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- [00:04]
A
Hello, everyone, and welcome to Amanpour. Here's what's coming up. Strikes continue across the Middle East. I ask regional experts Narant Kamrava and Karen Young, could the Gulf states be dragged into the war? Then extraordinary devastation in south Lebanon. Correspondent Nick Payton Walsh reports.
- [00:29]
B
And Cuba's at the end of last. They're very much at the end of the line. They have no money. They have no oil.
- [00:38]
A
The White House sets its sights on Cuba as a US Imposed blockade cripples the economy. Mark Entwistle, former Canadian ambassador to Cuba, brings historic perspective to today's crisis.
- [00:51]
C
Also, how does it affect the economy? Somewhat, but not quite as much as the dramas in the financial market.
- [00:59]
A
Headlines Economist Jason Furman tells Walter Isaacson fears of an Iran shock to the US Economy may be exaggerated. And a very warm welcome to the program, everyone. I Paula, I'm Paula Newton in New York sitting in for Krishna Amanpour. While President Trump says he is in the throes of a real possibility of making a deal with Iran, leading indicators point to more war. Israel and the US Carried out a wave of strikes across Iran as Defense Minister Israel Katz says attacks are continuing with full force. Iran launched a barrage of missiles at Israel overnight, sending rescue teams to several sites, sites of impact. That's according to Israel's defense forces. And Kuwait, Bahrain and Saudi Arabia all report missile and drone attacks as the Wall Street Journal reports that Gulf states are inching toward joining the fight against Iran. Then there's global oil prices that rose back above $100 a barrel as the market sees no quick end to this conflict. So, so what is the calculus for Gulf state leaders weighing whether to join the war and for oil traders setting prices in a very volatile market? Here to discuss, Mehran Kamrava. He is the press professor of government at Georgetown University in Qatar. And Karen Young was a senior research scholar at the center of Global Energy at Columbia University. And I want to thank both of you for joining us. Menan, first to you in Doha. From where you sit, I'm wondering, do you believe we're now at a likely point of escalation or de escalation? And I want to specifically point to three pivots here. Do the talks that President Trump speaks of have any chance of succeeding? Are the Gulf states, including Saudi Arabia, inching closer to joining the war as the Wall Street Journal suggests? And crucially, despite its public defiance, what are the odds that Iran's leaders are interested in a deal?
- [03:23]
D
Well, we are certainly a lot closer to de escalation today than we were a couple of days ago here in Doha. We haven't had any attacks for now going into 48 hours at least, no overhead explosions. And it appears that we're in a better place today than we were 12 hours or 24 hours ago. It does, of course, appear that Saudi Arabia and the UAE have taken a far more aggressive stance towards Iran, particularly over the last 48 hours, than they had in the past. But I think they're quite wary that at any moment, if they enter the war, America could pack up and go. And with President Trump being very unpredictable and using his unpredictability as a source of strength, I think the Persian Gulf states are quite worried that if they were to enter the war, they might then be left on their own without American cover, and then they would be going to war with a neighbor and that would have long term consequences for the region.
- [04:43]
A
So de escalation, but certainly at a point of great uncertainty. And Karen, so much of what is shaping the conflict has to do with what the head of the IEA says is a crisis worthy of the two oil shocks of the 1970s combined. I mean, extraordinary comments there. And he adds that this could indeed pose a major threat to the global economy. And you've pointed out many times, right, that this is not just natural gas, chemicals, fertilizer. What would escalation mean for the energy architecture, an energy architecture that at this hour is still so very dependent on the Strait of Hormuz?
- [05:24]
E
Well, I mean, I think Mehran was actually talking about the difference between the GCC states, their exposure and the hits they've already experienced. So Qatar has had this very severe attack on its LNG export abilities, the attack on Ras Lafan, Kuwait, Iraq not getting any oil out of the Strait of Hormuz. But the UAE and Saudi Arabia have these pipelines. And so where we see potential escalation is that if we see attacks on real production sites and the energy conduits that get oil out away from the Strait into the Indian Ocean into the Red Sea corridor, that would be an escalatory point where I do think we would see reactions and an entry of the war from Saudi Arabia and the uae. This is a major disruption to energy markets. That's absolutely true. But it's not a supply problem, it's a transit problem. And so we're still at the point where we could see, you know, a decent recovery. Most analysts now see oil prices staying high for quite some time until 2028, even with a resolution of this conflict and a resumption of flows in the next six to 10 weeks, we're looking at oil prices with us between 80 and $100 a barrel for some prolonged period through the end of 2027. So that's with things not really hitting major infrastructure damage with the exception of Ros Lafond and lng. You mentioned, you know, other products. So we've got oil, we've got refined products, including jet fuel, diesel, which have really been sort of price spiking because those are what are coming out of refineries in Kuwait not getting through the Strait right now. And the LNG and associated gas products like helium and manufactured products like aluminum, which a lot of the Gulf states produce aluminum because they have cheap energy sources. So those are the kinds of products where we're going to see some price pressures. And certainly that hits different markets, different economies in varied ways.
- [07:24]
A
Karen, your analysis is quite measured there, and we will get to more of the implications of that. But Maran, I want to say to you, the Qatari government says the war has resulted in what it says is a breakdown of the security system in the entire Gulf region. You're in Doha. What's the feeling on the ground there? And I take your point that in the last 48 hours things have been much more quiet. But are people there questioning the security architecture? Will it have a future? And are they also questioning the wisdom of their government and its ties to the United States?
- [08:01]
D
Well, not yet, but certainly when the dust of this destructive war is over, there's going to be a lot of soul searching and a lot of very serious questions asked, a lot of serious questions that regional leaders will be asking themselves and they will be held accountable to their populations. And either they would deepen their security alliances with the United States or they will continue the trend that has happened over the last decade or so, which is to diversify their security partnerships with the European Union, with Turkey, with Saudi Arabia, has a strategic partnership with Pakistan. And so what we are likely to see is a greater diversification of these security partnerships with various actors other than the United States. I think one thing you also mentioned is really important, which is kind of the way that life has been. I think we need to remember that countries like Qatar and the United Arab Emirates are among the safest in the world. There's tremendous tranquility and security that all of us have been feeling for the last however many years, for the last several decades, in fact. And that tranquility has been shattered and that now that breakdown in the sense of security, I think that's Far more important. And so it will increase the cost of doing business for many of these countries. The local economies here in the Persian Gulf rely on the creative classes that they attract from around the world. And that attraction is going to cost a lot more now than it did before the war broke out.
- [10:02]
A
Yeah, especially when you're dealing with that proximity again, to this energy architecture that Iran has now successfully weaponized. In a way, Karen, you've already mapped out some of it, but could you give us a view of the Gulf itself and how strategically important Hormuz still is? It's a vast array of strategically placed ports, pipelines. What happens, though, if it remains throttled or endangered for much longer? And I note that you pointed out what is the real problem here is if the actual infrastructure is damaged.
- [10:36]
E
That's right. So we don't have a problem of producing oil, but it becomes a problem when you get shut in. So the longer that oil wells are not producing, that takes longer for them to then be reactivated. So that's one issue to think about. The duration of this conflict increases, the price sensitivity and the kind of longer term implications. Now, you know, it depends who is the buyer, right? Who is the customer? And most of the energy supplies, whether it's LNG or crude or refined product that are coming out of the Persian Gulf are going eastward. They're going to Asia. And so those are the customers now that are facing really the impact of this. And the poorer economies of Asia are already having to make policy choices, you know, work from home policies, closing universities, encouraging people to only work four days a week, government employees, you know, asking to conserve energy. So poorer economies, we're talking about Pakistan, Bangladesh, even in East Asia and Vietnam. These are the kind of policies that are going into place. More wealthy Asian economies, South Korea, Japan, India have been able to institute fuel subsidies. So the government is essentially carrying some of the cost of the increase in energy prices. The Europeans are going to be more affected on natural gas. And this is why the 20% of global LNG supplies that Qatar was sending out of the Strait of Hormuz that are now not going anywhere and won't be going anywhere for a long time, maybe three to five years is going to hit Europe especially hard.
- [12:14]
A
Yeah, three to five years. I mean, think of it, Mehran. What is your understanding right now at the moment of the Iranian regime itself still intact, but who's in charge, do you believe? Because we are hearing from the Trump administration that it's apparently eyeing, perhaps in having some type of a conversation with Iran's parliamentary speaker, that is Mohamed Bagr Ghaliba. His public posture says no talks and that the US Postponement, he says, of striking energy facilities was, in his words, to escape the quagmire in which the US And Israel are trapped. Now, this is what an administration official, though, told Politico on this quote, it's all about installing someone like a Delsey Rodriguez in Venezuela that we say we're going to keep you there, we're going to not take you out, you're going to work with us, you're going to give us a good deal, a first deal on the oil. What should we know about him and how likely he is to be this elusive figure that the Trump administration wants in place in Iran?
- [13:23]
D
Golubov is an incredibly ambitious political actor in Iranian politics. Former mayor of Tehran, a pilot, former commander of the Revolutionary Guards, a perennial presidential candidate who has not had success so far, and currently the speaker of the Iranian parliament, a member of the deep state, someone very familiar with policymaking at the highest levels, and an operator, but also someone whose hands are tainted with the blood of civilian Iranians. He's been involved in many crackdowns going all the way back to the late 1980s and 1990s. And so he's a political operative, very ambitious, similar to most other well known figures within the Islamic Republic, tremendously unpopular among the bulk of the middle classes, but ultimately a very pragmatic and practical guy. And I think important to say he is said to be currently in charge of military strategy and military decisions. And in that sense, that's very important. A division of labor has emerged in Iran whereby the president is running the domestic political affairs of the country and the speaker of the parliament is running the military operations. And if indeed he's the Iranian figure with whom the Americans are going to talk, there's a deep realization in Washington that that's the political operative inside the country who makes key military decisions right now.
- [15:16]
A
Yeah. And as you point out, not someone, though, that Iranians themselves will be able to count on for any kind of change in their lives or certainly in their rights. Karen, given the fallout. So let's say there is a deal in the coming weeks. The fallout here will be profound, not just for Iran, but also for Russia, given the energy sources right now. The Trump administration has lifted sanctions on both Russian and Iranian oil. Treasury Secretary Scott Bessant claims that it doesn't enrich either regime because that oil was already paid for at source. It was stranded in tankers. So just letting that oil on the market. Is he correct about that? And do you believe that Iran and Russia will have to remain unsanctioned for a time in order to really stabilize the energy market?
- [16:07]
E
Well, this has been one of the very confounding surprises of this conflict that the US has relaxed these sanctions both on Russia and Iran. Now the ability to actually get cash in hand for both of these states is sort of a different problem, more difficult for Iran than it is for Russia. I would say Russia is clearly benefiting mostly because Russia will look like more of a stable, reliable supplier of energy needs to China. And that's a longer term prospect. So Russia now has a pipeline, Siberia 1, to China. It exports LNG and of course, crude oil to China. Now China can buy more of that crude, which has been sanctioned. A lot of it was floating, meaning that tankers are sitting out waiting to go to refineries in China that will be easier for them to offload now. But there's the prospects. Even, you know, the Russians have wanted to build a second pipeline for a long time and get sort of a longer term relationship with China as a customer. And they're likely to get that. China is already pretty well diversified in its energy needs and it will, I'm sure, try to, you know, reinforce that after this conflict as every country will be thinking about energy security going forward.
- [17:22]
A
Yeah. You certainly outlined the unlikely winners as this conflict continues. Karen Young, Mehran Kamrada, thank you to you both. Appreciate it. Now stay with cnn. We'll be right back with more news in a moment. Now Hezbollah says it's launched dozens of strikes against military targets and communities in northern Israel. Israel steps up its own attacks across the border with Lebanon. Defense Minister Israel Katz has ordered the destruction of five bridges across the Litany river, which will cut off southern Lebanon from the rest of the country. Now Israel's far right, finance Minister Bezalel Smotrich says the Latani itself must become Israel's new northern border. Correspondent Nick Peyton Walsh reports from southern Lebanon on how the effects, how this will all affect the civilian population there.
- [18:29]
F
Something familiarly awful is happening here. Israel said leave to the town of Nabatiya two weeks ago. Now life is ground out of its streets. This extraordinary devastation just helps explain how the south is being emptied, ultimately a strategic part of the Israeli campaign here. And those blasts distant, even higher up. Still no calm. They deal with the constant noise of jets around them here, but also just overnight intensification of airstrikes. And because they're up on the hill here, they feel and see everything and of course the injured from it come into here as well.
- [19:17]
G
All strike we hear here.
- [19:19]
F
You hear everything up.
- [19:21]
G
Everything. Yeah, we heard everything. Like yesterday was horrible yesterday. Many too many strikes.
- [19:29]
F
There are fewer people below, so fewer patients than at the start.
- [19:33]
A
Once we've got nine children together have been injured.
- [19:36]
G
Three of them died and the rest lost their families. 18 people martyred in that strike, all civilians.
- [19:45]
F
The burns unit treating a rescue worker who ran headlong into the carnage. And doctors families have moved in as it's safer here. To the south, near Tyre, where we also filmed with Hezbollah's permission, life too is being squeezed out. Sunday, Israel warned twice it would blow up all the bridges to the south, sparking panic. Which one would they hit first? They're shouting warning about the jets,
- [20:53]
A
which
- [20:53]
F
we've been hearing over the last half hour now. This one particularly low. This the force used. And they would hit it twice again later. Yet more isolated now in tear is the entire village of Majdal Zoon, who we met earlier and fled their homes to this school.
- [21:34]
B
51 families, about 240 person, five of
- [21:39]
F
the men dead, two girls here without fathers, who sleep with their grandmothers here but are still girls.
- [21:46]
A
I want to tell you a secret.
- [21:49]
F
Although Zaynab keeps pushing Yasmin's arm away, still. A million are forced from their homes in Lebanon and into anger, imagination, where these girls hide from horror, even in the mud. Muhammad is 16 and worldly. What do you think of Trump?
- [22:17]
D
Not good.
- [22:18]
G
Not good.
- [22:19]
E
Bad. Very bad.
- [22:21]
B
Very, very not good.
- [22:23]
D
I hate him, he's so bad. And we know that about the Epstein.
- [22:35]
F
The Epstein piles. Yeah, but no calm here either. So they say that four days ago they got what must have been a fake warning, a telephone call to the people here to get out as quickly as possible. So they say they ran out down here as fast as they could and hid down on the beach for five hours until the threat had passed. The city's old ruins sit silent and powerless as it keeps getting new ones.
- [23:09]
A
Our thanks to Nick Peyton Walsh there reporting from southern Lebanon. Now Cuba is facing severe pressure, perhaps the greatest at any time since the Cuban Missile crisis, as an American blockade prevents any oil from entering the country. Cubans endured nationwide blackouts many times now as the power grid completely collapses and Donald Trump sees an opportunity in Cuba's crisis.
- [23:37]
B
I do believe I'll be the honor of having the honor of taking Cuba. That'd be a good honor. That's a big honor, taking Cuba. Taking Cuba in some form. Yeah, taking Cuba. I mean, whether I free it, take it. I think I could do anything I want with it.
- [23:56]
A
So will President Trump have the honor of taking Cuba, or can Havana withstand this crisis as it has withstood so many before? For more on this, we are joined by Mark Entwistle. He served as Canada's Ambassador to Cuba in the 1990s when he forged a close working relationship with Fidel Castro. Marc, welcome to the program. It is good to see you again. And I want to point out to our viewers that you've been blunt about the price being paid by Cubans in humanitarian terms. In fact, you call the oil blockade and the US Sanctions here the modern equivalent of a medieval siege. Just to, you know, kind of put this in context for everyone, what are the conditions of ordinary Cubans today? And this is understanding what they've struggled with already for so many decades. Wow.
- [24:47]
G
Absolutely delighted to be here. It's too bad we're talking about Cuba in such, you know, sad times. Cuba has been struggling with an economy that has not worked, you know, well and properly for some time. The situation after COVID 19, the global pandemic worsened tremendously. Perhaps if the Cuban government could have had an opportunity to make some, you know, reforms to its economic system. But the current situation is exponentially worse. One can argue to the cows come home about, you know, whether the US Embargo is at fault or Cuban government policy is at fault. The current situation is, is effectively what I call each Cuba is under siege. The intent can only be to a surrender of the Cuban state. And the situation for everyday Cubans is infinitely worse. The food shortages and medicine shortages and hospitals and the electricity and power blocking off oil supplies and fuel supplies to an economy, any that are so essential to how the country even works, just moving things around and goods and services to people. It is a country under siege with no clear, evident plan of what comes next.
- [26:17]
A
And given what comes next here, I don't have to remind you that we are getting contradictory messages from Cuba itself. The foreign minister is saying that they are open to negotiations with the Trump administration. President Trump says that they are talking. But then you have this from Cuba's president, Miguel Diaz Canel. Listen,
- [26:37]
G
first of all, we recognize that there could be an aggression against Cuba, and we have unleashed a preparation plan
- [26:43]
C
to raise our people's readiness for defense
- [26:45]
G
in the interest of the war of
- [26:47]
B
all the people, to you who are
- [26:50]
G
our sisters and brothers, we speak with complete honesty and transparency. I can responsibly affirm that the leadership of the Cuban revolution is united.
- [27:01]
A
So how do you assess the strength of the regime right now and whether it can mount a resistance or even wants to, if it's actually, you know, looking forward to some US Intervention here in some way, if it can make a deal with Washington.
- [27:15]
G
Well, I think the reality on the island is that the Cuban people are absolutely exhausted and tired and fed up and worn out and frustrated and disheartened. Without question, I don't believe that the Cuban state has the broader support of segments of the population that it might have had in the past. Having said that, there is a secret weapon, if you will, that the Cubans do have, and that is a profound sense of national identity and patriotism and the kinds of language that are. That that is being used right now, including from the president of the United States himself about taking Cuba, and he can do anything he wants with it, really strikes at the heart of Cuban nationalism, which might be set aside for the time being in the face of economic trouble, but it sits there, it lurks in the background, and history hangs over Cuba like a kind of a thick fog. The idea that there could be some kind of deal with the United States, I think would be broadly supported by the Cuban people, as we saw during the Obama reset. Hugely popular. But the idea that we're returning to, or the Cubans would be forced to return to the 1940s or 50s as an effective economic colony of the United States, to be, you know, to be played with like a cat plays with a mouse. This actually unifies segments of the Cuban population that might not have been supportive of the government. So I think if I was giving any advice, the government of the United States, which I'm not, I think some lessons need to be learned about the historical relationship, and some of the language needs to be more respectful. This would go a long way. I think there is room, in fact, for them to reach some kind of an agreement on a way forward. This would not be satisfactory to the harder line elements in the Cuban American community, of course, who believe that now is the time to topple and finally bring down the government. But without a plan for the day after, what would the cost of that be to the United States? So I think the party should step back a little bit, go to the table as adults and look at a way forward. Cuba's changed a lot. If I learned one thing, dealing with the Cubans over decades, up close and personal, they are not communist ideologues. In fact, they're pragmatists. They're kind of high pragmatists. And Cuba's a nuanced and complex place. So I would set aside the kind of worn out Cold War narrative and look for ways that the two countries can actually work together and build and reset the relationship. I believe that's what the Cuban people would like to see.
- [30:21]
A
And yet so far as if you just go by President Trump's rhetoric, that doesn't seem to be the road they're going down. Mark, you talked a lot about the nuances. You talked about the nuance here and your relationship. I mean, you dealt directly four years in the late 90s with Fidel Castro himself. You spent dozens of hours with him, at least talking to him in your home in Havana as Canada's ambassador. How does that time in Cuba and your relationship with Fidel, you know, inform how you see the country today and what you believe is possible, knowing that the Castro name and the Castro family still wields influence there.
- [31:03]
G
Fidel Castro was a kind of a mercurial leader, very polarizing, you know, internationally obviously, but a kind of a historic figure which Cuba does not have any more. His brother Raul was always shunned the spotlight, was a very reluctant president, in my opinion. He's actually quite a shy person as an individual. So what you've got in Cuba right now is a kind of a managerial class leadership, but they are highly cohesive. And I think this is something that is when the President Diaz Canal was talking about cohesion, I believe they are. There is no Delsey Rodriguez lurking in the background that you can pry loose. The Cuban political leadership. I think they are open minded to ways forward. But they themselves have said that, you know, you have to respect the Cuban sovereignty and Cubans will sort it out for themselves. And I think they'll stay to that. They'll. This is what they believe. They believe they're at war. They believe they're under siege from a very aggressive neighborhood whose objective is to get rid of them, throw them all into the sea. So they tend to be highly unified. And by and large, they're a very professional leadership group. If there was an appetite anywhere in the US Administration to have serious talks and conversations with them about the future, I think they would be at the table. I really do.
- [32:50]
A
I know them quite well and I know you do. And there are reports, as you know, that there is this line of communication, right, between Raul Castro's grandson and the Trump administration, perhaps even with Secretary of State Rubio, who has obviously Cuban heritage. How much power and influence can they actually have in terms of bringing that to bear with Marco Rubio himself, given that you know, Trump administration may determine that that would be betraying a key constituency in the United States. Something that you've written about that there is this very powerful power political lobby that wants in the United States that wants something completely different.
- [33:30]
G
Yeah.
- [33:32]
C
And
- [33:34]
G
the approach in the United States to Cuba has a number of inherent contradictions in it built up over decades. And I mean, I might as well speak bluntly here. One of the realities of all of this is that the interests of certain hard elements in the Cuban American community who have electorally supported the Republican Party for many, many years and support the Trump administration have supported Secretary Rubio. It is not those. The interests of those Cuban Americans are not necessarily the interests of the United States. And you've seen in history where U.S. governments have reached arrangements of convenience with the, with the kind of hardline Cuban American community in Miami, for lack of a better way of putting it, until such time as the interests of the country, those relationships become inconvenient. We saw the Cuban American community for a generation believe it was betrayed by President Kennedy after the Bay of Pigs. It is possible that the needs of the Cuban American community over time will not be the needs of the United States as it seeks stability in the area, wants to manage migration of Cubans so it doesn't have to be deporting, you know, tens and thousands of Cubans. I believe the president has also said quite explicitly several times he would love to see a prosperous Cuba so that Cubans can go back to it. And I think that is one of the underlying driving factors as well, which may not be shared in the Cuban American community. American business by and large is quite distrustful of the reliability of the US Embargo itself. So you could have an idea that American companies will go back to Cuba. I've worked with a number of them in a consulting business to go back to Cuba and they may not go because it's uninvestable and they don't trust their own government's embargo enforcement. So there's a lot of contradictions here to manage.
- [36:00]
A
Mark Antwersel we will have to leave it there, but obviously we continue to watch the situation in Cuba. Appreciate it.
- [36:08]
G
You're welcome.
- [36:09]
A
You take care and stable cnn.
- [36:11]
E
We'll be right back after a quick break.
- [36:21]
G
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C
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- [37:24]
A
So as the world watches the twists and turns of the war with Iran, the global markets are mirroring that chaos. The price of oil plummeted and the stock market soared on Monday after Trump's announcement of oil positive talks with Iran. But Iran's denial of any communication caused the price of oil to creep up again. Fears are mounting that this economic volatility could create major long term damage. Well, former top economic adviser under President Obama Jason Furman argues it might not be all that bad. He tells Walter Isaacson that while the war could spark short term pains, the future impacts will be much less dramatic. And he explains how the US Economy has fared so far under President Trump.
- [38:09]
B
Thank you, Paula. And Jason Furman, welcome back to the show.
- [38:13]
C
It's great to be back with you.
- [38:14]
B
So you've got a op ed piece in the New York Times that says if you hate Trump's economy, I have news for you. What's the news for us?
- [38:24]
C
The news is that the economy over the last year was an awful lot like the economy in 2024. Now, if you're Donald Trump, that's disappointing because you think you took something that was a horrific wreck and turned it around. But if you're a Democrat and thought maybe Donald Trump was going to take something perfectly good and wreck it, maybe that's a little bit disappointing to you as well.
- [38:45]
B
Well, that's kind of odd. We had these tariffs. Everybody said tariffs are going to cause massive inflation, tax go up, go down, whatever. That didn't really cause much of an issue.
- [38:55]
C
Look, I would separate two separate things. One is how did the economy do in 2025 and in the last couple of months? That's a function of lots and lots of things. What our technology is like, what our people is like, the decisions of our businesses. And then to some degree, but probably not the biggest factor on policy the president has. And when you take all of that together, the year as a whole Wasn't super different from the year before. Now I do think 2025 would have been even better, but for all of those tariffs, I think Donald Trump hurt things just maybe not as much and as dramatically relative to all the other huge forces that affect the economy.
- [39:34]
B
So what are those huge forces?
- [39:36]
C
The biggest one in the last year has been the AI boom. A lot of it's showing up on the demand side of the economy as we're building more data centers and making investments to make AI work. I think we've seen some tentative data showing that maybe it's actually starting to show up in productivity, enabling people to do more with each hour of work.
- [39:57]
B
In other words, we're increasing productivity because of it.
- [40:00]
D
Right.
- [40:02]
C
I have just, I had been skeptical that it was showing up in productivity because businesses are slow to adapt and figure out how to use it. In fact, in the short run, I sometimes find myself spending hours trying to figure out the latest and best ways to use the technology in some sense not getting anything done in those hours other than an investment, hopefully in my future productivity. We've seen that in a lot of businesses. But the, the latest data suggests businesses really are starting to figure it out and it is starting to show up in the economy as a positive.
- [40:34]
B
What's happening with young workers in Generation Z? They seem to be the ones that are getting hit and they're the ones very, very upset about the economy. I think the New York Times, which you've worked with, with, they asked about the labor market to a group of, a focus group of Gen Z people and they said it was a scam, unfair, horrible. What are some of the economic changes that are affecting people who are like in the early 20s?
- [41:03]
C
Yeah. So we have seen a slowdown of hiring of young people. AI is not the biggest factor in that. Some companies blame it on AI, but it isn't really AI. They just have some other reason why they want to cut back on hiring. Some of it has been that the Fed, in an effort to slow the economy, kept interest rates high for a long time. That was the right call given how high inflation was. But it has a downside. And that downside shows up in the labor market. And it shows up in the labor market often first for younger workers. One reason why I don't think it's AI is if you look at the pattern of that job loss, it's not just college educated workers. You see it across on the educational spectrum. In fact, a higher level of education historically has been and still is some of the best insurance you can have against job loss.
- [41:55]
B
We've had the highest tariffs now, I think, since the 1940s. Is that right?
- [42:00]
C
Yeah, since the 1940s.
- [42:01]
B
So why hasn't that ticked up inflation?
- [42:05]
C
It has added to inflation. The inflation rate would probably be at the fed's target of 2.0%, but for the tariffs. Because of the tariffs, they're adding about half a point, maybe a little bit more to inflation. So when I say inflation has been roughly unchanged over the last couple of years, in some sense it would have fallen, but the tariffs prevented it from falling. And that's one of the things that has complicated the Fed's job. It's one of the reasons that it hasn't cut interest rates, rates as much as people might have liked for it to have cut rates.
- [42:40]
B
What do you think the Fed should be doing now?
- [42:44]
C
They're going to be very nervous about the inflation readings over the next couple of months. They're really going to spike as gasoline prices rise as a result of the Iran conflict. I think they should look through that and ignore it. There's nothing the Fed can do to settle the affairs in the Middle East. That is not an economic problem. That is a national security problem. They should focus on the underlying inflation rate and probably be willing to consider cutting rates if it looks like the economy needs it. If it looks like the labor market is weakening.
- [43:16]
B
Well, let's talk more about those effects of the Iran war. Sort of lot of volatility these days, but in some places you can see the price of gasoline at the pump pushing closer to $5 for premium and certainly for diesel. Doesn't that filter throughout the entire economy and cause infl.
- [43:38]
C
Oh, absolutely. We're going to see extra inflation. We're going to see difficulties for consumers. The impact on the economy as a whole is more muted because we also are net oil exporters, which we warrant. For example, in 1979, when the Iranian revolution sent oil prices spiking, our industries don't use nearly as much oil as they used decades ago. So for aggregate gdp, it's going to be a small hit, but for consumers, it's going to be a much larger hit.
- [44:10]
B
Your president you worked for President Barack Obama, once said that the strongest correlation to his popularity ratings was the correlation between them and the gas price at the pump. To what extent are we going to see some political fallout here?
- [44:27]
C
I think we probably will look. When gas prices went up, we would go into panic mode in the White House. We would be looking at every single economic indicator to predict what was going to Happen thinking about every single policy tool to understand what we could do. You see this administration doing that with basically allowing Russia to export its oil, allowing Iran to export its oil, coordinating a global release. All of that, though, is really small compared to the more than 10 million barrels per day, about one tenth of global oil production that's now offline because of the closure of the Strait of Hormuz. As long as that's closed, everything else is just dancing around the edges to mitigate just a small fraction of the damage that that's doing.
- [45:12]
B
Well, one of the things I learned in economics was that the economy and especially the markets kind of like certainty. And boy, one of the things that's happened in the past year has been amazing volatility. Tariffs go way up. They go down, they go back, they go forth. Likewise, oil prices, maybe they'll stabilize. For West Texas intermediary, It'll be around 80 a barrel, but it'll gone up to 100, down to 60. How is that volatility affect the economy?
- [45:40]
C
Look, there's two separate things here. How does it affect the stock market? Quite a lot. We saw a lot of drama in April of last year around Liberation Day. We've seen a lot of drama in the last couple weeks around Iran. How does it affect the economy? Somewhat, but not quite as much as the dramas in the financial market headlines. Because it turns out there's just an awful lot that matters in the economy. Some people are making decisions based on this, but an awful lot of businesses are making decisions entirely unrelated to these oil price gyrations.
- [46:15]
B
You say that the President can't do much to change. The economy has been pretty much the same whether it was Joe Biden or Donald Trump. But do the thought experiment for me. If Donald Trump had not imposed tariffs off and on and high tariffs and not done this war with Iran, would the economy be better, and if so, how much?
- [46:37]
C
So, yeah, I think it'd be better. The tariffs have probably added half a point to the inflation rate. The war is going to add at least another half a point, probably more than a percentage point. So inflation would be lower if Donald Trump hadn't done these two things. Economic growth would be higher. I'm not quite sure how much higher. That's probably more like a few tenths than a percentage point or two. But you want to separate two things in your mind. One is presidents do matter and every tenth matters, and we should fight for every extra tenth on growth and for every extra tenth reduction in inflation, but they don't matter quite as much. And dramatically, as the way we sometimes talk about them. And both of those statements are true.
- [47:22]
B
One statistic that always seems important to me is the overall purchasing power of wages. Explain what that is and how that's been affected recently.
- [47:33]
C
Yeah, so economists like to look at, on average, how fast did wages grow and compare that to how fast did prices grow over the last year, wages grew 1.4 percentage points faster than prices grew. And that represents, you know, good news for workers. It's actually towards the upper end of what we've seen over the last decade, but, you know, it's still a little bit disappointing in the grand scheme of what we've seen over time. I think we would have done even better had it not been for the tariffs. But it's about, you know, the same pace we had seen in the year before. Of course, that's an average. For some consumers, it was a lot worse, but for some it was even better.
- [48:17]
B
What effect has there been on the crackdown on immigration, legal and illegal,
- [48:24]
C
that has dramatically slowed the pace of job growth? We basically haven't had any job growth over the last year. Previous years, we'd had 100,000 jobs a month or more. But it also means we don't need as many jobs to keep the unemployment rate constant. And so even though job growth has slowed, unemployment only increased a little bit over the last year. And that's because when you have more immigrants, legal or illegal, you need more job growth. So we don't need quite as much job growth as we used to need.
- [48:56]
B
Is that what Chairman Jerome Powell meant when he said, it looks like that's about what the economy needs in terms of. Of dealing with very, very low growth in the labor force. When he said, it doesn't really matter that we've had zero job growth.
- [49:11]
C
Yeah, that's exactly right. I mean, the question for any country, whether you're looking at Germany or Luxembourg or China, is how many jobs do you need in Luxembourg? You don't need that many jobs. It's small. And China, you need an awful lot of jobs. To answer that question. It's not just the size of the country, but the demography. We have a lot of people who are reaching retirement age now. We have fewer people reaching working age now. And so you take all of that into account, and absent immigration, our labor force is roughly flat. We have as many people retiring as entering the workforce. We actually don't need jobs in order to keep unemployment constant. Now, I would rather we had more immigration and more job growth and more economic growth, but in Terms of jobs for everyone who needs one right now, A number of, you know, 25 or 50,000amonth is plenty.
- [50:03]
B
If you talk about long term issues, the biggest one seems to be the hollowing out of an American middle class and an American working class. Is that true and how can that be reversed?
- [50:16]
C
Look, some of the hollowing out is people who are middle class becoming affluent. We just have more and more of our population is affluent than ever before. And that's a really wonderful thing. We have seen faster wage growth for households at the 10th, 20th and 30th percentile than we have at the 80th or 90th percentile. That's been going on for about a decade now. That's another piece of good news. But we need to both prepare people better for jobs. I think education will continue to matter. I'm worried about what AI will do to jobs. I'm more worried for people that don't have a college degree than people who do, notwithstanding all of the conversation about what it does for white collar jobs. And the other thing we need is to run an economy that's as strong as possible. So more balanced economic growth, less reliance on one sector of the economy, more spreading it across the board.
- [51:13]
B
Let me push back a little on what seems to be your optimistic scenario, which is that really in the past 30, 40 years, that ability to get a good job at a good wage, like at a manufacturing plant or a factory, know that job would be secure, be able to buy a home by age 30, that seems really to have been gutted. Am I wrong about that?
- [51:39]
C
I look at what fraction of the population age 25 to 54 is working, for example, because you sort of exclude some people in retirement age, some people school age. That is basically near the highest it's been in 25 years. Look at how wages compare to prices. They've grown faster for about a decade now. I look at things like the size of the houses that people have today, the number of square feet, the amount of appliances, all of that more than it was in the past. So I think we do have a little bit too much of a bad news bias. And we need to simultaneously keep in our minds things could be even better. We've made unforced errors. We've not done some of the things that could help, while also remembering life 25 years ago wasn't quite as idyllic as we sometimes remember it as having been.
- [52:30]
B
Jason Furman, thank you all so much for joining us.
- [52:34]
C
Thank you.
- [52:37]
A
And finally, never before seen pictures of the first man on the moon in March of 1966. Neil Armstrong and fellow astronaut David Scott ended their Gemini 8 mission early following a life threatening emergency splashing down off the coast of okinawa, Japan. Now 60 years later, unreleased photos of their heroic return have been donated to to a museum in Ohio. Observers are struck by their smiles, the astronauts wearing wide grins as they walked through the crowds and onto the recovery ship that picked them up. Certainly it speaks to their professionalism after a crisis and perhaps relief that they made it out alive. And that's it for now. If you ever miss our show, you can find the latest episode shortly after it airs on our podcast. And remember, you can always catch us online, on our website and all over social media. Thanks for watching and goodbye.
- [53:37]
E
From New York,
- [53:48]
A
I'm Eva Longoria and I'm setting out to really experience France, to savor its world celebrated cuisine and
- [53:56]
E
explore the country's rich history.
- [53:57]
C
Eva Longoria, Searching For France premieres April 12th on CNN and next day on the CNN app, I'm CNN tech reporter Claire Duffy. This week on the podcast Terms of Service, there's a growing category of products aimed specifically at addressing women's unique health needs. These tools and services are sometimes known as femtech, and they can provide big opportunities and benefits, but they can also come with some risks.
- [54:23]
E
To walk us through all of this,
- [54:24]
C
I spoke with Bethany Corbin. Bethany is an attorney and CEO of FEM Innovation, where she advises startups, clinicians and healthcare organizations.
- [54:33]
E
In my opinion, what it really does is gives us a collective language to talk about women's healthcare innovation and the
- [54:40]
C
tools that are out there so that
- [54:41]
E
we can take control of our healthcare experiences and know how to advocate for ourselves in a system that's probably not been designed to advocate for us.
- [54:50]
C
Listen to CNN's terms of service wherever you get your podcasts.