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At This Hour
U.S. Economy Bounces Back Despite Inflation; Uvalde Response Review; Fetterman Admits Difficulties with Debate. Aired 11-11:30a ET
Aired October 27, 2022 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KATE BOLDUAN, CNN ANCHOR (voice-over): Hello, everyone, thank you for being here. I'm Kate Bolduan.
AT THIS HOUR, some encouraging economic news. U.S. economy bounced back in the third quarter, growing at an annual rate of 2.6 percent. A turnaround from the first half of the year when the economy shrank.
All against the back drop of the Federal Reserve aggressively raising interest rates five times this year to combat inflation. And even with this new report, economists say people should still be bracing for the possibility of a recession in tough times ahead. So let's get to the new report and what it means and what is it doesn't. Matt Egan is here.
And what does this good news say about what is next?
MATT EGAN, CNN BUSINESS SENIOR WRITER: Well, Kate, not that much. This is a rearview mirror number. It is a snapshot in time. We know the economy got knocked down in the first half of the year but it got back on its feet this summer.
GDP rising 2.6 percent, that is solid. Consumer spends slowed but it is still positive. I think that this should silence the argument that the U.S. economy is already in recession, right.
GDP is positive, the jobs market keeps chugging along. New numbers show that initial jobless claims, which is a proxy for layoffs, they remain low, at pre-COVID levels.
How you could have a recession if you don't have layoffs.
BOLDUAN: This is so confusing.
EGAN: Because the economy did go back to growth but there is still a risk of a recession going forward. And I think if you dig into the GDP report, there are some concerns. One, this is mostly about trade. Exports soared, imports fell. That alone was enough to swing GDP from negative to positive. The other concern is housing.
That subtracted from the economy. And that is an issue because mortgage rates keep going up. The average 30-year fixed rate above 7 percent for the first time in 20 years. It started this year -- a year ago it was at 3.1 percent. So it more than doubled.
And this is going to continue to be an issue. The Fed is still raising interest rates and there nothing about today's numbers that will get the Fed to stop slamming the brakes on the economy and so you'll see borrowing costs go up.
BOLDUAN: Two things can be true at once. This could be a good report and good news and there could still be tough times ahead.
EGAN: Exactly, Kate.
BOLDUAN: Thank you, Matt.
Joining me now for more is CNN global economic analyst Rana Foroohar, an associate editor for the "Financial Times" and the author of the book, "Homecoming: The Path to Prosperity in a Post-Global World."
Rana, it is great to see you.
What do you see, the last good news before the bad news sets in or just good news?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, look, Kate, your comment that two things could be true at same time is absolutely spot on.
You know, we've got growth. It is clear that we are not in a recession. But we haven't had a recession. And if you discount COVID, and the dip we had then, we haven't had one in over a decade. That is very unusual.
So it would be extremely unusual if we didn't see some slowdown, I think next year. I agree that there is nothing in this report that is going to make the Fed change directions. And the interest rate hikes are doing what they're supposed to do, which is to dampen down the economy and dampen consumer spending.
That doesn't feel great. We see rising interest rates for mortgages, all kinds of debt. At the same time this is necessary in order to avoid a hard landing. So I think we're in a pretty good spot, given all of the headwinds in the global economy and the U.S.
BOLDUAN: And Matt mentioned the new snapshot of the housing market; for the first time in 20 years, mortgage rates on average topped 7 percent.
What does that add to this picture?
FOROOHAR: Yes. Well, it is interesting. If you look at the average cost of carrying a mortgage for most Americans, that the housing market hasn't corrected too much and interest rates are so much higher, it is over 50 percent increase year on year if you're buying a new home.
So that is a lot. I do think that we're starting to see a slowdown in the housing market. I think you'll see corrections. And that will bring prices down but there is no question that housing inflation is outrunning any other kind of inflation and that is a real issue. And I'm watching that closely as a risk point for the economy.
BOLDUAN: Time and time again we've heard the president and his team point out that inflation is bad here, yes. But the outlook is worse elsewhere.
Does this track, this report and what you're seeing now, does this track still with that?
FOROOHAR: One hundred percent.
FOROOHAR: Europe is getting ready to go into what is going to be a miserable, miserable winter. China is in the midst of a major debt bubble. Their stock market has crashed.
And as tough as it seems here, the U.S. is, as usual, the cleanest dirty shirt in the closet. So I think it doesn't make anybody feel really great. But, yes, it is where you want to be right now.
BOLDUAN: Unless you enjoy wearing dirty shirts, as I will continue with the metaphor.
FOROOHAR: I'll try to come up with a new metaphor.
BOLDUAN: No, it is good. When you're good, you don't. That is the key.
In your new book, you wrote about where you see the global economy heading next.
How does that figure in with the turbulence we're living through right now?
FOROOHAR: What I'm watching is the fact that U.S. exports were up so much. Even though the dollar was strong, in general that should make it harder to export to global markets.
But I really think that we are starting to see the resurgence of a U.S. manufacturing economy. This made in America trend, the sense that we need to have a little bit of a balance. Not everybody in this country could be a software developer or a banker.
And these internal cities, these parts of the country, Ohio, Pennsylvania, that had been so hollowed out, rebound a little bit; the South and Midwest starting to come back.
I think that is good to the economy and it fits in with my thesis that you have to balance the global with the local. The two can't get too disconnected or it is bad for politics and the economy.
BOLDUAN: It is great to see you, Rana. Thank you so much. Also happening at this hour, the top law enforcement official in Texas
is giving the first public update into his agency's review of the police response to the Uvalde school massacre.
Colonel Steven McCraw is testifying right now. He was expected to offer the most extensive and revealing remarks about what happened that day, when 19 students and two teachers were killed and police had been called to save them. CNN's Shimon Prokupecz is in Austin, Texas, watching all of this.
So, Shimon, what are we are learning, what has been said so far?
SHIMON PROKUPECZ, CNN CRIME AND JUSTICE PRODUCER: Well, I think the most painful part truly -- and really every time we hear from the families, it is just gets more and more painful.
And sitting inside of that room and listening to these families, like Brett Cross and some of the other family members that spoke about the pain they've been going through, which has been doubled and tripled and really constant because of what they feel have been lies and misinformation and no transparency.
And here today, they have their moment to go face-to-face with the head of this largest state law enforcement agency, the leading law enforcement agency, which has been running this investigation, which has been in charge of releasing information, withholding information, giving out wrong information.
And you could just feel the pain and see it on family members as they stood there and faced the head of the DPS, Steve McCraw, with their complaints and their issues of how divided he has made their community, how the information has just created -- the bad information has created more pain.
He's of course defending himself. He did offer one apology. But he's defending himself. He's defending his agency, as he's been doing throughout this entire incident. Take a listen to some of what he told the family members.
(BEGIN VIDEO CLIP)
COLONEL STEVEN MCCRAW, DIRECTOR, TEXAS DEPARTMENT OF PUBLIC SAFETY: You're right. One of our core values is accountability, accept responsibility, plain and simple. And I did make that statement to CNN.
I can tell you this. If DPS as an institution failed the families, failed the school or failed the community of Uvalde, then absolutely, I need to go. But I can tell you this right now, DPS is an institution. OK. Right now is did not fail (INAUDIBLE), plain and simple.
(END VIDEO CLIP)
PROKUPECZ: And Kate, of course, there he's talking about his remarks to us. When I had questioned him about -- in October, we found him at a hearing some five hours from Uvalde.
And we tracked him down and questioned him. And I said, would you resign if any of your officers were held responsible or culpable?
And he said he would. And we have several DPS officials who have come forward who have shown to have some kind of lack of action here. And despite him saying that he would resign if any of that was to happen, he's now kind of being cute here today by saying, no, what I meant was as an institution if we failed, I would resign.
So it doesn't seem like he's heading in that direction. And today I don't think this is going to be enough for family members, who are still demanding more answers, more transparency and accountability, Kate.
BOLDUAN: And truly a full accounting of what really happened. And hearing that there still haven't been given -- and that is not what is coming out today, is not going to be enough for the families.
BOLDUAN: That is really at their core, what they're asking for. Shimon, thank you so much.
He'll be there as we continue to follow this. I do want to play, as we heard from Steve McCraw, let's hear from some of the families who spoke, as was described, very emotionally this morning before the commission. Listen to this.
(BEGIN VIDEO CLIP)
BRETT CROSS, GUARDIAN OF UZIYAH GARCIA: You sir, have told lies. You're not in control of your officers nor are you the leader this great state deserves at the helm of what was once known as one of the best law enforcement agencies.
You have disgraced the state, your position and the people. Regardless of the election, I expect the terminations and your resignation immediately.
MANUEL RIZO, JACKIE CAZARES' UNCLE: We've been in Austin. We've met with governor Abbott. No action was taken. We're not going to stop. We're going to keep going. But again, this is not who we are. This is not who we want to be.
(END VIDEO CLIP)
BOLDUAN: And that is just -- and that is just some of the emotional testimony. Once again, families having to go -- having to go before and lay their emotions on the table to describe what they're -- how their lives have been shattered.
You're looking at pictures of Jackie Cazares, because right now joining us is Jesse Rizo, the uncle of Jackie, one of the 19 4th graders killed in Robb Elementary School that day. Jesse, thank you so much for coming out to speak with me. You spoke
just now before the commission. You called for Steve McCraw to hand in his badge.
What was your message today?
JESSE RIZO, JACKIE CAZARES' UNCLE: My message is basically to hold him accountable, to illustrate what he has created to our -- with our community, with our friends, our family, people that we see each other at the grocery stores.
But I wanted to him to understand his comments and the comments of his staff and what kind of division he's created in our small community. That is what I wanted to make sure that he understood that and that it is time for him to actually resign, turn in his badge.
BOLDUAN: Jesse, did you -- did you get any new answers today in what you've heard?
J. RIZO: Not really. He tried offering the explanation as to the events that took place. And it seems to me like he's backing off from his commitment to withdraw if he found any responsibility with this -- with the DPS.
It seems to me like he's basically backtracking. He's trying to find a way to get out of the commitment that he made to the families and to the community and really to the world.
BOLDUAN: If this meeting -- and it unfortunately it seems like it may -- if this meeting comes and goes without concrete action, without any more answers, without any more accountability that you're seeking, what do you say to that?
J. RIZO: I'm disappointed. But I will commit to this. I will tell you this, that the spirits of the 21 that didn't make, it my friend Joe Garcia that didn't make it, they will continue to be with us. We'll continue to march forth.
We may not have accomplished much today but one thing is certain, ma'am, we're there in front of him, telling him how we felt, telling him what it takes to get on a car, on a bus, on a plane to tell the story.
And the amount of energy and when you get done making those comments and what you feel like at the end. But it will never be OK. We'll continue this until our very last day, our last breath.
BOLDUAN: It was five months ago this week that horrific tragedy happened that you lost Jackie. And you spoke to this and others did as well. This is a latest in the long series of the public meetings that you all have been really forced to stand up in and sit through to try to get answers and to be heard.
You talked about that today. How I think the word you used is how shattering it is each time.
What is this like?
J. RIZO: It is challenging. The first thing that we do is we find out what has taken place, who is going to be somewhere. And then we find out who wants to go and some people, rightfully so, they -- they discuss it.
And they needed to take a break from it. But basically you gather your thoughts and your wording and you basically get on board. And you get there and you could see the buildup.
We've taken bus rides and you could see the laughter and you see the crying and all of the emotions, people taking a nap, people writing things, all of that. And then you go and then eventually you get before the -- before the speaker, the audience. And then you basically say it.
RIZO: But you can feel the air just come out every single time. And then in situations like this when we don't get answers, it is disheartening. But it is something we'll continue to have to do. We owe it to the children, ma'am. We owe it to the teachers. We owe it to the family members that were left behind.
BOLDUAN: Yes. You don't want to have to be here. You don't want to be here at all. You don't want to have to be leading at this moment. You would like to be just back where you were before May 24th. Thank you, Jesse, for coming on. I really appreciate it.
J. RIZO: Thank you. Have a good day.
BOLDUAN: Thank you very much.
So there is also this: a break-in at the campaign headquarters of Katie Hobbs. Her campaign is blaming her Republican challenger for violent threats in the governor's race. Kari Lake is firing back.
(BEGIN VIDEO CLIP)
KARI LAKE (R-AZ), GUBERNATORIAL CANDIDATE: I can't believe that she would blame my amazing people, blame me for something like that. I don't even know where her campaign office is. I'm assuming it is in a basement somewhere, because that is where she's been campaigning.
(END VIDEO CLIP)
BOLDUAN: The latest on that bitter battle next.
(MUSIC PLAYING) BOLDUAN: Only 12 days to go until votes are counted. Phoenix police
are also now investigating a break-in at the campaign HQ of Katie Hobbs, the Democratic nominee for governor in Arizona.
A source in the campaign sais this surveillance video you see shows a man breaking in earlier this week. And right now Hobbs' opponent is suggesting it is made up. Kyung Lah is in Phoenix this morning with more.
Kyung, there is a lot going on here.
KYUNG LAH, CNN SENIOR U.S. CORRESPONDENT: It's a lot. The police say they are trying to figure out exactly who did this. The campaign meanwhile trying to figure out exactly what was taken.
Was any of it sensitive information?
And at the same time pointing the blame, laying the finger of blame at the Republican nominee, Kari Lake. Here is a statement from the campaign manager of the Katie Hobbs campaign, saying, "Let's be clear
"For nearly two years, Kari Lake and her allies have been spreading dangerous misinformation and inciting threats against anyone they see fit. The threats against Arizonans attempting to exercise their constitutional rights and their attacks on elected officials are the direct result of a concerted campaign of lies and intimidation."
Well, Kari Lake, after hearing that statement, responded in kind.
(BEGIN VIDEO CLIP)
LAKE: That is absolutely absurd.
And are you guys buying that?
Are you really buying that?
Because this sounds like a Jessie Smollett part two. I can't believe that she would blame my amazing people, blame me for something like that. I don't even know where her campaign office is. I'm assuming it is in a basement somewhere, because that is where she's been campaigning.
(END VIDEO CLIP)
LAH: So essentially saying it is all made up.
BOLDUAN: It is great to see you.
Now to the Senate race in Georgia. Herschel Walker is facing a new allegation that he paid for an abortion. The woman identified as Jane Doe spoke virtually at a news conference with her attorney.
She said that she had a year's long affair with Walker while he was married to his first wife and that led to a pregnancy in 1993. And she said that, the woman, she is coming forward now because, in her words, Walker is a hypocrite and is not fit to be a U.S. senator.
(BEGIN AUDIO CLIP)
JANE DOE, FORMER WALKER GIRLFRIEND: I was devastated because I felt that I had been pressured into having an abortion.
He's publicly taken the position that he is, quote, "about life," end quote and against abortion under any circumstances when, in fact, he pressured me to have an abortion and personally ensured that it occurred by driving me to the clinic and paying for it.
(END AUDIO CLIP)
BOLDUAN: Walker denies the allegation, calling it a lie, as did he with another accuser. Republicans are standing by their candidate right now. Today Walker will be joined by senator Ted Cruz on the campaign trail.
Let's go now to Pennsylvania where we now know that the control of the U.S. Senate could ride on that Senate race. Democrat John Fetterman bluntly acknowledging the challenges he faced in this week's debate as he is still recovering from a stroke. Athena Jones is following this.
Athena, what is Fetterman saying?
ATHENA JONES, CNN NATIONAL CORRESPONDENT: He is saying that this was difficult for him and it was tough but he's continuing to get back up after being knocked down. He made these comments on the stump in a Pittsburgh in a event with the Dave Matthews Band. Listen to what he had to say.
(BEGIN VIDEO CLIP)
JOHN FETTERMAN (D-PA), GUBERNATORIAL CANDIDATE: To be honest, doing that debate wasn't exactly easy. You know. And here is the right also about that debate. I may not get every word the right way but I will always do the right thing in Washington, D.C.
(END VIDEO CLIP)
JONES: So you see him acknowledging the difficulties he had in that halting and unsteady debate and the response on Tuesday night has been mixed.
There was certainly worry among Democrats because this is such an important race. There are some political observers including Democrats, who said that they would not have advised Fetterman to debate Dr. Oz because he was still recovering from the stroke.
JONES: And because Dr. Oz is a long time TV talk show host. Others are calling his performance profile encouraging and his campaign said he's raised more than $2 million since debate night. They're using that to hit Dr. Oz for his responses on abortion, saying it should be left up to local political leaders -- Kate. Thank you so much.
Joining me now for more is Jonathan Tamari, a national political reporter for "The Philadelphia Inquirer."
It is good to see you, Jonathan.
What impact do you think this debate has had?
JONATHAN TAMARI, "THE PHILADELPHIA INQUIRER": Well, as Athena mentioned, there is a lot of worry among Democrats and there was worry before the debate because what was once a significant Fetterman lead has narrowed significantly. It is essentially tied going into the last two weeks of the campaign.
So there is concern about Democrats to start. And if things were already moving against them, they acknowledge that that debate was not a great look for them. It was not a great -- not something that would turn that momentum around.
Their hope is that Oz's comments on abortion are something that could counteract whatever problems Fetterman had, that they could put that on TV and persuade some swing voters.
And it is too late honestly in this election to really have this moment penetrate too far and that it might not reach that many voters honestly by the time they go to the polls.
BOLDUAN: We've seen Fetterman responding to this concern about his candidacy.
But a basic question does remain, are voters deciding their vote on the policies or the person?
What are you hearing about that?
TAMARI: I think that what we're seeing from this debate is that if they're deciding on policies, the policies were well-known. What was said during the debate about policy has been said pretty much throughout the election.
Oz's statement on abortion was from a Democratic perspective clunky than he said before. But his position is the same as it always been. The new information is voters seeing Fetterman standing up on the fly and answer questions.
So that is where I think the concern for Democrats comes in. But I think we've seen that elections are most often decided, voters are deciding on their gut instinct. And we hope that they feel more comfortable with Fetterman as a life long Pennsylvanian who has more of a everyman image than Oz.
But Republicans would just point to the national environment in anger at President Biden to fuel their hopes. And as I said, it's close enough that either campaign could really win still at this point. BOLDUAN: Yes. And just before voters are counted, it looks like the
biggest names for both parties are headed to Pennsylvania. Trump is to be there campaigning for Oz. And Doug Mastriano in Western Pennsylvania on the same day that Biden and Obama will campaigning in Philadelphia and Pittsburgh.
What does all of this do?
TAMARI: Well, first it shows you just how important these elections in Pennsylvania are. Both for Senate and for governor. The Senate race could decide control of the Senate. The governor's race could decide abortion laws and voting laws in one of the country's biggest states.
They'll decide who oversees the 2024 presidential election, which we know will be contentious in Pennsylvania again. And in both cases they're trying to rally their bases. Biden and Obama will go to the two bluest parts of the state.
Trump is going to Trump country and try to get out these voters, who may -- might not be as enthusiastic about the Senate candidates but maybe would respond to the big guns that people -- that most famous names in their own parties.
BOLDUAN: Jonathan, it is great to see you. Thank you for coming on.
I want to show you this. Take a look at these pictures. Thousands of mourners swarming streets in Iran, marking 40 days since a woman died in the custody of the so-called morality police. The latest on Iran's crackdowns on these unbelievable protests -- next.