Economy
12:00 pm
Wed January 25, 2012

Fact-Checking The State Of The U.S. Economy

Transcript

MICHEL MARTIN, HOST:

The economy was such a focus of the president's speech last night that we thought it was appropriate to check in with NPR's senior business editor, Marilyn Geewax. Marilyn, thanks for coming in once again.

MARILYN GEEWAX, BYLINE: Hi.

MARTIN: Now, you just heard from Senior White House Advisor Valerie Jarrett. And the president said that, quote, "the state of the union is getting stronger," but I think you heard Ms. Jarrett say that a lot more is yet to do. So where are we, really?

GEEWAX: Well, the state of the economy at this moment is actually pretty good, at least compared with where we've been. Now, I know, if you're unemployed, it doesn't feel that way at all, but if you look at what happened in December, for example, 200,000 jobs were created. Last August, people were talking about the possibility of a double-dip recession. They thought the economy was actually contracting.

But now we're getting the data that shows, in the fourth quarter and towards the end of the year, actually, it's probably pretty good - better than 3 percent.

So if you're looking at the economy at this very moment, corporations have a lot of cash on hand. That means they can add to hiring. We've got - the unemployment rate is down from about 10 percent at the worst to 8.5 percent. Those are good things and they say when you're an incumbent the trend is your friend. So you want to not look at so much where have we been, but where are we headed? And, if you look ahead, the economy seems to be on a fairly good path.

But - and that's a very big but - there are some really major uncertainties out there that could change that trajectory by November.

MARTIN: Well, let's talk about that. What are those things? What are the things that - maybe just give me three things that economists are particularly worried about.

GEEWAX: You know, there are lots of things to worry about, but the big three right now - there are three foreign factors that are really weighing on economists' minds if they're going to break bad for us.

Number one is the European debt crisis. That's a serious problem. It hasn't been solved and it could get much, much worse, destabilizing financial markets around the world.

Number two, oil prices. You know, people really relate to gasoline prices. It matters a lot to consumers and understandably, that if gasoline is rising, that's a real problem for you. So it's also a problem if you're running for reelection. But we have a lot of tension in the Middle East. Iran is a situation that could go bad at any moment. So that's a real threat.

And then number three, China has been looking like it might be heading towards a recession. That would be bad for us.

And then - well, there's a big, giant fourth factor, and that is a domestic problem and what's going to happen with Congress.

MARTIN: Well, I was going to ask, though, because the things that you enumerated - I mean, from the standpoint of being incumbents. I mean, both, you know, members of Congress and the president - there are obviously, everybody in the House of Representatives, as Loretta Sanchez pointed out, are all running and, of course, a significant - a third of the Senate.

So they're all on the ballot and none of those things that you talked about really have anything to do with anything they can control. What about the things that they can control? I know that you went to a briefing with some key members of Congress. Was there any sense that they've found any common ground with the president? Or are there areas that they think they can work together?

GEEWAX: Yes. This morning, National Journal and The Atlantic put on this program where some key members of Congress were invited to talk about what they see happening this year and that's this fear that economists have, that nothing will get done this year, that there will be this really serious gridlock that could trigger problems with the economy.

And from what I heard this morning, there's good reason for those fears. For example, Congressman Paul Ryan - he's the head of the House Budget Committee - talked about his perception of President Obama's leadership and would he get anything done. And he literally said about President Obama, quote, "he has shown nothing but demagoguery," end quote, on the issue of things like entitlement reform, social security.

MARTIN: And?

GEEWAX: And he said that he could not work with this president, that all serious economic advances on issues like Social Security and Medicare would have to await a new president.

MARTIN: So does that reflect the feeling of the entire House leadership? I mean, he's the chair of the Budget Committee, which is certainly a key influential role.

GEEWAX: Well, that's what he...

MARTIN: But does that reflect the leader - the perspective of the leadership?

GEEWAX: I would say that there seemed to be a feeling there. There was also Senator Barrasso, a Republican from Wyoming. He was talking about some of the smaller issues. Ryan was talking about this really big stuff - Social Security reform. But Barrasso was talking about the payroll tax holiday that we're going to have in January and February. The president wants to extend that for the full year, but Republicans have attached to that the issue of this pipeline, an oil pipeline called the Keystone pipeline.

MARTIN: That Valerie Jarrett was just talking about a minute ago, saying that two have nothing to do with each other, so why are they related?

GEEWAX: Well, Republicans feel that this is a - the payroll tax holiday - it has to do with helping the economy. They feel the pipeline has to do with helping the economy and they want those issues linked. The president has made it very clear he does not want those linked. So listening to those kinds of comments, you do have a feeling that a real problem for the economy this year may be that effectively it's a dead year in terms of getting anything accomplished in Congress. And that could be problematic.

MARTIN: So, Marilyn Geewax, before we let you go, the next big political event in the presidential race is the Republican primary in Florida on January 31st. And it's really hard to talk about Florida without talking about the housing crisis. And as we mentioned earlier, the president made a proposal to allow homeowners to refinance, that he said would save, you know, significant dollars.

I wanted to - we don't know a lot about the plan to this point, but how significant an issue is housing in the consciousness of the American people, as part of the economic recovery?

GEEWAX: This is really a huge issue all over the country, certainly, but Florida has really been ground zero for this housing problem. The states that have been pummeled - Nevada, Arizona, California, Florida - they continue to really struggle with this problem, and as a result, their unemployment rate is higher. As I said, in the United States, unemployment is about 8.5 percent. In Florida, it's closer to 10 percent. In some places, like in the Tampa area, it's above 10 percent.

And if you talk to anybody down in Florida, they all say it's tied to housing. Until you really get at that problem of these foreclosures and the underwater factor. About 44 percent of the people in Florida who own a home, their house is worth less than they owe.

MARTIN: Forty-four percent.

GEEWAX: That's a lot.

MARTIN: That's a lot.

GEEWAX: So that weighs on voters' minds and that's a swing state. It's going to be an issue in this election.

MARTIN: Marilyn Geewax is NPR's senior business editor. She was nice enough to join us once again in our Washington, D.C. studios. Marilyn, thank you so much.

GEEWAX: Oh, you're welcome.

(SOUNDBITE OF MUSIC)

MARTIN: Coming up, the ladies head into the Beauty Shop to give their take on the president's State of the Union address. Indiana Governor Mitch Daniels wasn't the only response. The Tea Party chose former GOP presidential candidate Herman Cain to weigh in.

(SOUNDBITE OF TEA PARTY RESPONSE TO STATE OF THE UNION ADDRESS)

HERMAN CAIN: We, the people, are coming. That's the Tea Party message to Washington, the president and his administration. We, the people, are coming.

MARTIN: Politics and more in the Beauty Shop. That's coming up on TELL ME MORE from NPR News. I'm Michel Martin.

(SOUNDBITE OF MUSIC)

MARTIN: The new film, "Red Tails," is fictionalized account of a story drawn from the history books, that of the first black pilots to serve in the U.S. military, the Tuskegee Airmen.

UNIDENTIFIED MAN: One of the things that a lot of people don't realize, just how rigid segregation was at that time. What we did helped to break those barriers.

MARTIN: We'll speak with an original Tuskegee Airman, as well as one of the stars of "Red Tails." That's next time on TELL ME MORE. Transcript provided by NPR, Copyright National Public Radio.

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