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CNN IN THE MONEY
How Will Economy Affect Presidential Race?; Should Americans Worry About Inflation?
Aired June 20, 2004 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to the program, I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY: The unpopularity contest. Democrats love John Kerry less for who he is than for who he is not. We'll look at how that could affect the presidential race.
Plus, the rising price of just about everything, from gas to milk to schooling to health care. You name it. The essentials cost more and more. See why your life and Washington's inflation numbers don't always seem to match up.
And animal magnetism: Americans spending heavy on pets, like they've jumped a notch on the food chain or something. Find out how some companies are profiting from little Fido.
Joining me, a couple of IN THE MONEY veterans. In for Susan Lisovicz this week is CNN correspondent Christine Romans, and "Fortune" magazine editor-at-large, Andy Serwer.
So, this week, and I've been waiting for this, I'm looking forward to it with great anticipation, the Bill Clinton book tour gets under way. Just in time in time to coincide with the "Fahrenheit 9/11" movie, which trashes the Bush administration.
ANDY SERWER, "FORTUNE" MAGAZINE: Right.
CAFFERTY: And the movie about how the Republicans took off after poor old President Clinton when he was caught messing around with Monica Lewinsky. The Republicans got nothing going on.
CAFFERTY: Where is their stuff?
CHRISTINE ROMANS, CNN CORRESPONDENT: The Democrats are solidly in pop culture, and where the Republicans?
SERWER: Yeah, I guess when you think pop culture, you think -- you know, Democrats, you think Hollywood. But you know, the Republicans actually have some little juice in Hollywood, too. I'm thinking they should get Arnold and Tom Selleck together to do a little action movie, storming the Democratic Convention, make a documentary of their own. But it is true, I mean they really don't have any juice in that department. I'm not sure it really matters that much.
ROMANS: How much mileage do you think this Clinton book is going to get? Are you going to read it just because you can?
SERWER: Oh, very good.
CAFFERTY: That's great line. And I understand that the advanced orders for President Clinton's book, seven times greater than they were for his wife, Hillary's, book possibly greeting friction up there in Chappaqua.
ROMANS: Nine hundred and thirty-seven pages.
SERWER: And, you know, I think the buzz on "Fahrenheit 9/11" is pretty heavy. I mean, people are going to go see that thing, but I don't think it's going to really change anyone's minds. I mean, Democrats will see it, they'll love it. Republicans won't see it and there you go, and Michael Moore will make out like a bandit. Right?
CAFFERTY: I guess that's true. The Republicans really need to come up with a some sort of pop culture phenom.
SERWER: I don't know if it's in them.
ROMANS: No, I like what you said about Arnold Schwarzenegger. Arnold Schwarzenegger is a pop culture phenom. You're right. You know, they've Arnold.
CAFFERTY: Yeah, the walking barbell. He's married to a Democrat, old Maria, right?
SERWER: Yeah, it's complicated.
CAFFERTY: All right. Enough of this.
A lot of Democrats can practically tell you in their sleep what they don't like about George W. Bush. No surprise there. But a lot of Democrats say their party's drive to defeat Bush is, as the "Washington Post" put it this week, "stronger and deeper than the passion for electing John Kerry." The reason, according to Democrats who talked to the "Washington Post", Kerry hasn't succinctly spelled out what his presidency would offer apart from being the un-Bush, on doing much of President Bush's work. If Kerry can't close the sale with voters by next month's convention, a lot of Democrats are worried that their White House bid could run into serious trouble.
For a look at what that means for Kerry and for President Bush, we're joined by CNN political analyst, Ron Brownstein, who's a correspondent for "The Los Angeles Times." Ron, nice to have you with us.
RON BROWNSTEIN, CNN POLITICAL ANALYST: Good to see you, guys.
CAFFERTY: So the good news for the Democrats is, President Bush is vulnerable. The bad news for the Democrats is, John Kerry is who's the guy who's going to head the attack. Tell us a little about the dynamics of all of that. Why hasn't Kerry managed to click in better with the masses out there?
BROWNSTEIN: Well, I think John Kerry, by and large, his strengths are more about reassurance than they are about inspiration. You think about how he got the nomination in the first place. If you go back to last fall -- you know, people were talking about how he wasn't connecting with voters, how he wasn't an inspiring figure, and then when Howard Dean melted down in front of all of us, on live national television, through a series of comments, and then of course the election night speech in Iowa, suddenly those very qualities in Kerry looked very good by comparison. He looked like someone who could be president, who was responsible, who was stable, who had experience.
And now what we're seeing, I think, Jack is, a reversion to some of the concerns that existed originally, whether John Kerry is inspiring enough. Now, I think there are also many Democrats who believe that George Bush is providing plenty of passion for the Democratic base, and the real need is for a nominee who will reassure that last sliver of swing voters who don't really respond well to ideological arguments, but there's no question that Kerry is a somewhat diffident, distant figure, even for many Democratic activists.
ROMANS: And Ron, now the latest, the president's latest advertisements on television are calling himself, the president, "optimist" and essentially saying that John Kerry is a pessimist. Interesting timing, after Ronald Reagan who we ballyhooed for a week about what an optimist he was and how he lifted this country. Bush is now putting himself squarely in the optimist camp. Is John Kerry a pessimist?
BROWNSTEIN: Well, I think he is in the position of any challenger. I mean, when you're George Bush in 2000 or John Kerry in 2004, you have to accent the negative. If people think that things going well, they're less inclined, there's really no reason for them to change direction, and so the job of any challenger is to poke through all of the economic numbers, to find the trends that don't work, to obviously point to the failures and -- I remember being at events with George Bush in 2000 in which he talked about a crisis in the maintenance of national parks.
BROWNSTEIN: So, I mean, this is really what the challenger has to do. I mean, jobs are growing, and now again, so John Kerry is talking more about wages, he's talking about health care premiums, tuition increases, gas prices. This is what the challenger has to do and inevitably, it does leave him vulnerable to that counterattack from the incumbent.
SERWER: But Ron, I mean, I think it's pretty clear Kerry doesn't have a message a la Clinton, it's the economy stupid, something to focus on, something to connect with the voters. And my question to you is, is it just he's keeping the powder dry until say after the convention to focus and sharpen a message or does he just sort of not have a game plan?
BROWNSTEIN: Andy, I think that's a really good point. I think John Kerry is less focused on message now. I was just out with him, I thought the message was less coherent and sharp than it was in December and January. Obviously, this is the off-Broadway period of the campaign, as we've talked about. They are trying out themes and seeing what they'll unveil to the country at the convention and thereafter, which is when all of this matters more.
But I think you're right, I mean, John Kerry by inclination is not a politician who goes for grand sweeping visions; in some ways he's more like Bush's father than he is like this President Bush. So his inclination is not to synthesize, and they really haven't, I think, sharpened a crisp, coherent description of why George Bush should leave and what John Kerry would do.
That's not to say they don't have individual policies and particular distinctions, they can rely more on the international community abroad, they're going to roll back the tax cut at home, spend more on health care and education, there are lots of specific things. But is there one sharp point, a javelin that he's got aimed at the Bush administration? I think most Democrats would say no, right now.
CAFFERTY: But, there's no shortage of potential javelins out there. Like, here's how I can get 50 million people health insurance in this country who don't have it; here's how I can guarantee that there'll be something left in the pot when you retire from Social Security; here's how you can buy prescription drugs instead of having to make a choice over whether you treat your heart condition or buy food for your table; here's what I'm going to do about Iraq, here are the specific concrete things I'm going to do to restore -- I mean, doesn't take -- you know, a rocket scientist to come up with two or three concrete things, and I haven't heard a specific plan out of John Kerry on any of this stuff.
BROWNSTEIN: Well, by the way, they do have a deep opening there, Jack, after that list.
CAFFERTY: I mean, that was pretty well done.
BROWNSTEIN: No, actually, look. Look. In fairness, in fairness to John Kerry, there are actually specific answers. He has a very specific health care plan. He has some economic ideas in terms of more aid to the states, rolling back some tax breaks for investment overseas, changing some of the trade policies. There are specifics.
What there isn't as much is a box in which all of these are wrapped up into a clear message of why he believes George Bush has failed and the alternative direction that he offers.
Now, to some extent, I think this is a function of how vivid a personality George Bush himself is. Every challenger, I think, is overshadowed by the incumbent, in the eyes of the voters. He's never as a clear presence simply because it's all perspective. Voters are just wondering what Kerry would do based on what he says. They have opinions about Bush based on what he has done, that's always going to be a stronger presence. And I can tell you, from talking to voters around the country, Kerry doesn't really come up that much for a lot of people. Either they like Bush and they see no reason to really consider Kerry, or they dislike Bush a lot and they're willing to accept Kerry, strengths, weaknesses, regardless.
ROMANS: Ron, real quick, when there is a vice presidential candidate announced with Kerry, then does he get some of that inspiration?
BROWNSTEIN: Well, I think they're really hoping, you know, look, if you go back to '92, Bill Clinton, that whole period, the month before the convention, think of Al Gore, the appearance on MTV, into the convention turned around a race in which he was in third place, really redefined himself in the eyes of the public, as someone who is an embodiment of the striving middle class.
John Kerry does have to do that, starting with the vice president and then certainly at the convention. That is the critical moment for him to introduce himself to the public. Both in terms of his life story and rebutting this very effective charge from the Bush administration that he is a flip-flopper, showing that he's -- trying to show that he's a person of conviction and also giving people a clearer sense of where he's going to take the country. The convention is critical in that, you can't -- even though it's sort of a formulaic event, there's no real drama, it has proven to be a critical turning point in these presidential races, and it's a very high bar, a high test for John Kerry next month.
CAFFERTY: There's another school of thought that says if your enemy is busy shooting himself in the foot, you don't want to take the gun out of his hand. There are issues confronting the incumbency of George W. Bush and poll numbers that suggest that he might be in a little bit of trouble and maybe John Kerry's sly like a fox, just laying low and seeing how much self-inflicted damage accrues to the incumbent administration.
Ron, it's always interesting. I appreciate having you with us. Thank you.
BROWNSTEIN: Thank you.
CAFFERTY: Ron Brownstein, CNN political analyst, and member of the staff of the "Los Angeles Times". Coming up next on IN THE MONEY: How to make your wallet squeal. Everything from milk to schooling to health care costing more, despite what those lovely inflation numbers out of Washington suggest. We'll find out how much worse it could get.
And later, softening up the boss: Fathers are knocking themselves out of work and their families are paying. We'll look at what the dads are doing about it.
And from a dog house to our house: American pets are coming in out of the cold and getting treated like royalty. See what pampering means for some creative companies out there. Stick around.
SERWER: Is summer spending stretching you thin? You're not alone. Whether you're buying 10 gallons of gas, or a gallon of milk, a hard earned dollar just isn't going as far these days, but Fed Chairman Alan Greenspan says not to worry. Earlier this week, he told the Senate Banking Committee that inflation is, quote, "not likely to be a serious concern."
Brian Wesbury, though, says the Fed is getting it all wrong. He's the chief economist with Griffin, Kubik, Stephens, & Thompson, and he joins us now from Chicago to explain.
So tell us why is Alan Greenspan, of all people, wrong?
BRIAN WESBURY, GRIFFIN, KUBIK, STEPHENS, & THOMPSON: Well, well, first of all, you have to remember that just up to a couple of months ago, the Fed was telling us that deflation was more of a probability than inflation, and yet for the last two years, we've seen gold and commodity prices rising, we've seen the dollar weakening, and we've seen the yield spread very wide, and this has all happened with the Fed holding interest rates very, very low.
And I look at that statement from back in May that said deflation was more of a risk than inflation and believed that that's just wrong. Wherever I look today, I see inflationary pressures rising, and I think if you can call that -- the Fed wrong, I think this is one time when you can.
ROMANS: Milk, eggs, gas, all kinds of different stuff. Steaks cost more to eat it and you think the Fed needs to get moving, start raising rates and do it quickly.
WESBURY: Yes, I do. I think the Fed -- in fact, they should have been hiking rates late last year to avoid a bubble in inflation that we're seeing right now.
And one thing to remember is that even if the Fed raises rates at the end of June and again in August, it takes a good 18 months or 24 months before we really wring the inflation out of the system. So, my forecast right now saying that inflation hits at about 3 percent this year. And, in fact, if you look at this number so far, we're pretty darn close to that already. And then we're going to approach 4 percent next year.
Now, I'm not looking for runaway inflation, but 3 or 4 percent inflation, that was serious enough back in the 1970s to institute wage and price control -- so these numbers aren't low by any stretch of the imagination.
CAFFERTY: Let me ask you a question about who these reports are designed for. I mean, I get -- when Andy Serwer does these inflation reports on "AMERICAN MORNING" here on CNN during the week, I get mail from people saying, "what the hell numbers are the government looking at? I can't fill up my car, my groceries cost more." And if you took $100 bill and you went back a year ago and you bought groceries and you bought gasoline and you paid your energy bill at home versus what it costs for that kind of stuff -- who are these reports designed for that say there's no inflation?
CAFFERTY: Of course there's inflation.
WESBURY: Yeah, absolutely and -- you know, there's lots of problems with the inflation numbers. For example, home -- housing cost. Home prices are rising somewhere if you look at all the statistics between 6 and 10 percent a year, but because the consumer price index and the way the statisticians calculate housing prices, they say housing prices are only rising 2.4 percent -- have risen 2.4 percent in the past year.
Clearly, that's not true. The -- but there are some areas of the CPI which are showing pretty sharp increases. Health care costs are up almost 5 percent in the past year, education costs are up over 7 percent in the past year. And so, what's happening now is that we're beginning to see these price hikes we know are existing, bubbling through and showing up in the CPI.
SERWER: And I love it, Brian, too when the economists talk about the core inflation rate, which excludes gasoline and food because, of course, economists don't drive or eat.
WESBURY: That's exactly right.
SERWER: We all know that's right.
Listen though, I want to sort of defend Greenspan here a little bit, because people like yourselves are always saying, "oh, he's late, he's behind the curve." But really, isn't that his job? I mean, because the worst thing a Fed chairman could do is make a change and then say, "whoops, I went too fast." So, by definition, isn't he always going to be slow and err on the side of caution?
WESBURY: Well, I think they're going to be slow basically because of what they watch. They look at the unemployment rate, they look at GDP growth, they talk about a Phillips Curve Model, which is a model that...
SERWER: Oh, boy...
WESBURY: ...says unemployment goes down, inflation goes up.
WESBURY: Because of all of that, they're always looking at what I consider to be lagging indicators, which makes them late.
WESBURY: If I had my way, I would have the Fed looking at gold and commodity prices, the value of the dollar, the yield curve. Not any single one of those, but all of them together tend to give signals of inflation before it shows up. Last year they were all telling us that inflation was shooting up.
ROMANS: The Phillips curve, that's like a kind of screwdriver, right?
ROMANS: Let's talk about wages though, I wanted to ask you about wages quickly because wages are going down. Year over year wage growth, real wage growth, and you figure in those higher prices, you're actually taking home less money this year than last year, so you're getting hit on both ends, aren't you?
WESBURY: Yeah, well exactly. If you look at just...
SERWER: I am.
WESBURY: If you look at just wages, average hourly earnings, according to the payroll survey, yes, people's incomes, after adjustment for inflation are going down, but when you add in the benefits that are accruing with that, benefit costs are rising at twice the pace as wages today, which is health care costs, pension costs, those kinds of things.
In addition, there's lots of different statistics on incomes. Personal income, wages and salaries, disposable personal income, all of those just right now increasing much faster than inflation and it looks like that's one of the reasons that retail sales are so strong, because the people really are doing better because the economy has improved dramatically.
CAFFERTY: Brian Wesbury, chief economist of Griffin, Kubik, Stephens, & Thompson.
Brian, good to see you, again. Thanks for being with us.
WESBURY: Thank you. Great to be with you.
CAFFERTY: All right.
Coming up after the break, as we continue, Father's Day -- are you listening, children? I have four of them that that message is intended for. In honor of dear old dad, the results of a survey on work, play, and fatherhood.
Plus, fur, paws and profits: Why the pet business is nothing to bark at these days.
And are you pounding the pavement or pounding your head? We'll look at why you stand a better chance of getting noticed by employers this summer than you have in a long time.
ROMANS: Now let's take a look at the week's top stories in our "Money Minute." The U.S. trade deficit grew to an all-time high of $48.3 billion in April. That was much bigger than analysts were expecting. The economists say the higher deficits could be a drag on American economic growth this year.
United Airlines will not be getting some extra help from the government. The Air Transport Stabilization Board decided not agree to the airline's request for $1.6 billion in loan guarantees. United has been under bankruptcy protection since 2002. The board said the airline is likely to emerge from bankruptcy on its own.
And if you're celebrating Father's Day the weekend, we have some more good news for you. According to Challenger, Gray and Christmas, the men with the most job stability are married fathers with children between 6 and 17 years old. The average unemployment rate for those dads is just 3.5 percent. Men without children had a 7.5 percent unemployment rate.
SERWER: It was a mixed week for aerospace giant Boeing. First, it beat out Lockheed Martin to win a huge Pentagon contract to supply the Navy with the next generation of sub hunting jets. But then, more information came to light about (UNINTELLIGIBLE) Boeing executive who's cooperating with prosecutors in an investigation of the firm.
Boeing shares are up more than 40 percent from where they were trading a year ago, but is the party about to be over for Boeing? And that makes Boeing our "Stock of the Week."
You know, just to go back over those two things, first of all, I'm delighted to hear that they've got a new contract for those sub chasers, because the P-3s, which are the Lockheed planes, have been buzzing my mother's house in Maine for decades, so I'm tired of those things. Now we'll get some 737s, which they're going to do.
CAFFERTY: They're not looking for your mother's submarine, are they?
SERWER: No, they're not. She's doesn't have one. Anyway, this -- but this situation with this woman who used to work at Boeing, Darlene Druyan, I mean, she has got some serious business on this company. Conflicts of interest, negotiating her contract. The conflicts of interest are nothing new for a defense contractor at all.
ROMANS: Right, and prosecutors say she knows where the bodies are buried and they are looking to see exactly what kind of shenanigans may or may not have happened over there, but one of the analysts says it's not Boeing-gate, yet. Yeah, there are a lot uncertainties, but -- you know, this isn't a full blown crisis just yet.
CAFFERTY: Well, but the long-time criticism of things like $600 toilet seats and $500 hammers comes from what critics say is a too- cozy relationship between the nation's defense contractors and the Pentagon. Not enough competitive bidding, not enough oversight, not enough people watching the cookie jar. This woman, potentially, and they've got her in the squeeze now, she's looking at a five-year stretch in the joint, this woman could begin to peel back the layers of something that maybe this country's not real anxious to start looking at.
SERWER: Well you know, and there are fewer and fewer defense contractors because of all the consolidation in the business. First of all, I haven't gotten over the fact that Seattle -- that Boeing left Seattle. OK, so let's just start with that. But also, you know, the thing is, Boeing should be doing a lot better right now, I think. Because -- you know, we're in a war situation, they should be cranking it out, they're not really doing that, and let's face it, they really have lost their edge in commercial aircraft. I mean, Airbus has made up a tremendous amount of ground on this company. They used to dominate that business globally, now it's 50/50 with Airbus.
ROMANS: Well, but that business, frankly, I mean to use a technical term, sucks, if you listen to Continental...
CAFFERTY: I recognize that term.
ROMANS: You know, Delta, you hear everyday, another airline saying we're really in trouble, we don't know if we're going to have to lay people off yet, but definitely the airline business is, certainly not making any money.
CAFFERTY: So the question is, do you buy the stocks, do you buy Boeing shares?
SERWER: I would not. I'm not big on this business, I'm not big on the commercial aircraft business. As you suggested, it's definitely not a growth business right now at all. I mean, if you look at what's going on with the airlines and -- you know, they have just keep stepping on their own feet when it comes to defense business, so -- you know, I'm not a huge fan. Plus, when they left Seattle, I just -- you know...
ROMANS: And the stock is up 40 percent.
CAFFERTY: Isn't Starbucks in Seattle? SERWER: Yeah.
CAFFERTY: Not room in this town for both, I guess. One of them's got to leave.
SERWER: I guess that's it.
All right, coming up on IN THE MONEY: Who's your daddy? If the kids are treating dad like a stranger, there's a reason. We'll look at how much time today's fathers are spending at the office.
And later, pets are people, too. Well, not really. We'll tell you how some small companies are cashing in on new ways to pamper a pet.
And reply hazy? Try again. Check out a Web site where Alan Greenspan really is behind the eight ball.
SERWER: Hey, kids. It's father's day this weekend. Besides a new set of golf clubs and bigger TV, a new poll shows most dads want more time with their families and some peace and quiet. In fact, the survey by careerbuilder.com showed a big chunk of America's dads would be willing to take a pay cut, if it meant more time with the wife and kids.
OK, joining us with a little more insight into America's frazzled fathers is Richard Castellini, senior career adviser with careerbuilders.com.
RICHARD CASTELLINI, SENIOR ADVISER, CAREERBUILDER.COM: Thank you very much.
SERWER: So, I want to ask you a little bit about this environment we're in now with cell phones and pagers and e-mail and the sort of blurring between work and home.
How is that affecting dad's relationship with their families?
CASTELLINI: The e-leash as some people would like to call it is one that is a double-edged sword. It can offer them plenty of opportunity to be more involved in their kids lives with more flexibility, but on the contrary it can tie them too much to the office where it takes away from, you know, the family activities.
CAFFERTY: Andy said something about there are actually guys out there who would be willing to take a pay cut in order to stay home with the wife and children, is that true?
CASTELLINI: Yes. The one thing we found that was pretty interesting is close to 40 percent of our surveyed fathers were willing, you know, first of all, to give up the bread winner role and actually stay home with the kids and, you know, that's probably something different from our father's generation.
CAFFERTY: Do these men actually have children?
ROMANS: Let's talk a bit about what men and women were saying in the survey about their job satisfaction.
Isn't it kind of universal that people are a little less happy at work than they used to be?
CASTELLINI: Yes, you would probably look at what the economy has done for the past three or four years and it isn't 1999/2000 where everything was up and up. You know, the job growth creation has stagnated, until recently there have been all these factors that have put pressure on productivity of workers and they're not as happy any more.
SERWER: Yes, I would almost like to ask that question again about dads taking a pay cut thing. Because, you know, I...
ROMANS: You'd do it.
SERWER: No. That's OK.
We like to work awfully hard in this country and it seems that everyone is working harder than ever. You know, you've got both spouses working. Dads working 12, 14 hours a day.
Are we aspirational to death here in this country?
CASTELLINI: Well, one -- we did find out that working fathers, about 70 percent of them do work more than 40 hours a week and a quarter of them work more than 50 hours a week.
Is it, we want too much of a possession, you know, from a material standpoint?
I don't know. But it's certainly the trend of longer hours, less time spent with the family and, you know, especially on this Father's Day weekend, it's something that we should all probably take a look at.
CAFFERTY: With unemployment numbers being as high as they've been, we've gone through this recession, it's kind of been a seller's market when it comes to employers being sort of able to dictate hours and schedules and all kinds of things like that. That's beginning to change just ever so slightly now, isn't it?
We're starting to see some job growth in this country.
CASTELLINI: Yes, the past few months of job creation over 200,000 each month is certainly freeing up probably those people who felt trapped in their jobs, you know, too afraid to leave because the prospects were worse than what they had to deal with. And hopefully if the economy continues at this pace, there will be a better work life balance, as people can potentially move into better opportunities for themselves. ROMANS: Well, Richard, I have a theory. I think people really like their stuff and they their expensive vacations and they like their big screen TVs. And then they get those big screen TVs and sit down in front of them, they're not necessarily talking to their kids. You know, maybe if people have more leeway and more satisfaction at work, are they going to necessarily change the way they're living at home?
CASTELLINI: Well, you would hope so. I mean, you would hope that mothers and fathers, you know, really do value the quality time with their children.
Turn off the television and spend that time after work.
ROMANS: Turn off television after this program, you mean.
CASTELLINI: Yes, exactly. Engage with their children.
ROMANS: Richard Castellini, careerbuilder.com. Thanks so much for joining us.
CASTELLINI: Thank you.
ROMANS: We're going to stop and we're going to pay our rent for a couple minutes here, but after the break, it's not a dog's life any more. We'll show you one company bringing home the biscuits by giving pets the people treatment.
Plus, swap soaps for a real-life drama. Find out why fewer job hunters will be killing time on the couch this summer.
And the Fed's version of a fortune cookie. See if you can understand Alan Greenspan's word of wisdom on our fun site of the week.
ROMANS: Judging by the money involved, America is really going to the dogs and cats. A recent report shows spending on pets has more than doubled over the last decade to more than $35 billion a year, but it's not higher vet bills that have pet lovers digging into their pockets, they're spending big to pamper their animals like never before, they're buying them everything from specialty treats and toys to handmade clothes and beds.
Joining us today to talk about the booming business of pet related (UNINTELLIGIBLE) is Ren Moulton. He is the president of Dogmatic Products, the company that creates specialty dog products. This is something I can't believe.
You know, when I grew up you let the dog out, you let the dog in and you feed it a bowl (UNINTELLIGIBLE) and that was it.
But you're talking about all kinds of pampering for animals. What's driving it?
REN MOULTON, PRESIDENT DOGMATIC PRODUCTS: Well, I think really dogs and cats and animals have become a much more integrated part of our family. And I think, also, it happens to do with the current environment. I think during times of recession and also war times there's a correlation with expanding families and, in many cases, pets are kind of starter kids, too. So, I think that's primarily what's doing it. But also...
MOUTON: Sorry, go ahead.
CAFFERTY: Go ahead.
MOULTON: I was going to say, there's also a lot more products out there than ever before and they're definitely being made at much higher standards. There are a lot more products that are kind of anthropomorphic. Again like...
CAFFERTY: Wait a second. Time out.
What the hell does that mean?
MOULTON: I mean, you know, nowadays you can buy, for example, and it should be in every home like a $2,000 Gucci bed. Probably like 10 years ago the highest priced bed would be $10. So...
ROMANS: I wouldn't even spend $10 for a dog bed.
CAFFERTY: I took -- I took a dog and cat to the vet the other day to get their annual shots and a check-up and -- and they, of course, they both eat prescription food, they can't just like said eat the (UNINTELLIGIBLE) Purina food. We have to have prescription food because one has a heart condition and the annual booster shots and the physicals and some food was like $350. So, when you talk about a being a (UNINTELLIGIBLE), and plus they offloaded some orphan kitten on us that we also had took home going out of the place. So, it's not like starter kids. This is like, I could take my kids to the pediatrician and not have to part with that kind of money.
MOULTON: At the same time they're kids for 10, 12 years. A long line of expenses. So, that's true.
SERWER: I think it's outrageous that this stuff hasn't been invented and marketed before. I mean, how have we gotten along without this expensive stuff. Tell me about some of the most outrageous stuff out there. Jack, take some notes here.
MOULTON: I mentioned before, probably, the Gucci bed at $2,000.
SERWER: It's a bargain. Tell us what you've got, too. Some of your products.
MOULTON: Well, we got nutritionally microwaved enhanced flavored popcorn for dogs called Woofy-Pop. Which is great. CAFFERTY: Woofy-Pop?
MOULTON: Woofy-Pops. We got Nachews, which are basically Doritos for dogs. They're very healthy. There's Woofy-Pop We have the release, which is a hands-free leash, a patent product that we sell to the U.S. Army and Navy and everyone else. And the Cat Zip which is a cat nip stuff to pull back toy and a number -- we're actually working on something called the Collar I.D., which is a GDP enabled dog collar for tracking dogs and cats.
SERWER: That's critical, jack.
ROMANS: Lets be honest, this is really for the pet owners, this isn't for the pets, right?
Oh no. No, no, no.
ROMANS: This is so pet owners think they are doing the very best they possibly can so for their little pet or their little cat?
I mean, the dog doesn't care if it's microwave popcorn or if it's just table scraps, right?
SERWER: How do you know?
MOULTON: Well, I would beg to differ, you know.
CAFFERTY: You're hoping there is a difference, right?
ROMANS: Important first-person research with...
SERWER: Oh, has he been eating this stuff?
Ren, do you eat that stuff?
MOULTON: Of course, I do. Everyone in the office must eat Woofy-Pop at lunch.
SERWER: Nah. You are going to get sued.
MOULTON: Yes. I swear. It's actually -- It's actually made in a human grade lab so the same people who produce Newman's Own.
CAFFERTY: In order to do successful marketing of these product, I guess you would have to do a run-up on the psychological profile of the kind a person who would spend $2,000 Gucci bed for a dog who eats Woofy-Pops. I'm almost afraid to ask what the research on that might have shown.
But I mean, who are these people?
MOULTON: Well, actually, Woofy-Pop is kind of an attainable luxury. You can buy it for $3.99. Where as something like -- like a Gucci -- Gucci bed, for example, they're are only 10,000 people maybe in the U.S. that would go out, maybe even less than that. (UNINTELLIGIBLE)
CAFFERTY: Those people should be thrown out of the country immediately.
MOULTON: I would agree.
CAFFERTY: Deport them.
MOULTON: Yes, but, you know, 40 million dog-owning household, 35 million cat-owning households. 62 percent of the U.S. owns a pet whether it be a lizard or llama. And so...
ROMANS: And none of them talk back.
MOULTON: Exactly. They're the perfect well-behaved child.
SERWER: I seen like Burberry has dog stuff now. I mean, it's all this designer stuff. I saw ice cream for dogs. Doggy ice cream.
SERWER: And my kids wanted me to take a lick, no way.
MOULTON: There is some other things too, there's something called -- they're is something called thing in a back. It's about $13...
SERWER: I don't want to know.
MOULTON: It's a paper bag motorized -- a little thing that runs around it. Sells everyone. It's great. I actually have one.
SERWER: What that -- what does it do?
MOULTON: It's does exactly what I said, it's a thing in a bag and it's a paper bag with a little motorized, actually, just a ball that moves around and they have distribution pretty much everywhere.
CAFFERTY: The upside is you never have to take it outside and you never have to clean the carpets.
MOULTON: Exactly. Exactly.
CAFFERTY: Interesting stuff, Ron, thank you very much. Ren, excuse me. Ron Moulton, president of Dogmatic Products.
MOULTON: Thank you.
CAFFERTY: Good to have you with us.
MOULTON: Thank you very much.
CAFFERTY: Time for a break, don't think of them as ads, think of them as little movies with a lot of product placement that pay the rent for all hardworking folks on this program. Coming up, get advice you won't get. Fed boss, Alan Greenspan mysterious tips on our "Fun Site of the Week." I hope he's not watching, he isn't going to like this.
And it's cold, dark and lonely in our control room, but you can help. Tell our producers what's on your mind at this address firstname.lastname@example.org. And then they can busy themselves answering your letters.
COOPER: The next few months could be the best time in years to look for a job. Web master Allen Wastler has more on that and the "Fun Site of the Week."
We're getting some job creation, finally, in this economy of ours.
ALLEN WASTLER, MONEY.COM: The outlook is improving a little bit. Manpower came out with their quarterly survey. Now Manpower goes out and they talk to about 16,000 employers and say, what are you going to do?
Are you going to hire or you going to fire?
And this time around, 30 percent of them said we're going to hire. So, you take the 6 percent from the 30, you get 24 percent saying we're going to hire.
ROMANS: Sixty percent aren't going to hire. Sorry, maybe I have to be...
WASTLER: Fifty nine percent said...
WASTLER: No, 59 percent said staying pat.
WASTLER: OK, staying pat. So, you take the 6 percent away from the 30 percent, you get 24 percent, but you've got to toss out 4 percent of that because that's seasonal workers. You know we always higher the people to pick apples and what not.
CAFFERTY: So the bottom line, roughly, one in five companies is planning to add workers. That's a lot.
WASTLER: That's a lot. And it's the same that was happening during the second quarter of this year. So, what you're seeing is a stabilization in the outlook.
SERWER: We need some people here?
WASTLER: Oh, sure.
ROMANS: No, I think it's like nurses.
WASTLER: Actually, I just hired someone last week.
SERWER: There you go, you're part of the solution.
WASTLER: I'm part of the solution. Now, if you look at the different sectors that are hiring, it's construction, financial services, manufacturing durables, these are all the sectors that are popping up a little bit. And, one worrisome thing you might consider here. If there's a spike in interest rates, hmm, let's see. Construction, manufacturing, durables. That might be -- I don't want to...
CAFFERTY: (UNINTELLIGIBLE) one percent. Now if they raised interest rates 100 basis points, we'd be at 2 percent.
WASTLER: And actually, I would predict that if they did do a slight bump in interest rates you'd see a lot of companies, oh my goodness, (UNINTELLIGIBLE) money is going away. Lets go, let go, lets go.
CAFFERTY: Accelerate their development and...
WASTLER: And we'd see actually a bigger swell up than you would normally see. So...
ROMANS: What about regions where you're seeing the hiring?
I mean, is it the northeast? Is it the Midwest.
WASTLER: The west is the best.
ROMANS: The west!
WASTLER: The west is the best. It's just jumping right out there with that and then the south is following close behind there. And we've got some numbers there for you.
You can see, all the regions are sort of hiring a little bit, but the west is jumping on out there. You go, west, you go.
CAFFERTY: What about the "Fun Site of the Week?"
WASTLER: Well, we have Alan Greenspan up on the Hill talking about why you should get the job. And then Congress said, yes, you're right, you get the job. And so, Greenspan on our minds.
CAFFERTY: He's doing a good job, you know. It's a little tough to argue with how he's done over there.
WASTLER: Wouldn't it be nice to have him just right there to answer questions for you. We have that for you right here. The ask Greenspan site. Let's think of a question.
Are you going to raise interest rates?
SERWER: Interest rates?
WASTLER: Go, Al.
CAFFERTY: There's a lovely likeness of the Fed Chairman. I hope he's not watching.
WASTLER: Typical straightforward answer from (UNINTELLIGIBLE). Dubious of all sorts of solution. Oh, lordy, lordy. Let's think of another question here.
CAFFERTY: If you're going to raise rates, how high will they go?
WASTLER: How high -- there you go.
How high will they go?
ROMANS: The cowbell I love.
WASTLER: You must have misunderstood. We always...
WASTLER: All right, will Jack Cafferty be cheerful next week?
Mr. Greenspan, please.
SERWER: We should all do that.
SERWER: (UNINTELLIGIBLE) Good performance in the near term.
SERWER: That means, no, Jack. That means no.
CAFFERTY: All right, thanks, Allen. Coming up next on IN THE MONEY, it's time to hear from you as we read some of your e-mails from past week and we'll have the new e-mail question of the week. You can send us an e-mail right now to email@example.com. Back in a minute.
CAFFERTY: Time now to read your answers to our question of the week, about what should be put on U.S. coins or currency.
Tony wrote this, "What about the Reverend Dr. Martin Luther King, Jr., our currency could then honor one of the greatest speakers and represent the diverse and unique culture of our nation all at the same time."
Paul wrote, "No one's face belongs on either or paper money or coins. We need to go back to the beautiful coins that circulated in the latter part of the 19th century, the buffalo nickel, the mercury dime, the standing liberty quarter were all great representations of this country and they avoided partisan debate over controversial figures."
SERWER: Oh, cool.
CAFFERTY: And Paula from Cincinnati wrote this, "I think Bill Gates should have his face on our money since he has more cash than anyone else, he should at least be able to see a nice picture of himself every time pulls out his wallet.
Time now for our e-mail question this week, which is all about inflation. Which price hike is taking the biggest bite out of your wallet.
Send us your answers at firstname.lastname@example.org. The cleverest ones will be used on this program next week. And the ones not so clever will be answered by Jake.
Also visit our showpage at money.com/inthemoney, which is where you will find the address of our fun site of the week.
Thanks for joining us for this edition of the program IN THE MONEY. Thanks to CNN correspondent, Christine Romans, in for Susan Lisovicz. "Fortune Magazine" editor at large, Andy Serwer, and money.com managing editor, Allen Wastler.
I advise you to join us next week on Saturday at 1:00 Eastern, Sunday at 3:00, or you can watch Andy Serwer and me all week long on "AMERICAN MORNING," which begins sharply at 7:00 Eastern time. It's a fine little weekday broadcast. Until the next time, thank you and enjoy the rest of your weekend.
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