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At This Hour
U.S. Economy Adds 528K Jobs In July, Unemployment Falls To 3.5 Percent; Sen. Sinema Agrees To Move Forward On Dems' Economic Bill; Russia Ready To Discuss Prisoner Swap After Griner Sentencing. Aired 11-11:30a ET
Aired August 05, 2022 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JESSICA DEAN, CNN ANCHOR: Hi everyone. At This Hour, a blockbuster jobs report could quiet fears of a recession. But it's now up to the Federal Reserve to decide what it means for the fight against inflation. Democrats, one critical step closer to passing a massive bill that can have a big impact on the economy. And once unimaginable, natural disasters are becoming more common, posing an unprecedented challenge to FEMA, I'll speak to the agency's administrator about its future in a time of climate crisis. This is what we're watching At This Hour.
Thanks so much for being with us today. I'm Jessica Dean. Kate Bolduan is off. And we begin this hour with new evidence that the economy may be doing just fine despite persistent fears of a recession. The U.S. government released the latest jobs report this morning. And it far exceeded what economists expected. It showed the economy adding 520,000 jobs in July. That's more than double the number analysts expected, unemployment falling to 3.5 percent. And these numbers present a new complication for the Federal Reserve which has been hoping to cool the jobs market in an effort to bring down inflation.
At the same time, Senate Democrats now poised to pass a massive bill that could impact everything from the price of prescription drugs to the flight -- fight against climate change. We're going to have more on that in just a moment. We're going to start first, though, with that strong jobs report. And CNN's Matt Egan is live with us in New York. CNN's John Harwood is live at the White House. Matt, we'll start with you. Break down the numbers for us. Tell us what these numbers are showing.
MATT EGAN, CNN REPORTER: Well, Jessica, this is a hot jobs market that justified all expectations, but getting even hotter. This is a remarkable figure 528,000 jobs added in July. And basically no one saw this coming. Here's some crazy context for you. This is 200,000 jobs stronger than even the most optimistic forecaster had been predicting.
And the strength was really across the board. We saw job gains in professional services, government jobs, health care, leisure and hospitality, all of them growing. And we also saw two major milestones that really put an exclamation point on this remarkable jobs recovery. One, the unemployment rate dropping to 3.5 percent, that is tied with the half century low set before COVID. And two, payrolls have now fully recovered from the COVID recession, returning to February 2020 levels, that means all of the jobs lost during COVID have now been recovered.
And I think when you put all this together, it really undercuts the idea that the U.S. economy is already in a recession. I mean, economies that are in recession do not add half a million jobs in a single month. But this does make the already difficult job facing Jay Powell even harder, because remember, the Fed is trying to actually cool the jobs market off to get inflation under control.
This is exactly the opposite kind of number that the Fed was looking for. And so this does increase the pressure on the Fed to take even more aggressive steps to try to cool off inflation. And the problem is that the more the Fed does, the greater the risk of an eventual recession, maybe not this year, but next year 2024. So some good news on the jobs front and some less positive news, I think, on the inflation front.
DEAN: Delicate balancing act that they're trying to get right. And, John, I'm curious how the White House is reacting. They have to be happy to be able to say all of the jobs lost during the pandemic are back.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, they're delighted by this jobs report, although they acknowledge the realities that Matt Egan was just describing. Look, there's nothing a president likes more than being able to say to Americans, this is a great time to find a job. Jobs are plentiful. Wages are rising. The White House also welcomes this very strong evidence that we are not in a recession. It could be next year. We're not in a recession.
Now, Joe Biden took credit with his economic plan. That is the American Rescue Plan last year for having fueled this solid growth and jobs recovery. But he also said, we've got work to do. We've made significant progress for American families, but we got work to do. That work that he's talking about is work on inflation. And that's the balancing act that Matt was describing.
The Fed -- the sweet spot here was they wanted job growth to slow. The President has talked about that himself without falling off a cliff. Well, this is very hot. It's the opposite of slowing down. And what it is, though, is a political sweet spot because the combination of falling gas prices and the strong jobs report, the White House at this moment after all the political challenges of this year they couldn't hope for better news right now.
DEAN: John Harwood and Matt Egan, thanks for breaking it down for us. We appreciate it.
And joining me now is CNN global economic analyst Rana Foroohar. She's also the global business columnist and associate editor at the Financial Times. Rana, great to see you. The July report showed this economy adding 520,000 jobs last month, double as what had been predicted. What's your overall reaction to this news?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, honestly, Jessica, surprise. I mean, you know, it's spot on that nobody saw this coming. I would have thought that you would have seen some growth from a sector in travel and tourism, you know, it's summer. It's also important to remember this is a trailing indicator, the jobs numbers. So, you know, you need to think about that when you look at where we are in the economy.
But honestly, it's hard to say this is anything but a really, really strong number. You know, you've got growth across the board in almost every area. And it's a great upside surprise for the Biden administration, no question about it.
DEAN: And obviously, the economy is this jigsaw puzzle they have to put together exactly right. Do these numbers make it harder for the Federal Reserve to do what it needs to do, though, to slow the economy and reduce inflation?
FOROOHAR: Well, it depends on how you define harder. I would say it makes it clearer that the Fed is going to have to continue with rate hikes in order to get this economy cooled off. And that, of course comes with its own risks. One of the risks and you're already seeing it today is that the market is wary about rate hikes. Now, the stock market is not the real economy by any means.
But it's worth noting that more Americans are more invested in the market today than they were in recovery cycles of the past. And so when you hike rates, you get a correction in the stock market. And that starts to affect how people feel about their finances. Also, when rates go up, you start to see the housing market go down. And that's maybe not a bad thing. Because one of the things that's important to remember, when you talk about recession, you know, we often talk about it in kind of wonky technical terms.
But really, it's about how people feel. And even though you've got a strong jobs market, you've got 5 percent wage growth year on year still very strong. If you factor in inflation, if you factor in the price of housing which is, you know, double digit growth in the last couple of years, fuel, even though it's gone down a bit, foods still high. People don't feel as strong as the labor market might indicate. And in fact, year on year, price adjusted wages are actually down. So again, you got to take all this into consideration when you think about where we are.
DEAN: Right, all of those factors. And you mentioned recession. And that's something obviously we've all been talking about for weeks now, how it could be just around the corner. Is it here already? Does this report kind of in those concerns for this moment in time? I hear what you're saying but you have to take all the pieces together, but how does it really, what does it mean for the conversation moving forward?
FOROOHAR: Well, so I have always thought that when economists talk about recession, they speak in terms of a very technical. Recession, a technical recession is something we've already seen, two quarters of negative GDP growth. But the jobs market is different than GDP growth. It's different than food and fuel inflation. It's different than the price of housing. All of these things go into how the average consumer is feeling.
And, you know, you can see in consumer sentiment reports that people feel really good about their prospects in the job market, but they feel really concerned about inflation. And the administration and the Fed are trying to walk the line of dealing with all of those things without creating a major crash in the economy. And it is a tightrope, let me tell you.
DEAN: Yes, that's a big job. All right, Rana Foroohar, thanks so much for your expertise. We sure do appreciate it.
And let's go now to Capitol Hill where Democrats are on the verge of passing a key part of President Biden's economic agenda. Democratic Senator Kyrsten Sinema of Arizona now saying she supports the bill and the rest of her caucus breathing a sigh of relief. CNN's chief congressional correspondent Manu Raju is live on the Hill. Manu, with Sinema on board, obviously, it's looking good for Democrats. Republicans say they're going to go after that bill, though. What are you hearing?
MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yes, this morning. They're laying out what their strategy is to try to derail this proposal. They have very little recourse if no Democrats defect, but they will going to try to make it as difficult as possible for Democrats when this hits the Senate for tomorrow after they vote to open debate which all 50 Democrats need to do to do that, 50 Republicans will vote against it. The Vice President could break the tie moving ahead there.
Then afterwards, there'll be 10 hours of debate on each side we'll have. And then there will be a gauntlet of amendments, a series of amendments in which Republicans can offer and Democrats do anything they want. And Democrats -- Republicans plan an aggressive floor strategy to try to change the bill, scuttle the bill and potentially convinced Joe Manchin, Kyrsten Sinema or anyone else to defect and sink this bill at the end of the day, and is what Lindsey Graham told me just moments ago, he said, you can expect hell on the Senate floor.
(BEGIN VIDEO CLIP)
SEN. LINDSEY GRAHAM (R-SC): So what will vote-a-rama will be like? It'll be like hell. They deserve this.
SEN. JOHN THUNE (R-SD): These votes are going to be hard votes for the Democrats.
(END VIDEO CLIP)
RAJU: So the question will be whether or not anyone will change their minds. At the moment, Democrats are confident given what happened in the last 24 hours winning the support of Senator Kyrsten Sinema. She had objected to some of the key tax provisions in this proposal, one of which would have closed was known as carried interest loophole, essentially increasing taxes on hedge fund managers and private equity. Sinema got that dropped from the bill. She also have concerns about the 15 percent corporate minimum tax and language specifically allowing manufacturers and others to how they would depreciate their assets from their annual tax returns.
She narrowed that provision to the delight of some business groups. And instead Democrats are planning to impose a 1 percent excise tax on stock buybacks in which they promising. This ultimately will save $300 billion in the budget over the next 10 years. But still some vote -- from hurdles to overcome, even as Democrats are closer to making this bill into law. Jessica?
DEAN: Absolutely. They're back in tomorrow at noon some weekend work for the Senate there. Manu Raju thanks so much.
Coming up, first came to visit now the blowback after House Speaker Nancy Pelosi's visit to Taiwan. China now taking dramatic new steps in response. We have a live report that's next.
DEAN: New fallout from House Speaker Nancy Pelosi's controversial visit to Taiwan, China now suspending cooperation with the U.S. on a range of issues critical to both countries and to the world. CNN's Natasha Bertrand is live in Washington with the latest on this. Natasha, what are the details?
NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Yes, Jessica. So a serious escalation of tensions here as the White House and China go back and forth in response to that controversial visit by Nancy Pelosi to Taiwan. We're learning this morning that the U.S. did summon the Chinese ambassador to the U.S. to the White House in order to give him basically a dressing down in response to China's major provocations near Taiwan.
Over the last several days, China has, of course, launched a number of missiles near Taiwan. They have launched a number of fighter jets that have gone into Taiwanese airspace. And importantly, they actually crossed that median line, that halfway point between Taiwan and China that has been seen in the past as kind of a red line that China and Taiwan we're not supposed to cross, so a serious escalation here.
And we're learning that the U.S. reiterated to the Chinese ambassador, that this is not unprecedented. The visit by Pelosi was not unprecedented, and that the U.S.'s One China Policy, which states that Taiwan is not independent from China, really has not changed here. But what is unprecedented is the level of military provocations that we have seen from China. So the U.S. seeking to make clear here that nothing has changed on their end, but at the same time, they will not be deterred from operating in the western Pacific as they have been for many decades. Jessica? DEAN: All right, Natasha Bertrand for us. Thanks so much for that update. We appreciate it. And new this morning Russia now says it's ready to discuss a prisoner swap with the U.S. in private. It's now been 24 hours since a Russian court sentenced WNBA star Brittney Griner to nine years in prison for a drug offense. CNN's Kylie Atwood is live at the State Department. Kylie, what are the details of this potential swap?
KYLIE ATWOOD, CNN NATIONAL SECURITY CORRESPONDENT: Well, listen. This was a potential swap that the Biden administration put on the table back in June. And what they proposed was putting on the table Viktor Bout. His nickname is the Merchant of Death. He is a convicted arms dealer. He's serving a 25-year prison sentence here in the United States. And the Biden administration offered to send him back to Russia in return for getting back Brittney Griner and Paul Whelan.
Now, the problem being that the Russians came back through some secret channels, and actually made a counteroffer saying that they wanted another Russian added to the list, that Russian is actually serving a lifelong prison sentence in Germany for murder right now. So the Biden administration said that wasn't a serious counteroffer. So those conversations weren't exactly productive.
What we're watching for now is if they can come back to a place where they're having productive conversations over this, and there does appear to be some momentum in that direction with Foreign Minister Lavrov of Russia saying that the Russians are ready to discuss this matter through the channels, through the framework that was established when the two presidents, President Biden and President Putin met last summer and the Secretary of State Tony Blinken saying that the Biden administration is going to pursue that. So we're watching to see where this goes. Jess?
DEAN: Yes, we'll see how that develops. All right, Kylie Atwood at the State Department, thanks so much.
Now to the trial of right wing conspiracy theorist Alex Jones, a new phase in his defamation trial is now underway in Austin, Texas. Jurors will now consider awarding punitive damages to the parents of Sandy Hook first grader Jesse Lewis. They say that they've received death threats and were harassed because of Jones repeated false claims that the school shooting was a hoax. The jury ordered the "Infowars" radio show host to pay $4.1 million in compensatory damages and jurors could afford even more in today's phase of the trial.
And tonight, don't miss a CNN special report on Alex Jones Megaphone for Conspiracy. It's airing at 11:00 p.m. Eastern right here on CNN.
Coming up, the impacts of the climate crisis from deadly flooding to destructive wildfires, they're increasing in frequency and scale. How will the U.S. handle these future natural disasters? The FEMA Administrator joins me live. That's next.
(COMMERCIAL BREAK) [11:25:24]
DEAN: Just in to CNN, President Joe Biden and his wife will travel to flooded areas of Eastern Kentucky on Monday. There, they will meet with Kentucky's governor and survey relief efforts from the massive flooding the destroyed homes and killed at least 37 people. The announcement coming as Eastern Kentucky is once again under a flood watch today.
And it's not just Kentucky much of the U.S. right now facing extreme weather threats. In California, the state's largest fire is now more than 59,000 acres. And recent thunderstorms near the fire have caused flash flooding that's hampered firefighters efforts to contain it. Meantime, 70 million people across 20 states are under heat alerts today with the heat index in New York expected to top 100 degrees. And if all that wasn't enough, NOAA updating its outlook for this hurricane season predicting an above normal number of storms, including three to five major hurricanes.
It's a lot. And joining me now to discuss, FEMA Administrator Deanne Criswell, Deanne, thanks so much for being with us today, I want to start in Kentucky. Tell us what FEMA is doing on the ground there right now. How is the relief effort going?
DEANNE CRISWELL, FEMA ADMINISTRATOR: Jessica thanks so much for having me join you today. I was in Kentucky last Friday. I talked to the governor first on Thursday as this was unfolding. And I was able to survey the damaged areas last Friday. And I have to tell you that it's devastating. These are some of the most rural communities within Kentucky, and individuals are going to have a long time in their road to recovery.
We've supported the Commonwealth's efforts by sending in our search and rescue teams and we still have them they're available on standby. As you mentioned, we're seeing potential for additional weather. We have Disaster Survivor Assistance Teams that are out there. And they actually go into the neighborhoods door to door to better understand what the needs are. And they can also register families for assistance. And we're also sending in food and water and other commodities. And we'll continue to send in resources as we start to rebuild.
DEAN: Yes. And we're looking at pictures as you're talking and devastating is exactly the right word to describe what happened there. In addition to historic flooding, we're also seeing these fires and droughts out west. We're seeing the heat waves I was just mentioning across the country. And all of this before hurricane season really gets underway. Would you say your agency is built to handle disasters of this volume and magnitude?
CRISWELL: We have a really strong and dedicated workforce. And this is continuing to grow and the severity and the magnitude but our workforce is ready to respond. But if we continue to see this rise in the severity of these disasters and the number of these disasters, I think that there would be a time in the future that we wouldn't be able to keep up, which is why we've been so focused on trying to get ahead of the impacts that we're seeing from climate change, and investing billions of dollars through our mitigation programs to help communities reduce the impacts that they're seeing.
DEAN: And so is that what you feel like is you can the best kind of defense against climate change right now, because we do know, it's probably only going to get worse as time goes on?
CRISWELL: You know, I think as we work as a nation and, you know, across the world to reduce the impacts or reduce the changing climate that we're seeing, where FEMA's role comes in as to make sure that we are ready to respond to the consequences of that and where we can also help to reduce the impacts. And so there's some long term change that's going to have to happen to reverse the effects that we're seeing from climate change.
But until we get there, we do have things that we can do to adapt to what we're seeing right now. And that is by making smart investments in reducing the threats and the challenges and the impacts that these communities are facing.
DEAN: And I mentioned too, NOAA releasing its latest hurricane forecasts for the season, they're expecting and above normal Atlantic hurricane season. Obviously, that can be a very busy season for you all as well. How is FEMA preparing for that?
CRISWELL: Yes, we've already seen a number of named storms in the Pacific. And while we've only seen a few in the Atlantic, we are now going into the peak of hurricane season. But I'll tell you, it just takes one, right? It just takes one significant storm to cause devastation to a community like we saw with Hurricane Ida last year that spread damage across nine states from Louisiana all the way to the East Coast.
We have increased our posture of making sure that we have the resources and the commodities at our distribution centers. And as we see these hurricanes form, we will pre-position our resources to make sure that they're ready to respond as soon as it's safe for them to do so.