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Automatic TRANSCRIPT

Yes there. Is that big speech tonight. Up on Capitol Hill. President trump gives his state of the Union address. Democrats on one side of the Aisle Republicans of course on the other. I am town though not for that but for conversation I had this morning at the bipartisan policy. Center with Janet Yellen late of the Federal Reserve. Also David Malpass the president of the World Bank to people who keep close eye and have some thoughts on the global economy. And I started off with when I grant she was a softball question. Describe for me this this macroeconomic moment where are we thank softball slow growth but that leads to all sorts of conversation conversation we recently did our global economic prospects when moored so the bank does twice a year a thick report. I'm growth and it. It's looking looking at twenty two point. Five percent real growth some of the developing countries especially chime in a little bit India running above that average but but then the US in our forecast was consensus at one point eight percent. Europe is down at one percent only in Japan at point. Seven seven percent so they dragged down the average. So that gives you a sense of what's going on in the world that you've got to get some of the big countries going in order to get people toward prosperity Janet. Let me ask you this question. Then where are the drivers of growth. I mean if as the World Bank says the United States is going to grow at one point eight percent this year. Are we helping so growth. In the United States this year is likely to be slower earth in it was last year and the year before but likely the US economy is still going to grow at its potential or maybe even a little bit higher which in the senses all the expected especially given how tight the Labor for market is with the lowest on employment rate in fifty years so it shouldn't be surprising to see growth in the United States around two percent cent. We've had globally. We global growth is a drag on the US and the US growing slower of course is a a drag on the global economy but the driver of growth for the US and in many many more developed countries. This is true that the main driver is the consumer the US consumer is strong enough to think propel in the United States State's growth at a trend like pace which is not inappropriate given it means will continue to have a very tight labor market. Maybe it'll even tightened further but don't sorry wait. Let me just follow up really quickly. Don't you worry about consumers getting tired because it's been years now that everybody from you on down amount has been saying consumers there the thing. How much longer can that happen well? Consumer spending is in line with income growth. If if you can trust the current situation with what we saw before the crisis in the run-up to the crisis consumer spending was also the driver but it was debt-fuelled we had a lot of people using their homes like piggy banks. The saving rate had been declining to exceptionally very low levels. We've been through a very tough period in the United States in which consumers who've worked off debt and the labor market's market's been performing exceptionally well. We still have about one hundred eighty thousand jobs a month and wage gains are moderate but have picked picked up some and so don't see the consumer spending that's carrying this economy is based on very weak foundations. It's it's based on solid growth of income. I see it as sustainable dividend. I Apologize Weaving said. That's fine. Just picking up on some of those points. The misery index is way down and so that gives if you look at what drives people going forward and businesses to create a new businesses. As is people have confidence in the economy. So remember the old misery index the some of the unemployment rate and the inflation rate as the as the unemployment appointment rate has gone down the participation rate has gone up so I get all that and that's all good and I appreciate the indicators but but let me pick up on on something you said Janet which was that the US economy is growing about its potential one point eight. Maybe two percent. Is it troubling to know on that. The potential of the American economy is present It is troubling to percent I. It's something his been long anticipated so it's not an enormous surprise. Part of it reflects a slowdown in labor force growth. We have an aging population list immigration. The the second piece of it is productivity growth and it is depressing or of concern that not only in the United States but in most most developed countries were simply seeing slower productivity growth than his been the average partly I think it reflects sluggish investment spending part of it reflects slowdown in the pace of educational attainment in the United States. But most important just the pace of technological change seems like it's declined and there really is no agreement mint on the reasoning. But of course it's tremendous. It's a tremendous concern. I say this mostly just A. I guess there's probably thought bubbles out out there but it's not at all encouraging a former Fischer says I dunno truth God and we'll get back to that in a very quick topic since you both have brought it up the recession and the response the crisis next time because of course there's another recession coming. This expansion is long in the tooth although it does not As we all know died of old age corona virus I does that distress you at all in terms of global economic shock. I mean you were just in Hong Kong. You're you're feeling fine. We should say so far. You know so it's been three routes all it's quite a. Are you worried about that. I mean honestly well of course it is a potential attention influence on the global economy. It seems certain to have a significant effect at least for quarter to one Chinese growth and China's such a significant piece of the global economy. That's bound to have spillovers. Economists of look did what's happened with past episodes like the SARS virus or the mayor's virus but we don't know where this is going and I mean to. My mind is clearly a source of uncertainty and risk to the global outlook of the World Bank's position. So they'll be lowering of forecasts for at least the first as part of twenty twenty in part due to China in part due to the supply chains to give you an example. A lot of Chinese goods come out to the rest of the world in the belly of aircraft that are carrying passengers so as you cut down on passenger flights you need to adjust the supply chains in in order to get the goods out to make the products that the whole world economy is operating on a positive side that I bring out is the different science science. That's available this time then. The SARS SARS was two thousand to two thousand and three China released the virus this time and quickly released the virus so we have some hope that science response will shorten the full life cycle of this crisis. It's also true though that China's more integrated into the global economy. So that's you know. The transmission vector completely different correct. Devin malpass there. The president of the World Bank. Also Janet Yellen Ellen at mead past chair of the Federal