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Unemployment Hits More than Five-Year Low; Search for Flight 370; Attorney: Sterling Will Wage Fierce Court Fight

Aired May 02, 2014 - 09:00   ET

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

CHRIS CUOMO, CNN ANCHOR: And a good weekend to all of you. A lot of news to hear about. Let's take you to the "NEWSROOM" and Miss Carol Costello, you're a hero, I don't want to hear anything about it.

CAROL COSTELLO, CNN ANCHOR: OK, I'll accept that.

CUOMO: There it is.

COSTELLO: Have a great weekend. Thanks so much.

NEWSROOM starts now.

(BEGIN VIDEOTAPE)

COSTELLO: Happening now in the NEWSROOM, your job, your money. A major new report just out. On just how healthy our economy really is.

AMANDA KNOX: I did not kill my friend.

COSTELLO: Amanda Knox in a CNN exclusive.

KNOX: I did not wield a knife.

COSTELLO: New revelations and new details.

CHRIS CUOMO, CNN ANCHOR, NEW DAY: This judge believes that this fight was about money and that you stole money from your roommate and that that is what started this violent night. Is there truth to that?

COSTELLO: The Clippers take the court. As reports this morning team owner Donald Sterling has prostate cancer.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: This is the closest thing to a smoking gun that I've seen.

COSTELLO: Benghazi and a White House on defense.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That e-mail was not provided.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Have you read the e-mail, Jim?

ACOSTA: I have it right in front of me. COSTELLO: Amazing new video of the Baltimore landslide as it happens.

You're live in the CNN NEWSROOM.

(END VIDEO CLIP)

COSTELLO: Good morning. I'm Carol Costello. Thank you so much for joining me.

We begin with stunning news on the health of our economy. A new report from the government shows unemployment hit its lowest levels in 5 1/2 years. And hiring is at its highest level since 2012. 288,000 jobs were added in April which drops the unemployment rate by four notches to 6.3 percent.

So let's talk about this. Our chief business correspondent Christine Romans is here. Also with us chief economist at the Heritage Foundation, Stephen Moore.

Welcome to both of you.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Hi, Carol.

STEPHEN MOORE, CHIEF ECONOMIST, HERITAGE FOUNDATION: Hi, Carol.

COSTELLO: Glad you're here.

Christine, I want to start with you. So tell us the good news.

ROMANS: Well, the good news here, 288,000 jobs is an improvement and you saw revisions in the prior two months so that that freeze in the winter is thawing and for a broad-based group of industries here you saw gains. I mean, professional and business services, those are accountants, those are lawyers, those are IT professionals, job gains.

Construction workers, again, job gains. Now retail and hospitality, job gains there, too. Those tend to be lower paid jobs. But we saw broad-based job gains. That's something you want to see. You want to see these numbers above 250 consistently. You want to see us returning to the stronger job growth that we'd been starting to report last fall and that's where we are here.

And that 5 1/2-year low on the unemployment rate is significant for a couple of reasons. You also see the unemployment rate for black men falling. That's something that has been stubbornly high. It's been twice the rate of the general population when you're seeing all these subgroups starting to move at the same time. It's something you want to see consistently.

We've a lot of work to do, Carol. I mean, no question. There will be people right away who will be, like, putting all these asterisks on these numbers but it is showing us that there is movement in the economy for some people. The job market has turned. The long-term unemployed it has not, no question, but for some people the job market has turned. We want to see more months like this -- Carol. COSTELLO: OK, well, let's talk about those asterisks right now because, Stephen, this number is much stronger than expected but as a counter it's not a terrible GDP report, the worst in two years so there seems to be some sort of disconnect here.

MOORE: Well, there does. And, you know, I'm greatly relieved by this report. I think Christine really nailed it in terms of the good news in this report. And this is a strong report as Christine said. It's the strongest job numbers we've had in something like a year and a half or two years. So everything that Christine said is correct.

Actually we did see a nice reduction in number of long-term unemployed people, people who have been unemployed for less -- for more than six months. That number fell as well.

But, Carol, there's one kind of bleak part of this report and I'm not trying to, you know, spoil a good report. But, you know, it's interesting, Christine, I don't know if you saw this number, a million people dropped out of the labor force in April. This is -- this is a strange thing because it's true that employment is picking up in April and that employers hired more workers. But at the same time we saw, you know, another million people drop out of the workforce. And I find that to be stunning.

COSTELLO: Well, the other thing, Christine, when you take a look at the number of hours people are working and how much they're getting paid for that work there's very little growth there, too.

MOORE: Yes.

ROMANS: Yes. And we want to see that grow and I really want to see the hours worked grow.

MOORE: Right.

ROMANS: Because a lot of times what companies do is before they hire a new worker they start putting more hours on everybody else, so that's one of those canaries in a coal mine in a good way for the jobs market. So there are theses little things that we watch all the time. But I don't want to take away too much away from the headline here because we have been looking for broad-based growth to be sustained for a very long time.

And when you talk to businesses and I know Stephen does, too, you hear them say I'm not very confident about hiring, but things are getting better for me. Things are getting better for me. When you talk to, you know, headhunters, they say there are talent wars in engineering --

MOORE: Right.

ROMANS: -- and just about everything STEM.

MOORE: Right.

ROMANS: Anything that has to do with Silicon Valley, anything that has to do with real estate in Silicon Valley.

MOORE: Yes.

ROMANS: You know, there are parts of the economy that are really moving. So there are people who are say for them they have felt this turn. And -- I'm really glad about the long-term unemployed number, no question, Stephen, that number is still too high.

MOORE: Yes.

ROMANS: You know, the long-term unemployed and the underemployment rate, 12.3 percent, I think, still too many people sidelined by the recovery.

MOORE: Yes.

ROMANS: You only hope that the recovery is going to encompass more people eventually.

COSTELLO: Well, let me ask you this --

MOORE: You know, Carol --

COSTELLO: Let me ask you this, Stephen.

MOORE: Let me -- OK, go ahead.

COSTELLO: Because one of the problems has been are banks are reluctant to loan money and that's really slowing small businesses down.

MOORE: Yes. Yes.

COSTELLO: So this new number, this overall numbers, because it's not just this month's jobs report, it's -- you know, the conglomerate -- the putting together of all these jobs reports over the course of the year that does it for bankers. Well, they feel -- I don't know, will they have enough faith that the economy is truly recovering to part with their money?

MOORE: I hope so.

(LAUGHTER)

I hope so. And actually, you know, Carol, bank lending has actually been up in the last few months, and that is, you're exactly right. That is a forward-looking sign of strength.

I think, Christine, as I look at this report, and you're right, I talk to a lot of businessmen and women, who are -- you know, people hire people, as you do, you know, what they're saying is if you've got skills, you know.

ROMANS: Yes.

MOORE: You know, if you've got those skills that people need, you can find a job out there.

The problem, Carol, I think is that we have a skills deficit in this country and a lot of those people who still can't find jobs are the people who just don't have the education levels and the skills to match the jobs that are needed.

But, again, Christine, you've got to explain to me, why is it we saw again with -- at the same time that employers are hiring we're still seeing this very disturbing trend in number of people in the labor force.

ROMANS: So how much of that is people who were --

MOORE: In the labor force.

ROMANS: How much of that are people who are baby boomers who are in the labor force?

MOORE: Some of it. Some of it.

ROMANS: But are dropping out. How many we don't know are people who were on long-term unemployment benefits?

MOORE: Yes. Yes.

ROMANS: And those expired and maybe some of them didn't ever have an intention to go back in the labor force that corresponded with the end of their working life. We just don't -- I don't know the answer to that question but something we'll ask Labor Department economists.

COSTELLO: OK. The discussion will go on throughout the day here on CNN.

MOORE: Finally a little bit of good news, huh?

COSTELLO: I know.

ROMANS: Yes.

COSTELLO: I just want to focus on the positive for once.

(LAUGHTER)

Christine Romans, Stephen Moore, thanks to both of you.

MOORE: Take care.

COSTELLO: This morning Malaysian officials are pushing back against critics who say an initial report on the disappearance of Flight 370 didn't go far enough.

(BEGIN VIDEO CLIP)

HISHAMMUDDIN HUSSEIN, ACTING MALAYSIAN TRANSPORT MINISTER: It must be stressed that the report made public yesterday is a preliminary report. Nevertheless, as I repeatedly stressed since the beginning, we really have nothing to hide.

(END VIDEO CLIP)

COSTELLO: In the meantime, a search for possible wreckage in the Bay of Bengal has turned up absolutely nothing. Officials say it is highly unlikely the Boeing 777 went down in this area. Still, they're sending more resources to the region and -- but they say that could distract from the search.

So let's bring in CNN's Will Ripley, he's in Kuala Lumpur. We'll also joined by former NTSB director, Peter Goelz.

Will, first to you. How serious are Malaysian officials taking this notion that the plane went down in the Bay of Bengal?

WILL RIPLEY, CNN CORRESPONDENT: It seems like after what we heard from them a few hours ago here in Kuala Lumpur, Carol, they're not taking this very seriously at all, saying it's highly unlikely. They agree with the Australian search chief, Angus Houston, that all of the data indicates that MH-370 is in this area in the Southern Indian Ocean and not in the Bay of Bengal.

They say there are three ships there from Bangladesh that have been searching the area. As you said, haven't turned up anything. But what we haven't gotten an answer about yet, Carol, is OK, why are they so convinced, what is it is about this data, the satellite data, the calculations done by this team of experts here in Malaysia that has led them to believe that the plane absolutely or at least as far as their best educated guess is in the Southern Indian Ocean when eight weeks in, Carol, we still don't have a single piece of debris.

COSTELLO: Well, let's ask Peter about it.

Peter Goelz, so why are Malaysian officials so sure?

PETER GOELZ, CNN AVIATION ANALYST: Well, I think everything that they have, and granted, it's not a great deal, I mean, they've got the handshakes from Inmarsat and the -- the radar that shows the plane starting to head in that direction. And that's what they've got. And their best guess, their best estimates, are it's off of Perth. Now they are going to bring in a new group and look at this data and see if they come up with the same solution.

In terms of the Bay of Bengal, I mean, when I helped investigate TWA Flight 800, we had numerous claims that it was, you know, electromagnetic, that it was space junk, that it was a missile. We investigated all of them. And at this point unfortunately we're obligated to do that on Malaysian Flight 370.

COSTELLO: Back to Will for just a second and I want to focus a little bit more on this preliminary report that was released yesterday because the families of Flight 370 were frustrated by that report. There was no information about the plane's maintenance history, engine performance data or any information on air traffic control staffing, so did the Malaysian authorities say anything today that they were maybe going to release some data about those things? RIPLEY: Yes. Well, you heard the acting transport minister say that this is a preliminary report and so only five pages plus some supplemental documents was released. One thing that they did expand on when they were asked about it, Carol, is why on earth did Malaysian Airlines think that Flight 370 was in Cambodian airspace? What could have possibly lead them to believe that when all of the other data shows the plane was very far from that?

And they made an interesting revelation. They said that essentially the technology they were using to estimate the plane's flight path is similar to a flight tracker that you or I would have on our cell phone or iPad. That's apparently how they were estimating where Flight 370 was located in those initial hours after it disappeared. Certainly something they're going to be taking a look at now to see what technology they're using and how they can improve upon it.

COSTELLO: I want to bring in CNN safety analyst and author of "Why Planes Crash," David Soucie.

David, you also read that preliminary report. It's still unclear to me how many pounds of lithium batteries were on board that plane. Have you been able to determine that?

DAVID SOUCIE, CNN SAFETY ANALYST: Yes, I have the flight -- the flight manifest was released. There were some confusion because it was broken into two different categories. But there -- in essence there -- well, not more in essence, there are 5,400 pounds on that manifest of lithium batteries so that's what was on board that aircraft. That's more than the weight of two vehicles, two cars, in that aircraft of lithium batteries.

COSTELLO: Wow. So, Peter, you're formerly with the NTSB. Would that raise a red flag to you?

GOELZ: Well, as David has pointed out lithium batteries are prohibited from flying on flights with passengers in the United States. But the -- you know, the drawback on the lithium battery, you know, as a suspect is that there's not a scenario in which the pilots would not have been able to call an emergency, would have been able to indicate to the flight controllers that something was going on.

So, you know, it's an interesting point. It's something that, you know, probably worldwide air carriers ought to revisit but there's no evidence that it's got anything to do with the disappearance of Flight 370.

COSTELLO: David, do you disagree?

SOUCIE: I'm sorry, Peter, I do a little bit in that they are claiming that they did put those lithium batteries in the back cargo area. But the fact that they originally said there was 400 pounds and then later said there were -- 5,400 pounds leads me to doubt that they actually put them in the rear compartment.

And if they were in the front compartment it's a mere two or three feet between that front cargo compartment through a thin aluminum door to the avionics rack where the transponder is located. The ACARs box is located and the UHF and VHF radios are all co-located on the rack, that's just ahead of that -- of that door. So I'm not saying that's the case or that's what caused it because there's subsequent things that would counteract that that happened in the aircraft.

So what I'm saying is that there -- if the aircraft was loaded improperly which at this point why would it not be, but it would have been right near where those radio racks are. So that's the only connection I could make there.

COSTELLO: OK. So, Will, on another matter. On Monday Malaysia, Australia and China will hold a trilateral meeting. What can we expect from that?

RIPLEY: We can expect those three countries to get together and bring in some of the best experts to talk about where the search is going to go from here. They said today it could take up to 12 months, a full year, and cost $60 million. But how's that money going to be spent? And what technology is going to be used?

We know the Bluefin-21 has been searching, it hasn't had any success in finding anything with its underwater scans, and so they are going to be bringing in other types of equipment. They talked about, you know, these autonomous underwater vehicles, vehicles with side-scan sonar that can perhaps be towed from a ship and go a bit deeper and do a wider scan.

And they're going to be hiring private contractors to come in and search this really large area of the Southern Indian Ocean where they think the plane might be.

COSTELLO: Will Ripley, David Soucie, Peter Goelz, thanks as always. We appreciate your insight.

SOUCIE: Thank you.

GOELZ: Our pleasure.

COSTELLO: Still to come in the NEWSROOM, will Donald Sterling fight to keep the Clippers? One attorney says, oh, get ready for a big battle. Ted Rowlands talked to him.

Hi, Ted.

TED ROWLANDS, CNN CORRESPONDENT: Hi, Carol. It doesn't look like there's much of a chance that Sterling will be able to keep his team but wait until you hear from this guy who has gone head to head with Sterling in a legal battle. He has a different view. That's coming up.

Stay with us.

(COMMERCIAL BREAK)

COSTELLO: Donald Sterling has a bigger battle on his hands than trying to hold to his team. The L.A. Clippers owner reportedly has cancer. CNN has not been able to independently confirm this story. It was first reported by "The New York Post" and ESPN.

There is collateral damage linked to the sterling scandal this morning, though. The head of the NAACP, Los Angeles chapter, has now resigned. The group came under fire for plans to present Sterling with a lifetime achievement award and not acting quickly enough to cut ties after the racist audiotapes surfaced.

The NBA's push to force Sterling to sell the Clippers took another turn yesterday when the voters voted unanimously to move ahead. We're learning more about Donald Sterling's past and it ain't pretty.

CNN's Ted Rowlands is here with more.

Good morning, Ted.

ROWLANDS: Good morning, Carol.

If you look at it, it doesn't appear that Donald Sterling has much of a chance to keep the clippers. The constitution for the NBA for the owners is pretty clear. If the other owners want you out, you'll pretty much lose your team.

But one guy who has done battle with Sterling in a legal case before says not so fast. This guy is a fighter.

(BEGIN VIDEOTAPE)

SPORTSCASTER: We've got game seven coming up in Los Angeles on Saturday!

ROWLANDS (voice-over): Battling the buzzer, the Los Angeles Clippers still one game shy of advancing in the play-offs after losing a heart- pounding game six to the Golden State Warriors last night by just one point.

SPORTSCASTER: The warriors stay alive.

ROWLANDS: Meanwhile, as the NBA tries to force the sale of the team, some words of caution from an attorney who knows all too well that Donald Sterling enjoys a fight.

DOUGLAS BAGBY, ALEXANDRA CASTRO'S FORMER ATTORNEY: I'd be very surprised if he doesn't make a big battle out of it.

ROWLANDS: In 2002, Douglas Bagby successfully defended Alexandra Castro against the Sterlings, thanks in part to this photo of Donald Sterling in his underwear.

At issue, this house in Beverly Hills that Castro said Donald bought for her and her mother while they were lovers. According to Bagby sterling claimed under oath that he was never romantically involved with Castro and that she and her mother had somehow swindled the house by forging documents.

But then he saw the underwear photo. And others. And canceled checks and gift receipts from places like Gucci, Barney's and Tiffany's, all kept by Alexandra Castro, forcing Sterling to change his story.

BAGBY: He, then, decided, well, then, I'll just make them out to be such horrible people.

ROWLANDS: Sterling's new story according to Bagby, he gave her the house and the gifts for sex. But Castro saved love letters and cards allegedly from Sterling including this one she says he gave her after buying her the house. It had a handwritten message and was signed "love forever."

While the lawsuit against Castro was dropped, Sterling's inconsistencies surfaced during a deposition in a sexual harassment suit filed a few years later.

Sterling won that case but watch how he handles questions about paying Alexandra Castro for sex.

DONALD STERLING, CLIPPERS OWNER: I was under the impression and I believed that some of the money that she had asked for was for sexual favors that she had performed.

But it's not true, she didn't want to. She didn't do it and my impression was wrong. And I did not pay her for sex.

ROWLANDS: At this point, it's unclear whether sterling willingly sell the Los Angeles Clippers but many think the NBA should get ready for a fight.

BAGBY: Hard for me to see him just going gently into the night.

(END VIDEOTAPE)

ROWLANDS: And, Carol, we should note that we reached out to the Sterling camp and got no response -- Carol.

COSTELLO: I don't know -- I'm just sitting here wondering why Sterling's wife is still with him. She's standing up for him. She's appeared by his side. It's just very difficult to wrap your mind around, Ted.

ROWLANDS: Yes. You know, we should point out that this lawsuit against Alexandra Castro that we just talked about was actually filed by his wife. The same scenario that we've seen with his latest, quote-unquote, "mistress", so some are speculating that she may have involved in these decisions to file lawsuits against --

COSTELLO: Oh, come on, Ted. V. Stiviano was an archivist.

ROWLANDS: That's true, that's true, yes. With the visor. Yes.

COSTELLO: Yes.

ROWLANDS: Who knows? Who knows what's going on in this?

COSTELLO: I don't know. It's very confusing. Ted Rowlands, many thanks to you. No sports team has gone through a week like the Los Angeles Clippers have. And it's not over yet.

Andy Scholes joins me now.

They lost by one point!

ANDY SCHOLES, BLEACHER REPORT: Yes, what a rollercoaster -- emotional roller coaster the whole week has been. You know, it seems it's gone by so fast. It was just Saturday that we first heard the racial audiotapes from owner Donald Sterling.

Sunday, of course, the team had to play game four against the Warriors. They held that silent protest before game. Very emotional game, ended up losing that one.

And then, of course, on Tuesday, Adam Silver dropped the hammer on Sterling. The players had smiles back on their faces, a hop in their step. Got the big win at the Staples Center to take the lead in the series.

But, as you said last night, Carol, one-point loss, just a crushing defeat. And then after the game having to answer more questions about Donald Sterling. This time about the story that he reportedly has cancer. This is what some of the players had to say after the game --

(BEGIN VIDEO CLIPS)

BLAKE GRIFFIN, L.A. CLIPPERS: If that is true, you know, you know, my thoughts and prayers are with him. I mean, nobody -- nobody deserves to go through something like that.

CHRIS PAUL, L.A. CLIPPERS: Yes, that's the first time I ever heard of that. And that's truly unfortunate.

DOC RIVERS, L.A. CLIPPERS: Didn't know it until just now. You know, I don't have a reaction to that, you know, I hope it's not true.

(END VIDEO CLIPS)

SCHOLES: Good news for the Clippers right now is they are going back home, game seven is at the Staples Center and NBA teams in game sevens usually win 80 percent of the time.

COSTELLO: OK. I have to ask you about Magic Johnson because my dream is that Magic Johnson buys the Clippers because it's a picture of Magic Johnson and V. Stiviano that reportedly enraged Mr. Sterling. First, Magic Johnson said, oh, not interested and something's changed?

SCHOLES: On Monday on Twitter, he said, I want to put the rumors to bed, I'm not buying the Clippers. But he was at a conference just on Wednesday in front of a panel, he was asked about this again, and he kind of backpedaled off that. He's not saying no, now it's more about a maybe. Here's what he had to say --

(BEGIN VIDEO CLIP) MAGIC JOHNSON, FORMER NBA PLAYER: I've been saying no all the time. I think that we'll see what happens.

UNIDENTIFIED MALE: Keep talking. We went from no to we'll see. Keep going.

JOHNSON: If I will be owning an NBA team sometime, it has to be the right situation. If the Clippers is the right situation? Of course, it's one of the premier franchises.

(END VIDEO CLIP)

COSTELLO: Uh-huh.

SCHOLES: So, he goes from no to we'll see to, of course, the Clippers are a great situation. One of the best franchises and he already owns the Dodgers, so this would be the perfect situation. He's Mr. L.A.

COSTELLO: He keeps laughing at everything, I don't know.

SCHOLES: I bet wheels are in motion.

COSTELLO: I bet they are.

Andy Scholes, thank so much.

Still to come in the NEWSROOM, Amanda Knox in her own words for the first time since an Italian appeals court released an explanation for her murder conviction.

(BEGIN VIDEO CLIP)

AMANDA KNOX: It's only speculation that convicts us. It's evidence that acquits us. And I'm holding -- I'm holding firm to that.

(END VIDEO CLIP)

COSTELLO: Hear more from her exclusive interview with CNN's Chris Cuomo after a break.

(COMMERCIAL BREAK)