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CNN NEWSROOM

Jobs Added in November; Wall Street to Weigh In On Jobs Report; How Jobs Report Plays in Washington; Michigan Lawmakers Pass Right-to- Work Bill; Unemployment Rate Falls to 7.7 Percent; Fiscal Cliff Impact on Air Travel;

Aired December 7, 2012 - 09:00   ET

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


SOLEDAD O'BRIEN, CNN ANCHOR: So I hope you all get a chance to watch it and join us on Twitter as we have this conversation.

Monday we talk to Newark mayor, Cory Booker, he's on that food stamp challenge. We'll talk about that. Congressman Connie Mack and Mary Bono Mack is going to be with us as well. Olympic gold medalist, Gabby Douglass, will be joining us. She's got a new book out. And Adam Lambert is our guest as well.

That is ahead on Monday, "CNN NEWSROOM" with Don Lemon begins right now.

Hey, Don.

DON LEMON, CNN ANCHOR: You can tell it's Friday because you guys are out of control.

(LAUGHTER)

Have a great one, Soledad. I will be watching.

O'BRIEN: Thank you.

LEMON: "WHO'S BLACK IN AMERICA" as well.

Happening now in the NEWSROOM, November numbers. A new jobs report now out. And it's a surprise. What role could it play in the fiscal cliff negotiations?

Major earthquake rattles nerves and shakes buildings in Japan in the same area devastated nearly two years ago.

Fiscal cliff fears for air travelers? Budget cuts could ground your flight or compromise air safety.

And here's a warning. Be careful what you write on review Web sites. One woman is being sued for almost $1 million for posting a nasty review online. Find out which side the judge is taking.

NEWSROOM begins right now.

Good morning, everyone. Thanks for joining us. I'm Don Lemon in for Carol Costello this morning. Brand new number out from the Labor Department on jobs and the numbers are not what had been expected. This morning the Labor Department says 146,000 jobs were added in November and unemployment fell to 7.7 percent.

So let's put this all in perspective for you just one month earlier. In October, 138,000 jobs were added. So we're going to begin our coverage now with CNN correspondent and first up is Christine Romans.

Good morning, Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Good morning, Don. We give the headline 146,000 jobs created, that was more than we had expected, more than economists had expected, twice what a CNN Money survey of economists had expected. And the unemployment rate fell to 7.7 percent.

I'm going to tell you, it kind of caught me by surprise. Because most people thought that Hurricane Sandy was going to have some sort of effect on these numbers and the Labor Department, Don, is telling us that Sandy did not have an impact on these numbers. They looked across the country and they looked in this region, and things were -- you know, the surveys were within normal range.

So they don't think that Hurricane Sandy had an affect here. There are 12 million people unemployed, 40 percent of the people who are unemployed have been out of work for six months or longer. That's still the long-term structural unemployed, still a problem, Don.

Look over here on the right of your screen, you can see 14.4 percent underemployment. Some people call that the real unemployment rate. It means a lot of people are still hurting or have been left out of the market. But clearly you do have an improving situation here, an improving but still leaving some people behind.

This is what the trend looks like. OK? This is the big drought of jobs, the financial crisis here, A slow attempt to get out of the hole. And this has been that slow steady progress, Don. We want to see 150,000 jobs created or so every month to keep up with the growth in the population of the United States, working age population. So you can see the last three months a little bit of an advance each of those months.

When you go inside the sectors you can see where we saw some growth, overall transportation, warehousing, retail jobs of 53,000, that's probably holiday hiring, leisure and hospitality, healthcare jobs. That's an interesting part of the mix, too.

I'll tell you something, computer systems analysts, when you dig into this number, the government saying that's still a very good part of the job market. Also adding healthcare jobs overall. We've been adding healthcare jobs for something like three years now.

If we can, I want to break down the different sectors here. Here's construction -- we've lost some jobs in construction, though. Watching that one. Professional business services, that's where that computer systems engineering, computer systems analysts are.

Let's break down some of the other sectors in terms of race, the different groups. You can African-American unemployment here on the right, 13.2 percent, Don. That's down a little bit. But look at the structural difference between these worker groups. White unemployment, 6.8 percent, Hispanic 10 percent, African-American 13.2 percent. And again that's a little bit of an improvement for black Americans -- Don.

LEMON: Gees. That was comprehensive. Everything but the kitchen sink in that report, Christine.

(LAUGHTER)

ROMANS: I don't have the report on the kitchen sink, Don, but you can come back to me for that.

(LAUGHTER)

LEMON: Thank you, Christine. Appreciate it.

ROMANS: You're welcome.

LEMON: You will be back, I promise.

In just about 30 minutes, Wall Street will get its first chance to react to the jobs report. Alison Kosik live at the New York Stock Exchange with this.

Good morning, Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good morning, Don. So looks like the Dow -- go up about 80 points when the bell rings in about 25 minutes or so. You know what, despite the upside surprise with this report, though, there are some mixed feelings out there on really how important this number is going to be to the market. You know, some analysts are saying this isn't really a number they're going to rely on because it's kind of a noisy report.

We still need to see the full impact of Sandy. Also with the election over, there aren't any sort of bigger implications for the presidential race. Plus, because the numbers are so foggy, the federal reserve isn't likely to look at this number as a real trend maker. The central bank. It's already said it plans to keep stimulating the economy even after the labor market gets better. So we know this isn't likely going to steer the central bank in one direction or another.

Now you flip the coin over, though, you've got these people who say, you know what, this report is very important. Because it's going to be driving the conversation on the fiscal cliff. We only -- we've only got 25 days until those tax hikes and spending cuts start to take effect.

And here's the thing. This number came in much better than expected, Don. So the bad part about this is that it may not motivate all those politicians on Capitol Hill as much as it may have, if it came in much weaker so this may not light the fire, so to speak. So that could be the downside to the upside surprise to the number -- Don.

LEMON: All right. Alison, stick around. Stand by, we'll get back to you as well.

And from Wall Street now to Washington where the White House is probably keeping a close eye on today's numbers.

Our White House correspondent Brianna Keilar, of course, joins us now live.

Good morning, Brianna.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Good morning to you, Don. Certainly they're keeping an eye on the numbers here at the White House. We're still awaiting reaction from the White House and also from congressional Republicans. But they've long said here at the White House, take a look at the trend of these numbers over the month. So this number, paired with the last couple of months on its face, they will say the trajectory looks good, obviously more needs to be done.

Maybe the president can point to this and say my economic policies are working. But the fact is the election is over, many Americans obviously bought that argument. So you're not seeing the frenzy here or even on the hill, quite frankly, in responding to these jobs numbers and trying to spin them. But also to the point that Alison made as well. Perhaps it's something that doesn't add a whole lot of fuel to this current debate that is occupying Washington over the fiscal cliff and finding a deficit reduction plan and also -- sort of coupled with trying to avoid these spending cuts and these tax increases that are set for the end of the year -- Don.

LEMON: What is that, Brianna? Is that a leaf blower? What's going on behind you?

KEILAR: Honestly, sometimes --

(LAUGHTER)

I think it is a leaf blower. Sometimes it's a jackhammer. Sometimes it's a leaf blower. Sometimes it's a lawnmower. There's always a lot of work going on here at the White House.

(LAUGHTER)

LEMON: All right. Thank you, Brianna Keilar. Have a great morning.

From jobs now to labor. Protesters are furious that Michigan's Republican controlled House and Senate quickly passed controversial right-to-work bills.

The bills limit the right to strike and picket and employees cannot be forced to pay union dues. But Democrats and union supporters say this is a huge blow to workers' rights. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It terrifies me that they're trying to pass this through so quickly with no discussion from the other side, no understanding of what's important in it.

(END VIDEO CLIP)

LEMON: Poppy Harlow joins us now from Lansing.

Good morning to you, Poppy. And just how damaging is this for unions?

POPPY HARLOW, CNN CORRESPONDENT: Well, good morning, Don. If you ask the unions, they will tell you this could be extremely damaging to not just the unions, but they say to all of Michigan, to all of the workers. That is their perspective. Very different from those who support a right-to-work state.

Let's break this down for our viewers. What is right to work? What it would mean is that in the state of Michigan, no union and no employer together could mandate that an employee be part of the union or pay any amount of money to that union. Right now, if you work at Ford, General Motors, Chrysler, on the line, you've got to be part of the UAW, the United Auto Workers. This would not only affect public sector workers like teachers. It would also affect those private sector workers like auto workers.

Three bills passed, two in the Senate last night, one in the House. The governor, Rick Schneider, very supportive of this legislation. It's expected to be taken up here again at the State Capitol on Tuesday.

I want you to take a listen to a union worker that I just spoke with here at the Capitol. His name is Jeff Breslin. And then you'll hear from the governor.

(BEGIN VIDEO CLIP)

GOV. RICK SNYDER (R), MICHIGAN: To be pro worker, to give freedom of choice to our workplace and that legislators moved promptly and efficiently, and moving it through the legislature and when it arrives on my desk, I plan on signing it.

JEFF BRESLIN, REGISTERED NURSE AND UNION MEMBER: In the state of Michigan we have been -- had a fledgling economy for quite some time, we've been way down at the bottom of the list of -- in the country. We have just started to make a comeback. By passing right-to-work, that's taken that comeback and it's cutting the legs out from underneath it. It's going to hurt the economy. It's going to hurt the state. It's going to hurt the citizens.

(END VIDEO CLIP)

LEMON: So, Poppy, the governor's argument is that it makes the state more competitive and will lead to more jobs, right? HARLOW: Well, that is his argument. And you know the state next door, Indiana, Don, has recently passed this right-to-work legislation and there are those that say it's a boom to Indiana's economy and if they don't want to see jobs go from here to there. Now of course Democrats and union workers and pro-union labor, what would -- take big issue with that, but I do want to just show you the facts because you can't dispute the numbers here.

When it comes to wages, typically non-union workers do make less, do make less in their salary than union workers. And you see the numbers from the Bureau of Labor Statistics on average median weekly salary for union employees. It's about $938 versus about $729 so there is a disparity in wages here. Whether or not that makes the state more competitive, that is up to each and every individual.

I will tell you, thought, the SIEU, which is a very big powerful union, came out with a statement and they said, this is nothing short of an attack on the middle class.

I just want to give you some perspective here, Don. Showing the pictures of these big protests, if we can show our viewers again. I talked to the head of the head of the Michigan State Police, the head inspector here, this morning, Don. He was at the protest yesterday. He told me that in his 31 years here he's never seen protest this big.

That is how critical and personal of an issue it is in this state, which is the birth place of the United Auto Workers. And in this state, which is really at the heart of organized labor in America. And frankly, we're seeing a sea change in the Midwest when it comes to unions.

LEMON: Poppy Harlow in Lansing. Poppy, thank you.

We go to Japan now where a tsunami warning has now been lifted and only minor injuries are reported after a 7.3 magnitude earthquake struck at sea nearly 300 miles from Tokyo. A small tsunami was triggered while buildings shook in the capital city.

Today's quake happened almost in the same area along Japan's northeastern coast devastated by an earthquake nearly two years ago.

On every flight we hear the flight attendant say turn off your electronic devices, your gadgets. So wait until you hear who wants you to have more freedom to use those gadgets in the air.

(COMMERCIAL BREAK)

LEMON: Let's check your top stories right now here on CNN.

Opposition activists are defying Egypt's president, Mohamed Morsi, staging a new demonstration today in Cairo's Tahrir Square. Morsi is standing firm against the protesters saying he won't change his decision to place himself above the nation's courts or stop an upcoming constitutional referendum.

Attorneys for George Zimmerman are suing NBC Universal for its characterization of him in reporting on the Trayvon Martin shooting death. The lawsuit claims edited 911 recordings to make it appear that Zimmerman was racist.

NBC says it disputes the accusations and plans to defend itself in court.

A New York state prosecutors say actor Stephen Baldwin owes $350,000 in back taxes and penalties. Baldwin is pleading not guilty. He was released without bail following his arrest yesterday. An attorney for Baldwin says the actor handed over a check for $100,000 as a good faith down payment on what he owes. Baldwin is due back in court in February.

A surprise jump in the number of jobs in November, 146,000 jobs added last month. That's nearly double what some economists had expected.

Joining me now is former economic adviser to the Romney campaign, excuse me, and director of economic policy studies at the American Enterprise Institute, Mr. Kevin Hassett.

Kevin, good morning to you.

KEVIN HASSETT, SR. FELLOW & DIR. ECONOMIC POLICY STUDIES, AEI: Good morning.

LEMON: Give me your take on these numbers.

HASSETT: Yes. This is a very solid report, the fact is that we've been growing in about 150,000 jobs a month over the last 12 months, and we expected it to drop a lot because of all the problems that they had in the New York area. But that didn't happen.

So, I think what we see is a very solid labor market, the kind of labor market that could lead to sort of sustained moderate consumption growth.

Now, there is a little bit of bad news coming in the fourth quarter. It looks like capital spending is dropping off the face of the earth. So, people expect GDP in the fourth quarter to be kind of disappointing but the labor market is a nice foundation going into the next year.

LEMON: Why is everyone so surprise about the Northeast not affecting? I mean, it's horrific, but it's just a small part of the country.

HASSETT: But, you know -- I mean, New York is a big population center. And I think that the other thing is that these numbers -- remember the creation and destruction in a typical month could be $4 million or $5 million and it's the net of those that we're looking at this in report.

And so, if you have a lot of people not hiring because they're trying to dig out, it could have an affect on the numbers.

LEMON: Let's talk about the fiscal now, 25 days until we reach that cliff. Do you think the numbers give the president any leverage? HASSETT: Yes. I think that, in fact, these numbers are kind of huge for those negotiations because President Obama's argument has been that the economy is doing well enough that it could handle a tax hike. You know, if the economy were in recession, as we saw last time, then he would be reluctant to lift that top rate.

But if the economy is growing sharply, then if there's some damage from lifting the top rate, maybe the economy could afford it. Now, GDP growth number is not as strong as the jobs report, but if we had a really weak jobs report, then I think the president would have a really, really hard time, even getting moderate Democrats, to increase the marginal rate.

The fact that it's kind of a strong report I think puts a little bit of wind in his sails.

LEMON: You have kind of, Kevin, touched on it a little bit. Can you be more specific about what you think we're missing from today's report?

HASSETT: Well, I think that what's missing from the report, if we're looking at the health of the overall economy, is that businesses are really pessimistic right now. So, we've had five months in a row where the orders for capital goods have been going down and, in fact, going down sharply. And very often, business investment is the thing that turns down right before you have a recession.

And so, we have this very dissident set of data. We've got a strong jobs report, a solid jobs report that looks like the trend we saw this year is continuing, but we've got businesses holding back, probably in part because of the uncertainty over the fiscal cliff.

And so, I think that what that really be seen as, as a great opportunity for policymakers, because if people have a kumbaya moment, and they sit down and they get things fixed, then I think that we could probably expect a real celebration in the business sector because it looks like the consumer sector is pretty strong and solid.

LEMON: Kevin Hassett, thank you very much. We appreciate it.

We'll get more perspective on the day's job report in our next hour. We're going to be joined by William Rogers, a former Labor Department chief economist.

More about the fiscal cliff now. Travel worries, potential budget cuts could ground your flight.

(COMMERCIAL BREAK)

LEMON: Should you have more freedom to use your electronic portable devices in flight like this one? I say yes, because I fly all the time. But the head of the FCC certainly thinks so as well.

According to "The Hill", the chairman of the FCC just sent a letter to the head of the FAA. It calls for flyers to have greater use of their gadgets, including tablets and e-readers. Just this summer, the FAA said it would review its policy. That will not include cell phone call use.

You already know about the potential for tax hikes if Congress and the president fail to reach an agreement before the fiscal cliff deadline at the end of the month. But for airline passengers, the triggered automatic cuts could also affect your travel plans.

Here is CNN's Sandra Endo.

(BEGIN VIDEOTAPE)

SANDRA ENDO, CNN CORRESPONDENT (voice-over): This is air travel now. Cut that by $1 billion and it could ground millions of travelers.

MARION BLAKEY, PRESIDENT AND CEO, AEROSPACE INDUSTRIES ASSOCIATION: In the 56 years of the FAA's history, there's not been anything that has been as threatening as sequestration.

ENDO: The automatic spending cuts, which may kick in after the first of the year, would run deep for the FAA. The Aerospace Industries Association paints a doomsday scenario. Two hundred fifty small airports may have to close and 1,500 air traffic controllers laid off.

A former FAA administrator heads the lobby group.

BLAKEY: FAA is not one of those places that if you are looking for smart cuts you'd go. It's an operational agency, it's a safety agency. And you sure don't want to see cuts made there.

It really does force us to look at the fact that we could see our system become a much diminished system, operating on the kind of schedules you're used to in the third world, not here in the country.

ENDO: She says 9,000 TSA screeners could also get pink slips.

JOHN PISTOL, TSA ADMINISTRATOR: We have made a number of plans in the event that sequestration does go into effect.

ENDO: The head of the TSA John Pistol says they could handle the potential cuts.

PISTOL: The bottom line is to keep the frontline security operations in full force, to keep the movement of people and goods moving smoothly.

ENDO: The airlines we talked with wouldn't share their doomsday plans, referring us to a lobby group, which said, "No one knows what might happen should sequestration occurs"

Small comfort for the public looking to buy tickets.

(on camera): What do you think that's going to do for the airline industry and airports and security here?

UNIDENTIFIED FEMALE: Oh, gosh, make everything a little more difficult?

ENDO: Are you worried about that in terms of travel for yourself?

UNIDENTIFIED FEMALE: Yes, of course. Travel and travel costs.

UNIDENTIFIED MALE: I travel a lot. So anything that messes with it is a problem.

ENDO: So what's your message for Congress?

UNIDENTIFIED MALE: Let's get together and figure this out.

ENDO: The worst-case scenario may sound grim. But many industry leaders are taking a wait-and-see approach. All eyes are on this lame duck Congress.

(END VIDEOTAPE)

LEMON: That was Sandra Endo reporting, of course.

Did you know that you could be sued for writing a nasty review online? Well, it happened to one woman. So far the judge seems to be siding with the handyman, who sued her. That handyman, live in just a moment.

(COMMERCIAL BREAK)

LEMON: All week long, we've been reporting to you about the strange case of John McAfee. His attorneys are looking for ways to keep him there in Guatemala. Authorities there have rejected his bid for asylum, and that sets the stage for his possible return to Belize, to face questions about a neighbor's death.

CNN's Martin Savidge is following for this electric -- eccentric, I should say, millionaire.

(BEGIN VIDEOTAPE)

MARTIN SAVIDGE, CNN CORRESPONDENT: This is where John McAfee is saying in Guatemala City, that building right there. He's actually up on the third floor and has it all to himself.

That's really not a jail. It's definitely not a hotel. What it is, is it's a detention center for illegal immigrants. They get a lot of them passing through Guatemala, trying to get to Mexico and eventually to North America.

It was here that John McAfee suffered whatever the illness was that he had. And he was rush from here in an ambulance and taken to a nearby police hospital where he was checked up for several hours.

We went over there. The authorities said really it looked like he was suffering from stress and maybe was also suffering chest pains. His attorney, though, says it was actually a minor heart attack. Either way, he was released a couple of hours later and brought back here.

Now the question is: what happens next? We already know the president of Guatemala has denied asylum for John McAfee. It's possible his legal team could try for some other maneuver, maybe a stay or maybe even go all the way to the country's supreme court.

It's also possible he may be headed back to Belize where, I've spoken to authorities, they're waiting for him and will take him in for questioning. We'll wait for him as well.

Martin Savidge, CNN, Guatemala City.

(END VIDEOTAPE)

LEMON: All right. Thank you very much for that.