The White House
1600 Pennsylvania Ave NW
Washington, DC 20500
South Court Auditorium
Eisenhower Executive Office Building
2:38 P.M. EDT
THE PRESIDENT: Hello, folks. Can they hear me up on the stage there?
Well, let me begin by saying I apologize for being a little late. There’s a vote going on right now that I’ve a mild interest in. (Laughs.) And I apologize for keeping you waiting.
First of all, I want to thank the CEOs from some of America’s leading companies, from technology to financial services, to travel and retail. And we’re hear — I’m going to — we’ll hear directly about the outlook for their businesses in the economy, from their perspective, and how we transition from a historic economic recovery to a stable, steady growth and lower inflation, without letting go of all the historic gains we’ve made over the last 18 months.
But before we get started, I want to say two things about the GDP report we received this morning.
First, it’s important to start with what we know before this morning’s report. Our job market remains historically strong. Our economy created more than 9 million jobs since I came to office — in no small part because of the people on this stage. Our economy created more than 1 million jobs in the second quarter, the same period as today’s GDP report covers. And our unemployment rate is 3.6 percent, near a record historic low.
Secondly, households and businesses — the engines of our economy — continue to move forward. Just this past week, SK Group from Korea was here at the White House to announce $22 billion in new investment in semiconductors, advanced batteries, and electric vehicle chargers, and medical devices. That’s on top of the $200 billion in clean energy investments in America, from other businesses, since we took office. All powering the strongest rebound in American manufacturing in three decades.
Now, there’s no doubt we expect growth to be slower than last year, and — for the rapid clip we had. But that’s consistent with a transition to a stable, steady growth and lower inflation. There are going to be a lot of chatter today on Wall Street and among pundits about whether we are in a recession.
But if you look at our job market — consumer spending, business investment — we see signs of economic progress in the second quarter as well. And yesterday’s — Fed Chairman — the Fed Chairman Powell said — made it clear that he doesn’t think the U.S. is currently in a recession. He said, quote, “There are too many areas” of economic — where “the economy [is] performing too well.” He said “too” well — T-O-O. Too well.
He pointed to the labor market as an example. The best thing we can do right now is put our economy in a better position to make the transition to stable, steady growth for Congress to — and is — steady, stable growth is for Congress to act; that’s the best thing we can do. They’re voting right now, as I said.
I applaud bi- — the bipartisan effort to get the CHIPS Act to my desk to sign into law, which would advance our nation’s competitiveness and technological edge by boosting our domestic semiconductor production and manufacturing.
Another Congress should do, with — another thing that Congress should do is to pass the Inflation Reduction Act to lower prescription drug costs — which would reduce the deficit, I might add — and help ease inflationary pressures and ensure that 13 million Americans can continue to save an average of $800 per year in their healthcare premiums.
Both of these bills are going to help the economy continue to grow, bring down inflation, and make sure we aren’t giving up on all the significant progress we’ve made in the last year.
I’m going to stop there and begin the meeting.
But thanks to the CEOs for joining me. And let me start with you, Brian. And thanks for taking all my phone calls, pal. (Laughs.) The Bank of America.
I want to ask you a question: Your bank serves many Americans across the country. What are you seeing right now in terms of financial health of your consumers? What’s the bank records tell you about the financial health?
MR. MOYNIHAN: Well, thank you, Mr. President. It’s good to see you recovering.
THE PRESIDENT: (Laughs.) Thanks.
MR. MOYNIHAN: But at Bank of America, we have, you know, 60 million consumers and 35 million Core Checking accounts for Americans.
And so a couple of key points:
Number one, they’re spending more money. Through the first 25 days of July 2022, they have spent 10 percent more than they spent in July of 2021, the first 25 days. And that’s consistent with what we saw in the whole second quarter in earlier this year.
The second key point I’d say, Mr. President, is their balances are much higher than they were in the pandemic.
And so, if you look at people of, sort of, $100,000-income families in our client base, you’ll see that their balances go from three to five to seven times more than they were in the pandemic.
And, by the way, they have grown in the month of July versus June so far, which is good news. So they have some money in their accounts still to help them through as the economy resets and settles in.
The third thing is on their borrowing. Our credit statistics are better than they’ve ever been — much better than ‘19, which was a pretty good credit year for banks. So delinquencies are low; they haven’t gone up in the month of July. There’s lots of credit availability for our customers in their ability to borrow on home equity lines or their credit cards.
Obviously, the most rent- — rate-sensitive parts of the economy due to what the Fed is trying to achieve in slowing down the economy and getting on more sound footing: Mortgages and car loans and things like that have slowed down, but that’s an intended outcome.
And so even in the accounts, you can also see that they’re receiving paychecks, because we can see that, you know, recurring payment, so that’s good.
So the consumer is on good spending, as the balance is — is borrowing. And then the question is what they’re spending on, and — travel and experiences versus goods. They bought everything they could — they bought a lot of stuff when they were cooped up at home; they’re now out traveling and experiencing the world due to vaccines and — and the condition of the COVID pandemic.
But unfortunately, as you noted earlier in your comments, they’ve had to spend more on gas. And — but the good news is: If you look at June versus July, the year-over-year growth has gone from a 40-plus percent growth rate in spending on gas to 30 percent. So it’s starting to come down as you’ve seen the price of oil stabilize.
Then the last thing I’d add is just: What’s on their mind when we talk to them? The same things you read about in the paper. They’re worried about inflation, because prices go up. They’re worried about rent increases, because half the consumers in America don’t have a mortgage, so they’re renting or paying on a monthly basis. And they’re worried about — you know, frankly, a lot of our consumers are saving, putting money in the market and when the market is down. The good news is it seems that we stabilized on those matters, and we’ll go forward.
So, right now, they’re doing what we want them to do, which is being employed. Some of the stresses in the system — there’s no discounting that, and we’re trying to help all those customers through this stress. But that stress has been mitigated by the work that your administration, prior administrations did to help people through the pandemic and also just the strong employment that you spoke about.
THE PRESIDENT: Well, Brian, thanks a lot. I really do appreciate your — and thanks for always being available for your input. I appreciate it a great deal.
And now I have a question for the CEO of Marriott, who is very disappointed to hear they’re investing in travel. (Laughter.) It’s of great concern to Tony.
It’s — Tony — (laughs) — the travel and hospitality industry is — is experiencing and did experience tremendous hardship during the pandemic. But the recovery now is experiencing — is a very different experience. It’s — things look really up for your industry right now.
And what would — how would you describe the industry today? And how do you see the path of demand through the end of the year?
I know that’s — you can’t know — nothing is guaranteed, but what’s your sense?
MR. CAPUANO: Well, thank you, Mr. President, for the invitation today. I think what we’ve learned over the last couple quarters is really the resilience of travel. And when we look at our forward-booking data, we see real evidence of that resilience.
And what’s interesting — we think about our business through three demand segments: leisure, business travel, and group. The recovery has clearly been led by leisure. And, in fact, last year, leisure demand got back to where we were pre-pandemic.
But what’s encouraging is we’re seeing real recovery in the other two segments. Business transience has been a slower recover — recovery, but as we see more and more folks returning to the office, we see continued improvement. And maybe the biggest surprise has been the pace at which group demand has come back. And we —
THE PRESIDENT: Group demand?
MR. CAPUANO: Group, correct. And we fully expected social group to recover quickly with all of the canceled weddings and bar mitzvahs and family reunions. But now we’re seeing strong and consistent recovery in business group travel as well. So, quite encouraging.
We get lots of questions about what’s driving this recovery in the face of rising interest rates, high inflation environment, fuel prices and the like, but I think there’s a series of factors.
You and Brian both touched on one, which is the elevated savings rates we see across the country. There continues to be deep pent-up demand as a result of the pandemic. I think there’s a bit of a psychographic shift away from consumption of hard goods towards investment and experiences, which is helping our business a great deal.
And then when we look on a global basis, the continued opening of borders, the easing of restrictions that restricted travel is having a massive impact on our global business.
And maybe I’ll just close by thanking your administration and, in particular, Secretary Raimondo for your work to eliminate the inbound international testing requirement. We think that’s going to be very impactful in the travel and tourism sector. And, in fact, the U.S. Travel Association just came out and said they expect the direct impact of that change to be an incremental, more than 5 million visitors to the U.S. in the balance of this year, spending more than $9 billion.
THE PRESIDENT: Well, that — I mean, that sounds pretty encouraging overall, not just for this summer, but looking forward.
One of the things I want to ask you about is that the — obviously, the pandemic had a profound negative impact. But right now, as I look out there — and I’ve traveled around the world a lot of late, going to various conferences — there — there — there seems to be a willingness or an inclination for business to travel more.
To — instead of everybody sitting and Zooming everything, it seems to me, in-person movement of personnel and businesses around the country — and I see it more around the world, quite frankly — seems to be on the up. Is that accurate, or is that just a perception?
MR. CAPUANO: It is, Mr. President. And, in fact, we see two principal drivers. I think, number one, businesses that are customer-facing — consulting firms, law firms, accounting firms — they will tell you that the best way for them to optimize their business is to be in person, embedded in their customers’ offices every day.
THE PRESIDENT: Yeah.
MR. CAPUANO: And I think the last few years have reminded us of the power of in-person interaction.
The other thing we see is rapidly growing demand for training. Many employers across this country rely heavily on the strength of their corporate culture. And as they’re hiring thousands of new employees, it’s really hard to immerse those employees in a culture via Teams or Zoom. And so, the demand we see rising for in-person training has been quite significant.
THE PRESIDENT: Well, I don’t want to get off on this. Corning would know something about this. But there’s so many new jobs on the horizon in the tech-related field that the need to train personnel to be able to handle these jobs is totally within our capacity, but it’s needed. It’s not like it’s on-the-job training for a lot of these things.
And so, one of the things we’re looking at — our economic team, Secretary — is how we engage everything from community colleges to other entities to train people for the need that exists in that community — in that community.
And so it’s totally consistent with what you’re saying, because there are going to be — and we’re talking about potentially a lot of jobs. I mean, we’re talking about thousands of jobs.
And — but, again, a lot of it requires some, you know, training; it’s not all on-the-job training.
Well, I’m — thank you very much for talking to me about that, Tony. And —
MR. CAPUANO: Thank you.
THE PRESIDENT: And now I — what I’d like to do is —
there’s an outfit called Corning. Right, Wendell? (Laughs.) And you’re the CEO of a great company.
And, look, you know, we’ve seen an inflection point in U.S. manufacturing over the last — the last year. And by that I mean — you know, I can recall in the last administra- — I’m not criticizing the last administration — the previous four years — and even at the end of our administration, Obama-Biden, the question was, “Are we still going to be the manufacturing hub of the world? Are we still — you know, are we — in manufacturing, where are we going to sit? We’re going to do all these other things, but what about manufacturing?”
And — and so you’ve seen, in that inflection point, manufacturing in the U.S. Can you describe for me what you’re seeing at Corning? What’s your outlook on the manufacturing sector? Talk to me a little bit about that, if you could.
MR. WEEKS: Sure, Mr. President. First of all, you’re right — the last 18 months has been tremendous growth for U.S. manufacturing. And we’ve seen that in our results.
And that continues, but there’s some subtle things going on as well. We just did our quarter two earnings, so the numbers are fresh in my mind.
We’re still having good, strong year-over-year growth. Sales up about 7 percent, earnings up about 8 percent. And so, the growth rate continues at a little bit lower rate than it’s been the last 18 months though.
But that good topline: There’s a lot going on underneath the surface. So what’s — what’s driving us is very strong demand for optical communications — think optical fiber for our technologies like 5G, broadband access, cloud computing. Very strong demand for fiber optics and then also very strong demand for our solar materials going into renewable energy. So very strong on the infrastructure side.
But if we look at the consumer side, much like Brian commented on, we’re seeing a slowdown in consumer. So let me give you a few examples: Our — we have customers who make liquid crystal displays, so think about televisions, notebooks.
At this point in time, our customers are running their capacity at the lowest levels they have since the financial crisis. So, panel maker utilization is down tremendously. Now, a big part of that is that build of inventory in anticipation of demand, but also the demand signal is not strong from the retail side for that good. So that’s very low levels.
Think smartphones. Smartphones in quarter two were down about 11 percent year over year. So, pretty strongly.
Auto been depressed for a long time, mostly on supply chain basis. Demand has been there. But there’s interesting signals in global demand. In April, there were zero cars sold in Shanghai.
THE PRESIDENT: Zero?
MR. WEEKS: Zero. COVID lockdowns. But zero is a really low number, right?
THE PRESIDENT: No, I — I — yeah.
MR. WEEKS: Corona.
THE PRESIDENT: Over a lockdown or not.
MR. WEEKS: In Europe, in June, we had the lowest number of new car registrations that we’ve seen since 1996. So, we’re a global player. So it’s the whole global economy, so it’s harder for us to, you know, pick on what is in the U.S., Europe, Asia.
But if we were to look at it right now in the trends we see, I’d say the consumer electronics side looks slow.
Automotive, not really strong. Can’t quite sort between supply chain issues or demand.
And as we look forward, we’d say the overall trends — that’s what we’re counting on continuing: super strong demand in optical communications and solar. And as we now work with Secretary Raimondo on connecting the unconnected, next year that will continue and strong, and we’ll expand to meet that.
Solar demand we see going forward unabated, and we’ll also expand in that.
But consumer seems soft to us.
THE PRESIDENT: Yeah. Well, you know, one of the things that — my father was in the automobile business his whole life. Ran a major dealership — a General Motors dealership.
And, you know, growing up as a kid, you knew whether cars were selling or not — (laughs) — based on tuition or whatever the heck —
But all kidding aside, I was — I knew, but I never had tried to visualize, how critical the high-quality computer chips were for an automobile. And a significant part of the — of the slowdown that occurred when it hit is inflation — the cost of automobiles, because people are not buying them, also because they cost so damn and there’s so few of them. They’re not manufacturing nearly what they were able to manufacture in the past because of the fact of these lack of computer chips.
But it’s not just automobiles; it’s anything — you know, phones, cell phones — a whole range. Whereas, I found it interesting you talking about how, you know, on the — on the fiberoptic piece, that is moving. But how much of that do you think is related to the fact that we put in a — an infrastructure bill that provided billions of dollars for — for connecting the Internet, for having the ability to access the Internet because we’re making it available, quite frankly, with all the money we’re spending to make it available to every home in America, every neighborhood?
I mean, I’m not sure I’m asking the question properly. I think you know what I’m trying to get at.
MR. WEEKS: Yes.
THE PRESIDENT: So, talk to me about the difference: demand relating to where we fund it — and we’re talking the fiberoptics needed to deal with everything from solar to broadband in communities that don’t have it now.
I mean, one of the things I found was that — and the four of us have talked about this a lot — five of us have talked about this — is, you know, in the middle of the pandemic, seeing — going by a McDonald’s and seeing a bunch of families sitting out there in the parking lot not eating a hamburger but connecting to the Internet because they had no access to Internet so their kid could get — get access to the schooling they needed.
So, talk to me a little bit about how much of this is driven by the inability to afford it or the lack of desire to get it, and how much is driven by, when the government is invested in it, it makes a difference. I’m not sure I’m asking the question. You know what I’m talking about.
MR. WEEKS: I totally understand your question, Mr. President. It’s a very good question.
So the direct impact of the BEAD program, or the government effort to connect the unconnected, in this year, direct impact is very low. That really starts to come in to its power next year.
But there’s also an indirect impact, which is the commitment of the government and of the administration to making sure we build the infrastructure that’s required. It really does make a difference in the behavior of all the players.
THE PRESIDENT: Yeah.
MR. WEEKS: So what we’re seeing, though, is just strong demand from our carrier customers, because they want to be the ones that connect folks. And they’re building out 5G and new tech, which needs a lot more fiberoptics than 4G. And then cloud computing also needs a lot more fiber.
So those are the big secular trends. But, I mean, we shouldn’t underestimate the power of positive leadership on things like infrastructure, solar also.
You know, you’re in the midst of passing a significant bill as we speak, hopefully. Right?
But if that goes through, you can expect that to trigger not just the direct government piece, but by providing that leadership, others will come in with much more serious money — right? — to be able to magnify it.
So it has — it’s hard to answer your question. It’s a great question, but it’s a very subtle effect.
THE PRESIDENT: Well, I think you’ve answered it, because one of the things the Secretary has — has talked about is that when the government is in on something that everyone acknowledges is useful and needed, like, you know, the fiberoptic changes, then everybody goes, ”Well, maybe…” —
(White House aide hands the President a note.)
You’re trying to tell me something, huh?
Oh, so far, we’ve got 217 “yes” votes for the CHIPS bill, and the House has passed it. (Applause.)
Sorry for the interruption.
But, Madam Secretary, talk a little bit about what private-sector attitudes change, if they do, if the United States — if the government is taking a risk and a chance on betting on by putting their dollars where their — their money where their mouth is, in terms of what needs to be done.
SECRETARY RAIMONDO: Yeah. First of all, congratulations. That is huge. I don’t want to —
THE PRESIDENT: We’ve been trying a long time. (Laughter.)
SECRETARY RAIMONDO: Yeah, we have been. And you — the President has been amazing in his leadership on this. So thank you. Thank you.
This is —
THE PRESIDENT: Well, I’m a lawyer. I don’t know anything about anything.
SECRETARY RAIMONDO: (Laughs.) You know how to lead. And that makes a difference.
This is a perfect example: semiconductors. I mean, the private sector has been waiting for a signal, and they want predictability. There’s nothing that unlocks private capital like predictability. So when the — right? I mean, when the government steps up and says, “We’re going to invest in infrastructure, solar, chips,” it provides predictability and investments. And I — it’ll — it will encourage, I think, a lot of private-sector capital to follow along.
Not to mention the fact that what we’re investing in — semiconductors, broadband, roads, bridges, solar — we need this. You know? We need this to compete, as we talk about. So I think it’s very significant.
THE PRESIDENT: I’m taking too much time asking you all these questions, but you’re — I have great interest in your — can I ask, Janet — Secretary Yellen — how would you characterize now — and you’ve been very, very straightforward in your views on everything — how would you characterize the health of the economy now?
SECRETARY YELLEN: Well, thank you, Mr. President. I think I would say let’s — let’s first look back at the trajectory of the economy over the last 18 months. During that period, the United States has experienced an historic economic recovery. There were 9 million jobs created — over 9 million in the last year. And we saw the fastest single-year decline in unemployment in our historic record.
And I think, at the core, this rebound has really reflected the administration’s policies, especially the Rescue Plan and the timely fiscal support it provided, along with vaccination efforts that allowed our businesses to reopen and let Americans get back to work.
Right now, there are an enormous set of global headwinds, including a war in Europe and successive variants of the pandemic, but our economy remains resilient.
So, we’re clear-eyed about the challenges we face now and in the future, which have especially been driven by global factors like Russia’s illegal war in Ukraine, the lingering effects of the pandemic with lockdowns in places like China. Growth is slowing around the world. Inflation remains unacceptably high, and, of course, it’s your overriding objective, our administration’s top priority to bring it down.
As you said, Mr. President, we’re at a transitional moment in our economy. We’re focusing on moving from a period of rapid recovery that we enjoyed over the last 18 months to now achieving steady, sustainable growth, but without sacrificing the gains we’ve made.
And, you know, economists should look holistically, I think, at data when we evaluate the state of the economy. And we can see, for example, from today’s GDP report, that growth and private demand has slowed. That does indicate an economy that is transitioning to more steady and sustainable growth. But job creation is continuing. Household finances — as we’ve discussed and Brian discussed, household finances remain robust. Consumers are spending
And I believe that in the months to come, with skill and luck, it will be possible to maintain that strength, particularly the strength we enjoy in the labor market, while easing the tightness that has been driving inflation.
THE PRESIDENT: Well, you know, there’s an old expression. A baseball coach of the Dodgers, years ago — Leo Durocher — said, “I’d rather have Lady Luck sitting on my bench than skill.” My grandfather, who was an All-American football player at Santa Clara in the turn of the century, he’d say “No, I’d rather have luck and skill on the bench.” (Laughter.)
So we’re looking for both.
Let me just say, before I yield to you, Brian, and we can move on to the rest of the folks here: It’s interesting and totally understandable why the vast majority of the American people have no idea what the recovery plan did, what the government did at all.
I mean, the reason why we still had teachers in school, kids going to school, the reason why we had cops on the beat, reason why you had essential workers — states couldn’t afford it, cities couldn’t afford it, towns couldn’t
accord [afford] it, counties couldn’t afford it. So we came up with this Rescue Plan and gave them billions of dollars to keep the economy in their cities and towns and states moving.
And one of the things when I — and I fully understand it. Like I said, I was raised in one of those households where when the price of a gallon of gasoline went up, it was a topic of discussion around the kitchen table. And we weren’t poor, we were just typical middle-class family in a three-bedroom house with four kids and a grandpop.
But all kidding aside, it was — we lived fine, but it was — it mattered. It mattered whether the price of gasoline went up.
One of the things that I find is — I look at and I take it very seriously the confidence level of the American people in the economy. And they’re so down and they’re looking — there’s reason to be down, but I started thinking about it. And, Brian, you and I talked about it just a little bit.
You know, the first year, we were able to, with the — with the Rescue Plan, we were able to send them a check for eight grand. I mean, a check. One — and beyond that, by the way; there was more than that.
But when you’re mak- — if you’re making 120 grand and you get a check for 8 grand, that’s a lot of money. And so it helped save a lot of people, in terms of getting thrown out of their homes and rental housing and a whole range of things.
But I started thinking about it, just as, you know, somebody who’s raised as a middle-class kid. One year, even though you didn’t have the job you have now, even though you didn’t get a raise that year, the difference between having a job, having a 5 percent raise or whatever — 3,5,7, whatever it happens to be — in the face of inflation, the price at the pump — although that’s down every day so far. But, you know, it’s like, “Whoa, I feel worse off.” But then again, I didn’t get a check for eight grand from the government. They just — among other things. Does that make any sense to anybody, or is it just me?
SECRETARY YELLEN: Well, it really makes a huge difference, Mr. President, because, as you said, it kept food on the table, helped people take care of their kids, especially at a time when many were out of school and it was hard to work. And — and the spending it generated put people back to work.
And, you know, as I mentioned, we’ve seen the long — you know, the biggest stretch of job creation that got America back to work. And we need to bring down inflation, but we need to preserve the success that that plan achieved in the labor market.
THE PRESIDENT: I know you’re all busy as the devil, especially the folks who haven’t had a chance to speak yet. I’m sorry I have so many questions, but I have great respect for your collective judgment here.
Brian, I’m yielding to you. I’m going to shush up.
3:10 P.M. EDT
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