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Early Start with Rahel Solomon

Magnitude 7.7 Earthquake Jolt Myanmar, Thailand, China; Putin Suggests Temporary Administration in Ukraine; What to Expect from February's PCE Inflation Report. Aired 5:30-6a ET

Aired March 28, 2025 - 05:30   ET

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

[05:30:00]

RAHEL SOLOMON, CNN ANCHOR: All right, an update now on our 7.7 magnitude earthquake coverage that hit central Myanmar as well as parts of Thailand and China. No word yet on casualties in Myanmar, but residents tell CNN that they are scared to death. We are hearing that the quake brought down a bridge. You can see it in the distance of this video.

We're also getting shocking images from Bangkok, where a high-rise building that was under construction collapsed. Authorities say that one person is dead and 50 others hurt. It's unclear at this point how many people, though, are trapped in the rubble.

Thailand's prime minister has declared Bangkok an emergency zone. Let's go to CNN's Hanako Montgomery live this hour in Osaka, Japan.

And Hanako, as we said, I mean, the tremors of this, the feelings of this could be felt in China and Bangkok. Give us a sense of what else you're hearing. What more you're learning.

HANAKO MONTGOMERY, CNN CORRESPONDENT: Hi, Rahel. So, since we've last spoken, the junta in Myanmar have declared this an emergency situation for many cities across the country. Now, we know that Myanmar, of course, is currently witnessing a civil war, one that has been raging in the country for four years now. So information that goes in and out of the country is very limited.

But, of course, there is a lot of fear that there is massive amounts of damage and potentially a lot of lives lost. Now, we also know that, of course, the epicenter of this earthquake was in the city of Mandalay, which is the historical and religious capital of the country.

It's home to many Buddhist temples. And according to some of the videos that we're beginning to see emerge on social media, some of those buildings are actually coming down, those very historic buildings that have been built and have stayed in the country for centuries now.

Now, also, Rahel, it's important to note that Myanmar is one of the poorest countries in Asia, and it doesn't actually have the infrastructure or really the economic means to withstand this kind of very powerful earthquake and these tremors.

So, again, there is a lot of fear about potentially the damage that has been evoked in the country. Now, we do know that the fire brigade has been dispatched as they're trying to locate any remaining survivors and any individuals who might need some help. Now, as you mentioned, Rahel, the earthquake was so powerful that it was felt in neighboring Thailand and also China.

As you mentioned there, we know that at least one person has died in Bangkok, which has been declared an emergency zone. Residents and also tourists have been told to avoid any high-rise buildings, several which have been very badly damaged, according to one of the authorities there. People have also been warned to really just make sure that they aren't in any dangerous situations for potentially any aftershocks that might happen.

Of course, as you know, Rahel, Japan is a country that has seen a lot of aftershocks and has seen a lot of powerful earthquakes, and we've seen time and time again this sort of thing happening in the country.

So, again, there is a lot of fear here in Myanmar, in a different country in Southeast Asia, and potentially the aftershocks that could come could be very, very dangerous, as we've seen and reported before in the past in Japan.

Now, also in Bangkok, we know that the airports have continued to resume. They are in operation, but several train lines have been suspended, as again, residents are told to beware of any potential further damage -- Rahel.

SOLOMON: And Hanako, I'm just getting this reporting from Reuters here, crossing my e-mail. This is, again, attributing this to Reuters that three people have died after a mosque in Myanmar partially collapsed after this earthquake. We're going to continue to watch that.

Hanako Montgomery live for us in Osaka. Thank you.

And stay with us on CNN. We will be right back as our coverage of this 7.7 magnitude quake in Myanmar continues. We'll be right back.

[05:35:00]

(COMMERCIAL BREAK)

SOLOMON: All right, breaking news out of Southeast Asia. Reuters reporting now that several people are dead after a 7.7 earthquake rocked central Myanmar -- according to the U.S. Geological Survey. Now that quake, as we've been telling you this hour, was felt as far away as Bangkok, Thailand. Where this building that you're seeing here collapsed. Authorities saying that one person was killed. An unknown number of people remain trapped in that building. 50 other people we do know, however, were hurt.

In other parts of Bangkok, people fled into the streets as light fixtures inside said homes swung wildly. The Thai Prime Minister declaring the capital an emergency zone.

We will continue to follow that for you throughout the hour and the hours to come.

In other news, as European leaders deliver a show of support for Ukraine, Vladimir Putin is making it clear that he wants a Ukrainian president removed from power. The Russian president called for a temporary administration in Ukraine. Adding that he wants, quote, the root causes that led to today's situation eliminated.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): In principle, of course, it would be possible. Under the auspices of the U.N., with the United States, even with European countries. And, of course, with our partners and friends to discuss the possibility of introducing temporary administration in Ukraine.

[05:40:00]

For what? In order to hold democratic elections. In order to bring to power a viable government that enjoys the people's trust. And then begin negotiations with it on a peace treaty.

(END VIDEO CLIP)

SOLOMON: While speaking to a submarine crew in Murmansk, President Putin also said that Russia is willing to work with Europe. But accused its leaders of always trying to lead us by the nose.

And many of those Western leaders gathered in Paris Thursday for so- called coalition of the willing summit. They agree that now is not the time to lift restrictions on Moscow. After it demanded some sanctions relief earlier this week.

European stands sending a pointed message to the Trump administration. Which said that it was considering Russia's demands. But the British prime minister is saying that sanctions against the Kremlin should actually be strengthened. And Ukraine's president called on the U.S. to step up its game.

Israel's military says that two projectiles were fired at Israel from northern Lebanon in the past few hours. The launches triggered warning sirens along the border. The Israeli military says that it intercepted one projectile while the other fell in Lebanon. And this is the second such incident in nearly a week.

Meanwhile in Gaza more than a dozen aid workers have been killed or have gone missing over the past few days -- according to several groups. As Israel ramps up its renewed military assault on the enclave, the UN agency for Palestinian refugees says that eight of its staff members were killed.

Separately Israeli strikes killed a World Central Kitchen volunteer as meals were being distributed. And the Palestine Red Crescent Society said that nine of its workers have been missing since Sunday when Israeli forces fired on ambulances and fire trucks in southern Gaza. Israel claims that militants were using the vehicles as cover.

Iran's state media says that the country's foreign minister has responded to President Trump's proposal for talks on a new second nuclear deal. The foreign minister sent a letter through Oman and in it he said.

He has said to have reiterated Iran's position that the government would not enter direct talks while it is subject to military threats and pressure. He says that Iran could only engage in indirect negotiations.

His response comes after President Trump's letter giving Iran a two month deadline to reach an agreement. Trump pulled the U.S. out of the original nuclear deal in 2018 during his first term.

Well later this morning the Federal Reserve's preferred inflation gauge drops. Coming up we will break down what it could mean for you and your wallet.

[05:45:00]

(COMMERCIAL BREAK)

SOLOMON: All right, back to our breaking news this hour. A powerful 7.7 earthquake causing widespread damage in Myanmar and Thailand. Reuters reporting now that several people are dead at a mosque in Myanmar.

Authorities in Bangkok report that one person was killed there and 50 others hurt when a building under construction collapsed. An unknown number of people still remain trapped under the rubble. Now, people throughout the city felt the shaking with many running into the streets.

The Thai prime minister has declared Bangkok an emergency zone as authorities assess the damage. And there are reports of buildings collapsing in Myanmar just like the one we just saw. It's one of the world's poorest countries, reeling from more than four years of civil war.

On just a few hours, the latest look at the health of the U.S. economy. The monthly Personal Consumption Expenditures index is a key measure of inflation, tracking a wide range of goods and services. It's also the Fed's preferred inflation gauge.

It'll also give us some data on how much the U.S. spent on those goods and services in February. Now, last month's report showed that consumers pulled back their spending in January by the most in nearly four years. We do typically see shoppers ease off at the start of the year after the expensive holidays in December.

But economists are seeing that and warning that that could be a potential red flag, despite inflation cooling a bit. Let's now bring in Bill Lee, chief economist at the Milken Institute and also the former managing director at Citigroup. He joins us now from Henderson, Nevada, where it is 2:47 a.m. Bill, great to have you. I'm not sure if you stayed late or you woke up early, but nonetheless, we appreciate you being here.

So let's start with the inflation report in a few hours. What are you watching for? What are you looking for?

WILLIAM LEE, CHIEF ECONOMIST, MILKEN INSTITUTE: Well, so far, the trend in inflation really hasn't gone the way the Fed had wanted. It wants to see a steady decline down to 2 percent. Instead, inflation has really started to stay and hang around that two and a half percent area. It's been stubbornly sticky.

So the Federal Reserve right now is on hold because it feels the economy is doing quite well otherwise in terms of labor market. But the inflation numbers just aren't cooperating enough for them to continue their rate cuts.

SOLOMON: Do you expect a similar trend in this morning's report?

LEE: Yes, I think it's going to stay that way for a while. It seems as though there are downward forces for pushing the prices down. I have pretty much ease in place of it.

There's a lot of uncertainty and people don't want to change anything right now. Not pricing, not not employment, not any kind of big decision until they get a clearer sense of where the economy is going.

And by the way, that's something else that they were going to tell us this morning, because the thing that's holding up the U.S. economy has been very strong consumption. Consumers have been outpacing their income growth in terms of spending. And one of the signs of weakness in the economy is the fact that 80 percent of the consumption growth we've seen over the last several quarters has been due to about 20 percent of the population who have the money to spend. Six percent of the population really hand to mouth from paycheck to paycheck.

And the people who are fortunate enough to have assets like stocks and bonds and pension assets, those people are able to save and keep their consumption going. But the question is for how long?

[05:50:00]

SOLOMON: Yes, I mean, that's an interesting point, because obviously a lot of the news coverage as of late has focused on the tariffs. But you make the point that what we're seeing on the consumption side of the economy is actually worth watching as well. Give me a sense of how concerned you are.

And we hear these warnings from top American CEOs all the time. How concerned are you about what you see in the data in terms of consumer spending? And just to be clear, consumer spending is a huge component of GDP, more than two thirds. And so what happens there really matters.

LEE: Absolutely. In the United States, for the longest time, consumers have been driving where the economy is going. But just to give you a sense of perspective, imports, the things that people worry about so much, the tariffs on imports, imports are only about 14 percent of the U.S. economy. So in terms of share, it's not a very large share of the economy. And recently, of course, the obsession is about auto tariffs. Auto spending, even though it's a very big ticket item for a lot of families, auto spending is only three percent of total consumption.

We spend 30 percent on housing, 13 percent on food and 17 percent on health care.

SOLOMON: Yes, let me ask you something.

LEE: Sure.

SOLOMON: Well, I wanted to circle back to something and we're running out of time here, but you made this point in a recent note that I thought was really interesting. And you say that at least when it comes to the markets, the volatility that we've seen there is being unfairly, unfairly attributed to President Trump's tariffs. What do you mean by that? Say more about that.

LEE: Well, because the imports are such a small share of the U.S. economy, it's really a small handle to worry about the coming recession. I think what people really worry about marks that really is unsaid is whether or not people are losing confidence about whether President Trump is going to meet his goals of reducing the government, reducing taxes, reducing regulation and making this a good business environment where foreign investors want to invest in the United States.

Those are the issues that have been driving the U.S. economy for the longest time now, because on the election of President Trump, all of these points were the hope of driving the MAGA agenda, make America great by improving the employment prospects and investment prospects of the United States. But if there's some uncertainty now as to whether or not he's able to pull that off because of bureaucratic inertia and stuff, then that's why the stock market is pulling back, because future profits are being delayed even more if he can't meet these goals, especially before the elections.

SOLOMON: Yes, and if there's anything that investors don't like, and I would even say most Americans don't like when you're thinking about your wallet, when you're thinking about your job prospects, is uncertainty.

Bill, you know, because you have worked at the Fed before, how closely they're tracking all of these data points. And then some that we don't have access to, of course, in the public.

Two rates, still the expectations for this year. But, Bill, let's say you're at the grocery store, a friend sees you, a viewer sees you, and they say, what do I make of these headlines? Is the U.S. economy going to hold up this year? What do you say?

LEE: My advice to everyone has been just chill out for a bit. The news cycle has been hyping up the tariff inflation talk for quite a while now. And I think the real uncertainty is whether Trump will meet his MAGA agenda and make the deregulatory and tax cuts real again. If he does, then we're cool, we're smooth sailing. But if there's any kind of interruption or delay in achieving the MAGA agenda and in delaying these tax cuts and deregulation -- getting rid of regulation, and the midterm elections show up and Congress loses attention, that's when Trump loses inertia and that's where people are going to start worrying. And that's what I would say about the stock market. Not now, it's premature.

SOLOMON: So just chill out is the advice. Easier said than done, as are most things. But, Bill Lee, we appreciate you being here with us. Thank you.

LEE: Thanks for having me.

SOLOMON: And as we just sort of discussed there, President Trump is under fire from America's allies for his escalating trade war. Canada's Prime Minister Mark Carney is vowing to retaliate after the president announced sweeping new tariffs on Wednesday, 25 percent on all cars and car parts shipped to the U.S. Carney said that the tariffs were a direct attack.

(BEGIN VIDEO CLIP)

MARK CARNEY, CANADIAN PRIME MINISTER: I reject any attempts to weaken Canada, to wear us down, to break us so that America can own us. That will never happen. We will fight the U.S. tariffs with retaliatory trade actions of our own.

(END VIDEO CLIP)

SOLOMON: Japan's Prime Minister says that he will consider all options in his response to the new tariffs and both Germany and France are urging the European Union to respond.

OK, stay with us here at CNN. We'll be back in just a few moments.

[05:55:00]

(COMMERCIAL BREAK)

SOLOMON: Welcome back. People in parts of Texas are being urged to get to higher ground today as floods continue to pose a threat to life.

Plus, flood warnings are in effect in the far south of the state. The National Weather Service says that emergency crews carried out water rescues during a round of strong thunderstorms. They say that if you are in the area, look out for large hailstones, damaging wind gusts, torrential rain and a tornado.

There's also a high risk of dangerous rip currents along the coast. The next 36 hours could see six months worth of rain fall in south Texas off the back of a period of severe drought, dust storms and wildfires.

And thanks for joining us here on EARLY START. I'm Rahel Solomon, live in New York. For our international viewers, we will be right back with more on that devastating earthquake centered on Myanmar. But for our viewers in the U.S., CNN "THIS MORNING" starts right now.