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Jobless Rate Falls to Lowest Level Since 2008; Who is Black in America?; The Brown Paper Bag Test; Inside Camp Pacquiao

Aired December 7, 2012 - 08:30   ET


ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: They were taken in different weeks this year because of Thanksgiving. The calls that were made to figure out the unemployment rate were a week earlier, which means some people who were affected by Hurricane Sandy didn't have power or weren't at home, won't have been reached. So you may find a spread between the unemployment number and the jobless rate.

The other thing is, Sandy is going to have had an affect on this and what we're interested to know is whether or not the fiscal cliff fears had any effect on this. Was there less hiring, was anybody laying off in anticipation of the fiscal cliff? That's going to be hard to determine. Christine and I will look at the numbers when they come in to see if there's any indication of that. But the impact of Hurricane Sandy is estimated to have been about 86,000 jobs when the survey was taken which means it would be 86,000 fewer jobs than we otherwise would have had.

So we're looking at a much lower number. Christine appears to have it right now. We are --

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Lowest unemployment rate since December '08, 7.7 percent, 7.7 percent. That's the unemployment rate. A surprise there. I'm going to listen to the jobs part of it.

VELSHI: OK. The 7.7, that is unexpected. We were expecting the unemployment rate to go --


VELSHI: To 8.0, from 7.9 up to 8.0. It's gone the other direction.

O'BRIEN: So let me stop you there and bring in Diane Swonk as --


ZORAIDA SAMBOLIN, CNN ANCHOR, "EARLY START": One hundred forty-six thousand jobs created.


O'BRIEN: Wow, 146,000 so --

VELSHI: That's double what was expected. O'BRIEN: Let's bring in Diane Swonk, she's a senior managing director and chief economist at Mesirow Financial.

Thanks for talking with us. And you just heard those numbers coming across, 7.7 percent is the unemployment rate, 146,000 jobs that had been added. Really the estimates were completely off. What are the implications of these numbers?

DIANE SWONK, SENIOR MANAGING DIRECTOR, CHIEF ECONOMIST, MESIROW FINANCIAL: Well, certainly it's reassuring that Sandy didn't have as big of effect on the numbers. What's hard to tell is one of the points Ali made earlier is how many people were actually reached. We did see unemployment insurance claims surge in the wake of Sandy and they may -- may not have been totally included in some of this data as well because of electrical problems and people submitting on the survey.

So it's unclear that although the number looks a lot better than we expected, of whether it actually is capturing of the effects of Sandy, because there was so much devastation and so many interruptions and disruptions to reporting that my guess is that that's part of the reason we're seeing this distortion.

O'BRIEN: And is that so unclear that we eventually will just throw this out?

VELSHI: Yes. I --


VELSHI: It will get revised, first of all. And yes, that's probably what it is. I mean, we need to get Jack Welch to tell -- say these numbers don't actually make --


SWONK: Don't start, Ali.

O'BRIEN: Really? Are you trying --

SWONK: No, we do not, Ali.

O'BRIEN: Thank you. Thank you, Diane. I agree.

RICHARD SOCARIDES, WRITER, NEWYORKER.COM: It may mean the opposite, right? It may mean that even though there was a lot of disruption from Sandy that the numbers are - that we're doing better than we thought, right? That maybe the economy is really doing better than we thought?


SWONK: That certainly could be the case.

ROMANS: But the labor force declines. Some people hopped out of the labor market, which might be one of the reasons why -- VELSHI: Still might be Sandy's fault.

O'BRIEN: OK, so, Diane, you were saying. I'm sorry, go ahead.

SWONK: Well, you know, again, these numbers are more -- less clarifying and adding more to the chaos than clarity because of Sandy. And, you know, the underlying issues going on here, we need to know the breakdown. People jumping out of the labor force, that could actually be Sandy. It could also be unemployment insurance claims are beginning to expire. And we're seeing a lot of people take earlier retirement at 62. Not because they -- they can retire at 62, it's because it's a bridge when they run out of unemployment insurance.

And so we also have those 1947 vintage baby boomers, now retiring out and leaving the labor force. About half of the reduction in labor force participation rate in the last couple of years has been due to demographics alone. The other half very much a weak economy. But I think these are all important things. And unfortunately, my guess is that November is just not going to give us a lot of clarity on where we're actually going.

O'BRIEN: So then talk to me a little bit about the fiscal cliff and how the fiscal cliff could be factoring into these numbers that are -- you know, I think a bit of a surprise off of what they were predicting, even though the prediction kind of had a little asterisk next to it with -- you know, it's going to be unclear.

SWONK: Exactly. Well, you know, the one thing we have seen from the fiscal cliff is that CEOs have finally stepped up and gone in and gone to Congress in Washington and said, listen, deal with this issue. It's affecting us. We did know -- we do know that in the third quarter the fiscal cliff did contribute to a decline in investment. Although manufacturing was weakened. But actually have a declining investment is not justified by the underlying fundamentals.

And you've got to believe at least a portion of that was due to uncertainty regarding the fiscal clip and we've seen a number of companies actually come out and say, listen, it's not that we're firing. We're just delaying hiring and delaying investment projects. And that's very important because delays in an already weak economy, you don't want hesitation. It's a vicious cycle of hesitation and slow growth.

Kind of the opposite of what we saw in the '90s where you had, you know, certainty and all caution thrown to the wind in robust growth.

O'BRIEN: So, Christine is still on the call so she has one ear piece in and kind of talking to us with the other ear.

What else are you hearing on this call?

ROMANS: Well, the BLS said that Hurricane Sandy did not affect the overall rate. They just don't -- they look nationwide and they did not see that the overall rate was affected by Hurricane Sandy. The labor force declined a bid of some 300,000 or so. Sectors that were strong, retail trade was strong. But construction was a little bit weaker. Pretty unchanged for the workweek, 34.4 hours. You still have 4.8 million people long-term unemployed, which I think is an interesting number. Because that's been -- that's been just stuck.


ROMANS: These people have been -- and that's 40 percent of the people who were unemployed, have been out of work for six months or longer.


O'BRIEN: So then, Diane --

VELSHI: We're not -- you know, we can't make sense of what this means in the grand scheme of things. The market is liking it. The Dow futures are up 60 points right now. So they are -- the market is saying, all right, well, it wasn't bad news. We're not quite sure that it's as good news as it looks. Under normal circumstances I'd be sitting here saying, the unemployment dropped and we created 146,000, that's less than the previous month but still an OK number. You can't say it today.

O'BRIEN: All right. Well, when they do revise it, Diane -- I'll give the final question to you -- does that mean we have clarity on it? I mean is this the kind of thing where it's confusing now, but we will get clarity or is it going to be the kind of thing we're eventually going to throw this month out and not even really, you know, focus on it?

SWONK: Unfortunately, I think we'll throw the month out because of problems in gathering some of the data. But that said, the revisions, you know, they happen over the course of years. And so several years down the road we'll know what these numbers mean.


O'BRIEN: I feel really good about it.

SWONK: Exactly. The most the reassuring thing. Instead of the way, you know, we're already forecasting yesterday's information. This is forecasting information in the past. I mean it really is kind of -- this is when economics becomes an art and not a science at all.

O'BRIEN: Will you promise to come back on in two years and three months when they --


SWONK: I will promise to do that. And hopefully then these numbers will look more clearer and what we'll be able to see then is the trend. And we do know that there are some upward revisions to the employment data coming through from early preliminary estimates that the Labor Department has given us. So that might be a little better news next year when they release that data.

O'BRIEN: Right. Diane Swonk, nice to have you. Thanks. We appreciate your time this morning. WILL CAIN, CNN CONTRIBUTOR: Now we broke the news -- can Christine go back to listening to "Gangnam Style" --


CAIN: And reading the news off Twitter?

VELSHI: Go, sexy lady.

ROMANS: I wish I was still (INAUDIBLE) now.

O'BRIEN: Interesting.

ROMANS: 13.2 percent for blacks, down a little bit.

O'BRIEN: I was going to say that's down.

ROMANS: The unemployment is 10 percent. Whites is 6.8.

O'BRIEN: So still double digits.

ROMANS: Yes. Still -- it's still that -- structural disparity is so concerning.


ROMANS: Down a little bit, tough, to 13.2 percents for blacks.

O'BRIEN: All right. Get back on the call. Don't hang up yet.

ROMANS: I know.

O'BRIEN: All right. Let's get right to Zoraida Sambolin. She's got a look at some of the other stories making news for us.

Hey, Z.

SAMBOLIN: Thank you, Soledad. Two Navy warships are moving into position to monitor the possible launch of a long-range ballistic missile by the North Koreans. The U.S.S. Benfold and the U.S.S. Fitzgerald are both guided missile destroyer. Navy officials won't say exactly where they are located. Satellite images show North Korea appears to be moving toward a missile launch later this month.

A retired Navy sailor is now facing espionage charges. Federal prosecutors alleged Robert Patrick Hoffman tried to pass classified information about tracking U.S. Navy submarines to people he thought were with the Russian federation. Well, it turns out they were undercover FBI agents. Authorities say Hoffman served 20 years in the Navy and held a top secret security clearance.

Academy Award-winning actress Angelina Jolie meets with Syrian refugees who just completed that dangerous crossing into Jordan. Jolie, who is a special envoy to the U.N. Refugee Agency, listened to family stories of life without electricity, water, food, or safety. Close to half a million Syrian refugees have been registered in neighboring countries since that conflict began.

And check this out. This billboard in San Diego. It features a picture of 63-year-old real estate mogul Marc Paskin and it says, quote, "All I want for Christmas is a Latina girlfriend." His e-mail address is up there, too.

You may recognize this guy. He appeared on the reality show, "Secret Millionaire." The billboard is located in a mostly Latina neighborhood and some people are finding it offensive. But one young Latina women who works nearby thinks this is perfectly fine. She says, why not, if that's what he wants for Christmas -- Soledad.

O'BRIEN: Yes, I don't think it's not offensive for the reasons some --


O'BRIEN: I just like, wow.

CAIN: Weird.

O'BRIEN: It is.


SAMBOLIN: It is. It raises all sort of questions.

O'BRIEN: Might just a little bit of --

RYAN LIZZA, CNN CONTRIBUTOR: It's really odd. It's will -- that's the -- the e-mail is just -- Will has been --


SOCARIDES: All you need is one, right? All you need is one.

VELSHI: Right.

SOCARIDES: And he's got -- and it worked.

O'BRIEN: And then when your kids ask, so how did you and mommy meet?

CAIN: Yes.

O'BRIEN: I advertised on a -- on a billboard.

LIZZA: Why doesn't he do what all normal Americans do?

SAMBOLIN: Go to a bar.


CAIN: Go online.

LIZZA: And use


O'BRIEN: Moving on, shall we?

Ahead on STARTING POINT, how young is too young to learn about bias in skin color? One teacher is teaching kids as young as 6 and 7 about colorism, which is, you know, discrimination based on tone of skin. A new documentary "Black in America" takes a look at that.

And tomorrow the boxer -- what's his name again?


UNIDENTIFIED MALE: Manny Pacquaio. Manny Pacquaio.

VELSHI: Yes, it's going to be a great fight.

CAIN: Yes.

O'BRIEN: Manny Pacquaio. He's got that big fight.

John Berman, though, talks to him at his gym about what's ahead.

You're watching STARTING POINT. We're back in just a moment.


O'BRIEN: "BLACK IN AMERICA" documentary, it's the fifth one. It's going to premier on Sunday. And over the past weeks, we've been reporting stories on how we racially identify. This country, of course, has a value system that says light skin is better than dark skin and there are dozen of studies that confirm that very fact.

So our story today introduces us to -- 22-year-old Kiara Lee. And she is on a mission to teach young children about colorism. Discrimination based on skin tone. But sometimes how she does it is shocking. Take a look.


UNIDENTIFIED FEMALE: Same neighborhood, they were even in the same grade.

O'BRIEN (voice-over): Kiara Lee recently graduated from the University of Richmond. Her passion is educating children about colorism.

KIARA LEE, COLORISM ACTIVIST: Lashawnte, tell me about that. Why didn't the teacher call on her?

LASHAWNTE BROWN, SECOND GRADER: Because she's ugly and dark.

O'BRIEN: Lashawnte Brown is 7 years old and her mother is worried her little girl is already getting the message dark skin is bad.

BROWN: I think my skin is ugly.

UNIDENTIFIED FEMALE: Why do you think it's ugly?

BROWN: Because I don't want to be dark.

UNIDENTIFIED FEMALE: You don't want to be dark?

BROWN: No. I want to be light-skinned.


BROWN: Because light skin is pretty.



LEE: Can somebody tell me what that means?

My stance is teach the children what it is. Show them the history, make them aware of this issue so that when they go to school, when they go out in the world, they're armed with this information.

Because he wants to buy her, because her skin is lighter.

You got to sit in the back.

O'BRIEN: Even among 6-year-olds, Kiara is not afraid to shock. Today the brown paper bag test. Kiara stopped each child entering the classroom and compares their skin tone to a paper bag.

LEE: Let me see your arm. Can you put your arm out for me? OK. You're going, go sit on the back. OK?

O'BRIEN: Lighter than the bag you can sit in the front. It's a real test from the early 1900s, used by social organizations, churches and fraternities and neighborhood groups to decide who was light skinned enough to join.

(on camera): Was it too extreme to do to little kids?

LEE: No, I don't think so at all. I think the more interactive, the more shocking the activity is, the better because it's going to stick with them.


O'BRIEN: Our documentary "BLACK IN AMERICA" airs on Sunday. I thought that was really shocking and I have to say if I were a parent in her classroom, I would have called, complained and taken my kid out of that class.

SAMBOLIN: I will have called my kid out. Absolutely, it's too young. That's just too young.

LIZZA: That's too young. Seven years old is too young for that.

O'BRIEN: Too young. Listen to what those kids are saying. They already are internalizing messages.


SAMBOLIN: Where is that message coming from? That's a question I would ask. Because that just doesn't make any sense to me that that little girl would just out of the clear blue --

O'BRIEN: She's not the only one. She's not only one, I have done the story now four or five times and she's not, there are lots of little kids who clearly are getting messages that the color of their skin is not an attractive color.

SOCARIDES: Of course you do. And as young I mean, those messages start at very early age, people get those. I think it's very appropriate to talk about that.

SAMBOLIN: At seven years of age?

SOCARIDES: Yes, totally. Absolutely.

O'BRIEN: Her point is that these kids are already talking about it and that the exercise is shocking but since they're already dealing with it, she's got to confront it in some ways that --

LIZZA: I don't think kids have the ability to understand what that exercise is all about and that --

CAIN: There's more to the study. And I'm not plugging necessarily Soledad's documentary.


O'BRIEN: But feel free to.

CAIN: But there is obviously more to the story. And at first blush it is shocking but -- but I'm sure this is the study she's put more into.

O'BRIEN: Yes I know it's really interesting. All right our documentary airs on Sunday at 8:00 p.m. Eastern. And we are going to be tweeting live at the same time. Work our stories, tweeting live in some ways. So we'll be doing that during --

SOCARIDES: Right you're not tweeting.

O'BRIEN: Still ahead, Manny Pacquiao is ready for his fourth fight against his arch rival, Juan Manuel Marquez. The big question though, is he ever going to fight the superfight and that will the one with Floyd Mayweather?

John Berman asked him about that. We're going to have that next. We're back in a moment.


O'BRIEN: Fifty minutes past the hour. Welcome back to STARTING POINT. The mayor of Trenton, New Jersey, and two co-defendants indicted by a federal grand jury on seven new counts of bribery and extortion. Mayor Tony Mack, his brothers and a business associate implicated in a kickback scheme to sell city-owned properties to investors for less than it's assess value. The charges filed after a two year FBI investigation involving two informants.

Notre Dame linebacker Manti Te'o winning the Maxwell award as the nation's outstanding college football player. Te'o beat out Texas A&M quarterback Johnny Football Manziel, who is also his chief rival for the Heisman Trophy, which will be given out tomorrow night. Te'o is the first defensive player to win the Maxwell since 1980 -- Soledad.

O'BRIEN: That's a bit of a shocker.

SAMBOLIN: It is. It is.

O'BRIEN: OK, other sports news -- I love when I'm anchoring the sports news on the show. Will Cain really should be doing this.

CAIN: OK, it's fight night tomorrow in Las Vegas. As boxer Manny Pacquiao and Juan Manuel Marquez -- and you would have had trouble with that. They're going to do battle for the fourth time, their long and bitter rivalry maybe unmatched in the world of sports. Pacquiao is a fighter though by trade, but there are many sides to this champion.

And John Berman, our good friend he's been tailing the Pacquiao camp as the team prepared for yet another epic match.

SOCARIDES: You're not ready for prime time.


JOHN BERMAN, CNN ANCHOR, "EARLY START" (voice-over): Manny Pacquiao has won titles in eight different weight classes.

(on camera): When you hit the bag like this, do you see your opponents face? Do you look in this bag and you see Marquez in the bag here?

MARRY PACQUIAO, BOXING CHAMPION: Yes. You -- you know, you imagine that this is your opponent and you hit the head and his body.

BERMAN (voice-over): This will be his fourth fight against Juan Manuel Marquez. All have been close. All have been tough victories for Pacquiao.

Freddie Roach is Pacquiao's friend and long-time trainer, a former boxer himself, he's been living with Parkinson's disease for years.

(on camera): What's different about this fight, do you think?

FREDDIE ROACH, PACQUIAO'S TRAINER: The first two fights were really competitive, competitive compelling fights and they fought great together. And then in the third fight he had a lot of personal problems going into the fight and we just didn't fight our fight. BERMAN: One of your goals going into this fight is to be more aggressive. You're looking for a knockout here. Why?

PACQUIAO: I want this fourth fight to be the answer of all the doubts that are in his mind.

BERMAN: In his mind do you feel like there are other doubters besides him out there?

PACQUIAO: His fans, you know, they are still claiming that they won the fight.

BERMAN (voice-over): Bob Arum is a legend in boxing, he's been promoting fights since the '60s.

(on camera): Why do you think this is so important to Manny Pacquiao?

BOB ARUM, BOXING PROMOTER: This is the fourth fight he has been with Marquez. Every fight has been an exciting fight. Every fight has been a close fight. Every fight has been fought by both guys with some caution. This fight, each guy is determined to just throw caution to the winds and go after each other.

BERMAN: Are you concerned about how he's fading?

ROACH: He's becoming too nice a guy sometimes.

BERMAN: Too nice a guy in the ring or out of the ring?

ROACH: In the ring. And -- but I don't think he's fading yet.

BERMAN: There's another boxer I want to ask you about that you get asked about a lot and that's Floyd Mayweather. Do you think you'll ever fight him?

PACQUIAO: I'm willing. Everything.

BERMAN: You're willing. You're just waiting on him now?

PACQUIAO: Yes. I'm waiting for him.

BERMAN: If you had to bet a million bucks right now, would you bet on this fight ever happening?

ARUM: I would love it to happen. I would do anything to make it happen. But I don't believe it will happen.

ROACH: Everyone wants to see that fight. I want to see that fight. I want to get him ready for that fight. I want the challenge.

BERMAN (voice-over): Pacquiao is legend back home in the Philippines. He was elected to Congress there in 2010.

(on camera): Why politics?

PACQUIAO: I like politics to serve people. I'm the one who fights human trafficking, to stop that. I know what's the feeling of being poor; so I'm one of the people in the Philippines who lived in poverty and I want to help them.

BERMAN: Besides Congress, you do a few other things, too. There's the singing.


BERMAN: There's the acting.

PACQUIAO: Our hero is William Wallace. William Wallace from Scotland.

BERMAN: If they ever do a "Braveheart 2", I think you're a shoo-in. So if you're not fighting, you're not politicking, you're in Congress, you're not singing, you're not acting -- what do you do for fun?

PACQUIAO: I like sports.

BERMAN: Do you lose at anything?

PACQUIAO: Sometimes lose, sometimes win.

BERMAN: You said you think there's only one or two fights after this for Manny.


BERMAN: Is there a lot of nostalgia, then, as you're sitting here training?

ROACH: It will be a sad day. It will be a sad day. The thing is I want to see Manny Pacquiao go out and go out on top.

ARUM: If Manny is victorious, that will be a signature achievement for him in his career.

PACQUIAO: I feel excited for the fight. And I'm ready.

BERMAN: Do you feel like you have something still left to prove?

PACQUIAO: Yes, I can still prove that I'm still young and I can give a good fight.


O'BRIEN: Tonight at midnight, CNN is airing HBO's "Boxing 24/7, Pacquiao/Marquez 4". It documents their upcoming fight.

"End Point" is up next. We're back in a moment.


O'BRIEN: "End Point". Will Cain, want to start us off?

CAIN: These guys have so many interesting things to say. I cannot wait.

LIZZA: You just wasted ten seconds.

O'BRIEN: Dodge, dodge, dodge.

CAIN: You still are. And so January, Richard Socarides goes on his python hunt in Florida, which we will ensure that that's going to happen.


O'BRIEN: You can shoot a gun, right?

SOCARIDES: Yes. I have, you know, from camp. From archery practice. Isn't that the same? Archery practice?

LIZZA: Richard on a python hunt. The jokes --

O'BRIEN: Watch "Anaconda" first. Just saying. Go ahead, what's your "End Point"?

SOCARIDES: Make it good, Ryan.

LIZZA: I was going to talk about the fiscal cliff but, you know what? Let's just --

SOCARIDES: Bill Clinton says the fiscal cliff is going to be solved. Not to worry.

LIZZA: I can't stop thinking about the python hunt that Richard is going to go on.

SOCARIDES: And very seriously, next week, we're going to start to hear from President Obama for new Cabinet picks. I think it's going to be very interesting. I predict John Kerry at Defense and Susan Rice at State. You heard it here first.

O'BRIEN: Interesting. We'll see about that. Maybe I'll put some money on that with you.

SOCARIDES: A dollar?



LIZZA: You could shake your hands television?

SOCARIDES: Will you come on the hunt with me, the python hunt?

O'BRIEN: I've seen "Anaconda". There's not a chance I'm going on a python hunt.

SOCARIDES: All right. Good. You're all invited.

O'BRIEN: I will take the final word today for our "End Point." Don't forget to catch our "BLACK IN AMERICA" documentary. It's called -- she's saying that we're ready, there it is -- There it is, "WHO'S BLACK IN AMERICA". That airs Sunday at 8:00 p.m. Eastern time. 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 Douglas will be joining us. She has 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.