be much better prepared to the next thing that could happen. And
we'll be back to a different normal lunch. But what we really think is the new normal. So, I think, yes, we'll be back to normal, not the normal of
before, but a normal of the future.
QUEST: Tell me what it was like. I mean, you'd been in the job a while. But suddenly this happens. And you are reversing the company in a way that, you
know, the exact opposite of everything that the plan was, ramping up now becomes shutting down or slowing down. New orders becomes deferrals. What
would you like?
FAURY: And I like your question. (INAUDIBLE) has happened was nowhere on his maps. You know, we do all kind of reason, now (INAUDIBLE) what if and
what if, and we think we are very creative inventing crazy scenarios. And that one was nowhere. All airlines impacted at the same time across the
world. I mean, it's amazing. Now, yes, we had to go back to the drawing board. Look at the magnitude of the problem. Try to invent solutions, sit
down, think reflect, make decisions, move forward, communicate a lot, talk to many airlines, many suppliers, many governments to navigate a situation
that was unprecedented. Well, we've not done anything wrong. It's COVID-19; it comes from the outside. You just have to accept it and do your very best
in that situation.
ASHER: Economists say Zimbabwe can't afford a historic deal to compensate white farmers who are evicted from their land. We'll hear the response from
the country's finance minister ahead.
The World Food Program warns that 60 percent of people in Zimbabwe will need food aid as the coronavirus pandemic worsens and economic crisis $3-
1/2 billion deal to compensate white farmers evicted from their land. Economists say the country simply cannot afford it but Zimbabwe's finance
minister disagrees. He talked to CNN's Eleni Giokos.
MTHULI NCUBE, FINANCE MINISTER, ZIMBABWE: We need to put the problem to bed. It's been going on for two decades. It's very important to put a, you
know, to end -- to end and put this -- leave this behind. And really, we have a year to raise half of those resources. And we're going to work very
hard on the summers to do that. And really, most of these resources will be invested back into the economy. And that's the positive thing.
ELENI GIOKOS, CNN INTERNATIONAL CORRESPONDENT: Some would say the timing of this needs to be relooked when you desperately need to be applying money
into your healthcare sector.
NCUBE: We are pouring money into the health sector (INAUDIBLE) in terms of what we budgeted, we've only just gone halfway, and we're going to be
pouring more money into the health sector.
GIOKOS: I want us to look at a number. I mean, what's the number? How much do you want to spend on health going forward to make sure you have doctors
and nurses at work?
NCUBE: Oh, in this year -- in this year, we're going to spend easily $8 billion on health. That's the target.
GIOKOS: 8 billion Zimbabwe dollars on health. I mean, if I mean -- I mean, I don't know which exchange rate to look at. But if you look at the
official rates, that is definitely, many would say, not enough.
NCUBE: No, no. The way to look at it is not the way you have to explain in terms of this (INAUDIBLE) But in terms of percentage of the -- of the
government budget, because we spend from what we have. So, in terms of timing, there's no issue about timing here. What we've done with the
farmers compensation, this is a constitutional requirement. We have to fulfill that.
GIOKOS: You're saying you're being transparent; you're looking to do good by the farmers, you're looking to do good in the health sector, and yet the
very international institutions that you're hoping are going to help you raise capital have been very critical of the arrest of a prominent
NCUBE: Well, you know what, governments work is always complex, Eleni. At any one point, we do many things all at the same time. It borders on
tracking investments. A deal with farmers, enforcing the rule of law. All those things are normal government business. You've highlighted the issue
of the journalists and so forth. Look, from the charge sheet that I certainly have seen, the arrest has to do with the inciting virus.
GIOKOS: Do you think that what attracts, you know, foreign investment includes a free press?
NCUBE: Well, suddenly, you know, freedom of expression is very critical. And really every country should seek to promote that. And so, that's a
(INAUDIBLE) And I will say that's what drive investment. I'm thinking here, Eleni, of countries where certain resources are available only in that
country. So, suddenly, investors in the mining sector, for example, would go there regardless of price.
ASHER: Spain's Tourism, minister, says the country's spike in coronavirus cases does not mean it has been hit with a second wave. Earlier Thursday,
he told CNN that Spain is safe to visit. He said the U.K. should rethink its quarantine rules for returning travelers.
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FERNANDO VALDES VERELST, SPANISH SECRETARY OF STATE FOR TOURISM: I think we can share the situation that we cannot have a lockdown on our economies,
not the British, not the Spanish. We have to cope with a virus. This is what we have right now as a new normality. And what we trying to tell them
is, OK, let's try to have a more surgical approach to this situation. And once we have that surgical approach, I'm sure we can have safe corridors
that allow British tourists to have a very pleasant summer in Spain, as always.
ASHER: All right, the civil rights icon, John Lewis, is been laid to rest in Atlanta, Georgia. Let's listen in.
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