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American Morning
Interview With Glen Hubbard
Aired October 31, 2001 - 10:48 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.
BILL HEMMER, CNN ANCHOR: Joining us now to talk more about what that GDP number may or may not mean right now is Glen Hubbard, Chairman of the president's Council of Economic Advisers, live from the White House this morning. Sir, good to see you. Good morning.
GLEN HUBBARD, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Good morning. How are you?
HEMMER: I'm doing just fine, thank you very much, and happy Halloween. Let's talk about these numbers. When you look at GDP right now, it's the biggest drop, the big contraction, or restriction, we should say, in 10 years' time. How much concern does that raise inside your meetings there at the White House?
HUBBARD: Well, I think there is significant cause for concern. It's fair to say that the economy was growing, albeit modestly, in the third quarter prior to September 11th. The events following the tragedy had a terrible economic toll as well as a human toll. The other point I would make, of course, is that the key thing to focus on is how to get a recovery going. And that's precisely why the administration has been so centered on a stimulus package.
HEMMER: Before I talk about the recovery, talk about the other "r" word. How much is recession brought up in your talks?
HUBBARD: Well, certainly the probability that we are in a recession has gone up. There's no denying that. But I think it's much too early to tell whether we're formally in a recession. That, of course, is a judgment for economists at the National Bureau of Economic Research. The fourth quarter appears to be -- also be adversely effected by the shocks, and we'll have to wait and see.
HEMMER: And what do you watch on daily or weekly or monthly basis? If you can give us Econ 101 here. Keep it simple for us. What numbers do you watch, Mr. Hubbard?
HUBBARD: Well, let's break it up into two sides. The business side and the household side. On the business side, we look at things like durable goods orders and advance orders by businesses. On the household side, things like chain store sales, measures of retail activity, and, of course, consumer confidence.
HEMMER: -- all right. You talked about the recovery. The president is going to talk about that probably in about 20 minutes' time. We'll hear from him live when that does happen. What is the best argument right now that the White House is putting out to get an economic stimulus plan passed and through to help the economy?
HUBBARD: It's important to remember that while most private sector forecasts believe that the economy is coming back early in 2002, and then at a marked pace throughout 2002, those forecasts are predicated on the idea that there's substantial fiscal stimulus in the pipeline. The president believes it's important to have the right kind of stimulus. And we believe that it's important to have investment incentives for business and confidence building incentives for households. Tax changes for low and moderate income families, and accelerating the tax rate cuts that are already in place. That's going to be essential for the recovery.
HEMMER: Let me take the converse of that argument. In the past couple of -- well, in the weeks after the attacks of 9-11, there was an awful lot of money dolled out at the federal level. Billions and billions of dollars. How much concern do you have looking down the road right now that that money given out will not be able to be absorbed back into the economy?
HUBBARD: Well, you raise a very important point. Certainly there is a lot of spending stimulus that's out there. The emergency supplemental actions to shore up the aviation industry. We believe that that the additional funds from tax cuts will be quickly absorbed in the economy. Previous experiments suggest that. So I think it is very, very important.
HEMMER: Now if you had money on the side, would you put in stock market or would you wait?
HUBBARD: Well, fortunately or unfortunately these days I have very little money on the side, being in the government, so I'll have to take that as a hypothetical.
HUBBARD: I got it. I'll take that response in good faith, too. Glen Hubbard again, thanks. Live at the White House. Much appreciate your time this morning.
HUBBARD: Thank you.
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