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U.S. GDP Down 0.9 Percent in Second Quarter of 2022; U.S. Bill to Boost Semiconductor Production Set to Become Law; Final Details Being Worked Out on Ukraine Grain Exports; Russian Strikes Hit Kharkiv City Center; Trump Under Fire for Hosting Saudi-Backed Golf Event. Aired 4:30-5a ET
Aired July 29, 2022 - 04:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINA MACFARLANE, CNN ANCHOR: Hi there, welcome back to CNN NEWSROOM. I'm Christina Macfarlane. If you are just joining us, let's me bring you up-to-date with our top stories at this hour.
A state of emergency in Kentucky where at least eight people have died from flooding in the eastern part of the state. And the state's governor says sadly, he expects that number to go up. Evacuations are also under way this hour in Jackson, Kentucky due to rising floodwaters.
U.S. President Joe Biden had a phone call yesterday with China's President Xi Jinping warning that the U.S. is, quote, playing with fire over Taiwan as pressures mount over a possible trip by House Speaker Nancy Pelosi. The pair agreed to begin planning for a face-to- face summit later this year.
U.S. stocks closed in positive territory for the second consecutive day Thursday. All three major U.S. indices up -- the day up more than 1 percent on hopes that economic contraction could lead to lower interest rates down the road. According to data released earlier Thursday, U.S. Gross Domestic Product fell by 0.9 percent in the second quarter of 2022. U.S. GDP has now fallen for two quarters in a row, usually that's an unofficial indicator of a recession. But economists and U.S. officials say GDP alone is not enough to determine whether the country is in a recession. A bipartisan nonprofit actually crunches the numbers and makes the call. Rahel Solomon has more on that and the economic data that came out on Thursday.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Another day, another major economic report. It has been a busy week for economic data. Thursday the Commerce Department released second quarter GDP data which showed that the U.S. economy shrank at an annualized rate of 0.9 percent. The report showing while U.S. consumers are still spending, that's slowing.
We also learned that business investment is slowing especially in categories like inventories and in the residential space. Thursday's report will be revised at least two more times but does follow a 1.6 percent decline for the first quarter of the year. U.S. economy has now seen two straight quarters of negative growth and that is reigniting the debate about whether we're in a recession. Many economists say we're not. At least not yet.
The job market is still strong, unemployment is practically at a 50 year low, and demand for workers continue to be strong. The official arbiter of recessions is a group of eight economists that make up the business cycle dating committee at the nonprofit, nonpartisan National Bureau Of Economic Research. And they operate rather discreetly. But define a recession as a significant decline in economic activity.
The committee considers factors such as personal income, the job market and consumer spending.
I spoke to Harvard University professor, Jeffrey Frankel, a former member of the committee on Thursday, and asked might we see a recession call after this GDP print?
And he told me: The committee is very unlikely to say a recession happened in the first quarter because a whole host of other indicators were positive.
As for his thoughts on today's report, he says the economy is clearly slowing down.
Rahel Solomon, CNN, New York.
MACFARLANE: Well meantime, U.S. President Joe Biden is on the cusp of a major legislative victory thanks to the deal struck by Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin on the $739 billion Inflation Reduction Act. Mr. Biden urges Congress to seize the moment.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: This is the strongest bill you can pass to lower inflation, cut the deficit, reduce health care costs, tackle the climate crisis and promote energy security. So, pass it. Pass it for the American people.
(END VIDEO CLIP)
MACFARLANE: The bill aimed at combatting the global semiconductor chip shortage is on its way to President Biden's desk to be signed into law. It's designed to significantly increase their production in the United States. CNN's Miguel Marquez takes us inside a U.S. factory making these critically important chips.
MIGUEL MARQUEZ, CNN NATIONAL CORRESPONDENT (voice-over): It is enormous. GlobalFoundries semiconductor chip plant in Malta, New York. MARQUEZ: In this fab or fabrication unit, how many chips are being made for how many products?
CHRISTOPHER BELFI, EQUIPMENT ENGINEERING MANAGER, GLOBALFOUNDRIES: So, we can produce roughly millions of chips a day.
MARQUEZ: A day?
MARQUEZ (voice-over): The fab, where the chips are made, about the size of six football fields. The process, so sensitive, a single human hair could gum up the works. Even the light has to be controlled.
BELFI: Any exposure to ambient light will have a negative impact on our wafers.
MARQUEZ (voice-over): The chips produced here going to everything from cars, computers, videogames, communications technology and the defense industry.
SAAM AZAR, HEAD OF GLOBAL GOVERNMENT AFFAIRS, GLOBALFOUNDRIES: We're at half a trillion right now, our semiconductor industry. Conservative estimates by 2030, we're going to be at a trillion. So, the question isn't whether or not --
MARQUEZ: A trillion --
AZAR: -- a trillion-dollar industry. So, we're going to double between now and 2030.
MARQUEZ (voice-over): The Chips Act calls for investing $52 billion in semiconductor production here at home. Eighteen states now produce chips and could benefit from the funding.
GlobalFoundries started producing chips here in 2012. New York State kicked in $2 billion, helping the company secure another $13 billion to build a plant, today employing 3,000 employees with a median salary, says the company, of $90,000. At just this one plant, the expected effect of the Chips Act funding --
AZAR: We intend a double capacity in partnership with the federal government, with the state government.
MARQUEZ (voice-over): Doubling capacity, adding up to a thousand more jobs, many of them high-paying, all of it a boom to the area.
MARQUEZ: In the last decade, how has the economy here changed?
BETH HARR, ENCOUNTER CLOTHING STORE: It has just grown.
MARQUEZ: Leaps and bounds, booming?
HARR: It almost seems that it is sort of a bubble.
STEVE ROSATO, MANAGER, SARATOGA OLIVE OIL COMPANY: And the dividends are felt like a ripple effect throughout all the shops and all the restaurants and all the taverns. MARQUEZ (voice-over): Some conservatives and progressives argue government should not be in the business of subsidizing private industry. The industry says a little bit of public financing goes a long way.
AZAR: And the proof's in the pudding. Look at this facility we have, the number of jobs, the taxpayer return, 2, 3, 4X with the state.
MARQUEZ (voice-over): An industry started by America, an industry essential to the tech economy, an industry critical to the nation's defense, an industry the U.S. would like to dominate again.
MARQUEZ: Industry executives say it doesn't take much government financing to attract lots of private capital. They also point out that America's biggest competition in semiconductor production China, the EU, India, Korea and Japan. They collectively have put together about $280 billion in government financing to spur their own semiconductor industries. It is very big money and very heavy competition. Back to you.
MACFARLANE: Now Senate Majority Leader Chuck Schumer says he plans on Monday to vote on a bill to help military veterans who suffer from toxic exposure to burn pits. Democrats accuse Republicans of wasting precious time by blocking the advance of the bill this week.
Comedian Jon Stewart has been a staunch proponent of helping the veterans and he unloaded on Senate Republicans Thursday calling them cruel and cowardly and demanded action to help the victims.
(BEGIN VIDEO CLIP)
JON STEWART, COMEDIAN AND ACTIVIST: They lived up to their oath. And yesterday they spit on it. In abject cruelty.
These people thought that they could finally breathe. Do you think their struggles end because the Pact Act passes? All it means is they don't have to decide between their cancer drugs and their house.
(END VIDEO CLIP)
MACFARLANE: Of course, Republicans blame Democrats for the delay in passing the bill. They want votes on amendments that would change the way the project is funded.
OK, Ukraine's artillery puts a key Russian supply bridge out of commission. But now Russia is reportedly implementing a backup plan to keep military supplies flowing. That's ahead.
MACFARLANE: Negotiators are sorting out the final details before Ukraine can resume its grain exports. Officials still need to iron out the exact locations of safe corridors for shipping vessels.
Meanwhile, Ukraine is reporting a new Russian strike on the center of its second largest city Kharkiv. Cities across the Donetsk region are also taking fire from Russian artillery this morning. Down south, work appears to be underway by Russia to restore supply routes in that part of Ukraine. That's after Ukrainian artillery damaged a key bridge preventing heavy weapons from crossing.
Our Nina dos Santos is following development and joins me now in London with the latest. And Nina, we know that Ukrainian force have been preparing for a counteroffensive in the south for some time. What more do we know right now about that their effort under way to retake Kherson?
NINA DOS SANTOS, CNN CORRESPONDENT: Well, Kherson, remember, was the first city to have fallen to Russian forces as they began their invasion of Ukraine at the end of February this year. It's also the second biggest city in the whole of Ukraine, so it is crucial but geographically it's also a gateway across the Dnieper River there to places like Mykolaiv and the west, also Crimea down in the south in the east. It really is a crucial gateway towards those Black Sea ports that we're seeing being blockaded and heavily bombed, at that obviously being at the heart of the grain crisis that Ukraine is facing at the moment.
And for some time, Kherson has been used ever since obviously it was taken by Russian forces earlier this year as a place from which to launch various Russian offenses on Ukrainian troops. But what has changed now is that Ukraine has managed to get its hands on long range Western supplied weaponry, in particular from the United States. And that is what they've used this week where they have taken out one of the biggest bridges across the Dnieper River thwarting Russia's attempts to try and restock its troops on the other side of the Dnieper River there with things like tanks and big heavy weaponry.
No overnight we have heard from the Ukrainians that the Russians may have managed to mount a pontoon bridge. They yet again with this type of weaponry, that could again be targeted by Ukrainian forces. The Russian administrators of this region and Kherson are the same, but they have managed to use fairy equipment to get people across this river. But it is a sign that Ukraine is managing to fight back just one day after President Zelenskyy had a big speech in which he said, on the day of Ukrainian statehood, that Ukraine would prevail in this fight and defend every inch of Ukrainian territory and recapture it.
MACFARLANE: And while the fighting continues, of course, all eyes still on the Black Sea waiting for the movement of this grain. You know, it says at the moment they're trying to figure out the safe corridors with which to get the grain out. How difficult is that operation?
DOS SANTOS: Will, this is all part of a deal that was brokered of course by Turkey and the United Nations this week. Essentially the target was to try to get Ukrainian grain out through mine fields that the Ukrainian forces themselves, its navy, had had to mine at the start of the invasion of Ukraine to try and prevent an amphibious landing from Russian troops.
The idea is that Ukraine would help escort commercial ships out of some of the ports like for instance Odesa where 20 metric tons of grain is said to be at the moment waiting export, according to U.S. officials, to ease the blockage before of course the harvest that is about to happen here in the month of August. And Zelenskyy, President Zelenskyy says that that could mean that Ukraine could have 75 metric tons of food grain backed up that is so badly needed in developing parts of the world.
So far, we haven't seen any ships actually leave, but of course we're Friday, we do have the weekend to come, but all eyes are on the first shipments to see when they can make their way out through the dangerous waters in the Black Sea.
MACFARLANE: Keep a close eye on that over the weekend. Nina dos Santos, thanks very much.
OK, the Biden administration officials are reportedly frustrating that Russia has yet to respond to any -- in any meaningful way to the proposed prisoner swap. The U.S. has offered up notorious arms dealer Viktor Bout, who was once one of the world's most wanted man, in exchange for American basketball star Brittney Griner and former Marine Paul Whelan. Moscow says its top diplomat is busy and will decide whether to discuss the trade with the U.S. Secretary of State when time permits.
OK, you're watching CNN NEWSROOM. Still ahead, Donald Trump in the rough for hosting a Saudi backed golf tournament at his New Jersey country club.
MACFARLANE: Welcome back. Pope Francis travels later today to Nunavut in northern Canada. The final stop on his weeklong pilgrimage of penance. On Thursday for the first time since arriving in Canada, he apologized for the sexual abuse of minors by members of the Canadian Catholic Church. He called the crimes evil but blamed church members not the institution. During his tour, he also apologized to indigenous communities for Canada's residential school abuse scandal.
Donald Trump is under fire for hosting a controversial Saudi backed golf tournament beginning in the day ahead at his New Jersey club. LIV Golf funded by Saudi Arabia has rocked the PGA tour by luring away big name players with huge sums of money. CNN's Polo Sandoval reports.
POLO SANDOVAL, CNN CORRESPONDENT (voice-over): Former President Donald Trump teeing off in a ProAm at his namesake golf course in New Jersey amid controversy that's testing both the sporting world and international relations. The third event of Saudi-backed LIV Golf starts Friday at Trump's Bedminster golf club, attracting big name athletes with millions in guaranteed pay days.
Two-time masters champion Bubba Watson reportedly the latest to join in. The breakaway league has drawn criticism over concerns that it provides international legitimacy to Saudi Arabia's regime, which has been accused of human rights violations for years. It includes a 2018 killing of Jamal Khashoggi.
U.S. intelligence maintain Saudi Crown Prince Mohammed bin Salman have approved of the operation that targeted the Washington Post journalist. Bin Salman denies that allegation.
TERRY STRADA, NATIONAL CHAIR, 9/11 FAMILIES UNITED: It is a multibillion-dollar public relations stunt bought and paid for by the Kingdom of Saudi Arabia.
SANDOVAL (voice-over): Critics claim it's a moment of, quote, sports washing, using this league to help improve the kingdom's image, something on full display yesterday with players claiming Saudi Arabia is correcting its human rights record.
PAUL CASEY, PLAYER, LIV GOLF INVITATIONAL BEDMINSTER: I can confidently say that change is happening and that what we do is having a positive effect.
SANDOVAL (voice-over): Families of 9/11 victims point to Saudi Arabia is home to 15 of the 19 hijackers responsible for the terror attacks, though the Kingdom denies that involvement.
UNIDENTIFIED FEMALE: I lost my husband in the North Tower, Tom Strata.
SANDOVAL (voice-over): Donald Trump's golf club just 50 miles from ground zero. The former president defending the tournament to ESPN today.
DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: Well, nobody's gotten to the bottom of 9/11, unfortunately, and they should have.
SANDOVAL (voice-over): It's the first of two LIV competitions on Trump's properties.
JAY MONAHAN, COMMISSIONER, PGA TOUR: We welcome good healthy competition. The LIV Saudi Golf league is not that.
SANDOVAL (voice-over): The PGA has gone as far as suspending golfers who joined LIV.
BOB COSTAS, CNN CONTRIBUTOR: If it were backed by any other entity, then it would just be a rival tour. In this case, there's a direct business relationship between each of these golfers and the Saudi regime.
SANDOVAL: 9/11 families plan to speak out again on Friday ahead of the official start of this golf tournament. They maintain that they blame every U.S. president since the attack of 9/11 for not holding the Saudis responsible for their alleged role in the attacks of 21 years ago.
Polo Sandoval, CNN, Bedminster, New Jersey.
MACFARLANE: Now Britain's Prince Charles helped kick off the commonwealth games in Birmingham, England. He met with athletes and represented the Queen at the opening ceremony. The games brings together athletes from states and territories historically linked to Britain to compete in sporting events over the next ten days. More than 5,000 athletes are expected to participate.
And wedding bells will be ringing at the White House later this year. 28-year-old Naomi Biden is a lawyer based in Washington and the president's eldest granddaughter. She tweeted that she'll be married on the South Lawn later this year. Naomi is the daughter of Hunter Biden. Her fiancee is 24-year-old Peter Neal, who graduated from law school this spring. There is a long history of White House weddings dating back to the children of James Monroe in the 1800s.
Now, it sounds like something out of a horror movie. Scientists have found a way to give new life to dead spiders by turning them into robots. Yup, you heard that correctly. Robots that can pick up objects. Engineers from Rice University in Texas used so-called wolf spiders for the study. Here's how it works. They pump air into the dead spider's legs, then using a needle and super glue, they're able to triggering the opening and closing of the legs to pick up objects. Oh, my God, researchers say the zombie spiders will be very useful in the lab because they can carry more than their own body weight. That is super creepy.
But that does it for this edition of CNN NEWSROOM. I'm Christina Macfarlane in London. "EARLY START" with Christine Romans is next.