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Gas Prices In U.S. Have Hit A Record High; Economists Theorize Inflation Could Worsen In Coming Years; Tensions Between Russia And Ukraine Are Causing Continuing Grief For The World. Aired 2-2:30p ET

Aired May 11, 2022 - 14:00   ET

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

[14:00:00]

(COMMERCIAL)

ALISYN CAMEROTA: Hello, everyone. I'm Alisyn Camerota, welcome to CNN Newsroom.

VICTOR BLACKWELL: I'm Victor Blackwell, good to be with you.

Minutes from now President Biden is scheduled to speak in Illinois about the economy, inflation, rising food prices in the United States. The Labor Department just reported that inflation finally slowed a bit for the first time in nine months.

The Consumer Price Index rose 8.3 percent in April, compared to the same month last year. Now, that's still high, but a slower increase than what we've seen in previous months.

CAMEROTA: Still, economists say it probably be a while until we feel any significant relief at the grocery store or gas pump. Fuel costs just hit another new high, $4.40 a gallon on average for the first time ever.

BLACKWELL: CNN White House Correspondent Jeremy Diamond is travelling with the president in Kankakee, Illinois. So Jeremy, the president gave a speech about inflation yesterday. Today's supposed to be more about the food supply, what can we expect?

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Yes, Victor, but inflation will still be very much top of mind for the president as he addressing this dueling issue of rising food prices, as well as this global food shortage, part of it sparked by the war in Ukraine.

Ukraine, Russia key suppliers of wheat around the world. So we'll hear the president address both of those.

And the fact that he's talking about inflation for the second day in a row, a reflection of the extent to which he is facing serious political pressure on this issue - a top issue of concern for voters heading into the midterms.

Today we'll hear the president announce several new steps to help farmers, encourage them to boost U.S. food production both to bring down prices here at home, and also to help alleviate some of those global food shortages that we're seeing.

It'll include doubling the federal investment in domestic fertilizer production to $500 million.

Also expanding access to insurance for farmers who plant two crops on their lands. And also expanding access to technologies that help some of these farmers reduce their dependence on fertilizers. Fertilizer prices have also been rising in large part because a lot of fertilizers are produced in Russia.

And we've seen, of course, sanctions on Russia and also of course just the broader ramifications of the war in Ukraine. All of this coming, as you guys mentioned, as we saw inflation - potentially the first signs that inflation is slowing, according to the Consumer Price Index reflecting last month's numbers.

But nonetheless, still very close to those 40 year highs, a very high issue of concern for the president. And once again, he's going to be here talking about those increases, talking about what he has called Putin's price hike.

Also talking about Republicans and what he says is their lack of a plan to fight inflation, even as we see Republicans continue to hammer the president because of those price increases that we're seeing across the country.

Victor, Alisyn.

BLACKWELL: Jeremy Diamond there in Kankakee. We will - of course we'll go to the president as soon as he begins to speak. Let's talk more now about these inflation numbers.

CNN's Matt Egan is here.

So the index is down 2/10 of a percent, does that mean that the peak of inflation is behind us?

MATT EGAN, CNN REPORTER: Well, Victor and Alisyn, we may well look back and say that yes, March was the peak of this historic inflation crisis. The fact that year-over-year consumer prices, those gains have decelerated is a welcome sign after so many months - really ever month since last summer of it heating up and going the wrong direction.

But I think in reality this report was kind of a mixed bag. I mean, some economists that I talked to, they were encouraged by the numbers. Others, they were kind of alarmed.

I think one of the concerning points here is that we actually saw core inflation month-over-month, that actually heated up. That excludes food and energy, and this was because airfare went up really sharply just as people started travelling again.

We also continue to see record setting price spikes on a whole variety of categories. Everything from baby food, and restaurants, to new cars and trucks - Victor this will get your attention, men's suits 22 percent more expensive than a year ago. Those are all all-time records since the government started tracking those categories.

You know, at the end of the day I don't think anyone on Main Street is going to be celebrating this very small deceleration in prices.

And we also have a chart that shows how when you look at inflation just over the past year it's really a very small decline in terms of the rate of increase there, and inflation is still going up more than it was just a few months ago. So it is way too early to declare victory here.

CAMEROTA: It's a good thing you have a lifetime supply -

[14:05:00]

BLACKWELL: I was today years old - I was today years old when I realized that there was a category for men's suits specifically following the price.

(LAUGHTER)

CAMEROTA: But I think you're set because you have a lot of them.

Meanwhile, Matt, tell us about these other two big factors that are so unpredictable. The war in Ukraine and COVID.

EGAN: Yes, absolutely. I mean, I talked to Mark Zandi the Moody's Analytics Economist before and he said that he's got a reasonable degree of confidence that March was the peak.

But he said that assumes that nothing goes completely off the rails with either COVID in China, or the war in Ukraine. And we know that those two issues have been just so unpredictable.

And so, if - you know, oil prices go up sharply because Russia cuts off supply of energy, or because Europe decides to impose an embargo on Russian energy that's going to be bad news.

We know is that gas prices are at record highs, $4.40 a gallon. And yet China their lockdowns has been a big issue as far as supply chains go. So those are concerns. The hope is that those issues get better, inflation starts to cool off, and the economy can continue growing.

CAMEROTA: That is certainly the hope. Matt Egan, thank you very much for spelling it all out.

Joining us now to discuss further we have Douglas Holtz-Eakin who served as the Economic Advisor to President George W. Bush. And Personal Finance Columnist for the Washington Post Michelle Singletary, she's also the author of "What to Do With Your Money When Crisis Hits: A Survival Guide." Sounds like we all need that.

But Douglas, I want to start with you. So, has inflation peaked?

DOUGLAS HOLTZ-EAKIN, CHIEF ECONOMIST, WH COUNCIL OF ECONOMIC ADVISORS IN G.W. BUSH ADMIN.: Well, you can't tell that for sure. I think the really troubling part of this particular report (ph) is that if you look at the essentials categories.

If you look at food, energy, and shelter which are about 50 percent of the typical family's budget that's up year-over-year at a 10 percent rate, higher than the headline.

So the things you need the most are rising the most rapidly. And indeed I think the president's problem is that if you look at the typical monthly increase since he took office, for that category of goods and services, that's 19.8 percent over this tenure, that's the political problem. People are looking at the essentials and they're just getting more expensive.

BLACKWELL: Michelle, let's go specifically to the price of food. The BLS (ph) says that the food index rose, as just referenced, 9.4 percent year-over-year, the biggest increase in more than 40 years.

You're the personal finance person, what are families supposed to do with that? I know you're going to say stay away from restaurants and cook, but you've got to buy food. How do you counter that?

MICHELLE SINGLETARY, PERSONAL FINANCE COLUMNIST, THE WASHINGTON POST: Well, stay away from restaurants and cook at home.

BLACKWELL: OK.

SINGLETARY: You know, I mean, listen you have to do a lot of substitution, and you've got to be very judicious about when you go to the grocery store. You know, have a list. I take a list and stick to the list.

Don't take the kiddies with you if you can help it, leave them home because they want to grab things. These little things - and I know that there are many Americans who are already stretched, they're already doing that. They're going to dollar stores, they're really trying to do it.

But for the vast majority of Americans really it means that you've got to hunker down and look at your budget and cut where you can. Brand - store brands, I mean, I joke with my children.

You know, they all like different brand names. So I buy the brand name one time, and then I buy the store brand and put it inside the box of brand name, they don't know the difference.

(LAUGHTER)

I mean, you're just doing little tricks, you know? You don't eat out as much. When you eat out, if you want to eat out, you know -

BLACKWELL: Yes.

SINGLETARY: - because you really want to support the restaurants. Maybe you don't get an appetizer, you don't get dessert, you share an entre, get water and some lemons and make you lemonade at the table. I mean, just those kind of things help cut.

BLACKWELL: Yes.

CAMEROTA: There's a lesson there - there's a metaphor there as well, Michelle. As we wait to hear from the president, Douglas, are there helpful hits? I mean, I hear everything that Michelle is saying, but these, as you say, are fixed costs.

There's not much that Americans can do about their rent, and about the gas that they need to get to work. I mean, what are the hints that you recommend for everyone?

SINGLETARY: You know, when - especially when it comes to how long (ph) -

(CROSSTALK)

HOLTZ-EAKIN: Well, I think you've -

CAMEROTA: Hold on, Michelle. Hold on, Michelle, one second. Go ahead, Douglas.

HOLTZ-EAKIN: Oh, no, I think you've hit on a very important point. To me the most troubling number in this entire report is that shelter, you know apartments, houses, continues to go up.

The inflation rate there (ph) is now 5.1 percent, that's been steadily rising. There's no place to go in that front, we're seeing that across the country. That's the real inflation problem. It doesn't go away quickly.

You know, we can see food and energy prices bounce around from month to month, shelter isn't like that. So we've got an inflation problem in the thing that people have to live in, and that's going to be the real challenge.

And the president's going to talk about the pain of inflation, he's going to talk about things he'd like to do about inflation. There's not one thing he's going to say that's going to address the shelter inflation problem.

BLACKWELL: Douglas, let me stay with you on this. Is a recession more likely than not, now?

[14:10:00]

HOLTZ-EAKIN: I'm a little concerned about the - all the sort of talking down of the U.S. economy. 2022 is not a recession year, this is a very strong economy. The reason we have the inflation is it is too strong.

So we're going to see the Federal Reserve raise interest rates, it is intended to weaken the economy to control inflation, that's the plan.

The inflation risk comes in 2023 and later if the Fed overdoes it. It's a hard task that they've been given, somehow slow the economy enough to stop inflation but not too much to cause a recession. I think the big risk is next year. CAMEROTA: Michelle, I read that you said that you live your life as

though you're in recession everyday. How do the rest of us do that, and specifically when it comes to shelter, as Douglas was talking about?

SINGLETARY: Well, when it comes to housing, one of the things that I recommend, and Victor knows it. You guys, we've been talking about this -

BLACKWELL: I sure - I know what's (ph) coming.

SINGLETARY: - you know what's coming. You know, shared housing, folks. And here's the thing. If you don't have to move, and you can bring in people, do that. If you're graduating and you can go home and live, go home and live with your parents - and parents, let them come home. Don't charge them rent, especially if they've got student loan debt.

Throughout the time of my homeownership my husband and I have almost always had somebody living with us that was in a financial crisis or maybe had lost their job, or divorce.

And we let them stay for a while, we don't charge rent. We make sure that they're budgeting right. And so, you've got to do those kinds of things.

One thing is you might want to talk to your landlord if your lease is up to see if you can extend the lease say instead of 12 months, 15 months and would they give you a break, or leave the rent where it is.

And so those are the kinds of things that you can sort of do. If you don't have to buy a house right now, don't buy a house. You know, because it's going to cost you more, the mortgage is going to cost you more. So you want to look at that big ticket thing in housing and see what you can do.

If you can't live with your parents, maybe there's an auntie. Or you know what? If you're moving to a new area maybe one of your coworkers has a spare room. And I actually did that, a friend of mine was moving when we were in Baltimore - moving to Baltimore to work for a television station, and she lived with me for about, I think two years. And so those are the kinds of things to do until things settle down and stabilize.

CAMEROTA: That's great. Victor, I do have the spare room if any of our colleagues need that.

Michelle Singletary, Douglas Holtz-Eakin, thank you both very much.

Stay with us, the president's about to speak on the economy just moments from now, so we will bring those remarks to you.

BLACKWELL: Also a short time from now the Senate will vote on a bill that would preserve access to abortion across the country. It is expected to fail, but we'll talk about that with the Democratic Senator on the strategy and what is next. CAMEROTA: And Ukrainian forces are reporting progress. They say

they've liberated several villages near the country's second largest city, so we're live on the ground and we'll take you there ahead.

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[14:15:00]

CAMEROTA: President Biden is in Kankakee, Illinois at a family farm talking about the country's food supply shortages and inflation, let's listen.

PRES. JOE BIDEN: More buildings, more territories have been burned to the ground this year than entire state of New Jersey from New York all the way down to Virginia. The entire state of New Jersey.

And so, what this young man does - and it's amazing what they do trying to - and it relates to lack of water in most of the places I've flown over those reservoirs that were 200-feet deep that are now 2- inches deep, literally not figuratively.

So one of these days I want to come back and talk to you all about conservation as well, and the climate. But thank you for what you're doing, man. You're - I really mean it. Thank you.

(APPLAUSE)

BIDEN: Folks, I know it's hot in here so I'm not going to talk more than an hour and a half. Look, I want to make a few, I think are fairly important points. First of all, I want to thank Jeff for that introduction and you Gina, for your hospitality you've extended today.

I joined Congresswoman Robin Kelly here, the real champion for working families and farmers who represents this area. And I just do what she says, she sends a note to the White House and I get it done.

No, but she's a key player in infrastructure getting high speed internet, clean water to every person across this district. And I know we wanted to be here, also was Dick Durbin and Tammy Duckworth, but they - and I mean, they were going to come but there's a vote today in the United States Senate and they're unable to be here.

They're two of the most genuine, reliable people I've ever worked with and I've been doing this for a few days.

And I want to thank Tom Vilsack. Tom and I became friends when Tom was Governor in Iowa. We travelled the state. Tom has forgotten more about farming than most people ever learn.

I'm sure this room knows as much, but the idea, Tom talks about how critically important agriculture is to the United States in every single solitary way.

But the real reason I'm here is to thank American farmers. Thank farmers - you feed America, you get us through - you got us through a pandemic. And you're literally the backbone of our country, it's not hyperbole. But you also feed the world, and we're seeing with Putin's war in Ukraine you're like the backbone of freedom.

You know, I was at a factor not long ago - a couple - eight days ago down in Alabama, and they make javelin missiles -

[14:20:00]

- to help the Ukrainians stave off the Russians, beat them back in their aggression. And I pointed out that the proof point that America is the arsenal of democracy, that's what they are. We always have been, we've been the arsenal to democracy.

And I stand here today to thank American farmers who are the breadbasket of democracy. You really are. You know, we talk about every investment banker could leave their job, if every farmer left we'd all starve to death. You know, let's talk about what's important to us. All these jobs are important.

But I just think about it, right now America's fighting on two fronts, at home it's inflation and rising prices. Abroad it's helping Ukrainians defend their democracy and feeding those who are left hungry around the world because Russian atrocities exist.

And Jeff, and the American farmers understand Putin's war has cut off critical sources of food. Ukraine was the world's largest producer of wheat, and corn, and cooking oil - but wheat the largest.

For example, Ukraine says they have 20 million tons of grain in their silos right now - 20 million tons. And guess what? If those tons don't get to market, an awful lot of people in Africa are going to starve to death because they are the sole, sole supplier of a number of African countries - Somalia - I won't go through them all.

But the point is this, that because of what the Russians are doing in the Black Sea, Putin has warships, battleships preventing access to the Ukrainian ports to get this grain out, to get this wheat out.

The brutal war launched on Ukrainian soil has prevented Ukrainian farmers from planting next year's crop, next year's harvest. And they're not doing too damn well in Russia either, and Russia's the second largest producer.

But we're doing something about it. And our farmers are helping on both fronts, reducing the cost of - price of food at home, and expanding production and feeding the world in need. You know, I just toured Jeff's beautiful family farm, 800 acres of soybeans, corn, and wheat.

We talked about farmers all across America, what they're experiencing today. In addition to Putin's war in Ukraine, it's been cold and wet this spring like it is - it's cold today.

(LAUGHTER)

BIDEN: We waited for 90 degree weather until I showed up here, right? But look, many farmers in the Midwest have been put behind the 8 ball because of that. But it kept them from getting into their fields and planting the crops.

But as Jeff just shared, American farmers always find a way. They always feel something extra, a spark of patriotism - and that's not hyperbole. A spark of patriotism (ph), the sense of never giving up, always finding a solution.

To all our farmers, I want you to know your Congresswoman, me, the secretary of my Cabinet, we have your back, Robin has your back - she's always looking at what's going on in the agricultural world. For example, we're reducing the red tape so it's easier for farmers to conserve inputs in double crop.

For folks at home who don't know what double cropping means, harvesting two different crops from the same field in the same year. And that's what Jeff does with wheat and soybeans, which America is a top producer of, soybeans.

And wheat will be harvested around July 4, if all goes well, god willing, creek not rising as my grandfather would say.

But look, then you plant soybeans in the same acreage. And he'll tell you, double cropping comes with some real risks. Growing season for wheat is short, and if the weather conditions aren't ideal, or aren't at least good, or there are other disruptions then the timing of everything is thrown off.

But it's a risk we need to take. That's why my administration is looking at how to extend crop insurance coverage to give financial security to farmers like Jeff who practice double cropping.

Secondly, I want to also - farmers worried about rising fertilizer costs, and the content of the fertilizer. That's why earlier this year the U.S. Department of Agriculture announced it would invest $250 million to boost fertilizer production.

Literally (ph) on the plane out here, on Air Force One, I turned to Tom, and I said, Tom double that, make it $500 million, it's so desperately needed. We can't take chances. It's critical to get this done.

Now when we leave here today I'm heading up to Chicago. You know where Tom's going? He's heading to the airport when we get to Air Force One, he's heading to Germany to the G7. That is all the democracies in Europe getting together, and their agricultural teams getting together.

North America, Europe, and Asia they're all part of it to solve some really big problems.

[14:25:00]

They're going to see what actions we can take to increase fertilizer supplies globally, and identify how we can work together to prevent export restrictions on food and agricultural inputs, and bring more global production to market which will stabilize prices and bring more certainty to our farmers, and keep people from dying of hunger. You know, this bill is in (ph) other ways as well. My administration

have been working to drive down the cost to farmers, and Tom mentioned a little bit, and prices to consumers.

To reduce gas prices last month I was in Iowa, a biofuel processing plant - a biofuel processing plant. And I announced an emergency waiver to allow E-15 gasoline to be sold across America during the summer.

It's an extraordinary effort, but it had to be done for this summer. E-15 uses more ethanol, like crops grown here, in Illinois, and elsewhere around the country, and it can reduce the cost of a gallon of gasoline at the pump by 10 cents per gallon.

Every little bit matters. I know it's a big deal, and Robin is a big supporter of this, so she's pushing it in the House as well.

Only four big companies, by the way, control more than half the markets for beef, pork, and poultry. Without meaningful competition our farmers and ranchers have to pay whatever the four big retailers say they'll pay for their chickens, their hogs, and their cattle.

These big companies can use their position as middlemen to overcharge grocery stores and (inaudible) families. Just consider this, 50 years ago ranchers got over 60 cents on every dollar spent to produce the beef that he raised. Today they get 39 cents.

Fifty years ago hog farmers got 40 to 60 cents for each dollar the family spent raising that hog, today it's about 19 cents. And as the big companies made massive profits, the prices you see at the grocery stores have gone up, and the prices farmers receive has gone down.

This reflects a market distorted by lack of competition. So last year I signed - one of the first executive orders I signed was that the competition - to make competition more available and level the playing field.

And through the American Rescue Plan we're investing about $1 billion to help smaller meat processors expand their capacity, give farmers, ranchers, and consumers more options, and have better prices.

Look, I'm a capitalist. But capitalism without competition is not capitalism, it's exploitation. It's exploitation. Folks, we can make sure the American agriculture exports will make up for the gap in Ukrainian supplies.

In fact, during my first year in office American agriculture exports shattered all previous records, $177 billion last year alone, I remind people my predecessor did not come close.

By travelling in our - we can't - we have to keep investing in our farmers to reduce the cost, to reduce prices to consumers, and have the most productive, more efficient farmers in the world here in the United States.

We've always combined generations of know-how with cutting edge technology to feed us, and the world. And I'm going to keep fighting for family farmers like Jeff so they can do what they do best.

I hope Congress is going to join me, I know Robin's going to fight like hell to have it happen. And working hard to invest in farmers like Jeff, and feed American and the world - that's what we have to do.

Let me close with this, look at the family farms like this one as a reminder of the bounty, beauty, and generosity of this nation. I know this, and you're tired of hearing me say this for the last two years - it's never, ever - I was in the Tibetan plateau with Xi Jinping, I travelled with him and spent more time with him than any other world leader has in China. And he said - he was talking about America as a diminishing power.

And I said, Mr. President, it's never been a good bet to bet against the American people, no one's ever won betting against the American people. And I said, by the way - he actually went on, he said, can you define America for me? Just me and the translator, and him a translator, simultaneous translation. By the way, I turned all my notes over to the State Department -

(LAUGHTER)

BIDEN: It matters. But you know, what happened was he said, can you define America for me? And this is the god's truth, because it's been quoted 1,000 times now. I said, yes, one word, possibilities. We're the only nation in the world - the only nation in the world that has come out of every crisis stronger than when we went in it.

Every single time regardless of what it was. No other nation has done that. It's one of the reasons why in some places we're called the ugly Americans, we think we can do anything - we know we can do anything.