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U.S. Economy Adds 528,000 Jobs In July, Far Surpassing Expectations; Russia Ready To Discuss Prisoner Swap With U.S.; W.H. Summons Chinese Ambassador To Condemn Military Activity Near Taiwan; Dems Score Victory As Sinema Agrees To Sweeping Economic Bill. Aired 9-9:30a ET
Aired August 05, 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: Good Friday morning to you, big news just in time for the weekend. I'm Jim Sciutto. Poppy is off today. And we begin with major news on the economy. Just in to CNN, new jobs numbers for the month of July show 528,000 jobs added last month, that number double expectations. It lowers the unemployment rate to just 3.5 percent.
CNN's Matt Egan is here to help us break down these numbers. Frankly, the headline number, Matt, is a big one here. But also it shows healthy growth in several sectors of the economy.
MATT EGAN, CNN BUSINESS & ECONOMY REPORTER: Yes, Jim. This is blockbuster growth, and it's pretty remarkable. This number is going to go a long way towards shutting down this idea that the U.S. economy is already in recession. To be adding more than half a million jobs in a month at this stage of the recovery is pretty impressive.
Let me give you some context around this 528,000 jobs figure. This is twice as much as the consensus from economists. Not only that, but it's 200,000 more than even the most optimistic forecasts had penciled in. Two big milestones that came out of this report. The labor market has now fully recovered all of the jobs lost during COVID.
Total nonfarm payroll is back to February 2020 levels. The unemployment rate is now down to 3.5 perfect. That matches the half century low set before COVID. Again, none of this suggests an imminent or an ongoing recession. But here's the problem. A heating up jobs market is exactly the opposite of what the Federal Reserve wants right now.
The Fed is trying to put out this inflation fire by cooling off the jobs market. They're worried that adding this many jobs wages this hot, it's just not consistent with healthy inflation. And so, today's numbers suggest that the Fed is actually going to have to do more to slow this economy down. And that means even potentially more aggressive interest rate hikes in the months to come. That is a concern to investors. As soon as this number came out, we saw stock futures fall pretty sharply because the market is starting to get concerned that the Fed may actually have to do even more to cool off this inflation fire.
EGAN: Jim, I could not able to hear you, so back to you.
SCIUTTO: Matt Egan, thank you for the update.
So for more on the state of the economy, what these numbers mean, I'm joined now by Austan Goolsbee, the former Chairman of the White House Council of Economic Advisers under President Obama. He's currently a Professor of Economics at the University of Chicago Booth School of Business. Austan, good to have you on this morning.
AUSTAN GOOLSBEE, FORMER CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Yes, great to see you again, Jim.
SCIUTTO: It's a big number. Double expectations. Does this mean, as you look at this, that the U.S. economy is not entering a recession?
GOOLSBEE: Yes, I mean, it's a jaw dropping number of this magnitude. There has never been it's worth -- not only is it double expectations --
GOOLSBEE: -- there has never been a time when the unemployment rate was this low, that we're putting up numbers like this. Normally, numbers like this are reserved for times when unemployment is very high, and you're really booming coming out of a downturn. There's no way it that I could see that for the first six months of this year, when we added several million jobs that you could consider that a recession.
GOOLSBEE: Still, if the Fed starts raising rates more, it's already raised rates at a very fast clip. That could turn around in a kind of a rapid basis, because eventually we're going to run out of bodies. You can't have an unemployment rate, be at the 53-year low and keep adding 500,000 jobs a month, there just aren't enough people. So we could rapidly just run up to the wall.
SCIUTTO: Yes, I mean, we used to talk about maximum employment around 6 perfect. So these numbers are remarkable historically. The Fed has already been raising rates, as you know, pretty aggressively. Does -- when you look at this -- to the fact that the job market has remained strong, could that be an indicator -- and I know this is early, that it is perhaps engineering a soft landing here or is it just too early to say?
GOOLSBEE: It's too early to say but gee, whoa, let's keep our fingers crossed that that is what it means. We got --
GOOLSBEE: -- two observations in a row now.
One that job vacancies fell without an increase in unemployment and now a jobs number that was extremely strong, suggesting there is a little space that they could reduce the heat in the job market without sending us into recession.
GOOLSBEE: But all of this hinges on whether we're getting the positive supply shocks in the language of the economists, or whether this is -- the inflation is coming from demand.
GOOLSBEE: If you are a more of a demand person, then they're going to be arguing. And it seems like the market is arguing, oh, we're going to have to cool things off even more now. But if we're getting -- if what we're getting is kind of the opposite of the downturn that came from COVID, we could be in for a very nice surprise. It could be a lovely fall.
SCIUTTO: Yes. It's a good point. So many have made that is this idea that, you know, the inflation is really post-pandemic because of supply issues. I do want to ask is in this number also showed some pretty robust wage growth, I believe about 5 perfect, does that potentially add to inflation figures going forward?
GOOLSBEE: Almost certainly. You're never going to hear me say it bad words about a job report where we got more than half a million jobs in a single month.
SCIUTTO: I hear that.
GOOLSBEE: So that said, it is the fact that if wages keep growing, they're not growing as fast as inflation. But if they keep growing at this kind of speed, it sort of sets a lower bound on how much inflation can come down, because it's hard for inflation to come down more than to be below wages --
GOOLSBEE: -- for an extended period. So that is a danger. That's why the market is a little nervous about seeing a strong number like this --
GOOLSBEE: -- because they think that means the Fed is going to actively try to cool it down.
SCIUTTO: Yes, the markets always funny and that sometimes good news makes a, you know, turns into bad news about where things are going. Catherine Rampell has made the point that this means that the U.S. economy has just about replaced all the jobs lost during the pandemic. As an economist, that period of job growth and the speed with which that happened, is that historically unusual?
GOOLSBEE: Unusual, totally unprecedented. They've never been anything like that. But that was true on the way down too. There's never been any --
GOOLSBEE: -- collapse of jobs that quickly. And there's never been a recovery of jobs as rapidly as we have recovered. In large part, that's probably because COVID was unlike any previous recession. I've been saying we should call it a downturn, but we shouldn't even call it a recession. It looks so different from all other recessions.
GOOLSBEE: But part of that is an indicator that the economy fundamentals, they probably are still quite strong in a way that's unprecedented compared to other business cycles.
SCIUTTO: Yes, the headline figure, 3.5 percent just remarkable. Austan Goolsbee, always good to have you on to break things down.
GOOLSBEE: Great to see you.
SCIUTTO: Well, Secretary of State Antony Blinken is responding after Russia signaled overnight it is willing to negotiate a potential prisoner swap with the U.S. for WNBA star Brittney Griner. You'll remember just yesterday, she was sentenced to nine years in prison following a guilty plea for smuggling a small amount of cannabis oil into Russia.
Back at home, her WNBA team, the Phoenix Mercury, held a moment of solidarity with the opposing team before last night's game. Many of them becoming emotional, wiping away tears. Then Griner's coach spoke about her sentencing.
(BEGIN VIDEO CLIP)
VANESSA NYGAARD, HEAD COACH, PHOENIX MERCURY: To hear her but words and her apologies and just trying to send love and prayers to her and strength, I couldn't imagine being in that situation. And she was so courageous. And like continuing to be a good role model in so many ways of this impossible situation. And she showed great strength and great humility. And we just want her home.
(END VIDEO CLIP)
SCIUTTO: CNN's Senior International Correspondent Frederik Pleitgen is in Moscow. Fred, the U.S. courts had suggested a prisoner swap before her sentencing. Russia was unhappy with that. They wanted to add another convicted murderer to that list and one held in Germany. Do you sense a substantive change here in those public comments from the Kremlin spokesman about their openness to a swap? FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: To a certain extent, yes, it does seem as though there might be a little bit more momentum than we've seen before. Now, certainly a lot of that or all of that is probably going to be behind closed doors. But you do see the fact that, for instance, Sergei Lavrov, the Russian Foreign Minister said they're willing to engage with the United States in talks that is certainly something that we hadn't heard from them before.
Now, of course, all of this comes after Brittney Griner's conviction yesterday and that nine-year jail sentence that was handed down. And, you know, one of the things that Brittney Griner's legal team had been telling me before the verdict even took place is they said that they believe that there needed to be a verdict and there needed to be sentencing for a possible prisoner swap to take place.
So maybe we are seeing some momentum in the wake of that. Again, it's very difficult to say. But they also said during that trial that they believed that none of the arguments that they had actually put forward in the trial, also some of those appeals that Brittney Griner's coach was just talking about.
We can see some of that on our screen just now, some of the comments that Brittney Griner made while she was in that cage yesterday. They believe that none of that was taken into account by the judge when that verdict came down and when the sentencing came in. I want to listen in really quick to what the lawyers had to say after the trial.
(BEGIN VIDEO CLIP)
MARIA BLAGOVOLINA, BRITTNEY GRINER'S LAWYER: She's very upset. Very upset, very stressed. And she's -- well, she can hardly talk honestly, so it's difficult time for her.
ALEXANDER BOYKOV, BRITTNEY GRINER'S LAWYER: The average is five years, or around five years, and almost a third of the people convicted, get the parole.
(END VIDEO CLIP)
PLEITGEN: And the lawyers told me once again today they are going to file an appeal against this verdict. But they've also been clear on the fact that they believe that, at this point in time, a possible exchange is probably the most realistic way forward. And that brings us to the diplomatic sphere, Jim, where we have seen a little bit of that momentum.
It's interesting because not only Sergei Lavrov commented but of course the Kremlin did as well. And one of the things that Dmitry Peskov said is he said, look, of course, these negotiations can take place. Apparently, instrument for that has already been put in place at the summit between President Biden and President Putin.
Last year in Geneva, they put forward a mechanism to deal with such cases. But he also said that none of the details of that are allowed to be public or these things simply will not take place. So expect all this to happen behind closed doors. But, of course, we know the U.S. is pushing hard, Jim.
SCIUTTO: Yes, it's not unlike what you often see from Iran, big sentence and then the negotiations start when Americans have been held there.
Fred Pleitgen, thanks so much.
New this morning, China's Ministry of Foreign Affairs is taking dramatic steps in response to House Speaker Nancy Pelosi's visit to Taiwan, including canceling future phone calls and meetings with U.S. Defense leaders. All this as Taiwan reports a record number of incidents by Chinese warplanes today as well as really alarming military exercises around the island.
CNN White House Reporter Natasha Bertrand, and CNN Correspondent Selina Wang following all the headlines. Natasha, first to you, it strikes me as a change from the White House approach on this because after initially cautioning Pelosi away from this trip, you know, at least in private, and even some of the public comments from Biden, now they seem to be saying, hey, China, you're the one who's inflaming this situation with these exercises.
NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Exactly right. And they're making public the fact that they actually summoned the Chinese ambassador to the U.S. to the White House in order to essentially condemn what China is doing right now near Taiwan to dress him down, according to National Security Council spokesperson, John Kirby, who told us this in a statement today, he said that they brought him in to demarche him about the Chinese provocations near the island of Taiwan and how they view it as completely unacceptable.
But I think that the way the White House is viewing this now is that this is a pretext by the Chinese, according to Kirby, to kind of up the anti-intention so that they can create kind of a new status quo. And the United States is saying, we're not going to accept that status quo. We are going to continue operating in the western Pacific as we have for many, many decades.
And the fact that China now is increasing its aggression does not mean that we're going to take the bait, does not mean that we are going to respond in kind. We do not want a crisis here. And that is why they're continuing this high-level dialogue with the Chinese as much as they possibly can.
SCIUTTO: And when you say new status quo, a new status quo meaning, China attempting to push U.S. forces back from things like going through the Taiwan Strait, that sort of thing?
BERTRAND: Essentially making it as seem as though they now have this, you know, military activity around Taiwan, that's going to continue, right?
SCIUTTO: Right. BERTRAND: Increased tensions and keep it that way, in the sense pushing the United States out or trying to. That is what the United States is saying, we're not going to upset.
SCIUTTO: Yes, a dressing down. Selina Wang in Beijing. Taiwan reporting, well a record number of incidents by the People's Liberation Army of China. And you see that, the picture is there, I mean, missiles launching within sight of public beaches on the coast of China. What specifically are Taiwanese officials speaking about?
SELINA WANG, CNN INTERNATIONAL CORRESPONDENT: Well, that's right. We've learned from the Taiwanese officials that 68 Chinese war planes flew into Taiwan self-declared air identification zone. Now this is the airspace around Taiwan where China frequently flies its warplanes into, but this is a record number of daily incursions. And it comes after that very escalatory news yesterday, according to Chinese state media, that Chinese missiles had actually flown over Taiwan Island, not around it, but over it.
So all of these moves are part of the very inflammatory military drills happening over the course of several days that essentially encircle the island. And the message China is sending to the world is that we've got a powerful modern military that has the ability to cut Taiwan from the rest of the world.
But that punishment also being extended to the U.S. We've just learned that China is canceling, suspending bilateral talks with the United States on a whole wide range of issues, including in military defense in climate change and illegal immigration, anti-drugs. And that canceling of talks and climate change is extremely critical and damaging because this was one of the only areas where the U.S. and China were still talking over the course of these past several years Despite these recent tensions. That is a major blow to the world, to the future of solving the climate crisis, Jim.
SCIUTTO: Selina Wang in Beijing, Natasha Bertrand here in Washington, thanks so much to both of you.
Coming up next, critical step in the Democrats efforts to pass the biggest climate investment in U.S. history as well as changes to tax, laws and prescription drugs. How they got Kyrsten Sinema on board.
Plus, a CNN exclusive, what we're learning about talks between former President Donald Trump's attorneys and the Justice Department.
SCIUTTO: A major legislative win for Democrats. Senator Kyrsten Sinema has indicated she is ready to vote yes on the party sweeping economic package after party leaders agreed to change some new tax proposals. Those changes include adding an excise tax on companies' stock buybacks as part of the agreement, which leaves the remaining deficit figure at 300 billion Democrats say that this is paid for.
With the Arizona senator support, Democrats will likely have the 50 votes the caucus needs to push the bill through their chamber. Just a couple of weeks ago, folks thought this was dead.
CNN Washington Correspondent Sunlen Serfaty is on Capitol Hill. So Sunlen, Sinema has said it's pending the parliamentarians ruling. You know, it's a little in the weeds here. But basically, the parliamentarian has to decide if the pieces of this legislation qualify as budget measures. I mean, how long do we expect before we hear a final word?
SUNLEN SERFATY, CNN WASHINGTON CORRESPONDENT: Yes, Jim, this is certainly a major hurdle that this bill has to overcome. And we could see a ruling from the Senate parliamentarian as early as today. Now, this is a process that the Senate parliamentarian goes through. It's known up here on Capitol Hill called the bird bath. And basically, she is looking at each and every provision in this bill, making sure that each and every one of those provisions, has an impact on federal revenue, has an impact on spending and has an impact on the deficits.
And that is certainly a critical moment for Senate Democrats because they, as we've been talking about for the last weeks and months, really, they want to pass this through by the process of reconciliation, budget reconciliation. So they need this to have a favorable ruling from the parliamentarian to be able to get this through by only a simple party line vote 50 Democrats here in the Senate. So certainly a critical moment for Democrats.
And again, this is a major piece of the Biden agenda with major investments in climate, energy, healthcare, and tax reform. And on that last part, tax provisions. That's really what Senator Sinema has in recent days expressed some concern over and she was successful in pushing for Democrats to make some very specific changes to this bill.
They dropped a $14 billion carried interest tax provision from the bill. And also they're making changes to the Democrats plans to pare back how companies can deduct their depreciated assets from their taxes. And notably, as you mentioned at the top, to make up for that lost revenue. They're adding in a 1 perfect excise tax on stock buybacks.
So certainly an important moment. The Senate will be in this weekend working. They will be holding a procedural vote at some point this weekend, trying to push it forward in the Senate. And when and if they pass that, it's over the House for final passage of this bill. Jim?
SCIUTTO: Sunlen Serfaty, thanks for covering.
Joining me now to discuss this, Senior Editor for The Atlantic and CNN Senior Political Analyst Ron Brownstein. And Asma Khalid, she's White House Correspondent for NPR. Good to have you both on. And Ron, listen, just a straight up list of the Democratic Party's legislative accomplishments. And by the way, you could call several of these bipartisan, the budget bill looks to be on track now. You had gun legislation bipartisan. The chips legislation got through this about semiconductor production in the U.S., but also NATO membership for Finland and Sweden. When you add that up, how does that stand in previous administrations for getting that kind of legislation passed and that period of time?
RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST:
BROWNSTEIN: Yes, they are on track to get a lot done. Obviously, there's a lot that Democrats care about that passed the House that got blocked in the Senate, particularly voting rights.
BROWNSTEIN: But when you look at what they were able to do, and as you note on several of these with bipartisan support, it is a significant list. And this bill is as Joe Biden might have once put it, a BFD. I mean, the Medicare negotiating prescription drugs is something that Democrats have been seeking for 20 years since Part D and Medicare was created. under George W. Bush, somebody could have an enormous effect on pocket books around the country.
And then the climate investments, which are the biggest investments in transitioning to our clean energy the federal government ever made, their estimates that will bring down U.S. climate emissions by 40 perfect, nearly enough to meet the target at 50 perfect by 2030. And politically, gives Democrats really the first I think positive thing they can go to young voters with and say your vote makes a difference.
Previously, their message to young voters was mostly negative, you know, stop Republicans --
BROWNSTEIN: -- from taking away your voting (ph) rights. This is something positive and it does add up to a significant legislative record even with in many part party priorities that were still blocked by the filibuster.
SCIUTTO: Asma Khalid, the number one issue for voters that you often see in polling is the economy and inflation.
And Bernie Sanders, of course, who caucuses with the Democrats, his criticism of this bill is that it doesn't hit the bottom line for most Americans in the way many are demanding. So some way to help them get through and over these higher prices. I mean, is that from a political standpoint with the midterms three months away, is that a miss in this budget legislation?
ASMA KHALID, WHITE HOUSE CORRESPONDENT, NPR: Look, I mean, I think that Democrats do, to Ron's point, need to go out and have something concrete that they can pitch to voters. And this is it. I mean, if you look at it, it is essentially a slimmed down version of the Build Back Better -- SCIUTTO: Yes.
KHALID: -- legislation that the Biden White House first put forth, but it has a new name, it's now called the Inflation Reduction Act. Namely, because, you know, Democrats are acutely aware that inflation is the primary concern that voters have. You know, when you talk to economic analysts, there's no expectation that this bill will, in any tangible way, actually help bring down rising costs before November. And that is just not a realistic proposition, but it's a messaging strategy.
And I do think --
KHALID: -- for Democrats, you know, it's one thing to be able to put forth legislation, Democrats have consistently struggled at being able to message those wins. That's something they struggled with for many months around the infrastructure bill. And I'm curious if this is different, and they're able to pitch it to voters, because that's part of it, not just passing here, but pitching it.
SCIUTTO: Yes. Ron, the sort of contradiction in the midst of this, right? Is -- you have President Biden achieving many of his legislative goals, in some cases, against the odds in recent months. I mean, if we were talking two weeks ago, we would have said, you know, any version of Build Back Better was dead. But at the same time, you have Democrats, certainly privately, but more and more openly questioning whether Joe Biden should even run for president in 2024.
Rick Wilson of the Lincoln Project, he tweeted about this earlier today saying, quoting him here, "Jesus. Democrats can't organize a two-car motorcade, but sure can turn the guns on the leader of their party 90 days before an election." I wonder, did you agree with that criticism here that the party, surprisingly is not rallying around the President in the midst of this?
BROWNSTEIN: Well, look, I think the 2024 conversation is real, it has a lot to do with Biden's age. And I don't think that's going away, no matter what legislative achievements they have. The more immediate question, the more immediate problem, Jim, is that Biden's approval rating among Democrats at --
BROWNSTEIN: -- Democratic voters that fallen below 80 percent and that threatens to compound what is the typical --
BROWNSTEIN: -- effect going back for 150 years where the party out of power is already usually more motivated to vote in the midterm election and the party that holds the White House. And I do think this achievement does have the potential to restore faith in the near term, leaving aside 2024 among some Democrats, particularly younger Democrats. I mean, his approval numbers among young voters have been terrible.
BROWNSTEIN: And this is something that is a big fire for -- can I also put one flag in the ground? All of this reminds me of what Barack Obama was able to do in 2012 with the auto bailout. And I think when you look at the combined effect of the investments in this bill, encouraging domestic manufacturing, the infrastructure investments and the semiconductor bill, encouraging domestic manufacturing, I think you're going to see Biden or whoever is the Democratic nominee in 2024 going to rusted out industrial communities --
BROWNSTEIN: -- and making the case that we have invested in your prosperity the same way Obama was able to do --
BROWNSTEIN: -- across the Midwest with the bailout in 2012.
SCIUTTO: Listen, a lot is happening. No question. Ron Brownstein, Asma Khalid, good to have you both on. Look forward to having you back soon.
Coming up next, this hour, the attorneys for former President Trump are now in direct talks with the Justice Department about its January 6 investigation and specifically how far they believe they can take their executive privilege claims. We're going to have details from CNN's exclusive reporting coming up.