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U.S. GDP Drops; Kai Ryssdal is Interviewed about the Economy; Biden and Xi Speak in Call; U.S. Offers Prisoner Exchange for Griner and Whelan; Terri Jackson is Interviewed about Griner. Aired 9-9:30a ET
Aired July 28, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JIM SCIUTTO, CNN ANCHOR: A very good busy Thursday morning to you. I'm Jim Sciutto.
BIANNA GOLODRYGA, CNN ANCHOR: And I'm Bianna Golodryga, in for Poppy.
We begin this morning with breaking news.
The U.S. economy shrinking yet again. The Gross Domestic Product falling 0.9 percent in the second quarter. Following the 1.6 percent drop in the first part of the year. Now, all of this signaling a slowdown in consumer spending, and adding to fears that the U.S. may be, may be in a recession. We'll have much more on this in just a moment.
SCIUTTO: Yes, there are a lot of numbers to look at. We're going to look at all of those.
Plus, underway right now, a highly anticipated call between President Biden and the Chinese President Xi Jinping. It is their first conversation since March as ties between the U.S. and China have deteriorated to their lowest point in decades. Real tension, particularly over Taiwan.
Secretary of State Antony Blinken speaking today with his Russian counterpart, Sergey Lavrov. This as CNN learned exclusively of plans underway for a prisoner swap, trading convicted Russian arms dealer Viktor Bout for detained WNBA star Brittney Griner and U.S. Marine veteran Paul Whelan. We're watching that closely.
Let's begin, though, this morning with those new GDP numbers. CNN chief business correspondent Christine Romans is here with more.
So, Christine, break down, because there are a lot of numbers that not just you but that economists follow.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Sure. Oh, yes. Yes.
SCIUTTO: This headline number is not good.
ROMANS: So this is GDP, Gross Domestic Product. It is the largest gauge of the size of the economy. And it shrank 0.9 percent in the second quarter. So this is a rear-view mirror looking picture. And that's after the economy shrank 1.6 percent in the first quarter. That first quarter was blamed on the omicron variant and how much was going through the economy with both supply chain problems and with Covid problems.
So you can see it shrank again, not quite as much, but that is a negative read. Two negative reads in a row is the beginning of the definition of a recession in this country, although you really never see a recession with such strong jobs growth as the Fed chief pointed out yesterday, 2.7 million jobs created in first half of the year. You don't see that in a recessionary environment.
What this tells you is after last year, the strongest year for the American economy since the Reagan administration, now you have a slowdown underway in the U.S. economy. Very great gangbusters growth to slowing down a little bit.
And slowing down is what the Fed has been trying to engineer, right?
ROMANS: Because that red hot economy, with all these supply chain problems and then a war in Ukraine were causing all kinds of inflationary problems. So, this is the sign of, you know, tapping on the brakes, the U.S. economy slowing down a bit.
GOLODRYGA: But not a technical recession, right? This is sort of a rule of thumb gauge as to how the economy is doing.
ROMANS: This is the -- exactly. And this has become very political. I can't believe the semantics that have been going on in Washington these days about - about what a recession is.
ROMANS: And certainly, some people feel like they're in a recession. And, quite honestly, in the American economy, there are some people who are always in a recession because we have such income inequality in this country.
ROMANS: But the National Bureau of Economic Research, it's a bunch of economists who have a committee who sit around and look at every single number known to man, and then after the fact decide if something was a recession. The last recession we had, by the way, was only a couple of months. That was in the beginning, remember, of 2020. That wasn't even one quarter. That was a two-month recession, two or three-month recession because of the Covid crisis. So every one is different. Every one, you know, there is not this hard and fast rule about what makes a recession. You know it when you see it, when the economists look at every number and figure it out.
ROMANS: But you made a really good point in the break, I think, Bianna, that at some point it becomes self-fulfilling when you look at numbers like this, that people feel nervous, they pull back on their investments or their spending, and then you start to talk yourself into a recession.
ROMANS: I think that's something that some policymakers worry about.
GOLODRYGA: Yes, we spend a lot of time talking about inflation. Now concern turns to recession. We'll see.
Christine Romans, thank you so much.
ROMANS: Good to see you guys.
GOLODRYGA: Well, joining us now to talk about all of this is Kai Ryssdal. He is the host of Public Radio's Marketplace."
Kai, welcome to the program.
A lot to break down here for us. Just explain to viewers at the top right now how they should be interpreting these numbers.
KAI RYSSDAL, HOST, PUBLIC RADIO'S MARKETPLACE: Well, I think the first thing you have to realize is that the average consumer in this economy is not going to feel the difference between an economy at 0 percent growth plus half a percent or minus half a percent, right? It's all about how things feel when they go out and they have to buy gas or food or milk or whatever it is. And the fact is, as Christine was alluding to, it's how people feel now that is the challenge because growth has started to slow as we see. Job growth is slowing just a little bit, even though we're adding still hundreds of thousands of jobs every quarter, every month. So, it's a challenge in how people are starting to feel, and then that affects their behavior. So that's the biggest thing that people are worried about, right, gas and food and being able to buy what they need.
Powell said it yesterday, right, people are going and not buying the food that they need because it is so expensive. And that's really a challenge. SCIUTTO: Yes. Now, the numbers, there are contradictory numbers.
SCIUTTO: GDP growth down, job growth, hiring is still strong. Christine made the point to us earlier, durable goods, for instance, was positive, better than expected. I wonder, the Fed, another three- quarter percentage rate hike yesterday. Inflation is real. They've got to get inflation under control. But is there a possibility that the Fed overreacts, right, and then tips the economy into recession?
RYSSDAL: You know, I think it's possible. Powell, in my interviews with him, has been really, really clear that they're going to wait to see what the data says. And he actually said yesterday, look, we've got a long time before the next meeting. The next meeting is in September. There's a lot of data coming in between now and then. We get another look at inflation tomorrow.
I think now more than ever the Fed is going to be what Powell, and Yellen before him, like to call data dependent, right? They're going to wait. They're going to see what the data says. They're not going to project what they may or may not do in terms of interest rate hikes because they need to wait things out.
So, overshooting, I don't know. Maybe. They're definitely behind the curve, right? We know that. Powell has said that. They missed it. They should have been faster and earlier, they weren't, and now they're trying to make up for lost ground.
GOLODRYGA: And Powell also noted, however, yesterday, that he does not believe that the U.S. is in a recession.
Let me ask you what a lot of economists have been focusing on as of late, and that is that this isn't all just squared with the Fed. It doesn't all just depend on them. The Congress has a role to play here too in lowering and addressing inflation.
So, I'm curious to get your thoughts on what this new bill, potential bill, this new deal yesterday with Senator Manchin, surprising everyone by signing off on it, called the Inflation Reduction Act of 2022, no longer is it what it's previous name, right?
GOLODRYGA: But now we have a new act focused on bringing inflation down. How significant is that?
RYSSDAL: Look, I think it is pretty significant. And, of course, branding is everything with the name of that act.
But, look, the Fed is the primary driver in this economy for controlling inflation, but they cannot and should not have to do it alone. So if you look at some of the things in this bill, and who knows what the political fate of this thing is going to be, right, just because of the dynamics in Congress, but, look, prescription drug costs could come down. There are tax credits for electric vehicle buyers for lower income people. I mean there are ways that this is going to control inflation, deficit reduction. So it's - it's -- look, this is super trite. It's a little bit of a team effort now when inflation's at 9.1 percent and everybody realizes that this is the biggest threat to the economy right now.
So, it's good that Congress is doing this. Could Congress do more? Sure. But that's not the Congress we got.
SCIUTTO: Yes, there's some big tax changes in there as well.
SCIUTTO: Kai Ryssdal, always good to have you on. Thanks so much.
RYSSDAL: You bet.
SCIUTTO: Coming up next hour, we will get reaction from the White House. The director of the White House Economic Council Brian Deese, he will join us. Please stay with us for that.
And, right now, critical call still underway at the White House with tensions escalating between the U.S. and China. President Biden speaking with Chinese President Xi Jinping for the first time in months.
GOLODRYGA: Hanging over all of that, though, are concerns over House Speaker Nancy Pelosi's potential visit to Taiwan. Administration officials working quietly behind the scenes to convince her of the risks.
CNN White House correspondent Arlette Saenz and CNN international correspondent Selina Wang are both following the sides of this conversation.
Arlette, first to you. What's the White House saying about their key priorities going into this call?
ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: Well, Bianna, President Biden has been on the phone with Chinese President Xi Jinping for a little over half an hour at this point, marking the fifth time that the two leaders have spoken since Biden took office. And officials here at the White House have said that this call is about maintaining an open dialogue with one of America's greatest competitors, but they've also acknowledged that there are very real points of tension between the two countries that likely would arise on this call. That includes Taiwan and also Russia's aggression in the South China Sea, also economic competition between the two countries as well as Russia's war in Ukraine.
Now, while the planning for this call had been underway for quite some time, it's taking place against the backdrop of a potential trip by House Speaker Nancy Pelosi to Taiwan, something that the Chinese have said that they would strongly oppose if she moves forward with such an endeavor.
President Biden, last week, revealed that the U.S. military was against Pelosi, did not think it was a good idea for her to be traveling at this time and administration officials have been working to try to convince her of the possible risks. Defense Secretary Lloyd Austin said that he spoke with Pelosi recently about the security assessment for that region.
Now, China has vowed a forceful and strong response if Pelosi moves forward with that trip. And they're -- while they haven't detailed exactly what that might look like, there are concerns that any increased military posturing in the region could potentially lead to a miscalculation that could, in turn, turn into conflict.
So, right now, as this phone call between the president and China's Xi are -- is taking place, it's a very precarious moment as the president is also trying to balance the relationship going forward, especially as the U.S. and China remain key competitors at this moment.
SCIUTTO: No question.
And, Selina, we should note, there have been multiple U.S. congressional delegations to Taiwan, this one getting particular attention given the leadership position of Nancy Pelosi. But Xi Jinping has his own domestic challenges, Covid-19, economic results of shutdowns there. Tell us how domestic politics are influencing his reaction to the Pelosi visit - or potential Pelosi visit.
SELINA WANG, CNN INTERNATIONAL CORRESPONDENT: Well, Jim, one possibility here is that in order to distract from all these problems at home, that Xi Jinping reacts forcefully to this potential visit because years of Covid lockdowns have devastated the economy here and the snap lockdowns still continue.
On top of that, we are just months away from this key political meeting when Xi Jinping is expected to seek an unprecedented third term. So the risk here is that at this critical moment Xi might make a rash move that could include some show of military force in order to avoid looking weak at home. He may see this trip as humiliating. So he cannot look weak.
And that is what makes this moment so dangerous is that there are domestic, political considerations on both sides and neither side can look weak. That is why this call is so important to lower the temperature and to manage those tensions to reduce the risk of that miscalculation that could lead to a real conflict.
But important here, Jim, is that China has only made vague pronouncements so far. No details on what those powerful measures could be. And many experts I've spoken to, including here in Beijing, say that, look, all of this from Beijing, it is just tough talk. China doesn't actually want to risk a military conflict, and it's not ready to because if China were actually to ultimately move on Taiwan, they would want to make action on their own terms, on their own timing, not on someone else's.
But it is impossible to overstate just how important Taiwan is to the communist party and its legitimacy. They're strongly against any move that appears to give legitimacy to Taiwan as an independent country or that makes the U.S./Taiwan relationship more formal. And in Beijing's eyes, this Pelosi visit potentially would do both of that.
So, the critical question here then is, how does Beijing react in a way that sends a forceful message at home and abroad, while also avoiding any escalation, Jim.
SCIUTTO: We should - we should always note what the Taiwanese themselves think about this. They want their independence. It's a vibrant democracy, a vibrant economy, supplies much of the world's semiconductors. When it comes to them, their choice is to stay independent and that's, of course, important in any conversation.
GOLODRYGA: Yes, and some - some -- some argue that it may be up to Taiwan, and maybe getting their input on this as to whether they think it's worth Nancy Pelosi coming.
SCIUTTO: That's a good point. Yes.
GOLODRYGA: To help decide whether she actually does end up going.
Arlette Saenz, Selina Wang, thank you so much.
And still to come, the Biden administration frustrated, waiting on a Kremlin response. Will Russia take the offer to swap a convicted arms dealer for detained Americans Brittney Griner and Paul Whelan. We'll have the latest on negotiations, and we speak with the executive director of the WNBA Players Association up next.
SCIUTTO: Plus, another big phone call, news this morning, that President Biden and Democratic Senator Joe Manchin spoke for the first time in seven months after the lawmaker handed his party and the president a major deal. What may still stand in the way? A lot of moving parts here.
And lawmakers preparing to speak with two key former White House officials about the January 6th insurrection. Today, former Acting Chief of Staff Mick Mulvaney and, as soon as this week, former Secretary of State Mike Pompeo. What lawmakers are going to ask, what it all means, that's coming up.
GOLODRYGA: Well, right now, Biden administration officials are frustrated with Moscow's lack of a substantive response to the proposed prisoner swap that would free two Americans detained in Russia in exchange for convicted Russian arms dealer Viktor Bout.
SCIUTTO: The swap would secure the release of WNBA star Brittney Griner and U.S. Marine veteran Paul Whelan. Whelan's brother says his family is growing hopeful that Paul will come home soon.
(BEGIN VIDEO CLIP)
DAVID WHELAN, BROTHER OF PAUL WHELAN CURRENTLY DETAINED IN RUSSIA: Miss Griner, her supporters, her advocacy on her own behalf, her supporters' advocacy, has been gracious in including Paul's case and calling for both Miss Griner and Paul's freedom. It's been a huge help for someone like Paul, who doesn't have the same celebrity. Really, there are so many Americans who are in wrongful detention around the world, anything that raises awareness about those cases and Paul's, in particular for our family, is hugely appreciated.
(END VIDEO CLIP)
SCIUTTO: Huge potential relief for those families.
CNN's Natasha Bertrand joins us now.
Natasha, what do we know now about the deal, but also Russia's reaction to it?
NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Yes, Jim. So, the Kremlin spokesperson, Dmitry Peskov, is throwing cold water on this, this morning. He said that there is, in fact, no agreement that has been reached on this prisoner swap. And we are learning that administration officials are deeply frustrated by the lack of a substantive response that has come from Russia in the week since they offered what they say was a very serious proposal to get Paul Whelan and Brittney Griner back to the United States.
Now, the reason that the administration actually made this public yesterday was because they are so frustrated that they have not received this reply from the Russians. They believe that it was important for the administration to tell the American people that the administration is trying its best here and that they made this big offer to the Russians that actually, you know, they view as very, very significant, especially given Viktor Bout, the Russian prisoner, who the Russians now want back, as part of the swap.
Viktor Bout, of course, was convicted of international arms trafficking in 2012 and he was sentenced to 25 years in prison. So this is no small thing that the administration is offering to give him back to the Russians here in exchange to bring these Americans home.
Take a listen to what one former DEA agent actually said about Viktor Bout and his activities back in 2010.
(BEGIN VIDEO CLIP)
THOMAS HARRIGAN, DEA CHIEF OF OPERATIONS: When arrested, he oversaw operations capable of delivering enough weapons to launch rebellions, fuel revolutions and slaughter untold thousands of people. He was an accessory to violence on a scale that is beyond comprehension.
(END VIDEO CLIP)
BERTRAND: So clearly the administration not taking lightly the fact that they have offered this alleged international arms smuggler back to the Russians. Someone that many administration officials fear could, of course, re-emerge on the world stage and continue to engage in those activities. But, of course, the balance that the administration now needs to weigh is kind of the geopolitical consequences of giving Bout back with the human imperative to get these Americans back to their families here.
The secretary of state, Antony Blinken, is going to be speaking with the Russian foreign minister Sergey Lavrov, which is another major development here. They are going to be discussing this prisoner swap. Of course, the administration still trying to get the Russians to agree to this exchange.
GOLODRYGA: Yes, and this would be their first conversation since before the war back in January.
GOLODRYGA: It's also worth noting that the judge who oversaw Bout's trial, and who convicted him, also signed off in her mind that this was the right decision to make, to bring these two Americans home, even if that meant sending Viktor Bout back to Russia.
Natasha Bertrand, thank you.
Well, the WNBA Players Association shared a message for Brittney Griner overnight, tweeting in part, not a day, not an hour goes by that you're not in our minds and in our hearts. We talk a lot about the power of the 144 and hope you know that we are all sending you strength.
Well, joining us now is Terri Jackson, executive director of the WNBA Players Association.
Terri, thank you so much for joining us.
I know this must be a lot for you to take in this morning, the possibility, potential -- potentially having Brittney come home in exchange for Viktor Bout. I want to talk about your mobilization effort and going public, and what you call go time in bringing Brittney home. There had been a few months because of the State Department suggesting that this should not be brought to the forefront that we did not hear much about Brittney and we did not speak much about her. But that all changed. And you helped spearhead that and make it public.
Do you think that's one of the reasons we now have President Biden signing off on this potential prisoner swap?
TERRI JACKSON, EXECUTIVE DIRECTOR, WNBA PLAYERS ASSOCIATION: Well, I don't know. But, Bianna, first of all, let me - let me thank you for having me on the show. The more that we have the opportunity to talk about BG, and raise awareness about this case, it's just a tremendous opportunity to talk about her, to talk about Paul Whelan and other detainees. So, again, thank you very much.
Yes, we were quiet in the beginning, hearing that she was -- she's been detained, seeing the State Department's involvement at such a high level, making her a priority. Yes, we have said, and it really wasn't my words, it's the words of my members, it's go time. It's the words of our brothers over at the MVPA, particularly Carmelo Anthony, I'm echoing him when, you know, he said it's go time to rally, you know, his brothers over there in the NBA to provide support.
I am very hopeful that this go time moment, the mobilization of so many different organizations, the AFL-CIO, Athletes For Impact, Athlete Allies, so many organizations coming together, mobilizing around BG, saying her name and talking about this case. I'm hopeful that what that did show President Biden and his administration was that he had the support, he has our support to do whatever is necessary to bring them home.
GOLODRYGA: Well, we know Brittney had written a letter to President Biden recently and that her wife, Cherelle, had spoken with both the president and the vice president.
We saw Brittney yesterday in that Russian courtroom. I still will never get over seeing anybody in a cage cell the way they are in Russian courts. But I'm curious to get your thoughts on how you felt when you saw her, how did she look to you, how did she sound to you?
JACKSON: You know, every time we get the opportunity to see her, it's a mixed bag of emotions. There is absolutely great comfort in seeing her, in seeing our sister. I also spend probably a lot of time, you know, getting up close it the television and looking to read her expressions and see how she's carrying herself. She's just such a tall, beautiful, graceful individual. And to see, you know, to see her walk and to see her reaching out and talking, you know, chatting briefly with those around her, just gives us a little bit of peace, honestly.
We know -- we can only imagine what she's going through. We can only imagine. And you're right, seeing the cage and seeing the handcuffs, it does not really make us feel great, but being able to lay eyes on BG, yes, that gives me a little bit of comfort and peace and I'm sure it does for our members also.
GOLODRYGA: Yes, I know geopolitics is not your area of expertise, but we know Brittney Griner was detained February 17th, just days before the Russian invasion of Ukraine. There had been warnings for months that this invasion was possible. The U.S. State Department had issued warnings against traveling to Russia.
I'm just curious, has this changed your policy and your perspective on the number of WNBA players who travel to countries like Russia, to Turkey, to China, to playoff season because of the extra income that they make? Is it worth it now, in your opinion, given what's happened with Brittney?
JACKSON: Well, you know, thank you for recognizing that this is not my area of expertise. As the executive director of the players association, I am a lawyer by training. I get stretched in so many directions. This is an amazing opportunity to have this role. It's a point of privilege that I sit as their executive director.
And I've had this role for six years now. And each year I have seen large numbers of our players, of our members go overseas to compete and to make money. An so I know the reason that drives them there.
Does it change my position? No. It doesn't - it doesn't change my position. I don't - I don't have a point of privilege to have a position on -- in the decisions that our members make. But I certainly understand them.
And it does make me very cognizant that my responsibility is to work harder to ensure that the opportunity to play here, to play in the W, and to increase their compensation, that's my responsibility and that's my job. Until I get that opportunity again at the negotiating table, I recognize that there are going to be players who go overseas, likely not to countries where perhaps they are - there's - there's comfort, right, and their safety will be in question.
JACKSON: But I recognize why they go. And I recognize my responsibility in driving that conversation and ensuring that the opportunities are here for them.
GOLODRYGA: Yes, well, their salaries, as we know, don't mirror that of the NBA players, that is for sure.
Terri Jackson, we are thinking of you. We are praying for Brittney Griner and Paul Whelan and hope for their safe return back to the United States. Thank you so much. We appreciate it.
JACKSON: I appreciate the time.
SCIUTTO: Still ahead, Democratic Senator Joe Manchin hands Democrats a potential win on the president's major climate, healthcare spending, tax bill. But there's still some land mines in the way. The other Democrat who is not quite yet on board, we're going to talk about that next.
GOLODRYGA: And we are just moments away from the opening bell on Wall Street. Futures are flat this morning. You can see the mix right there on your screen. Markets responding today to major economic news. The GDP numbers out in the last hour showing that the U.S. economy dipped for the second quarter in a row. Now, this comes after markets rallied yesterday on news of yet another Fed interest rate hike.
We're watching everything for you. Stay with us.