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Recession Fears Changing U.S. Consumer Habits; U.S. Attorney General Does Not Rule Out Charging Trump; U.S. Basketball Star Brittney Griner to Testify Today; Hundreds Rescued After Torrential Rains Slams Missouri. Aired 4-4:30a ET

Aired July 27, 2022 - 04:00   ET



CHRISTINA MACFARLANE, CNN ANCHOR: Hello and a warm welcome to our viewers joining us in the United States and all around the world. I'm Christina Macfarlane in for Max Foster here in London. Just ahead --


UNIDENTIFIED MALE: Great likelihood is that we will have a recession.

UNIDENTIFIED MALE: This 40 year high in inflation is having a real impact on the economy.

UNIDENTIFIED FEMALE: Consumers are shifting their spending to more essential categories like food and fuel.

REP. ADAM KINZINGER (R-IL): Our investigation though it is not a criminal investigation certainly has brought some things to light that DOJ is watching.

UNIDENTIFIED MALE: DOJ is now inside the White House for the first time. That's a big change.

UNIDENTIFIED MALE: It is a hard grind, that's what Ukrainian commanders are predicting to try to push the Russian troops back.


MACFARLANE: It's Wednesday, July 27, 9:00 a.m. here in London, 4:00 a.m. in Washington. Where in the coming hours, the U.S. Federal Reserve is expected to hike its benchmark interest rate in the latest attempt to cool the economy and tame inflation. Second-quarter data on the country's GDP will be released tomorrow with analysts waiting to see if the numbers show that the economy has slowed again. Add in soaring prices, rising expenses and an ill performing stock market and it's creating the perfect recipe for recession fears. Despite all this, the White House remains confident the U.S. can steer clear of this one.


JANET YELLEN, U.S. TREASURY SECRETARY: Growth is slowing globally and I'm not saying that we will definitely avoid a recession.

JOE BIDEN, PRESIDENT OF THE UNITED STATES: I don't think that we'll see a recession.

BRIAN DEESE, DIRECTOR, U.S. NATIONAL ECONOMIC COUNCIL: Citigroup, little of the data that I see tells me that the U.S. is on the cusp of a recession. Morgan Stanley, with strong job growth and continued robust final domestic demand and consumption, this economy really does not look particularly recessionary.


MACFARLANE: But most Americans aren't buying it though. A Morning Consult/Politico poll from earlier this month shows 65 percent of register voters already feel that they're in a recession and that sentiment is changing spending habits. McDonald's says despite small and frequent price increases to combat inflation, customers are still waiting to pay for the convenience. Chipotle has adopted the same practice. The reports says higher income customers have increased their visits while lower income customers are ordering as often. Luxury and big-ticket purchases are also on the decline as consumer confidence in the U.S. economy slipped for the third month in a row. CNN's Rahel Solomon has more now from New York.


RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: The state of the economy this week with major corporate earnings and economic data. Tuesday, we learned consumer confidence fell for a third straight month with only 17 percent of people surveyed rating business conditions as good. Almost a quarter describe business conditions as bad. Consumer confidence gives us a look at several things, including how the public feels about the economy and perhaps more key, how they plan to spend.

Plans to make major purchases also signaled a slowdown. Investors feeling a slowdown as well after Microsoft and Google parent company Alphabet both reported weaker than expected earnings on Tuesday.

Walmart, meantime, reported it's already seeing a slowdown in where people are spending. The U.S. retailer warning that investor profits are likely to fall 11 percent to 13 percent for the fiscal year. Retailer says that while it's expecting to see more customers, inflation is forcing people to spend more on essentials like food and fuel and less on apparel. Walmart makes larger profits on categories like apparel as opposed to food.


Wednesday meantime we hear from the U.S. Federal Reserve where it's largely expected it will raise its benchmark interest rate by another three quarters of a percent. That then ripples through the economy and raises borrowing costs for everything from mortgages to car loans and credit cards. The Fed is hoping by raising borrowing costs we consumers spend less and bring a bit more balance in the supply of goods and the demand for those goods and services and this should lower inflation in the future. Speaking of inflation, we get another key inflation report on Friday.

In New York, Rahel Solomon, CNN.


MACFARLANE: But it's not just the U.S. feeling the pain. The International Monetary Fund has downgraded its global growth forecast for the second time this year. The IMF chief economist says the outlook is gloomy and more uncertain. It now predicts the world economy will grow to reach just 3.2 percent by the end of 2022, that's nearly half of last year's outlook. The range of issues are cited for the change in the forecast include slowing trends in the world's top economies, high inflation, COVID-19 lockdowns and the war in Ukraine are just some of the issues impacting the global economy.

Well, Europe is also facing the prospect of a winter with much less natural gas to heat homes and businesses. Russian-owned Gazprom is cutting supply To the Nord Stream One pipeline to 20 percent of capacity. Moscow says more repairs are needed on the turbines in the pipeline. But European leaders say it's retaliation for sanctions imposed after Russia invaded Ukraine. To deal with the problem the European Union is rationing its gas. Member countries have agreed to lower demand by 15 percent starting next week. But the cuts are voluntary and several EU members are exempt.

Let's see how European markets are reacting right now. As you can see all of them trending in the green there. And here is a quick look at the U.S. futures as well. Similar picture as you can see the Dow, Nasdaq and the S&P 500 all in the green.

Twitter shareholders will be voting on whether to approve Elon Musk's proposed $44 billion merger agreement. The vote will take place during a virtual meeting scheduled for September 13th in spite of the company's ongoing legal fight with Musk. Twitter's board has unanimously recommended shareholders vote in favored of the deal. If they approve the vote could give Twitter additional leverage for its legal fight against Musk.

Now, an investigation into the efforts to overturn the 2020 U.S. presidential election is getting deeper into the Trump White House and closer to the former president himself. The "Washington Post" reports the Justice Department is now looking directly at Donald Trump's actions as they continue to question his close allies. And U.S. Attorney General Merrick Garland suggests prosecuting Trump is now a very real possibility. Ryan Nobles has the details.


RYAN NOBLES, CNN CONGRESSIONAL CORRESPONDENT: Attorney General Merrick Garland making it clear that his office will not hesitate to prosecute the former President Donald Trump if it finds evidence that Trump criminally stood in the way of the certification of the 2020 election. Garland in an interview with NBC said that there is no one who is above the law and that his office will pursue the matter without fear or favor. Take a listen. MERRICK GARLAND, U.S. ATTORNEY GENERAL: We pursue justice without fear

or favor. We intend to hold everyone, anyone, who was criminally responsible for the events surrounding January 6 for any attempt to interfere with the lawful transfer of power from one administration to another accountable. That's what we do. We don't pay any attention to other issues with respect to that.

LESTER HOLT, HOST, NBC NIGHTLY NEWS: So, if Donald Trump were to become a candidate for president again, that would not change your schedule or how you move forward or don't move forward?

GARLAND: I'll say again that we will hold accountable anyone who was criminally responsible for attempting to interfere with the transfer, legitimate lawful transfer of power from one administration to the next.

NOBLES: Now, in the past Garland has been very specific about making sure that the Department of Justice is focused on the actual rioters that breached the building on January 6. In fact, that took up the lion's share of their investigation in its early stages.

But just recently, they have been expanding beyond just the rioters themselves, looking into election interference, looking into things like fake electors and other things and of course just this week we learned that they have brought before the grand jury two key Pence aides, Marc Short, Mike Pence's former chief of staff, and Greg Jacob his chief counsel. There's also reporting from the "Washington Post" and others that show that the investigation has expanded and has been questions directly asked about Donald Trump himself.


So, this is Garland saying that they will go where the evidence takes them. The other question of course is whether or not the January 6 Committee forces their hand by sending a criminal referral. Members of the committee this week said that they are very satisfied to see the Department of Justice moving forward, but the committee of course is not giving up. They still have hearings planned for September and a final report for later this year.

Ryan Nobles, CNN, Washington.


MACFARLANE: Well meantime, a former Trump defense secretary told the house committee that Trump never ordered him to have 10,000 troops ready to be deployed to the Capitol on January 6. Trump had previously said that he requested National Guard troops to be ready because he felt, quote, the crowd was going to be very large. Here's more from Chris Miller's testimony.


UNIDENTIFIED FEMALE: To be crystal clear, there was no direct order from President Trump to put 10,000 troops to be on the ready for January 6, correct? CHRIS MILLER, FORMER ACTING DEFENCE SECRETARY: No. Yeah, that's

correct, there was no direct -- there was no order from the president.


MACFARLANE: Now as powerful as the January 6 hearings might be, a new CNN poll finds that they are not moving the needle very much in terms of how Americans view the Capitol riot. However, public consensus is growing that Donald Trump acted illegally or at least unethically in trying to hold on to office after the 2020 election. With 79 percent of those surveyed saying that that was the case. While 61 percent of Americans think that Trump's statements leading up to the attack encouraged violence.

Now the CEOs of at least two gun makers are due on Capitol Hill today to testify about the mass shootings in the U.S. The chair of the House oversight committee says it's long past time for the gun industry to be held accountable. She plans to show a video featuring survivors and victims' families from the recent mass shootings from Uvalde, Texas, Highland Park, Illinois and Buffalo, New York.

Now in just over three hours from now, U.S. basketball star Brittney Griner will take to the stand for the first time in her criminal trial. She's been detained in Russia since February on drug smuggling charges and had already pleaded guilty. Her defense team is asking for leniency. Well, this is a crucial week for Griner. Our Clare Sebastian is here with details on the case. It clear, what do we expect to hear from Griner the first time we'll hear from her today?

CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, really important day as you say, she is expected to testify in her own defense. I think the sense now we're getting from the case given that she's pled guilty -- which according to a source close to the case was her decision alone. And taking into account the fact that very tiny percentage of criminal cases in Russia end in acquittal, she decided to plead guilty and potentially to try to mitigate her case to try to improve the sense that she deserves leniency. This is a charge don't forget bringing drugs across border into Russia that carries a maximum ten year sentence. So, take a listen to what her lawyers had to say Tuesday.


ALEXANDER BOYKOV, DEFENSE ATTORNEY FOR BRITTNEY GRINER: We are still saying that she involuntarily brought them here because she was in a rush as she said packing and this medication, she just forgot to take it out of her luggage.

MARIA BLAGOVOLINA, DEFENSE ATTORNEY FOR BRITTNEY GRINER: We have a lot of mitigating factors, so we do hope that the court will take it under consideration. And the court in Russia in fact has very broad discretion with regard to the sentence. So, we'll see what will happen.


SEBASTIAN: So, they're arguing that the cannabis oil that was in her luggage unintentionally, they're taking the intent out of the plea there. But they're saying that this was -- they brought in an oncologist actually to say that this was designed for medical purposes. That she was taking this sort of as an athlete for medical purposes which is allowed in the U.S. And she just didn't realize that she had packed it in her luggage and it wasn't allowed in Russia. Now course, leniency is one thing, her supporters they want her out of Russia. There is a very clear political side to this case as well.

MACFARLANE: But the reality is her fate is going to be unclear really until there is a verdict.

SEBASTIAN: Yes. I mean, I think the sense is certainly we've heard from the Russian side and even from a U.S. official previously speaking to CNN that until she gets through this criminal trial and certainly admits responsibility, was a critical part of this. That they can't move on to any discussions of what to do with her in terms of bringing her back to the U.S. There's been speculation about a potential prisoner swap as we saw happening with another American detainee in Russia, Trevor Reed, who was released in April. We know that potentially New Mexico Governor Bill Richardson might be heading to Russia in the coming weeks. He was instrumental in Trevor Reed's case. So, it looks like there is potential movement on that but the trial has to and first.

MACFARLANE: And we'll watch very closely to see what Brittney Griner has to say today. Clare, thank you.

All right, the quick victory Russia expected in Ukraine has turned in to a grinding war of attrition, one that requires reinforcements by Russia appears to be deploying more troops.

Plus, from deadly flooding to devastating wildfires, the vast impact of the growing climate crisis is hitting home for millions of people.


PEDRAM JAVAHERI, CNN METEOROLOGIST: Catastrophic rain events over the past 24 hours across portions of Missouri, rainfall amounts exceeding a foot in a few spots. Additional heavy rainfall is in store. We'll touch on this coming up in a few minutes.


MACFARLANE: Extreme weather made worse by the climate crisis continues to ravage parts of the U.S. In Colorado, the Pueblo Fire Department rescued two people who were trapped by rushing water under a bridge. And in St. Louis, Missouri record-breaking rainfall has caused widespread flooding. Hundreds of people were rescued after they were left stranded on rooftops or in their cars. At least person was found dead in a flooded vehicle. CNN's Omar Jimenez has more.


UNIDENTIFIED FEMALE: Look, you can't see nobody cars.

OMAR JIMENEZ, CNN CORRESPONDENT (voice-over): Roads turned into rivers.

UNIDENTIFIED MALE: That is the only road out of this area and it is impassable.

JIMENEZ (voice-over): An interstate shut down.



JIMENEZ (voice-over): And firefighters forced to make dozens of rescues, all as a record amount of rain fell in the St. Louis area in just a matter of hours.

CHIEF DENNIS JENKERSON, ST. LOUIS FIRE DEPARTMENT: We had approximately eight and a half feet of water that developed in a low lying area. And we were told by a civilian that there was a possibility of somebody in a car. As the water was receding. And we have pulled a civilian out of a vehicle that has passed.

JIMENEZ (voice-over): Others went scrambling for shelter.

UNIDENTIFIED MALE: I heard thunder early this morning. You know, I didn't think much of it went back to sleep and a couple hours later, just heard some water coming into the apartment. I woke up and there was a couple feet in and just keep coming up -- filling up.

JIMENEZ (voice-over): From midnight to 7:00 a.m., St. Louis got more than eight inches of rain. The previous record for one day was less than seven which happened all the way back in 1915. The surrounding St. Louis area saw anywhere from 6 to 10 inches overnight, according to the National Weather Service. Area officials urged everyone to avoid travel as they say they were getting 911 calls of multiple people stuck.

UNIDENTIFIED FEMALE: You don't know how deep it is. It's simply not safe. It's not worth the risk.

JIMENEZ (voice-over): Torrential rain left parts of the area almost unrecognizable, trapping cars on streets, flooding train tracks and homes.

Climate scientists say such turbulent weather is becoming more familiar as rising temperatures mean the atmosphere can hold more moisture, leading to more rain and more extreme conditions, from deadly heat to destructive fires, dangerous floods. It's a dynamic officials are increasingly trying to be prepared for across the country.

ALI ZAIDI, WHITE HOUSE DEPUTY NATIONAL CLIMATE ADVISOR: Whether it's the extreme heat affecting tens of millions of Americans or the hurricanes, or the droughts, this is the new normal. This is a climate emergency.

JIMENEZ (voice-over): In St. Louis, the floodwaters are receding. But scientists say the chances of this happening again are only going up. Omar Jimenez, CNN.


MACFARLANE: Well, in California crews are making progress as they battle a wildfire raging near Yosemite National Park. The Oak Fire has burned through more than 18,000 acres around 7,500 hectares. Fire officials hope rising humidity and cooling temperatures will help them get the blaze under control.

And in Texas, at least nine homes were destroyed after a grass fire exploded into an inferno near Dallas. Another 17 homes were damaged. Families are getting a look -- their first look at the destruction, and the sense of loss was palpable.


MICHAEL JARAMILLO, LOST HOME IN BATCH SPRINGS, TEXAS FIRE: I really do remember when we first came here, when we first took a look at the house, this was our house and like this is the only thing I've got now. And I just got to start all over.


MACFARLANE: Officials say the flames are now completely out, but north Texas is still facing an elevated fire risk. CNN meteorologist Pedram Javaheri has those details plus the latest on Missouri's deadly flooding.

JAVAHERI: Yes, good morning, Christina. You know, you look at the rainfall amounts and it almost appears that it fell out of a tropical storm, a land falling hurricane, but this wasn't the case here as over a foot of rainfall observed across portions of Missouri, historic amounts even in St. Louis. And anytime you look at areas with this much rainfall, we know it's quite a rare event. In fact, statistically it has a 500 year recurrence interval, which means that there is a 1 in 500 chance for this to happen in any given year or less than 1 percent probability. So very rare setup that led to this flooding across this region. And the rainfall amount pretty expansive here as the storm continued to soak this landscape for many hours in a row.

The disturbance responsible it's shifting a little farther toward the east. There's a slight risk for severe weather east of this region as well, but the rainfall threat going to remain rather high. Now it is east of St. Louis, although there is a marginal risk for St. Louis. But notice around Charleston, around portions of Louisville, Charleston, West Virginia into Nashville, Tennessee, all of these areas from Wednesday and Thursday could see rounds of heavy rainfall in store for them.

Now on the western United States, the story has been all about the heat. Parts of California, parts of Washington state seeing record temperatures in the past 24 hours as excessive heat stays put here for the next couple of days. What we're watching here when it comes to heat here of course really impacting the fire weather situation around the western United States as well and heat alerts will continue. Some areas as warm as 109 degrees across Oregon and Washington with Seattle really running away here with the incredible amount of heat in store.

Should be around 79 this time of year. Notice, they'll be well into the 90s for at least the next several days around the Northwest.

Now, west of Yosemite National Park, the Oak Fire, 18,000 acres consumed, about 26 percent containment, we could use some he rainfall. We've got plenty of it around parts of the Southwest, but not quite to us here across portions of California. So that is what we're watching here.


Arizona into New Mexico, we'll get some beneficial rainfall help with the drought situation there. Looks like maybe a slight possibility we'll tap into some moisture into portions of California but not nearly enough to douse the fires across this region. In Portland, we'll aim for 97 degrees, in St. Louis around 87, but in New York high temperatures should be in the middle 80s -- Christina.

MACFARLANE: All right, well in Germany, hundreds of firefighters are struggling to contain a forest fire raging in the northeast. Conditions are especially dry after the recent heatwave making it easier for the fire to spread. On top of that, officials say crews have to be extra cautious because ammo from an old military base is buried there. To the south firefighters are battling another powerful blaze near the German/Czech border.

Well, too much rain is the problem in southern Pakistan. Several regions have been inundated during the monsoon season, at least 89 people have been killed and authorities say July rainfall in the Balochistan is nearly 450 percent above average. Hundreds of people are stranded after two bridges washed out. And Pakistan's military is helping with rescue efforts and emergency response teams are providing basic food and medical care.

Now, Russia appears to be ramping up its presence in southern Ukraine. As Ukrainian forces try to retake lost land. We'll have a live report from Odesa.

And we also look ahead to Mike Pence and his former boss Donald Trump who were in Washington laying out their plans for the future in dueling speeches. .


DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: I always say I ran the first time and I won. And then I ran a second time and I did much better. We got millions and millions more votes.


MACFARLANE: Welcome back to CNN NEWSROOM. I'm Christina Macfarlane in London.