Return to Transcripts main page

CNN Live At Daybreak

Crucial Report on Nation's Economy Just Released

Aired October 31, 2001 - 08:30   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: A crucial report on the nation's economy, we think has just been released, and Kathleen Hayes of CNN has been crunching the numbers on my laptop here right besides me, trying to get the information.

Gross domestic product -- take me back to econ 101. Gross domestic product is?

KATHLEEN KOCH, CNN CORRESPONDENT: It's the economy's growth rate, and it includes -- you want to go back to econ 101, let's do it. OK. GDP equals consumption plus investment. That's what businesses spend on computers, on new buildings. Plus government spending. And then you add in what we export, we sell overseas, take out what we buy from overseas.

We are going to get the number for you in just a second. People who are looking for a decline, a decline of about a percentage point. The economy in the second quarter, barely grew at all. It was up only 0.3 percent. Contrast that to the quarter going into Y2K, the fourth quarter of 1999, when the economy was growing at an 8 percent rate, but we have been steadily going lower, lower, lower, spending less money, as businesses, consumers finally spending less money, so now we are expecting the first negative quarter since the 1990 recession.

O'BRIEN: All right, now, the markets are always what? Three months ahead of the rest of us. Is this already factored into the market as you can try to find those numbers for me?

KOCH: I think actually it has, Miles, but the -- what's going to happen now, this is really going to focus people on just what is going on in the economy.

Now we are going to have discussion about recession. People have been arguing, are we in a recession? Or aren't we in a recession? If we get negative GDP, now they're focused, they're going to say, how long is it going to last? How much worst will things get from here? How many more layoffs will we see? And when can we think of coming out of it.

O'BRIEN: OK, we're told the Associated Press is reporting down .4.

KOCH: OK, then not quite as bad as expected. Maybe the consumer held up a little bit better than we thought. Maybe businesses didn't cut spending back as much. The problem is right now that the latest numbers we have seen that are more up to date, like the Conference Board's consumer confidence survey yesterday for the month of October showed that confidence really took a leg down. September was bad enough. October got worse. We have seen weekly jobless claims, new claims of unemployment benefits on a steady trend higher. Those numbers tomorrow at 8:30, all these suggesting the economy continues to deteriorate. Now in the fourth quarter of the year, and maybe we'll see a worse number than in third quarter.

O'BRIEN: If you are in lower Manhattan today, how do you process all the competing information, all that contradictory sort of information?

KOCH: If you are at the stock exchange trying to decide if you are going to buy or sell, I think actually, it -- chances are that this morning people say this number wasn't quite as bad as expected. Maybe we get a little bounce. We've had two days of selling after a pretty good week last week. So maybe people will step back and wait again for Friday, the employment report. That's the number that could really shake the markets, depending how bad it is. People expect the unemployment rate to rise, and for the number of new jobs to be actually a net job loss of about 300,000. That's a pretty bad number.

O'BRIEN: All right, Kathleen, you are pretty fast on the laptop there, we appreciate your assistance in getting those numbers out as soon as they became available.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com