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A Real Recovery for Some; U.S. Falls in Education Rankings; The Concert that Changed the World; Big Brands See Scoring Chance
Aired December 7, 2013 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: The economy is climbing back. I'm Christine Romans. This is YOUR MONEY.
The U.S. economy growing at the fastest pace since the beginning of 2012. Driving the growth? Businesses. Stock it up, filling the shelves, do they expect demand from consumers to surge and what happens if consumers are not buying? That's (INAUDIBLE) of what happens next.
ROMANS: Another critical sector to watch, housing. Sales of new homes surging up 25 percent in October. The sharpest gain in 33 years. And that means more construction jobs and trips to the hardware store. Positive jobs numbers show the economy is healing.
203,000 jobs added in November. The U.S. on track now to create the most jobs since 2005. The jobless rate lowest now in five years. Stock market may have taken a breather this week, but it is a banner year for stocks.
Here's something interesting, though. A quarter of Americans hold three quarters of all stocks. So Americans -- many Americans are more concerned about where the next meal is coming from than their 401(k). Fast food workers on strike this week in nearly 100 cities. Protesting what they call poverty wages.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Keep your burgers, keep your fries.
UNIDENTIFIED PROTESTERS: Make our wages super-sized.
(END VIDEO CLIP)
ROMANS: The economy, jobs, the minimum wage. That's the president's agenda for the next three years.
Austan Goolsbee is an economics professor at the University of Chicago's Booth School of Business and former chairman of the president's Council of Economic Advisers.
Also with me today, Kevin Hassett, the director of Economic Policy Studies at the American Enterprise Institute, a former adviser to presidential candidate Mitt Romney.
Austan, let me start with you. You look at this economic strength recently, and really, you have to say, even with all of the asterisks, we haven't seen so many things from auto sales to GDP to the -- you know, small businesses hiring that had been pointing in the same direction.
Could Washington screw it up? That's what I'm worried about. Where is the fly in the ointment?
AUSTAN GOOLSBEE, PROFESSOR, UNIVERSITY OF CHICAGO BOOTH SCHOOL OF BUSINESS: Of course, of course they could screw it up. And I don't think we should get too far ahead of ourselves on this. We've had a few months of positive reports, I agree with that. But they haven't been overwhelmingly positive.
And on some of those like the dramatic surge in housing, it's hard to believe that that is going to be that sustainable. We're not going to go back to the go-go days of construction that we're going --
GOOLSBEE: -- during the housing bubble.
ROMANS: Kevin, let me ask you. You say the president's policies have made this the slowest recovery on record. The economy is on track to create more than two million new jobs this year.
Does the president deserve any of this credit?
KEVIN HASSETT, SENIOR FELLOW AND DIRECTOR OF ECONOMIC POLICY STUDIES, AEI: You know, I think that the economy has healed itself, I agree with Austan. If we look at the numbers, I'm actually more optimistic than Austan, and you know, I guess maybe he would have a political incentive, although he's not that way, to exaggerate.
But the fact is I think we are at about 3 percent. I think that the December number will be about 250,000 jobs. If you look at the bones of the data, they're very, very solid. But I think that it's interesting that all that is healing and starting to happen when Washington is just sort of slowing down. They've cut government spending back. The revenues have come in, in part, because of the tax hikes, which is something that has probably less damage, created less damage than I expected.
ROMANS: But the sequester has --
HASSETT: But the fact is that Washington getting out of the way has been a pre-condition, I think, for the private sector taking off.
ROMANS: I'm going to let Austan weigh in on that. Because a lot of economics tell me that the sequester is biting. You look at this year, 92,000 federal jobs had been lost, I think, overall this year. You know, government jobs lost over all this year.
I mean, do you think that the -- Washington inaction and the sequester is hurting, holding back the growth, Austan? GOOLSBEE: Yes, it's holding back the growth. It hasn't -- I thought it would hold back growth even more than it did. But I think most of the private sector, you know, nonpolitical analysts who look at the economy for 2013 say that the austerity and the fiscal drag cut at least 1.5 to 2 percent off the growth rate. So we could have been in a much stronger position. I don't think that the -- engaging in austerity in no way help the growth rate. I guess I disagree a fair amount with Kevin.
ROMANS: Yes. I figured you guys would be completely on the opposite sides of the fence on that.
HASSETT: But 1 percent out of the 1.5 was the tax hike, though. I mean, that's Mark Zandi's number, right.
HASSETT: So the 1 percent of the drag this year out of the 1.5.
GOOLSBEE: I agree with that.
ROMANS: Meantime, you know, signs this week that maybe, I don't know, maybe the bailout -- automakers might have been worth it, Austan. GM and Chrysler, double-digit sales increases compared to last year.
Look at these numbers. Treasury Department planning to sell the last of its stock in GM by the end of the year.
So interesting to me. Do you think that this proves that what was first President Bush and then President Obama's bailout worked, Austan?
GOOLSBEE: Well, in a way, it did work. I mean, we were facing the liquidation of the -- of American auto industry's big three automakers at that time because of financial system was shutdown. But I don't think that we should use that as an aspiration. We should never -- we should hope never to be in a position again, rather than using that as, you know, these are good investments the government ought to be engaged in.
I think you've seen manufacturing coming back. Some of -- some of that that is just based on cost and productivity relatively shifting to the U.S. of the more attractive place to do business. And some of it is just we've had a lot of pent-up demand. People have been driving the same car as long as they can drive it until the fenders finally fell off. They got to -- eventually got to get some new cars.
ROMANS: That is so true. All right, Kevin and Austan, nice to see both of you. Thank you very much.
The American auto industry leaving the bailouts in the rearview mirror and thriving. We talked about the numbers. Now let's check out the flash. This is the new 2015 Mustang unveiled this week at car's 50th birthday party. It was a sleeker profile, more power, better gas mileage and an optional four cylinder engine.
For more stories that matter to YOUR MONEY, give me 60 seconds on the clock. It's "Money Time."
ROMANS: One-time poster boy for corporate greed could soon be out on parole. Former Tyco CEO Dennis Kozlowski was convicted in 2005 for stealing hundreds of millions of dollars from his company. Among his lavish expenses, a $6,000 shower curtain and $2 million Roman toga party.
Ready to binge on the new Netflix series "Turbo Fast?" Not so fast. The streaming giant is releasing the original children series five episodes at a time around the holidays. But this isn't the end of binge watching. All 12 episodes of "House of Cards" season two will come out on Valentine's Day.
Forget smart phones, how about a smart bra? Microsoft is working on a brassier that detects stress so you can avoid stress related overeating.
Norman Rockwell's "Saying Grace" sold for $46 million at Sotheby's in New York. It sets an auction record for a single American painting.
And Billy Joel is in a New York state of mind. The piano man will perform at Madison Square Garden once a month. Don't go changing, Billy.
ROMANS: Up next, pull up a chair, have some Saturday brunch with me, please. Christiane Amanpour and Candy Crowley and I sit down. We have a table for you and a chair right up there. What are we talking about? Maybe dishing some dirt on your favorite CNN anchors, solving the world's problems?
Start Saturday smart with us next.
ROMANS: America has the world's biggest economy and the most powerful military, but the best education system? Maybe not so much. The PISA survey compares skills from thousands of 15-year-olds in 65 economies around the world. U.S. students are average in reading and science they're below average. In math, in math the U.S. came in number 36 out of 65 developed countries between the Slovak Republic and Lithuania.
The top performer? Shanghai. The OECD says students from Shanghai are more than two years ahead of their peers in Massachusetts. That's one of America's top performing states.
The U.S. did better in reading, 24th in the world ranking but number one? Shanghai again. In science the U.S. came in number 28th on that list. The top performer? You guessed it. Shanghai, China.
Now the U.S. won't be getting a most improved award either. The U.S. fell in all three subjects from 2009 to 2012.
U.S. Education Secretary Arne Duncan says the results paint a picture of educational stagnation. Those are his words.
So is the U.S. falling behind or is everyone else just getting better?
I sat down with my colleagues, chief political correspondent Candy Crowley, and chief international correspondent, Christiane Amanpour, and I asked them why is the U.S. is falling behind.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: What is the problem with education? We keep throwing money at it. But the interesting statistics again are that even though the U.S. spends a huge amount of money on education, it doesn't spend -- as much as other countries which are currently doing better on disadvantaged schools, for instance.
In other words, in other countries they're doing better in their public education. They spend more money where it's more needed, in the disadvantaged areas.
ROMANS: And on early childhood education.
ROMANS: A lot of these countries they get kids very, very young --
AMANPOUR: Here, they spend more on the advantaged already.
CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: They spend more time on the educational system. I mean, there's -- there has always been a big movement to why are the kids out for three months where they forget everything from -- you know, why are the vacations so long? You know, anyone who's had a kid in school, you think, wait, they're off again?
ROMANS: You know, Arne Duncan this week -- Arne Duncan called it the great stagnation in education. You know that we are stagnating here. We've got to be figuring out a way to get kids the education, the skills for the workforce. Those piece of rankings that you're talking about showing that American 15-year-olds falling behind, falling behind or the rest of the world is moving up?
AMANPOUR: Quite significantly -- no, falling behind.
ROMANS: And East Asian countries doing very, very well.
AMANPOUR: Let's not kid ourselves. ROMANS: And here's what's so interesting to me. Companies complain that the kids coming out of college don't have the skills. Colleges complain that the kids coming out of high school don't have the skills. The defense complex complains they don't have enough American-born skilled math and scientists and physicists for security clearances.
You know, this is a national security and economic security issue. Yet you find just this paralysis on figuring out how to do it.
CROWLEY: Well, there are some great experimental things going on. And first of all, what's interesting is, while all these conversation is going on, the other conversations is, do you really need college anymore? So you have these kind of opposite -- you know?
ROMANS: People who have that conversation have a college degree, by the way.
CROWLEY: Yes. Well, yes.
AMANPOUR: And the answer is yes.
CROWLEY: A lot of people look and say, yes, you do because there's only so many jobs and they're going to take a college graduate no matter what the job is.
ROMANS: And Mark -- Mark Zuckerberg, but not everybody --
CROWLEY: Right. Exactly.
AMANPOUR: But that's where you could be, an entrepreneur. I mean, Bill Gates and all the other big innovators in this country, many of them, actually dropped out of college or whatever they did, and were able to use their brain power and their hard work to harness, you know, an economy for the future. But not everybody is Bill Gates or Mark Zuckerberg.
A lot of young people right now, but I -- again, I'm always fascinated by -- OK, so now we know that Shanghai is doing -- one of the best in education. We know in Europe that Poland is. To me, it seems that these are the aspirational countries right now. These are the countries that want to punch above their way.
AMANPOUR: Join the developed world and the developed economies. And I'm sure the U.S. was like this 100 years ago.
ROMANS: That's right. And my grandfather always said -- it's a phrase from the Great Depression -- hunger is the best sauce. Meaning that everything is better if you're hungry. And these are countries that are hungry for success. They want the success the United States had in the 20th century.
You know, I'm going to defend the U.S. on those rankings a little bit here and say that Shanghai is a very slim slice. AMANPOUR: Yes.
ROMANS: And very -- you know, China wants to show its best students. Some of these other countries aren't dealing with -- in their classrooms -- what America is.
CROWLEY: This huge --
AMANPOUR: The poverty.
ROMANS: Poverty and a huge diversity of students.
CROWLEY: Poverty but there's also just diversity of students.
CROWLEY: It's cultural differences in students. It's geographical.
ROMANS: There is nothing simple about finding the solution to this so-called education stagnation. That's the way Secretary Duncan puts it. But some teachers tell me they're doing the best with the resources they have. Other teachers complain the increased in spending isn't going to the right places.
What I worry about is who is getting left out. Majority of students who fall squarely in the middle. It used to be if you were average in America, you'll be able to get a good job, make a decent living, and eventually send a kid to college. Maybe that kid could excel and build a middle class life.
Despite signs the economy is improving, the world more competitive than ever, our education system simply must keep up.
Coming up, Nelson Mandela's 70th birthday spent in South African prison cell. A world away, star power was lighting up Wembley Stadium in London and shaped history in the process.
Up next, we're going to take you inside the one event Mandela himself credited with helping change public opinion on Apartheid forever.
ROMANS: Nelson Mandela. U.S. markets observed moments of silence for him on Friday. Here's the man after 27 years in prison who wound up working with some of the best minds in corporate America to raise money and change the way business was done in South Africa.
Mandela garnered more international support and admiration than perhaps any other leader in recent memory, but that wasn't always the case. He didn't become a global household name until the 1980s when he had already spent more than two decades in prison.
CNN's Nischelle Turner has the story of the star-studded concert that helped raise awareness for his cause. (BEGIN VIDEOTAPE)
RICHARD GERE, ACTOR: This is all generated for one man that none of us has ever met, Nelson Mandela.
NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: In 1988, Nelson Mandela was behind bars in South Africa when a collection of musicians and celebrities coming together in London to call for his release sent a message around the world.
UNIDENTIFIED MALE: Nelson Mandela.
TONY HOLLINGSWORTH, PRODUCER, NELSON MANDELA, 70TH BIRTHDAY TRIBUTE: Well, it was an 11-and-a-half hour broadcast to 600 million people. There were only five billion in the world. To get that, we not on had to sell the program to 67 countries we had to give it away to 30 African countries that wanted to broadcast it.
TURNER: Promoter Tony Hollingsworth organized the all-star 70th birthday tribute for Mandela. His goal was to change the way some referred to the jailed leader.
HOLLINGSWORTH: The run-up to the first ever broadcast, it was still possible for Margaret Thatcher as prime minister of England to stand up in the House of Commons and ask the question in public -- how is it that the BBC can be broadcasting an event for a terrorist. And that's how powerful that word was. And that's how powerful that word was.
And the Apartheid regime knew it, that if they could keep him being labeled as a terrorist, they could keep him in prison.
And I said, you can't get a black terrorist leader out of prison. You can get a black leader out of prison. So we've got to get rid of one word, terrorist.
TURNER: With that goal in mind, he recruited stars like Dire Straits, Whitney Houston and Peter Gabriel, figuring that exposing a global audience to Mandela through music could change the conversation.
HOLLINGSWORTH: At that point in time, in 1980, the whole of the music industry was very, very powerful. It was big. It was big on television. And so, by then, helping to come on board, it allowed this instrument that we had to project his image across the world.
UNIDENTIFIED MALE: That the whole world is watching.
TURNER: In the aftermath of the broadcast, as the pressure that would ultimately free Mandela mounted on the South African government, Hollingsworth got a letter from his concert partners, the African National Congress, and the Anti-Apartheid Movement. HOLLINGSWORTH: "Dear Tony, certainly it marks a landmark in our history. The greatest single event we have undertaken in support of the struggle. Now we can certainly look forward to the future with enormously received revived hope." UNIDENTIFIED MALE: It's the best party we've ever been to. Thanks for having us.
TURNER: Nischelle Turner, CNN, New York.
ROMANS: The producer, Hollingsworth, followed -- produced a follow-up concert in 1990. The newly freed Mandela attended in person and thanked all of the artists involved in that original 78th birthday concert, saying, he believed it was that event specifically led to his being released from prison.
Coming up, President George W. Bush turned to painting after he left the White House. That's right. He just finished this ornament for Christmas.
Nice work, Mr. President.
With three years left, our current president already knows what he wants to do after he leaves 1600 Pennsylvania Avenue. I'm going to tell you what his retirement dream job is next.
ROMANS: Our last president left the White House to become a painter, but President Obama hopes sports will fill his time after he leaves Washington.
Here's "The Score."
The president apparently dreams of hosting Sport Center's "Top Ten List" on ESPN after he retires. "The Hollywood Reporter" says that's what the president Disney chief Bob Iger at a recent private dinner. Disney, of course, owns ESPN. Iger's response, he reportedly got a pretty good giggle.
All right. It's the biggest sporting event in the world. I'm not talking about the Olympics or the Super Bowl, it's the 2014 FIFA World Cup. Thirty-two countries are now drawn into eight groups. Kicks off next summer in Brazil.
With the world watching some big brands are trying to score a piece of the action.
CNN international correspondent Jim Boulden joins us now with a look at the business of the World Cup.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Christine, national soccer teams the world over spent two years fighting for a place in the World Cup finals next year in Brazil. And big brands, many of them American, compete with each other to spend millions of dollars to be associated with it.
BOULDEN (voice-over): As teams from countries the world over were fighting for one of the coveted 32 spots, big global brands were battling it out to be associated with the FIFA World Cup. Estimated by some at a cost of $100 million each to be an official sponsor.
THIERRY WEIL, FIFA DIRECTOR OF MARKETING: When you're talking to companies which are looking to have a global exposure, World Cup is the platform where you have global exposure.
BOULDEN: When it comes to current sponsors for FIFA, it's Visa, not Mastercard. Adidas, not Nike. McDonald's, not Burger King. Coca- Cola, not Pepsi.
ARNAS ROY, GLOBAL FOOTBALL MARKETING DIRECTOR, COCA-COLA: The FIFA world cup is the -- is the pinnacle.
BOULDEN: For Coke, the World Cup is key.
ROY: In 2010, the campaign was the biggest ever marketing plan for brand Coke ever, and the ambition is to go higher.
BOULDEN: Coke estimates some $2 billion people were actively, quote, "engaged," with the 2010 World Cup in South Africa. Not just watching a match or two. Their goal, says Coke, attracting teenagers.
Brand experts say global corporations are often associated with other big sporting events, as well.
STEPHEN CHELIOTIS, CHAIRMAN, SUPER BRANDS COUNCIL: If you sponsor things like the World Cup, the Olympics, the Champions League, add in the Super Bowl, effectively, you're saying to people, we are a big, great brand, you should aspire to be associated with us, you should want our products.
BOULDEN: And if you aren't there, your competitor will be.
ROY: This is the number one passion for Latin America, for Europe. It's more than just a sport. It's about culture. You have to be there. You have to go and own that space.
BOULDEN: That space also goes totally against a new trend of niche marketing and microtargeting.
CHELIOTIS: It's a hell of a lot of money. You've really got to justify it. And there's going to be some wasting there. Not everyone watching the World Cup is going to be drinking Coca-Cola or whatever it might be.
BOULDEN: Though for the brands, it's not about selling a specific product. It's about your brand basking in the glow of the Super Bowl, or the Olympics, or the FIFA World Cup.
BOULDEN: Brazil was a no-brainer for these big companies, but the next World Cup is in Russia in 2018, and then Qatar in 2022, both hugely controversial destinations.
Will companies fall over themselves to be associated with the World Cup after next year -- Christine.
ROMANS: All right. So interesting. Thanks, Jim.
All right. Coming up at a brand new YOUR MONEY at 2:00 p.m. Eastern today, the jobless rate, lowest in five years. But in this low-wage economy, tips -- tips are more important than ever. So here's a quiz for you. Which job gets the best tips? Waiter? Bartender? Gaming dealer? Or is it none of the above? The answer at 2:00 p.m. Eastern. We're going to see you then.