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First Move with Julia Chatterley
Historic Month Of Job Losses For The U.S.; U.S. And China Trade Officials Agree To Strengthen Cooperation; Lessons Of The Great Depression. Aired 9-10a ET
Aired May 08, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:25]
ANNOUNCER: This is CNN Breaking News.
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: Welcome to a special edition of FIRST MOVE this hour with an in-depth look at America's jobs crisis
following the worst monthly job losses ever.
We'll bring you analysis on what comes next and what restarting the economy may look like and will require and wherever you are in the world, advice on
managing anxiety and stress.
All right. Let me give you the numbers. The U.S. losing a stunning 20.5 million jobs last month. This report, just to give you a sense covers the
period from mid-March to mid-April when new jobless benefit claims were at their highest.
This now gives us a U.S. unemployment rate of 14.7 percent. That's the worst level since records began in 1948. As I've been saying all this week,
bad as these numbers are, it's simply not an accurate picture of the damage that's been done during the lockdowns. These numbers don't include those
who are out of work, but simply not searching for a job, which of course is tough while you're under lockdown.
But there are other inconsistencies here. Most of these job losses were considered temporary in nature, though. So, the hope is that if that is the
case, they could perhaps come back quickly.
U.S. stocks, meanwhile, continue to gain ground, fueled in part I think by the hope that what we are seeing here is the lows, the worst of the
economic damage. And now, the restart begins and perhaps things pick up, though, I have to say a word of warning from JPMorgan coming this week
saying it could take as long as 12 years for the United States to gain all the jobs back that it lost over the past few months.
Let's get to the drivers and analyze what we saw. Richard Quest joins me now. Richard, we run out of words to describe, I think what we're seeing
here, not just in the United States, but of course, globally.
And it says something when you're presented with an unemployment rate of 14.7 percent, and your initial response is relief, that actually it wasn't
a lot higher. These numbers are horrific.
RICHARD QUEST, CNN BUSINESS ANCHOR, "QUEST MEANS BUSINESS": And that's certainly the thought because if you took yesterday's private payroll
numbers, and you took them into today, the fear was it could be as high as 22 million that would be unemployed with a rate of over 16 percent.
So, to the extent we've got what we've got today, there's a small blessing in that and there's another small blessing because I do think today we need
to focus on what might be the positive or be little though it is, and that is of that 20 million -- 17 million of it -- 17.5 million identify their
unemployment as being temporary, short-term, layoff, furloughed, being transferred onto the increased unemployment benefit.
That means and again, it's horrific number, but it's -- we're looking for silver linings in very gray clouds, and it does mean that perhaps a much
smaller number of this, two million perhaps will be long term unemployed, the rest being reemployed.
And the other thing is, of course, there are increased unemployment benefits, but this is very small comfort for people who have seen their
lives completely and utterly turned upside down.
CHATTERLEY: I agree with you, Richard. And there's so much guesswork at this stage. If there's any beneficial comparison to the economic
depression, it's that we've acted differently this time around. We've ramped up spending, it's trillions of dollars. There's some kind of safety
net that wasn't there even three months ago.
But we're facing two crises here. The economic crisis and the underlying health crisis and key to recovery is addressing both of those things, and
at the heart of it is confidence and that's the unknown and the big challenge here.
QUEST: Right, and we got a good idea of the future at least seen from the United Kingdom in yesterday's Bank of England monetary report.
Now, the Bank of England, which I think it expects U.K. unemployment to go up to about -- well, into double digits, but the Bank of England said if
you look three years out, two to three years out, you see an employment back at four and a half percent.
Now, I grant you, this is so many unknowns that you can pardon the phrase, you wouldn't take it to the bank. If you told me on New Year's Eve that we
would have an unemployment rate in the United States at 14.5 percent, I wouldn't have believed you and said you've been having the champagne early,
instead.
[09:05:24]
QUEST: But I think we can say -- and one other piece of news on this looking forward to the future, Lufthansa this morning says it's hoping to
put 160 aircraft back into circulation as of June.
Meanwhile, IAG says it hopes to start meaningful flying in July. So, we can start to see to use the cliche, the green shoots of recovery, but they are
very, very fragile.
CHATTERLEY: This is such a critical point, Richard. When I looked at those numbers 30 minutes ago, I was trying to do the math on what proportion of
these job losses are in the leisure and the hospitality industry, and it's around 42 percent in April.
This industry, this sector, and it's a lot of jobs was very much in the frontline, wherever you look around the world, but particularly here in the
United States, bringing these jobs back is a huge, huge chunk of the numbers that we're talking about here.
QUEST: Anywhere between 10 to 14 percent, depending on which ones you look at of people globally are employed in some form of travel and tourism at
its widest definition. So, it is a vast industry.
And you're right, it's about 45 percent of the job losses, and that includes restaurants, bars, clubs, and tours and, and the like.
Now if you take -- but the artificiality of these numbers is borne out for example, by the fact the airlines can't furlough staff now because they are
bound under their agreement until September, and you've got PPP, which is also keeping many employees perhaps arguably falsely employed, or at least
artificially employed on the government payroll.
So, we won't get a good idea of long term unemployment facts, until at least -- I'm guessing probably July, maybe as late as August, September,
when we've seen a recovery underway, and we've got an idea of what's not coming back.
CHATTERLEY: Yes, and the Congressional Budget Office saying a 10 percent unemployment rate, even at the end of this year, so millions of jobs gained
from here, but still millions of jobs lost in the last two months.
Richard Quest, thank you so much for your thoughts and analysis there.
QUEST: Thank you.
CHATTERLEY: Well, President Trump responded to this employment numbers saying the jobs will be back very soon.
(BEGIN AUDIO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Fully expected. There's no surprise. Everybody knows that. Somebody said, oh, look at this. Well, even
the Democrats aren't blaming me for that.
But what I can do is I'll bring it back. Look, I created with a lot of great people and with the country, because our country's warriors and now
maybe more than ever because they're going back to work and they are warriors -- we created the greatest economy in the history of the world,
the best we've ever had, best employment numbers, best stock markets, best number of jobs in every way, the best economy in the history of the world -
-
(END AUDIO CLIP)
CHATTERLEY: CNN senior Washington correspondent, Joe Johns joins us now. Joe, whichever way you look at it, blame game aside, these are crippling
devastating numbers for the United States and the decision now on how to act to bring these jobs back and support confidence is key.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Absolutely, confidence is key, and that's probably one of the most important things that people on
both sides of Pennsylvania Avenue have been stressing, however, Democrats say the way to get confidence in the economy, confidence in the various
sectors is to have more testing.
The people over here at the White House have a somewhat different view. They say the critical thing is limitation on liability, so that some of the
companies when they start back up, don't instantly get sued, because someone caught coronavirus, for example.
So, that debate continues, and it will probably make its way into legislation, at least, at some point.
A couple other points about what the President said in his statement there, he was in the middle of an interview on Fox, his favorite station, when
these numbers came out, and I do want to direct your attention to that claim he made that even Democrats don't blame him for this.
It is also true that a lot of the President's critics have said that this situation could have been limited in the United States somewhat if the
President had acted a bit quicker.
As to what you raised there at the top, Julia, you know, that issue of when does this recovery that the President predicts start, the Council of
Economic Advisers over here at the White House have put out what their view is and they've suggested that we might just see it an inkling, just a bit
of signs of recovery in the next monthly report, which would come out at the very beginning of June.
[09:10:19]
JOHNS: Now, that would cover the month of May, but they say we're not going to see what they call, fuller measures of recovery, at least until the June
report, which comes out in July.
And that, of course, is a somewhat rosy scenario, given the fact that we don't know the level of confidence out there in the American public, and
it's not clear at all that things are going to start moving that quickly. Back to you -- Julia.
CHATTERLEY: You raise a great point. There are two crises here, an economic crisis and a health crisis and they are entwined whether we like it or not,
and we have to tackle both. Joe Johns, thank you so much for that.
Now, as we were mentioning earlier, the hard-hit travel and hospitality sector account for many of the months of these dramatic job losses, around
42 percent. But the CEO of IHG, one of the world's biggest hotel groups is cautiously optimistic. He says some markets are already showing signs of
recovery.
(BEGIN VIDEO CLIP)
KEITH BARR, CEO, INTERCONTINENTAL HOTELS GROUP: Let me canter around the world and tell you where we're at today and then how we're thinking about
the recovery.
And so, in China, we had 190 hotels close at the peak, and now we only have a handful closed. So, we're back in business in China. Across Europe,
Middle East and Africa, we have about 50 percent of our hotels closed.
But in the United States, we have less than 10 percent. And so we're about 15 percent hotels closed around the world, running about 25 percent
occupancy, and that varies from market to market.
But the question is about the recovery and I was on a call the other day with about six CEOs and we're all saying our crystal balls are a little bit
blurry at the moment about when that happens because it will really require when does social distancing begin to end, when do borders begin to open up.
And so our view on recovery is that domestic businesses will recover first before big international ones.
Mainstream businesses which have a big drive component will be part of that. There'll be individual business travel and individual leisure travel
before groups, meetings, conferences and events, and international long haul will probably be the last to recover.
Fortunately, the vast majority of our businesses are big domestic businesses and so our brand portfolio, our business plays to where the
recovery should be first.
(END VIDEO CLIP)
CHATTERLEY: That was Keith Barr, the CEO of IHG, outlining the shape of the recovery as he sees it.
Now while we watch the economic fallout, investors are reacting positively to news on the trade front.
The U.S. and China have pledged to create favorable conditions to implement the Phase 1 trade deal. Beijing says the two countries also agreed to
strengthen cooperation on public health.
Ivan Watson joins us live from Hong Kong with more. Ivan, you and I were talking about the Scold War yesterday. Well, Scold War and rhetoric aside,
if we can at least see these two nations not taking further action to escalate trade tensions, in fact, moving towards positive directions on
this front. That is good news.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Isn't it incredible, Julia, what a difference 24 hours makes where just a short time ago,
Beijing and Washington were hurling these really nasty broadsides against each other, accusing each other of failings in confronting the coronavirus
pandemic.
And then suddenly we learn from the Chinese government, from a statement that in fact, there's been this phone call Friday morning Beijing time,
Thursday night, Washington, D.C. time between a top Chinese official and the U.S. Trade Representative Robert Lighthizer and Steve Mnuchin.
So, and then, on top of everything, they're talking about cooperation in the public health sphere and on continuing to work towards the Phase 1 of
this Trade Agreement that the two governments had worked towards last year.
So clearly, that has made investors a little bit happier. It does raise questions about what exactly has been going on with this sudden U-turn.
Diplomats at the U.S. Embassy in Beijing have been telling CNN that the work on Phase 1 of the Trade Deal never stopped even throughout the entire
pandemic, that some of China's purchases that were agreed to were impacted by the coronavirus pandemic, and it's hard to imagine that that that
wouldn't affect things, given that it's brought basically much of the world's economy to a standstill.
And we've just heard from President Trump speaking on his favorite channel, Fox, where he's been saying that he's kind of two minds that he was working
towards a trade deal with China and then this pandemic hit and he is torn, he has not decided yet with what to do.
So, I guess we can sit and watch and decide will the worlds' two economies continue blaming each other for this pandemic? Or are they suffering so
much economically, that they recognize that they have to find a way to move forward? Or could they perhaps compartmentalize their relationship?
And I guess we'll just have to watch and see.
[09:15:27]
CHATTERLEY: Yes, a Scold War de-escalation, perhaps. We should watch for the next 24 hours and see where we go. Ivan Watson, thank you so much for
that. It's not over.
Still to come, what the Great Depression can teach us about dealing with today's unprecedented job losses, and also what it can't. Critical.
And 50 percent of Americans say their mental health is suffering as a result of the coronavirus crisis. We'll discuss ways to help support your
mind while also keeping your body healthy. Stay with us. That's after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE on this all important jobs Friday where the American economy says it lost 20.5 million jobs in April. It's
the worst monthly numbers on record.
It gives us a U.S. unemployment rate of 14.7 percent. That's the highest since the Great Depression.
The Labor Department is also saying that that jobless rate, that unemployment rate would have been five percentage points higher if workers
on temporary layoffs were included in the numbers.
We are just a few minutes to go before the opening bell. We are still looking at a solidly higher open for U.S. stock markets. It's based on
trade optimism, and I think the hopes that we've seen the worst for job losses, the bad economic data, and of course, trillions of dollars of
stimulus, let's not forget that.
Meanwhile, Uber Lyft, PayPal and Germany's Siemens are all saying this week that their businesses appear to have bottomed. Companies are announcing new
plans to get workers back to.
We've seen Ford say North American production will begin on May 18th. Disney says the Disney Spring Shopping and Entertainment Complex in Florida
will begin a phased reopening on May 20th.
[09:20:14]
CHATTERLEY: Austan Goolsbee joins us now. He is Professor of Economics at the University of Chicago and a former Chairman of the White House Council
of Economic Advisers.
Sir, great to have you on the show this morning. Your assessment both of the headline numbers, but also the message here that actually these numbers
could have been a lot higher.
AUSTAN GOOLSBEE, PROFESSOR OF ECONOMICS, UNIVERSITY OF CHICAGO: Yes, maybe. I mean, this is -- we're all still taking a deep breath and trying to
process a number like this. It's unbelievable. The worst day in the history of the U.S. job market.
We haven't seen numbers like this since the Great Depression. But there is one sense in which this number is actually worse than the Great Depression
and that is the worst year of the Great Depression was 1932 and the unemployment rate rose almost eight percent that year.
We rose more than 10 percent in a single month. So, what everyone is hoping is that this is in some sense, totally different than a regular business
cycle. Because if this is like the Great Recession or the Great Depression, then it will take 10 years plus before we can get the unemployment rate
back down to something like normal.
CHATTERLEY: There are reasons to compare and contrast with the Great Depression and say we saw policymakers react really quickly, trillions of
dollars' worth of stimulus, a safety net of sorts, as complicated as it has been was provided.
The vast majority of these jobs according to this report, too, are temporary in nature. How confident are you and what proportion do you think
will come back as states reopen? And how quickly will that happen?
GOOLSBEE: Look, all of those is not like anybody has the definitive answer. For sure that's what we want to happen, that this came from a virus and if
we could get control on the spread of the virus that we could come back faster than a normal recession.
It certainly helps that we had such a big government response. But I would emphasize that government response, though it is in the trillions of
dollars is not really about getting the economy going again. That's primarily just relief money, so that people don't have to liquidate their
businesses or don't get evicted from their houses. It's not really intended to juice the GDP or it or anything like that.
I don't think that what caused this free fall was government policy, and I don't think even government saying you can go back to work, I don't think
will work, you've got to control the fear of the virus.
CHATTERLEY: Economic confidence, we talked about this earlier on in the show. That's wrapped up in to your point, financial security, but also
controlling the crisis that caused this, which is health.
What are we missing here? Because I know you're incredibly passionate about the need to raise testing, to raise tracing, because then you need to test
less or less randomized testing, is that the key really that unlocks recovery in your mind?
GOOLSBEE: I think in my mind, it is and I kind of base that not on a theoretical hope, but in the observation that there are now numerous
countries around the world where even though there is no vaccine, and even though there is no treatment, they have been able to get their economies
out of lockdown and start growing again.
And all of those countries have followed the same playbook, which is you do enough testing so that A, people are not afraid that if they go out of
their house, they're going to bump into somebody who has the disease and doesn't know it, and B, the only people that have to come out of commission
are the people who are infected.
Right now, we're trying to slow the rate of spread of the virus by just everyone staying home. And of course, if everyone stays home, the rich
economies of the world are dominated by services. Those are exactly the things that get pulled down. That's why we're seeing these great depression
like numbers.
And we're going to keep seeing them until we do enough testing that we can figure out which group of people need to come out of commission, not
everybody.
CHATTERLEY: The challenge here, to your point, I think is as we see the unemployment come down, as recovery take hold, we also see case numbers of
COVID-19 rise and that has a sort of downward spiral effect.
You understand the difference here in the political angle. We showed the President speaking on Fox News earlier saying no one blames me for this.
If what you're saying is true and we don't see a sustained, powerful recovery by November, what does this mean politically, do you think the
President Trump?
[09:25:20]
GOOLSBEE: Well, I don't see how it would be good for President Trump, though we really have no models. We can't say oh, this is just like 1983.
You know, there is nothing like this.
That said, most likely what's going to happen is we're going to get numbers on GDP growth and income in the United States for this second quarter that
looked like the jobs numbers look. We're going to see the worst growth of all times, and then if you plunge that far, it is not hard to come back
part of the way.
So, most expectations are that we might see a minus 30 percent in the second quarter, and then maybe a plus 10 in the third quarter, which would
normally be a quite a positive, but minus 30, plus 10 is still way below zero.
So, I would have to think that that's going to weigh down the President's reelection chances and he knows that and that's why he is out trying to
spin it, if you will, that no, no, everything is going to be fine. Everybody, please just go back to work.
But if that leads to relapse, reinfection and re-shut down. We've got problems.
CHATTERLEY: How much more money is needed? You said it's just about stabilization. If we want to boost recovery, how much more money is needed,
do you think?
GOOLSBEE: The answer to that depends critically on whether we do the testing. If we don't do the testing in the United States and this virus
continues to spread like mad, and if the states try to reopen, and a bunch of people go back out and that infection rate goes back up, then it will be
trillions more. It is unlimited.
If we're just going to burn money to keep warm until the heat comes back on, the most important part of that equation is getting the heat back on.
And that means doing the testing so that people are not afraid. If not, I think it's unlimited.
And look, the Fed is already talking about a $5 trillion lending facility for businesses in America so people better get used to having a lot of
zeros on the end of these numbers.
CHATTERLEY: We can't get this wrong. Austan Goolsbee, great to get your perspective this morning. Thank you so much for that. Stay safe, sir.
GOOLSBEE: Thank you.
CHATTERLEY: Thank you. The market opens, next.
(COMMERCIAL BREAK)
[09:30:59]
CHATTERLEY: Welcome back to FIRST MOVE. I'm Julia Chatterley. U.S. stocks are up and running this Friday on what is a historic day for the U.S.
economy.
We do see green across the markets and NASDAQ again in positive territory for 2020 despite the United States posting its worst month of job losses on
record. Twenty and a half million jobs were lost last month, worst hit with more than seven and a half million jobs gone. The leisure and hospitality
industries as we were discussing earlier.
In the meantime, unemployment has risen to the worst levels since the Great Depression, just to break it down in terms of what we're seeing here,
teenagers suffering the most of all. Unemployment in that bracket has risen to more than 30 percent while the unemployment rate for Asian, Hispanic and
white workers all hit record highs.
Stocks have been rising for much of the week on hopes that the economy can now rebound from here. But just to give you a counter indicator here,
yields on short term U.S. Treasuries have fallen once again to record lows.
The bond market clearly worried that recovery will be long and hard. Torsten Slok joins us now. He is Chief Economist at Deutsche Bank
Securities. Torsten, great to have you with us. First, your observations on some of these numbers here, and then the details beneath the headline.
TORSTEN SLOK, CHIEF ECONOMIST, DEUTSCHE BANK SECURITIES: As you have been mentioning, Julia, I mean, there's a number of important details here that
are very critical for understanding these numbers.
Obviously, the headline is eye-watering these are just the worst numbers we've seen, and we probably will see in our lifetimes. It does show some
different aspects that are important.
Very importantly, as you have mentioned, also, that 40 percent of the job losses were in leisure and hospitality. So, that does tell us something
about the composition of the job loss. It is that a lot of this work in hotel, in restaurants and bars, and these are generally lower paying jobs,
but it also tells us something about what does it mean for wages? What does it mean for the overall consumption outlook when you have such a
significant part of several industries seeing such significant hardship?
Another very important dimension is that when you look at the categorization and how these jobs are classified, there are some important
distinctions in terms of thinking about, are these people who are unemployed, but they are saying they're unemployed temporarily, or these
people who say, I'm employed, but I'm just not at work at the moment.
And this distinction may sound a little bit peculiar, but it is quite important whether people say that they are working, but they're not on the
job at the moment, or whether people are saying, I'm unemployed, but I'm looking for a job.
And when you look at all the aspects of whether this is temporary and permanent, you do find that 97 percent of the job losses here were
categorized as being temporary.
So see, and we will find out in the coming months if this truly is just a temporary shock, but where we stand today, it is indeed very devastating
and eye-watering numbers.
CHATTERLEY: What we can't gauge at this stage is what reopening looks like, and to your point about temporary versus permanent, how many of these jobs
come back and over what time horizon? Just what's your sense of that? And I appreciate it's tough to gauge.
SLOK: Well, I think that there's two very important different dimensions to that issue. Namely, first of all, we all agree that even when the
restaurants do open up here in the New York City area as an example, we will have more distancing between seats. When airplanes start to fly again,
we will have more distancing, we have already seen some airlines have more distance in between seats.
That on his own also means that you should have a slower recovery, you may not need as many waiters, you may not need as many bartenders and you may
not need as much staff on airlines if you have more social distancing.
So, one reason why you would expect the unemployment rate to go up the elevator and down the escalator is because it takes time to bring these
jobs back and particularly when you have these health requirements.
The second dimension, and this is really the most uncertain thing in the outlook. That is the PPP program that you have covered so well over the
last few weeks. This is all about, well, it's small businesses when they got alone. It was done under the condition that if you rehire back all of
the workers that you had in February, if they are rehired back by July the 1st, then that loan will turn into a grant.
[09:35:20]
SLOK: So, the big uncertainty in the next few months is, will we see a significant increase in employment in small businesses? And if we look at
how many jobs are supported by the SBA and PPP loans, the Paycheck Protection Program loans, it actually in our calculation is up to 50
million small business -- 50 million workers in small businesses that are getting support at the moment.
So, there is an upside risk that if companies really do go back and hire a lot of those workers back, we could see also jobs come back much quicker,
but it's very uncertain at this point, which of these two is affecting the slow escalator going down, or this PPP Program effect, which of these will
be dominating over the next few months?
CHATTERLEY: The counter to that is that an estimated 38 states at this moment have people that are on average now earning benefits with state and
Federal benefits combined that were higher than the wage that they earned before.
And I know certain states -- Iowa and Texas -- for example, are trying to prevent people from staying on benefits just because they're frightened.
But that's an added restraint on rehiring, surely too if people are better off staying at home.
SLOK: And this, of course, is a difficult calculation. Remember the bonus on unemployment benefits, as you know too well, of course, will run out at
some point. Now, there are stories yesterday and today about the Democrats talking about maybe having more automatic stabilizer considerations around
how long a time this will continue.
In other words, saying maybe we should extend the bonus on unemployment benefits, maybe we should extend the high level of employment benefits
until the unemployment rate reaches a certain level.
So, if that were to be the case, then we would have a more protracted period of this problem that for some people, it is indeed, more higher
paying, if you will, to be on unemployment benefits.
But the bottom line is, is if you look at the Congressional Budget Office estimate of where they think we are going to be at the end of the year, and
this is called by our own Deutsche Bank estimate, they think and we think that the unemployment rate at the end of this year will still be 10
percent.
So, it tells you that even when we take everything into account, and we throw everything into our spreadsheet and think about, where are we over
the next few quarters, even the Congressional Budget Office comes up with the answer, this will be a slow and gradual recovery and the unemployment
rate will only come down very, very slowly, unfortunately.
CHATTERLEY: Yes, that's million more jobs than we have today. But still millions of jobs lost than where we were two or three months ago, which is
part of the crazy of the situation that we find ourselves and in the challenge in predicting.
Torsten Slok, great to have you with us. Thank you so much for that. Chief Economist there at Deutsche Bank Securities. Stay safe, Torsten.
SLOK: Thank you.
CHATTERLEY: We're going to take a break. Coming up, what's ahead in 2020? And comparing that to what happened in the 1930s. The time of food
shortages and unprecedented poverty. What lessons have we learned from history? Both good and bad -- after this.
(COMMERCIAL BREAK)
[09:41:16]
CHATTERLEY: Welcome back to FIRST MOVE. It's important to remember that behind the job loss statistics are millions and millions of individual
stories.
We've been talking to the people behind the numbers like the hundreds lining up at food banks in Los Angeles for the first time in their lives.
CNN's Kyung Lah has the story.
(BEGIN VIDEOTAPE)
ARMAN SARIAN, SMALL BUSINESS OWNER: It is hard, emotionally, financially. Everything. Our life has changed 180 degrees.
KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT (on camera): And it happened overnight?
SARIAN: Overnight. It happened overnight.
(END VIDEO CLIP)
LAH (voice-over): Arman Sarian tells the story you hear again and again at food banks across today's America. He pulled up for free food in his BMW.
Until coronavirus hit, his Los Angeles printing shop more than supported his family of four.
(BEGIN VIDEO CLIP)
LAH (on camera): Are you scared?
SARIAN: Yes, but as a household of the family, I don't show it. I have two teenagers to raise up. We have to keep up the good spirit, but we're all
scared.
(END VIDEO CLIP)
LAH (voice-over): The lines of the needy and the numbers of unemployed all harken back to the darkest time in America's economy, the Great Depression.
Like then, this downturn touches millions upon millions. Entire industries halted like air travel.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I miss you.
UNIDENTIFIED MALE: I miss you.
(END VIDEO CLIP)
LAH (voice over): Cruise ships, tourism and theme parks and retail and restaurants. From Las Vegas to Main Streets across the country -- gutting
jobs.
(BEGIN VIDEO CLIP)
LARRY HARRIS, USC MARSHALL SCHOOL OF BUSINESS: Think about five fingers, 20 percent is one out of five. So, one out of five people in the United States
who wants to be working is no longer working and that's jaw dropping.
(END VIDEO CLIP)
LAH (voice over): But there is a difference with today's economy.
(BEGIN VIDEO CLIP)
HARRIS: We know exactly what's causing the job loss. In the Great Depression, people understood there wasn't enough money but they didn't
really understand why.
(END VIDEO CLIP)
LAH (voice over): A vaccine, a medical breakthrough could help put this father back to work.
(BEGIN VIDEO CLIP)
LAH (on camera): Have you ever had to do anything like this before?
UNIDENTIFIED MALE: No. This is the first time for me.
(END VIDEO CLIP)
LAH (voice over): He is a writer and actor in Hollywood. An estimated 750,000 jobs in California have been impacted as the entertainment industry
suddenly stopped.
Driving up with his son, he said he wanted to talk in support of the L.A. regional food bank, but only if we didn't use his name.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I think it's difficult for a lot of us to try and provide for our families and you know, still maintain some dignity. So,
once you realize you're not going back to work for a while, it's pretty heartbreaking.
(END VIDEO CLIP)
LAH (voice over): Kyung Lah, CNN, Glendale, California.
(END VIDEOTAPE)
CHATTERLEY: As we've watched this jobs crisis unfold, historical comparisons with economic catastrophes like the Great Depression of the
1930s are perhaps inevitable.
A depression is a really bad recession and the damage to the United States economy was significant and it was prolonged. Between 1929 and 1933, growth
fell 27 percent unemployment rocketed from three percent to 25 percent of workers.
And a second downturn hit then between 1937 to 1938, but there are Key differences between then and now.
Clare Sebastian joins me. Clare, and you've been looking at some of what are very critical differences that need to be made at this moment? Talk us
through them.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, differences and similarities. I think, just to put it in context, let's look at the chart
that shows unemployment going back to the Depression.
You can see that not since 2008, not in 2008, not in the severe Depression in the early 1980s did we come anywhere close to these numbers and the
consequences as Kyung Lah's package displayed there are starting to look like those iconic images that we remember from the 1930s of people lining
up for bread.
[09:45:12]
SEBASTIAN: Now, this is happening much quicker. You've talked about 10 years of job gains being raised in the space of a couple of months.
I want to show you again, some pictures of people lining up in their cars for food banks today. The eerie parallels of the 1930s, but look closely
because those people who are lining up in their cars, they are lining up in nice cars, in SUVs.
This displays the speed of the decline people don't have food, but they still have their nice cars and these cars, they speak to another aspect of
what we're seeing here. The build up to this, the 10 years of cheap money similar to what we saw in the roaring 20s where credit became suddenly
available to people.
People have built up, you know, credit for cars, for houses, consumer debt really was at a record as we go into this and that is exposing
vulnerabilities in society right now. People have a lot to lose. I think cracks are starting to appear now just as they did in the 1930s -- Julia.
CHATTERLEY: Yes, and this is the critical question, isn't it? What about lessons, though? Because the way we've reacted this time around, I think is
very different, and that's a good thing. Have we learned enough?
SEBASTIAN: Yes. So, picking out some of the lessons that we can learn. I think, looking back to the 1930s, a lot of people in history, historians
will say that a lot of policy mistakes were made, things that the prolonged crisis made it last 12 years, which obviously we very much hope that this
one doesn't.
But one of the things was to spend your way out of it -- fiscal spending. Obviously, we're seeing a lot of that now, and with FDR in the 1930s, we
saw the New Deal, which was a huge sort of infrastructure project that created various institutions as well.
But many people looking back say that that wasn't enough. It did get people back to work, but it did not end the Depression. Unemployment stayed in
double digits for pretty much the entire 1930s.
Secondly, a proactive Fed. We have a very proactive Fat nowadays, Julia, but back then in the 1930s, it was in its infancy and research. Since then,
it has shown that the Fed made critical mistakes at that point, not embarking on open market operations to basically not being proactive
enough.
Thirdly, I mentioned the institutions, the safety net is critical. The FDIC, the Federal Deposit Insurance Corporation, SEC, Social Security, all
created in the 1930s -- very important to look at that because the question now today is, while these things have helped, still remain in place, all of
them -- is the safety net enough?
I think when you see people lining up at food banks, you have to question that.
And finally, the quote from FDR from his 1933 inauguration, "The only thing you have to fear is fear itself." This is critical because what research
has shown is that consumption in the 1930s did not return as was expected.
The New Deal put people back to work, but they stuffed the cash under their mattresses. In many cases, they were simply too scared, too scarred to
spend, and I think that's one thing that policymakers have to worry about here even when the lockdowns and even when perhaps there's a vaccine, will
people go out and spend? That is the big question.
CHATTERLEY: Confidence is everything and we cannot forget, this is an entwined crisis -- an economic crisis and a health crisis. We've got to
tackle both.
Clare Sebastian, thank you so much for that analysis there.
All right, we're going to take a break here on FIRST MOVE. It goes without saying that losing your job has an unimaginable major impact on both you
and those you love.
Coming up, we'll discuss ways to help people cope. Don't go away.
(COMMERCIAL BREAK)
[09:50:38]
CHATTERLEY: Welcome back to FIRST MOVE. One major consequences of sudden mass unemployment will be an epidemic of mental health problems brought on
by isolation, disabling anxiety and financial distress. Then you can add in the stress of caring for those who are ill or even grieving for lost loved
ones.
If you're feeling any of this, then you truly aren't alone. Well, our next guest is armed with coping strategies and says there are lessons to be
learned in resilience hereto.
Adam Grant is an organizational psychologist at the Wharton School of the University of Pennsylvania. He's also the host of the TED Talk podcast
called "Work Life."
Adam, great to have you on the show. Thank you so much for joining us. What's the first thing people need to understand if they're facing job loss
or the anxiety of this at this moment? Never mind the broader pandemic issues?
ADAM GRANT, ORGANIZATIONAL PSYCHOLOGIST, WHARTON SCHOOL OF THE UNIVERSITY OF PENNSYLVANIA: Well, I think the first thing to realize is that
unfortunately, there's a primary loss of a job and income, but there are also secondary losses. Sometimes, it's anxiety or depression. In other
cases, losing a job is a major blow to self-esteem, self-confidence and control.
And so we need to figure out how to address those secondary losses along with the actual job loss itself.
CHATTERLEY: How do you do that, Adam?
GRANT: Well, I think one of the most counterintuitive things we've learned in Psychology is that instead of seeking advice from other people, you
should actually give advice to other people.
So find someone else you know who's lost a job and walk them through a set of recommendations for how they might start their job search, and it turns
out when you do that, it builds your confidence because you're generating the strategies. It also motivates you to follow through.
CHATTERLEY: You say generosity is the best anxiety message or medicine, so you're saying by giving advice to other people, by giving support to other
people, perhaps you take some of that inward as well and recognize that it applies to you, too.
GRANT: Yes, we know from decades of evidence that one of the reasons that people often struggle with feeling daily anxiety and depression is they get
stuck in a cycle of rumination, where they're just looping the same thoughts and fears over and over again, and stepping outside of our own
problems to try to help other people fix theirs not only boosts our confidence, it also helps us remember that we can make difference, that we
matter to other people and that can be a dose of motivation exactly when we need it.
CHATTERLEY: And what about for people with children as well? It's not just the anxiety of the impact that it's having on you. It's about whether
you're doing a good job taking care of your children. What impact this is going to have on them in the future as well. What are we teaching them
perhaps about resilience here as well?
GRANT: Well, I think some of the same ideas actually apply. So, children in order to be resilient, they need to feel that they matter, and when we
break down mattering, it's the sense that other people notice you, care about you and rely on you.
And I think most parents are pretty good at the first, by paying attention to their kids and giving them unconditional love. But we have to remember
that kids also need to feel that they have something to contribute.
And so one of the first things that parents can do when they feel like their kids are struggling, let's say to focus in online school, is to say,
hey, I would love some recommendations from you on how we can make this experience better, and then kids actually take more ownership over the
solutions because they were persuaded by someone they already like and trust -- themselves.
CHATTERLEY: I love the idea of that. You know, I think sometimes it's hard to imagine what the future looks like because we're still dealing with the
fallout from the present.
But you also have a very positive message about growth, changes, the things that we learn in these moments about ourselves, not just about resilience,
but the things that perhaps we want to do with our lives that we haven't done and behaviors that we want to change going forward. Should we also be
focusing on this at this moment as well?
GRANT: I think so. I had a really interesting conversation from my "Work Life" podcast with the astronaut, Scott Kelly, who did the year-long
mission in space, which was an American record, and one of the things that Scott did before he ever got in the rocket to leave Earth was he imagined
the day his mission was ending and how he wanted to feel on that day.
And then he did a little rewind exercise and said, okay, what do I have to do day by day in order to get to that place that I want to be at when the
mission is over?
I think that's an exercise we can all do right now, and one of the highlights of it is it reminds us there are silver linings, right? So, if
you start to think about how you want to feel on the day that this crisis is over, you realize, you know what, you might miss some of the family time
or flex time that you've picked up.
You might miss the fact that you don't have to change out of sweatpants most days if you're working from home, and I think keeping those silver
linings in sight is one way to weather the storm of this crisis.
[09:55:26]
CHATTERLEY: Just focus on the little things and take it day by day. I guess that's the underlying message here. We'll get through it. Adam, great to
have you with us. Thank you so much for that.
GRANT: Thanks for having me.
CHATTERLEY: Adam Grant from the University of Pennsylvania there. Thank you.
All right, that just about wraps up the show. Thank you for being here on what is a momentous day. But it's not just about the United States. It's
happening all over the world. Efforts now is being made to fight this and to support people impacted.
That's it for the show. Stay safe everybody. Have a restful weekend, a safe weekend, and we will see you next week.
(COMMERCIAL BREAK)
[10:00:00]
END
