TRADE NEGOTIATIONS BECAUSE THEY
HAVE BEEN DEEMED QUOTE,
ESSENTIAL.
WHILE TRADE TALKS WON'T BE
IMPACTED, THE U.S. ECONOMY COULD
BE IN JEOPARDY DUE TO THE
SHUTDOWN.
THAT'S NOT A GUESS.
FED CHAIRMAN JEROME POWELL
WARNED YESTERDAY THAT THE LONGER
THE SHUTDOWN GOES ON, THE MORE
DAMAGE IT WILL DO.
WE'RE GUESSING HARVARD ECONOMICS
PROFESSOR KEN ROGOFF HAS BEEN
THINKING A LOT ABOUT THE
POTENTIAL HARM AND WHAT ELSE
MIGHT DING THE ECONOMY.
WELCOME, PROFESSOR.
THANK YOU SO MUCH FOR JOINING
US.
>> THANK YOU FOR HAVING ME, LIZ.
LIZ: WE ARE LESS THAN NINE HOURS
AWAY FROM THE LONGEST GOVERNMENT
SHUTDOWN IN HISTORY.
JEROME POWELL OF THE FED IS A
GUY WHO'S PICKING HIS WORDS VERY
CAREFULLY THESE DAYS, SO IF HE
SAYS IT'S GOING TO HURT, I WOULD
LIKE TO KNOW WHEN AND HOW YOU
THINK AN EXTENDED SHUTDOWN COULD
BEGIN TO DAMAGE OUR ECONOMY.
>> WELL, I THINK WE DON'T KNOW.
WE DON'T SEE THINGS LIKE THIS
VERY OFTEN.
IF THEY ENDED TODAY, I THINK IT
WOULD TURN OUT TO BE LIKE A LOT
OF NATURAL DISASTERS, A BIG
HUMAN TRAGEDY BUT THE LONG-TERM
MACRO EFFECT'S NOT THAT BIG.
BUT IF IT GOES ON, YOU KNOW
WHAT, THE GOVERNMENT DOES DO
STUFF, THINGS BUSINESSES NEED,
THINGS WE NEED TO KEEP OUR
ECONOMY GOING.
I DO THINK YOU'RE GOING TO START
TO GET LONGER TERM EFFECTS.
THAT'S OBVIOUSLY JUST THE DIRECT
EFFECTS ON CONSUMPTION FROM THE
800,000 WORKERS NOT GETTING
PAID.
LIZ: OKAY.
THAT'S A HEADLINE.
THE DIRECT EFFECT FROM THE
800,000, WHETHER IT'S THE COAST
GUARD MEMBERS WHO DIDN'T GET A
PAYCHECK TODAY BUT ARE STILL
WORKING, TSA AGENTS.
WHERE DO YOU THINK WE FIRST SEE
SIGNS OF THAT, WOULD THAT BE IN
RETAIL SALES?
I'M JUST TRYING TO GIVE OUR
VIEWERS A SENSE OF A BIT DOWN
THE ROAD IN THE LANDSCAPE.
>> I THINK, YOU KNOW, THE
OBVIOUS THING WOULD BE RETAIL
SALES.
AGAIN, THE SHUTDOWN IS
ARTIFICIAL.
IT COULD BE MADE TO GO AWAY
QUICKLY.
BUT IT COULD LAST A LONG TIME.
IT WOULD CERTAINLY EAT INTO
PROFITS, EAT INTO GROWTH.
I HESITATE TO OVERSTATE IT,
BECAUSE A LOT LIKE WHEN WE HAVE
NATURAL DISASTERS, IT'S NOT
NECESSARILY AS BAD AS IT SOUNDS,
BUT IT'S VERY BAD FOR SOME
PEOPLE.
LIZ: OKAY.
BEFORE WE GET OFF THE FEDERAL
RESERVE DISCUSSION HERE, DO YOU
THINK THAT THE FED IS RIGHT IN
BACKING OFF ON INTEREST RATES?
THIS AS WE GOT A DECEMBER JOB
GROWTH NUMBER OF 312,000 WHICH
WAS A BLOWOUT NUMBER.
DO YOU THINK IT'S JUST TIME FOR
THE FED TO TAKE A PAUSE
REGARDLESS OF DECENT DATA COMING
OUT?
>> WELL, THE QUESTION'S WHERE'S
THE INFLATION.
I MEAN, IT'S BEEN TWO DECADES
SINCE WE REALLY HAD SIGNIFICANT
INFLATION.
I THINK THAT'S REALLY THE BIG
QUESTION.
SUPPOSE WE HAD INFLATION OF 2.5%
FOR A COUPLE YEARS BUT GOOD
GROWTH CONTINUED?
THAT'S NOT A BAD TRADEOFF.
I WOULD HAVE TO BE VERY CAREFUL
ABOUT OVERTIGHTENING.
THEY SAY THEY HAVE A 2%
INFLATION TARGET BUT IT'S BEEN
LOW FOR A LONG TIME.
THEY COULD ALLOW IT TO BE HIGH
FOR A LITTLE WHILE, I DON'T
THINK IT'S A BIG DEAL, BUT THEY
HAVE TO TALK THEMSELVES INTO
THAT.
LIZ: THEY HAVE TO BE VERY
CAREFUL, I'M HEARING YOU SAY
THEY NEED TO BACK OFF HERE.
WE ARE FACING BREXIT DISCUSSIONS
NEXT WEEK.
HOW WORRIED ARE THA
HOW WORRIED ARE YOA
HOW WORRIED ARE YOU THAT THAT
COULD REACH ACROSS THE POND AND
AFFECT US?
>> I MEAN, IT'S NOT ON THE ORDER
OF MAGNITUDE OF HAVING CHINA
HAVE A PROBLEM, BUT IT'S
CERTAINLY CHAOS.
THEY SHOULD HAVE A SECOND
REFERENDUM.
IT'S REALLY, THEY SHOULDN'T BE
DOING BREXIT.
I THINK IT WAS SOLD WRONG.
BUT THAT SAID, JEREMY CORBYN ON
THE LEFT DOESN'T WANT TO HELP
PUSH THINGS ALONG BECAUSE HE
THINKS HE WILL BE IN GOVERNMENT
IF EVERYTHING BLOWS UP AND THE
PEOPLE ON THE FAR RIGHT WITHIN
MAY'S GOVERNMENT DON'T WANT TO
GIVE IN.
IT REALLY SEEMS LIKE AN IMPASSE.
I DON'T KNOW WHAT IT'S GOING TO
COME TO AT THIS POINT.
IT'S VERY BAD FOR EUROPE.
IT COULD BE BAD FOR US.
LIZ: I WOULD THINK.
IN THE END, THOUGH, YOU FEEL
THAT IF YOU HAD TO PICK, WHICH
IS WORSE FOR THE ECONOMY, THE
CHINA TRADE TENSIONS OR THE
GOVERNMENT SHUTDOWN, RIGHT NOW
YOU SAY?
>> OH, CHINA'S A MUCH BIGGER
DEAL.
CHINA IS THE STORY OF THE LAST
THREE DECADES.
WE HAVEN'T SEEN A SLOWDOWN LIKE
THIS, IT'S LOOKING LIKE IT MIGHT
BE THE REAL DEAL.
MAYBE THEY WILL PULL OUT OF IT
YET AGAIN, BUT THAT'S A MUCH
HARDER THING TO DO WITH THE
SHUTDOWN, WHICH WE CAN JUST MAKE
GO AWAY BY HAVING THE DEMOCRATS
AND PRESIDENT TRUMP SNAP THEIR
FINGERS.
LIZ: YEAH.
WELL, RIGHT NOW THEY HAVE THEIR