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QUEST MEANS BUSINESS
US Growth Misses Mark; FAA Furlough Bill; US Markets Flat; Spain Cuts Forecasts; Greece Layoff Vote; Dollar Down; Make, Create, Innovate: Universal Connections
Aired April 26, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: A lack of spending prevents further mending. US economic growth has stymied.
The US tries to put a stop to flight delays caused by budget cuts.
And the UST at the USB. Meet the man who invented this.
Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. Well, it's official: austerity in America is holding back growth. And the look when it goes forward for the months ahead, the outlook doesn't appear to be any much better, either. Let's have a look at it.
The US economy for the moment did manage to accelerate in the first quarter of the year, as you can see on the chart behind me. In fact, it grew by 2.5 percent in the first three months of the year. That's quite a bit better, as you can see there, than most of the recent quarters.
But what we were expecting was something quite a bit closer to the coveted 3 percent, not 2.5 percent over there at the end of the chart. Austerity measures are partly to blame for this. Forced spending cuts came into effect in March, and a lack of government spending offset some of the gains that were made in other areas.
Robert Shapiro was the US undersecretary of commerce under President Clinton. He's now the chairman of Sonecon, and he joins us now, live from CNN Washington to put these figures into perspective.
So, Robert, what's your first reaction to this GDP number? It's not all that bad, if you're sitting where I am.
ROBERT SHAPIRO, CHAIRMAN, SONECON: Yes, well, it certainly looks good from a European perspective. What it seems to indicate is that the economic process is doing quite fine. The problem is the political process.
And we see that in two regards. First of all, consumer spending not only was pretty strong, but it really has accelerated relative to all of 2012. Business investment was strong, but that's a little less certain, because a lot of that was inventory build-up.
The real negatives in this report were, as you mention, government spending because of the nitwit sequester policy, and US exports. And trade was also a negative, and that reflects EU nitwit austerity policy.
So, I think if we could take the ill-advised political element, which has been driving towards austerity in the face of fairly weak economies and just let the economy recover on its own with support from monetary policy, I think we would have hit that 3 percent.
DOS SANTOS: Well, as you mentioned, we had things like the sequester going on over the last quarter. Would you have ever expected that to have had more of an impact on these figures?
SHAPIRO: Well, the reason we don't see more of an impact is that we saw an even larger impact in the fourth quarter of 2012. And so, this is building off of that. And in fact, the damage to growth from the reduction in government spending was less great in the first quarter of this year than it was in the last quarter of last year.
So, even though it was a negative, it was a smaller negative than it had been in the previous quarter.
DOS SANTOS: Yes.
SHAPIRO: And, so that's why you see less of a negative.
DOS SANTOS: And it --
SHAPIRO: It would have to -- the spending cuts would've had to have accelerated to get a larger effect.
DOS SANTOS: And it came off the back of a more difficult comparison for the last quarter. If we take a look at the consumer spending figures here, though, contained inside this GDP report released just hours ago, that is a particular bright spot, because the consumer accounts are about two thirds of the US's economic makeup. And those consumer spending figures came in the strongest since 2010.
SHAPIRO: Yes. And this has been a trend we've been seeing over the last year, and what it really reflects is the end of the deleveraging process. That is, the financial crisis and the deep recession increased people's debts, particularly relative to their assets. The same thing was happening to business. And among consumers, what you saw was a significant slowdown in spending so the people could use their incomes to reduce their debt levels.
Well, actually by the beginning of 2012, the household debt levels had essentially returned to normal levels. They had worked off the premium from the crisis, and so you -- so this is, for people who follow those kinds of pieces of data, this has been expected.
DOS SANTOS: Just ever so briefly, Robert, having been in government yourself, responsible for economic policy for the United States, how should the current administration translate these kind of GDP figures into real growth in terms of jobs?
SHAPIRO: Well, I think there are a couple of things. One is I think the jobs problem is not only a problem of this cycle, this weak recovery, it's also a structural problem because we saw even greater job creating problems, actually, in the Bush expansion.
So, I think what we need to do is, we need to put in place a set of policies that will make it cheaper for business to create new jobs. I think now's the time to think about permanent reductions in the employers' side of the payroll tax, for example. I think that would help.
Apart from these employment targeted policies, the most important thing is to not weaken the economy by continuing with misguided, short-term austerity measures. Yes, we have to reform our tax system to increase the tax -- broaden the tax base. We have to reform our social security and particularly our Medicare and Medicaid systems.
But those are really longer-term -- medium and long-term problems. For the short term, what we need to do is support this economy.
DOS SANTOS: OK, Robert Shapiro, there, thanks ever so much. The former undersecretary of commerce under President Clinton bringing us his views, there, on the latest GDP numbers.
Well, speaking of the United States, the US House of Representatives has voted to end budget-related air traffic controllers' furloughs. They're being blamed for widespread flight delays.
President Obama is expected to sign the bill soon, and Felicia Taylor joins us now, live from CNN New York with all the latest on that. So, Felicia, people have been getting increasingly frustrated with the FAA and these furloughs.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Oh, there's no question about it. These are causing delays of up to 90 minutes. A number of flights have been canceled all throughout the week. And as you well know, Friday, heading into a weekend, is obviously one of the busiest days.
But these furloughs, this House approval is now obviously going to be signed, hopefully, by the president -- every indication is that he will do that -- and that they will kick in over the weekend, so we can hopefully see that these stoppages will end.
But they've now approved $253 million to get these air traffic controllers back on the job. 15,000 were affected, and that's -- that actually adds up to about 1500 people a day. They were ordered to basically take off one day per pay period, which is about two weeks.
And it's responsible for about 3,000 flight delays. That is big business that has been avoided from the airline industry. So, it's good news, it's wonderful, but there is obviously other government agencies that have still to be affected and are still being affected. Nina?
DOS SANTOS: From where you're sitting, Felicia, is there any sense that legislators have really learned the lesson from this one?
From where you're sitting, Felicia, if you can hear me, is there any sense that legislators and lawmakers have learned their lesson on this one?
TAYLOR: Oh, you're putting me on the spot on that one. I would hope so. At least both the House and the Senate were able to come together and agree on this in pretty fast form, and that is certainly encouraging news, considering this whole sequestration process that we've seen.
But there's a lot still to be done. There's a lot that hasn't been agreed upon, and there are still critics of the fact that this was approved. And some are saying that this is just a Band-Aid to cover up the other problems that still exist. So, I would say it's pretty still -- a pretty strong divide.
DOS SANTOS: Felicia Taylor, as always, thanks ever so much, even if I did put you on the spot, there. Obviously, she came up trump, didn't she? And that was quite interesting, what she had to say about the outlook going forward.
Let's get back to the issue that we were talking about Stateside when it comes to those GDP figures coming in about half a percent shy of what the market was expecting. There's not much in these kind of latest figures to encourage the markets, as you can see, because the Dow Jones Industrial Average, which was falling before, has been sort of flatlining for most of the session.
This is one of the high points of the day, as you can see, and that's only up about a tenth of one percent, or just shy of the 19-point mark.
We also saw some consumer sentiment numbers, which were revised higher, although they're still at their lowest level since January. That is one of the interesting things about the statistics that came out today.
If you break down the GDP numbers, what it shows is that consumer spending is at its highest level since 2010. If you take a look at the consumer sentiment numbers, though, that seems to paint a rather more dismal picture.
We'll be taking a closer look at Spain after the break. We're going to be live in Madrid for more on what those revisions we told you about earlier mean for the economy already in tatters. We'll tell you more about what Spain had to say on its economy.
DOS SANTOS: Hello and welcome back. You're watching QUEST MEANS BUSINESS on CNN. Spain has softened its commitment to austerity. The government has decided to ease its deficit forecast for this year by nearly 2 percent. And it's also been given the go-ahead from the EU to postpone meeting its deficit targets not just for this year, but for two years to come.
The government said that it needs to warn people in the market to expect a faster contraction this year than previously thought. We're talking about a level of minus 1.3 percent in total.
We also saw the finance minister and deputy prime minister announcing these provisions. We're talking about Soraya Saenz de Santamaria, here, and she said that there was no need for major new reforms or taxes. Al Goodman joins us now, live from CNN Madrid with more on what the deputy prime minister had to say, and also to put this into context.
So, Al, we've been talking about bad news for Spain for the last two days, because the unemployment record shot -- unemployment rate shot to a record yesterday. This is just two very difficult days for the Spanish government.
AL GOODMAN, CNN MADRID BUREAU CHIEF: This is really just a delay of the pain. There's been so much pain in Spain, and now, as you said, they're easing it off. They're postponing it until manana. And that's really what we have here.
Because since Brussels has given them a couple extra years until 2016 to get the budget deficit down to 3 percent as a percent of GDP -- it was supposed to be next year -- that gives the government some breathing room, and that's what you hear the two key ministers announcing this day, that at the national government level this year, they're not going to apply any more real stiff austerity measures.
But, they're still expecting the 17 regional governments and all the town halls to try to snip a little bit around the edges. So, there is going to be some pain, it's just not going to fall on the shoulders of the prime minister. Nina?
DOS SANTOS: And Al, how much of this has to do with the fact that obviously in the upper echelons of Brussels, well, the kind of austerity mantra seems to be changing its tune a bit. People are starting to realize that perhaps it hasn't worked?
GOODMAN: Well, the prime minister is right there at the top of the choir with Chancellor Angela Merkel of Germany on -- he was Mr. Austerity. But in recent days and weeks, we begin to hear the tune change just a little bit, first from the ministers, and then from the man himself, Prime Minister Rajoy, saying that we need some stimulus plans as well.
But he doesn't really have anything in his pocket that he can throw in there as stimulus. So, it's basically been him keeping his hands off the pensions. That's what a lot of people fear is the next big cut, but we apparently are not going to get that.
He has been able to sell, as you know, Spanish debt in the market. The interest rates have come down, they're not at those shocking 7 percent rates anymore. But they're still pretty high, especially when compared to Germany. So, they're far from getting out of the mess, and people in the streets are still very much feeling the pain here in Spain. Nina?
DOS SANTOS: OK. Obviously the lady behind you who is waving at us wasn't feeling the pain as much, Al Goodman, but you probably didn't see her during your report. Thank you very much for that. Al Goodman there on the streets of Madrid, bringing us the latest.
Well, this weekend, Greek lawmakers decide whether to effectively sack 15,000 public workers to unlock nearly $12 billion worth of bailout loans. While they vote, protesters are planning rallies and demonstrations in Athens.
Thousands of Greeks have taken part in anti-austerity protests and strikes. Some of those strikes and protests have actually turned violent. A little earlier, I asked the Greek minister for public order, Nikos Dendias, if he was expecting more unrest.
NIKOS DENDIAS, GREEK MINISTER OF PUBLIC ORDER: Well, one always has to be worried about strikes, especially in an economy under crisis, such as the Greek one. But I have to say that the signs that the Greek economy is finally getting out of the crisis.
We're approaching the summer, we are expecting a record number of tourists this summer. So, please allow me to have the hope that there are no more strikes forthcoming, and eventually that the Greek economy will be coming out of the tunnel of recession.
DOS SANTOS: But we're talking about a country that's been in recession for five or six years now, successively. And also, unemployment is in the double digits. For many people, they don't see the light at the end of the tunnel, and that raised the specter of social unrest.
DENDIAS: Well, you're absolutely right in mentioning that Greece has been through recession for the last six years, and that's a record for any country that I know of. And also, the rate of unemployment is more than 25 percent. And especially in the younger generations, it's close to 45 percent and maybe even more than that.
Taking into account that sort of adversity, I think that the Greek society had performed with admirable courage and has survived the difficulties. But I think that there are signs that there is light at the end of the tunnel, and I think that the Greek society now has finally seen that light.
So, I do not really expect any sort of social unrest in the future, of course provided that eventually that better days in the economy do come.
DOS SANTOS: Well, Greece has always been a gateway to Europe for migrants coming from the east, and a lot of them have become stuck there by Greece's ongoing economic crisis. That again raised the potential for xenophobia.
We've already seen a number of unfortunate attacks on migrant workers in Greece. As the minister for public order, what are you doing about it, and how worried are you about it?
DENDIAS: Well, I am worried about it, but I have to say that in general, the Greek society is not xenophobic at all. Rather, the opposite. Having said that, I think that we have taken all necessary measures to protect any human being in Greece, migrant or no migrant. Because, really, that is what a human being is entitled.
Apart from that, of course, illegal migratory flows present a huge problem to Greece. Please be kind enough to think -- to account that Greece is receiving more than 90 percent of full illegal migrants of all the European Union, which is a huge amount.
And if you add that to the existing crisis in the economy, it really creates a very difficult situation for the Greek society.
DOS SANTOS: Now, I'm speaking to you from London, you're currently in New York. These strikes start in two days' time. Are you going to be going back to Athens to deal with that situation?
DENDIAS: Well, I'm going anyway back to Athens tomorrow afternoon. I have to be in Athens, there's a crucial vote in the Greek parliament -- Sunday evening, so I have to be there.
DOS SANTOS: And now, time for tonight's Currency Conundrum. Who's famous face will appear on a new British five pound note? Is it A, Winston Churchill? Could it be B, Margaret Thatcher? Or C, David Beckham. We'll have the answer for you later on in the program.
Speaking of currencies, the dollar is down against the British pound, the euro, and also the yen. We'll be back with plenty more QUEST MEANS BUSINESS after this.
DOS SANTOS: Welcome back. If you want to use any of these gizmos on your computer, all you need these days is a free USB port. But you might remember that wasn't always the case. The tangle of computer wires used to be all the more complicated because each of these kind of devices needed their own specific type of cable.
Take, for instance, a PS2 port for your mouse and also your keyboard, there. A parallel port for your printer. And a SCSI cable for your scanner, like that. In Make, Create, Innovate, CNN's Nick Glass introduces us to the man who made all these connections universal.
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Of all the computer brand names strung along California's Silicon Valley, Intel is unquestionably one of the big boys. The breathtaking fact is that 80 percent of all computers on Earth are powered by Intel microchips.
We all pretty much know the logo and that TV and radio jingle.
(INTEL JINGLE TONES)
GLASS (on camera): I'm here to meet an engineer originally from India, who transformed the way we interact with our computers.
GLASS (voice-over): Has this ever happened before? An engineer starring in a TV ad? A winking engineer dude, no less. The guy here was an actor, but the real Ajay Bhatt has had to adjust to fame.
AJAY BHATT, USB CO-INVENTOR, INTEL: I was totally surprised by how it has impacted everybody. My name became a common name, at least in engineering schools and technical communities. When I go there, I truly get a rock star treatment, and that is quite unusual to me, people asking for your signature, people asking for pictures.
GLASS: Ajay Bhatt gave us something we all use: the uniform connection for our computers, the Universal Serial Bus, or USB.
BHATT: USB is an interface that allows a user to attach a variety of devices, like phone, or a tablet, or a camera to a PC.
GLASS: It all began with a sense of frustration in the 1990s, with multiple portals, multiple connections on every computer.
BHATT: And you're looking at two devices, you connect the wire, and you want things to happen. And the world was not that simple. This, in 1996, was the lightest laptop you could find. Each interface is for a single purpose. It does something special.
So this one would talk to keyboard. This one would talk to some modem or communication device. This one would talk to a printer. And the cables used to be this thick.
GLASS: Bhatt set out to simplify it all, to create a single connection for the entire computer industry.
BHATT: Our vision was, let's just develop something where you just attach a device and you start using it.
GLASS: Over six years, Bhatt lobbied his colleagues and other computer firms for everybody to jump on the same bus, the Universal Serial Bus.
BHATT: Well, initially it was difficult for them to understand the merit. In the computer industry, the legacy -- the previous interfaces were there, there is hundreds of millions of dollars of investment that is there. So, you sort of have to change the ecosystem.
GLASS: We're all plugged in, now, in the same way. There are thought to be over 10 billion USB devices in use.
BHATT: If you look at the USB, and this was conceived in 1992, and look at it, it still works the same way as before. The speeds have gone up on the wire, but it supports all the devices you had before.
GLASS: And the connections are getting ever faster. The current generation, USB 3, is 400 times faster than Bhatt's original device.
BHATT: And as we go forward, I see USB going to 800 and 1600 times faster than our original USB.
GLASS: The invention of the USB is a story about a humble engineer from Gujarat in India who became a rock star at Intel in California.
BHATT: A lot of people told you that this couldn't be done, and then you go to the store or talk to users and they're all delighted by USB, how easy it is. Makes you feel good.
DOS SANTOS: After the break, the cost of cheap clothing. The death toll from Wednesday's factory collapse in Bangladesh is now over 300. Matab Choudhury says that Western clients must now shoulder some of the blame.
DOS SANTOS: Hello and welcome back. I'm Nina dos Santos. These are the headlines this half hour.
U.S. President Barack Obama has repeated his warning that the use of chemical weapons in Syria could be, quote, "a game-changer."
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Syria's information ministers told Russian television that it does not own and has not used such weapons. He says that American and British suggestions on Thursday that Syria had used sarin, quote, "lacked credibility."
Bangladeshi officials say that at least 50 people have been found alive inside a collapsed garment factory on the outskirts of the capital, Dhaka. Rescuers have been digging tunnels into the rubble in the search for survivors. It's hoped they'll be freed within the next few hours.
You're looking at an aerial view of the Massachusetts prison hospital where the Boston bombing suspect has just been moved to. Dzhokhar Tsarnaev is said to be recovering from gunshot wounds to his head, neck, legs and hand. An official tells CNN that investigators are searching a Massachusetts landfill for his laptop.
Thirty-eight people are reported to be dead after a fire at a Russian psychiatric hospital near Moscow. Most of the victims were patients and were found still in their beds. A criminal investigation is currently underway. Only three people escaped the blaze.
(END VIDEO CLIP)
DOS SANTOS: Well, the death toll from the Bangladesh factory collapse now stands at 304. More than 2,000 people have been rescued. Hundreds more may still remain trapped inside the rubble. The 8-story building collapsed on Wednesday after a day after cracks first started to appear inside the structure.
The disaster has sparked large riots and protests (inaudible) in Dhaka. People in the capital say that they're angry with what they see as a slow response by the authorities. They're calling for the arrest of the building's owner and for the government to improve conditions for garment workers right across Bangladesh.
Well, the building was home to several different clothing makers. It's not exactly clear which retailers they are producing those garments for. The U.K.-based firm Primark says that one of its suppliers was actually inside the building and that its ethical trade team will provide any support that it can.
The Children's Place says that it used one of the factories inside the building in the past, but not at the time of the collapse. It's a similar story for Dress Barn, which says that it hasn't used suppliers inside the building since all the way back in 2010.
Joe Fresh says that a small number of its apparel items were being produced in the building and also Walmart says that it's currently investigating if any of the products were being made there at the time.
Matab Choudhury is the director of the British Bangladesh Chamber of Commerce, which represents Primark and other U.K. companies that do business there. He told our Max Foster that both the government of Bangladesh and Western clients are to blame for this tragedy.
(BEGIN VIDEO CLIP)
MATAB CHOUDHURY, DIRECTOR GENERAL, BBCC: The regulation and the people who want to check the regulation, the buildings, they are all -- the building control officer. They can be bribed in this. So if they can be bribed, you know, they obviously instead of three floor, you can make it up to six floor. They will decide one day it will be corrupt (inaudible).
MAX FOSTER, CNN HOST: We don't know what happened in this case. But you think in some cases, that does happen?
CHOUDHURY: It is. It is. It is.
FOSTER: The buildings aren't strong enough?
CHOUDHURY: Is not strong enough and I think is -- it is very, very important at the moment government should take, you know, these special precaution.
FOSTER: So (inaudible) say, of course, you'd blame the government. You don't want your clients to be blamed.
CHOUDHURY: No, they're definitely -- I should blame the Western brand because they go to the Bangladesh, they ask for the -- what is call the buying agent and they are saying, OK. We want 2 million of this garment. How cheap you can go?
So the buying agent from the Bangladesh, he go and who are not compliance, you know, the factory. They go there and they said we need another million to make these things. So the -- we don't compliance factory. That thing is a good news for us. And they try to do these things. So I think the government is responsible, same time the Western patron, you know, these are like, you know, the --
FOSTER: The big Western brands, they put so much pressure on them, the local --
CHOUDHURY: Yes, definitely. They are -- they are the responsible as well, because they don't go to compliance factory. They go in Dhaka, ask for the buying agent and they said we want to make these things. Can you provide us these things?
FOSTER: Is this going to be a wakeup call, then, to your clients, your members?
CHOUDHURY: I think it will be wakeup call. But I think the government should take, you know, the very quick, quick, quick decisions to go all the buildings --
FOSTER: And decide which ones are safe?
CHOUDHURY: Yes, which one is safe and which was -- is not safe.
FOSTER: And close down the ones that aren't safe?
FOSTER: That would have a big impact, though, on those -- on some of those Western brands, wouldn't it, because they're going to lose some output.
CHOUDHURY: I understand that will be the big impact. But you imagine these garments, you know, they say about 270 people already dead. And 2,000 people inside the building. So virtually these people will be dead (inaudible). So it's a disaster --
FOSTER: Worry about it happening again.
CHOUDHURY: Serious. Serious.
(END VIDEO CLIP)
DOS SANTOS: Straight ahead here on QUEST MEANS BUSINESS, who's in -- who's on the money? We reveal the new public figure appearing on British banknotes.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): And now the answer to tonight's "Currency Conundrum" for you out there. Earlier we asked you which famous face will be appearing on the new British 5-pound note, and the answer is, well, as you can see there, Sir Winston Churchill. The Bank of England says that we can expect the new banknotes to appear in British wallets from 2016.
I might point out, though, obviously, a 5-pound note is worth considerably less these days, thanks to inflation, than when Sir Winston Churchill was alive many years ago.
Jim Boulden now reports on why Winston Churchill was the man chosen.
(BEGIN VIDEO CLIP)
JIM BOULDEN, CNN CORRESPONDENT (voice-over): Many faces stare out at us when we make purchases, statesmen and women, scientists, military figures and, frankly, you would be hard pressed to recognize many of them if it's not your money.
Here in Britain, it's a bit easier. The current monarch is always on the coin of the realm. So it's who's on the back of the note that makes a difference.
BOULDEN: (Inaudible) thought a social reformer, Elizabeth Fry, in a few years' time, she'll be replaced on the 5-pound note by former Prime Minister Winston Churchill.
BOULDEN (voice-over): You might have thought the recently deceased Margaret Thatcher was in the running, but she's not even on the list suggested by the public for faces on the back of banknotes.
Diana, Princess of Wales, is; so are The Beatles. Physicist Stephen Hawking and footballer David Beckham as well. Actor John Cleese and businessman Richard Branson have also been suggested. And how about Mick Jagger? No to all of them so far.
Churchill becomes the 16th Briton to be on the back of the banknote since the policy began in 1970. Along with his portrait will be a quote from the speech he made when he became prime minister in 1940, "I have nothing to offer but blood, toil, tears and sweat."
And the Bank of England says look carefully behind his portrait.
CHRIS SALMON, CHIEF CASHIER, BANK OF ENGLAND: He was an MP. And obviously that was where he made his address to Parliament in May of 1940. At the time on the great clock on the Elizabeth Tower is 3:00 pm, which is the approximate time when he made the address.
BOULDEN (voice-over): Also next to Parliament, a copy of Churchill's 1953 Nobel Prize for Literature. The things you can learn from your currency -- Jim Boulden, CNN, London.
(END VIDEO CLIP)
DOS SANTOS: Well, going into the weekend, many people are asking themselves, does Europe still enjoy the springtime temperatures and will the good weather last. Our meteorologist Karen Maginnis is standing by to tell us all at the CNN International Weather Center.
Enlighten us, Karen.
KAREN MAGINNIS, AMS METEOROLOGIST: Well, it does look like some portions of Europe are still going to enjoy those springlike if, in fact, not summerlike temperatures. Take a look at some of the readings we've seen over the past 12 hours or so.
In Berlin, 24, their normal average high temperature is about 14. So definitely way above normal there. Also for London and Paris, with temperatures in the low 20s. Going into the weekend, there's going to be a big change that comes up as we look for Saturday. For London, a high temperature there only of 11.
So less than half of the temperatures that you enjoyed for Friday. Munich will soar to 24. So you can kind of see the dividing line between those who are going to be much, much cooler and still wear that warm sector is located. Kiev is looking at 21 for a high. Warsaw at 24, but it looks like those temperatures get chipped away a little bit over the next 48 hours.
Here's a broad view, the latest radar over the last 12 hours, we did see some pretty good thunderstorms erupt across northeastern France into the Benilux region across Germany and a few light showers, for the most part, across the United Kingdom.
But that heavy concentration of rain or, in fact, thunderstorms, will plague some portions of France -- southern France primarily -- and into central and southern Italy.
Well, here's the view as we head towards the weekend, those temperatures not going to be nearly as warm as they have been in London. Those readings in the 20s, well, they'll only be in the low teens. And for Berlin, no 20s expected here. But still running just about average.
But, boy, is it nice to see temperatures in the 20s when you've been suffering with winter-type chills and rainy, dreary weather for many months now. And Warsaw, those temperatures do decline just a bit. We won't see 20s, maybe for Saturday, but then by Sunday and Monday, we're back into the low teens and the mid-teens coming up.
Well, what about the flight delays? If you are an international travelers, for Berlin, those delays not expected to be lengthy at all. The lengthiest delays we're expecting right now should be out of Munich, and that'll be the cloud cover; it could be a little breezy there as well. So lower visibility and those flight delays expected on Saturday between a half hour and 45 minutes.
Back to you, Nina.
DOS SANTOS: OK, Karen Maginnis, thanks ever so much for bringing us the full picture for the next two days to come.
Well, let's just recap our top story this evening. The U.S. economy, as you can see here, grew by 2.5 percent for the first three months of the year. But that did, crucially, miss many analysts' expectations.
What I want to show you here is to put it into perspective with the other economies around the world. And in fact, if you look at how U.S. growth stacks up, you can see the effects of the varying economies and the economic trajectories and policies that they decided to unveil over the last couple of years, notably the effects of austerity.
Take a look at this. China's economy grew by 7.7 percent over the last 12 months. But still many people thought that was disappointing because it didn't reach the 8 percent mark. Japan's central bank today said that it was raising its forecast for the next 12 months of growth. It now expects almost 3 percent, which is quite a bit better than expected before.
What I want to show you is that obviously Europe has been mired in an austerity spiral for three years and, guess what? The European Central Bank is nowhere near as optimistic as places like Japan or the United States as the austerity policies continue to bite with its latest forecast shows that there will be no growth at all. It might even enter a recession.
And it's even worse for Spain. Of course, today, the government said, as we were telling you before earlier in the show, to expect faster contractions this year than previously thought. In fact, they revised downwards their trajectories to -1.3 percent.
Let's have a look at how the U.S. GDP figures have been affecting markets as obviously we went into the final trades of the day. As you can see, the Dow Jones industrial average been flatlining for much of the day.
We did see some consumer sentiment numbers, which were revised higher, although they're still at their lowest pace since January. But as you can see, people don't really know where to go on the Dow. It's only up around about 12 points as we head towards the close. People aren't really sure where to go with this market.
That's it for QUEST MEANS BUSINESS. I'm Nina dos Santos in London. MARKETPLACE AFRICA continues on CNN. Have a great weekend, whatever you're doing.
ROBYN CURNOW, CNN HOST: You're watching MARKETPLACE AFRICA. I'm Robyn Curnow.
Now in countries like South Africa, consumers are becoming increasingly brand savvy. This week, we're going to take an in-focus look at the more unconventional and innovative marketing strategies that are being used to target this emerging middle class.
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MAGDALENE MATABOTA (PH), DOOR-TO-DOOR MARKETER: This is the Joko tea. It's handled inside the tea bags.
CURNOW (voice-over): Magdalene Matabota (ph) walks from home to home, introducing members of her low-income community to a range of consumer brands. Not your conventional marketing strategy, but one that works in Africa.
PREETESH SEWRAJ, MANAGING DIRECTOR, PRODUCT OF THE YEAR SOUTH AFRICA: What we've found is especially if you look at the South African market, in the last two decades, more manufacturers are entering the marketplace, using it as a stepping stone into other African markets.
CURNOW (voice-over): And in the African market, you'll find millions of customers, customers that might have been overlooked by big multinational businesses in the past.
ZUNAIO DINATH, CHIEF OFFICER: I think typically we've always traditionally catered for the formal markets and the upper end of the spectrum.
But I think when you go to the low end of the market and it's not because people are poor that they're less -- they consume less or they are worse type of customers that you want, you actually need those customers. They are the next value chain and the next, you know, million customers will come from there.
CURNOW (voice-over): But how do you reach these millions of customers?
GIL OVED, FOUNDER AND CO-CEO, THE CREATIVE COUNCIL GROUP: Yes, well, it's working for you.
CURNOW (voice-over): That's where marketing companies like Creative Council come in. A $50 million company pioneering African marketing solutions.
OVED: So multinational brands are coming from all over the world. And they want in on Africa, as is obvious. And agencies like ours are helping them engage the consumer in a new, inventive way, which is actually a very old, traditional way. It's one-on-one conversations.
CURNOW (voice-over): Also known as word-of-mouth.
UNIDENTIFIED MALE: So I'll use something that a friend has recommended or a sister or a brother or a parent or (inaudible) has recommended. They're quite wary and skeptical to try new things.
You need to bear in mind one thing, that their disposable income is very, very, very low. So they can't take chances. They've got to be 100 percent certain that the purchase that they make they're comfortable with and it will also solve their needs.
CURNOW (voice-over): And to make sure that products will fulfill their needs, these consumers ask a trusted member of the community, like Magdalene (ph), who's making a living by telling people what to buy.
MATABOTA (PH): This is my real job, because I love it. I love it very much, meeting different people and then I have to explain to them, this is nosoup (ph) use this nosoup (ph) and then it make your food so delicious and then I enjoy it.
CURNOW (voice-over): Magdalene (ph) is a walking advertisement, helping multinational corporations spread their marketing message to the customers, who are hard to reach.
UNIDENTIFIED MALE: In reaching your customers, you need to reach them in different ways. So one of the big things is that the traditional media doesn't necessarily reach into the far, more rural parts of a country.
So a lot of it has to be done by word of mouth and (inaudible) promotions. So what we do is, you know, we hired people that actually go out into the different townships, into the different rural areas and really promote the product. And they walk the streets and communicate. So they go to techs hearings (ph) and places where people gather and really spend a lot of time promoting the product.
CURNOW (voice-over): These promoters are called zonal champions (inaudible) operates in an area north of Johannesburg.
UNIDENTIFIED FEMALE: (Inaudible) is a township area as classified in South Africa. So you deal with a lot of people that know you. They expect you to know (inaudible). So they relate to you more because you sound like them (inaudible) and they can relate it for any questions that need to be answered, they are able to approach you better.
CURNOW (voice-over): But this isn't a part-time job.
OVED: So zonal champions aren't like normal promoters. They don't usually have working hours. Obviously, there's official working hours. But the truth is we (inaudible) brand and you're passionate about, you do it 24/7, 365.
UNIDENTIFIED FEMALE: Sometimes the (inaudible) product (inaudible) because (inaudible) ambassador. So you have to look the part, always be alert. You can be walking on your free time, maybe on your lunch time.
You're just walking by the mall, somebody (inaudible). You have to always play the part 24/7, because you are living the brand (ph). Someone can come to you and say, you are not working. But (inaudible) just (inaudible) and something like that. So that's what we're here for.
CURNOW (voice-over): This marketing strategy provides employment opportunities.
MATABOTA (PH): I was a home staying mom. Just I wasn't doing anything. Now I'm a Unilever ambassador.
CURNOW (voice-over): Not only are these brand ambassadors serving an overlooked market, these employers are also part of an untapped workforce.
UNIDENTIFIED MALE: We found a niche. We found that there's a whole lot of people that are uneducated and previously probably unemployable, so to speak. And we've found a methodology of training and managing these people in such a way that we can actually give them a job as a zonal champion or as a brand champion or someone that can drive a message into their communities.
CURNOW (voice-over): And it's also about building trust, which can eventually lead to sales.
OVED: There's a wonderful Zulu idiom (ph). It goes, (speaking foreign language), which means one hand washes the other. That is the kind of communal respect that Africans have which brands that come from all over the world need to understand.
It means that if you're a brand that supports me in the community, creating employment opportunities, gives me real product information, I will support you and buy your product. One hand washes the other.
If brands can tap into that and build their trust, then they'll win the African continent.
CURNOW (voice-over): And for many multinational corporations, they say it's a continent well worth winning over.
UNIDENTIFIED MALE: Africa is really the last great frontier in terms of an investment opportunity in the global space. Any manufacturer who's not playing in Africa right now is actually preparing to lose in the future. You need to be in Africa and playing in this marketplace if you want to be a strong, healthy, successful company going forward.
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CURNOW: Coming up next, we meet a man who says there's money to be made if you know what's hip and happening on the streets of South Africa.
CURNOW: CG Alcock is not your conventional businessman. He grew up in a mud hut in rural Quazulu Natel (ph), South Africa, and said he speaks nearly all of the 11 official languages of the country. Now you won't ever find him in an office. Instead, you'll find him out here, on the streets, pounding the pavement, talking to people, finding out what they want.
Now this is because he runs a branding and marketing company that tries to bridge the gap between big multinationals and the consumer.
CG ALCOCK, CEO: At one stage I said to my father -- we'd met someone who'd gotten investors, I said, will you send me to university? And he said, oh, and he could never afford it. But what I will do is I will teach you -- I'll bring you up ready to understand Africa and to understand how to do business in Africa. And that's the best university you'll have.
CURNOW: And how are you using that experience, that childhood experience now in what you do?
ALCOCK: I think the big thing about changing behavior, which is what marketers are trying to do, is about understanding what changes behavior. And it's why consumer insights and what we tend to say is that what people do is easy to see and to understand. But they do these things because of deeper passion points. Those passion points are hopes, dreams, fear.
So we pull that understand into our marketing. An example, often, I have a photo of two Basutu (ph) tribesmen driving a donkey down a little pathway with very expensive coffin on the back of the donkey.
And that's -- it's -- you know, it's kind of bronze handles and all of this. And you know, the dichotomy there is that why would such poor people go and -- who don't have transport -- buy this really expensive coffin. And the reality is that that's that thing about the insight and the passion points, that people will do that because of the dignity of death that's so important.
And they'll spend improportionate amounts of money on it. And those marketers, if they can understand those motivations and build on them, we obviously can benefit the brands.
CURNOW: And it doesn't mean just because you're poor or you have limited income that you're not brand aware. And I think that's the key, isn't it?
ALCOCK: Within that market, also brands are a status symbol. They're saying what you are, but they're also a quality -- all the elements that you find (inaudible). So I am -- I've got a picture of these shoes made out of leather and car tiles that sell in one part of Soweto.
And they all have Lacoste or Nike and whatever, I think, because the guys want to establish that these are proper shoes. Everyone knows they're not Nike, but they understand what he's communicating in terms of --
CURNOW: And if you're going to buy shoes made out of car tires, these are the ones you should buy.
ALCOCK: You should buy, yes.
CURNOW: So what other lessons that need to be learned and how do you think this market is going to be served essentially in the years and the decades to come?
ALCOCK: I think the key lessons are really about that understanding, you know, the starting point is dealing with understanding and going there. And you know, that going there is very important because if you don't walk down the street and talk to the hawkers, or you go to, you know, some places that you wouldn't normally go on your average Sunday, you're not going to understand that market.
That market is also becoming more demanding and more sophisticated. And they're quick learners as well, they're early adopters. And they say, you know, how are you helping me? So don't just come here and think you can take advantage of me.
CURNOW: So how do you switch that, then? How do you make that work?
ALCOCK: Well, the key is you've got to develop a relationship. And it's about value at the end of the day. What value are you adding to this person's business? And you know, that's the reality through all business interactions.
But traditionally, it's been a one-way thing, that the storekeeper or this hawker has been sitting with (inaudible) thank you for coming and giving me some tablecloth that's branded. Now they're saying, yes, but I'm advertising your brand. Give me the tablecloth. But what else are you giving me? So I'll say, OK, well, I'll give you a discount on stock. OK, cool. Then now we've got a relationship.
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CURNOW: Well, that's all from us here at MARKETPLACE AFRICA. Please do go online. We're at CNN.com/MarketplaceAfrica. I'm Robyn Curnow. See you again next week.