- We need to be growing at 3% per year in order to double per capita incomes in a generation, which is 25 years.

Most of the quote, unquote Global South is growing below that number.

[soft instrumental music] - Hello and welcome to "GZERO World."

I'm Ian Bremmer.

And today we are taking the temperature of the global economy.

In many ways, it's a tale of two COVID recoveries, the United States and everyone else.

The risk of global recession has receded, and that's largely due to the resilience of the US economy.

The world's second-biggest economy, China, is stagnating, led by a collapsing real estate sector and the flight of foreign investment.

Other G7 economies, like the United Kingdom and Germany, are tilting towards a mild recession.

Global South countries around the world hold record amounts of debt.

So, where are we heading?

Is the world's economy still shaking off its post-COVID hangover, or are these problems more entrenched?

I have some good news, and there are reasons for optimism.

I'm going to unpack why that is and get a hard assessment of the overall economic outlook with my guest today, economist Dr. Dambisa Moyo.

And later, "GZERO" is on the ground with the grassroots organizations filling a crucial gap amid New York City's ongoing migrant surge.

But first, a word from the folks who help us keep the lights on.

- [Narrator 1] Funding for "GZERO World" is provided by our lead sponsor, Prologis.

- [Narrator 2] Every day all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains with a portfolio of logistics and real estate and an end-to-end solutions platform.

Addressing the critical initiatives of global logistics today.

Learn more at prologis.com - [Narrator 1] And by... Cox Enterprises is proud to support "GZERO."

We're working to improve lives in the areas of communications, automotive, clean tech, sustainable agriculture and more.

Learn more at Cox.career/news.

Additional funding provided by Jerry and Mary Joy Stead, Carnegie Corporation of New York, and... [bright upbeat music] [soft energetic music] - How's the American economy doing, really?

First it was heading for a recession, then it was too hot.

Unemployment is down, that's good.

Prices are still rising, that's bad.

Interest rates are up.

Stocks are to record highs, though only inflation adjusted.

Adding to the mixed indicators, it's an election year, so we all wanna kill each other.

And while the country's economic health is front and center, there is a strong political interest in making things seem better or making them seem worse.

- Now our economy is literally the envy of the world.

15 million new jobs in just three years.

Wages keep going up, inflation keeps coming down.

- We are a nation whose economy is collapsing into a cesspool of ruin.

- When you look at the world's post-COVID recovery, Biden is right.

America's an outlier.

US GDP grew faster than any other advanced economy last year.

Wages are up, inflation is falling.

Unemployment's been under 4% for the longest stretch since the 1960s, yet most Americans agree with Trump.

Only 28% have a positive view of the economy.

That's just 13% of Republicans, and it's less than half of Democrats.

Voters consistently say it's the top issue for 2024.

So, why do they disagree?

Don't underestimate psychological impact of high inflation.

Unlike unemployment or stock prices, inflation affects every single American, teenagers, blue-collar workers, retirees.

It's also sticky.

The rates come down, but it's still higher than it was five years ago.

Don't get me started on the price of chocolate chip cookies, up 44% from 2019.

So much for more cookies.

But something else is happening.

Consumer sentiment is lower now than it was in the mid-70s when inflation was higher and lasted longer.

Some economists are calling this current moment a vibecession because American's economic views seem to be based on feelings rather than hard data.

Environmental factors like reduced foot traffic in cities and higher crime rates can make it feel like the economy is doing worse than it actually is.

The grocery prices are still high, which doesn't represent the overall economy, but has a much stronger emotional impact than, say, the price of industrial steel or crude oil.

But the current economic mood isn't just vibes, man.

It's harder to get a loan than it was five years ago.

Housing, most Americans' biggest expense, is up 22% for renters and over 40% for buyers, making everything else more expensive.

The good news for Democrats is consumer confidence has been rising since its low, back in 2022.

And there might be enough time to close the gap between expectation and reality before the election.

Problem is that Biden's approval rating is taking a beating, and what should be his greatest strength dragging him down.

If the president could find a way to convince voters of the strength of America's economic recovery and not focus on his age or immigration, it might be his best shot at holding the White House.

Here to help us explain the US economic recovery versus the rest of the world, inflation and how China's financial woes factor into all this, I'm joined by economist, author, and member of UK Parliament's House of Lords, Dr. Dambisa Moyo.

Dambisa Moyo, welcome back to "GZERO World."

- Thank you, Ian.

I'm delighted to be back here, thank you.

- The global economy right now, if you had to give it a grade, not in a curve, what is it?

- Solid B.

- Solid B?

Now, see, in the geopolitical world, things seem to be going to hell.

And yet, I mean, when I talk to the heads of the IMF, the ECB, that sort of thing, they do feel a little more comfortable.

B sounds good.

Am I wrong?

- It actually really depends where you are.

If you're in the United States, and, again, from a top-down level, things seem pretty good.

We're seeing inflation a little bit sticky, but, you know, it's not at the numbers that we saw a year, a year and a half ago.

And in terms of growth, the mood music coming out of the IMF, certainly for the United States seems pretty constructive.

But if you look outside the United States, even large developed regions like Europe, we still see recessionary pressures.

You've got the Germany situation, the UK, across emerging markets.

The large emerging markets still are concerned about slow and low growth.

So I think the story is more complicated if you start to look at a disaggregated level.

- So the thing that people seem to be most negative about is we're not seeing pickup in China, consumer sentiment is poor, structural conditions for the economy almost everywhere you look seem to be negative.

First of all, is that correct?

Is that really the large economy that is under the most pressure right now?

And is the Chinese government responding to it appropriately?

- So I think there are two things.

The China thing for sure in the economics realm is a big drag on the narrative.

As you know, China is the largest foreign direct investor, lender, and basically in terms of trade, trading partner to the developing world, and actually, to many developed economies as well.

As you know, it's in the top three largest foreign lender to the United States government with Japan and Saudi Arabia, possibly other two.

And then, of course, you know, you look at the Chinese influence across Europe and the Middle East, and you can't discount the sort of slowdown that we're seeing there.

The deflationary pressures in China as being a sort of global drag.

And then the other thing is the geopolitical risks.

I think, really, if you take a step back and think about what has changed in the sort of global economics narrative is that global risks from the geopolitical side have become quite material and they do have knock-on effects.

We know from the inflationary side, but obviously now they have knock-on effects in terms of trade is particularly what we are seeing.

The disruptions of trade flows coming out of the Middle East.

- Is the biggest concern on the Chinese side the fact that the consumer doesn't have confidence, or is it more structural in terms of government and corporate debt and real estate sector overbuild, that kind of thing?

- I think it's a confluence of factors.

I mean, first of all, I think there's a sense that the Chinese political class has been a little bit slow in responding to what people feel is a number of negative factors, which some of them you've mentioned, the consumer sentiment issues around the debt.

But also the sort of broad geopolitical, I'm going to call it anti-China sentiment through the regulatory statements out of the United States, notwithstanding some of the more recent constructive conversation, I mean, fundamentally there's, China's been offside, concerns around tariffs.

So all those put together, I think people have been expecting a much more, sort of, shall we say enthusiastic response from the policy side.

We're seeing bits and pieces that have from come from the Chinese policy side.

- From the Chinese policy side?

And we haven't, it's incremental.

- And it's been a little bit piecemeal all things considered.

I think a lot of people, particularly last year at this time, people were sort of hoping that post the Chinese New Year and post-COVID with some of the changes in the policy there that we would've seen a massive sort of return to China's strength.

We haven't seen that.

- Now, on the United States front, I mean, is it close to Goldilocks?

I mean, in terms of coming out of the pandemic, we heard so many and massive concerns about how high inflation was.

Has come down pretty significantly.

- But it's not at target.

- Not at 2%.

But it's under three now, isn't it?

- Well, it is, but as you saw just in the last week, we've seen, you know, numbers are still quite sticky on the consumer side as well and the wholesale side.

So I think there is, you know, questions.

I mean, Larry Summers has been very vocal that it may very well be the case that the next rate move, contrary to market belief, could be up and not down.

- You don't buy that?

- I think we have to wait and see.

It's pretty fair to say that Chairman Powell has been very clear about the general view that inflation is very problematic, even though there might be wisps of moving in the right direction to lower, we have to wait and see.

And I say this because the market was pricing in three cuts for the year.

Now we've definitely seen a move for people, I think June 12 is now when they expect to see the first rate cut.

And I think that they're now, there's much more caution around what that win and how big the rate cut might be.

- I mean, is 2% the right target for US inflation?

I mean, is there really such a massive difference in terms two and three?

- That is the question.

There is a big difference.

100 basis points does make a material difference.

I think the more fundamental question is, should there be, and I know the discussion is occurring, should we be moving that target, given the way the world is, the geopolitical, both supply and demand factors that have emerged on inflation, supply factors such as deglobalization, the wars creating supply challenges, and therefore raising inflation pressures there.

But then there's demand side as well, with all of us coming out of quarantine and back into the economy that was also creating pressures.

I think, together, those factors, both on supply and demand side of inflation, have meant, you know, should we fundamentally be thinking about a different rate target?

I mean, it's very complicated.

It's something that's been debated, as you can imagine, quite feverishly among wonky economists.

But at this point, I think they've decided to stand pat on 2%.

- I'm getting a sense from you that you wouldn't necessarily think it was wrong if they came out and said, you know what, in this environment, our rate target should be 2.5, for example.

- Well, I think it's too early to say that.

The American Enterprise Institute has a chart showing that, actually, there've been enormous declines in a number of, I'm going to call technology-led types of inflation.

Things like food production, transportation, telecommunications have come down materially.

But we still see increases in a number of what I'm gonna call public goods.

Education costs have gone up, healthcare costs have gone up.

And so I think it's a fine balance for public policy to figure out where the right target might be.

- I understand that economists, everyone's good at looking backwards, but if you and I were sitting here in 2020 at the beginning of the pandemic, could you imagine that the US economy would rebound and be as resilient as it seems to be today?

Would that have been a shock to you?

- It would've been a shock because I would not have properly calibrated just how aggressive the public policy response might've been, in our case actually turned out to be.

- The PPP.

- The QE, the amount of money that was put into the system, what we were willing to do with interest rates.

I mean, this is true also for the 2008 financial crisis.

You know, it's very hard to calibrate how far public policymakers will go.

I am reminded, when I worked at Goldman Sachs many years ago, a trader once told me that you never trade based on what public policymakers should do, you trade off of what they're going to do.

And I think what is that they're going to do is always hard to predict.

Clearly they've gone much further, both in terms of interest rates and quantitative easing than I would've anticipated in 2020.

And, you know, historians and economists will always perennially debate whether it was enough, was it too much?

We're still doing that with 1930-- - But in retrospect, that feels like the right move now.

- Yeah, and absolutely, and I think this, once again, future people will say we want small government and we're looking at the consequences in terms of debts and deficits.

And people like Stan Druckenmiller, the hedge fund manager, but also Paul Tudor Jones, also a hedge fund manager, have talked extensively about how the concerns about the big debt and deficits.

This is becoming a big political issue.

The CBO, the Congressional Budget Office, forecasts around where deficits in the United States could go.

All these are things that are making the decisions that have been made during crisis points, quite a political football.

But the fact of the matter is, if you're a public policymaker in situ, when you're facing a lot of highly challenged risks that are unanticipated and hard to calibrate, I think sometimes you do have to be a bit more aggressive.

- So I wanna end with the developing world, what we now increasingly call the Global South.

Developing world an economic frame, Global South a political frame.

But either way, countries that are more challenged in periods of crisis.

So if we are coming out of this period of pandemic, but nonetheless still are experiencing all of these geopolitical and political risks, does that make you structurally more negative on the Global South at large, understanding that there are pockets that are more attractive, or can they also experience the same kind of rebound, given all the money that's been pumped into these economies historically?

- So Ian, there's a fundamental problem that we've not been able to resolve, which, actually, it's been a problem since pre-2020, and that is the situation of economic growth.

We need to be growing at 3% per year in order to double per capita incomes in a generation, which is 25 years.

Most of the quote, unquote Global South is growing below that number materially.

And so I'm talking about the largest economies, countries like Brazil, South Africa, these are countries that have over 50 million people.

You've seen what's happened in Argentina with Milei's coming in with these new shock therapies, essentially, to try and get the economy growing again, facing huge debts, but also all the sort of external factors that we've talked about and that they've had to import such as inflation, et cetera.

So fundamentally, the problem of growth has not been resolved.

This is a problem that's been going on since, you know, you could look back and argue since it was 2008 in the aftermath of the financial crisis.

And if countries, these large economies are growing suboptimally, the risks are being felt not only in those economies, but we're feeling them in the south border of the United States and elsewhere with disorderly migration around the world.

And so I would like to remain optimistic that these emerging market economies are, they're net importers of things like technology.

They could gain considerably from decarbonization and some of the new sort of energies that are emerging from the science side and technology.

But fundamentally, if we cannot boost growth, and if you look at the IMF, World Bank in particular has been talking about this decade being one of the most challenging in the next-- - Globally.

- Globally.

- For the Global South and for Africa specifically.

- Exactly.

- I keep hearing that, yeah.

- And remember also with 2020, that pandemic actually moved 200 million people back into-- - Extreme poverty.

- Extreme poverty.

I mean, these are the headwinds that we're facing at a time of massive debt, deficits and, you know, real inequality both within countries, as well as between.

- And we haven't mentioned climate change, but of course, the reality is that climate change is affecting precisely these populations much greater.

The geopolitical conflicts you've talked about that I spend my time thinking about have affected these countries, these populations much more harshly.

I mean, is it reasonable to expect that we can get global growth to hit those numbers that they require without massive amounts of redistribution from wealthy countries?

- Well, I should hope so because, I mean, I fundamentally believe that we should be investing, we should be thinking about risk mitigation strategies that don't try and put a stranglehold on growth and investment.

And so I did mention decarbonization.

That's, to me, the evolution of what people call climate change.

And I think we all want to see, and I think there's a great acknowledgement that there are headwinds emerging from the carbon situation and climate issues that we're all very familiar with.

But in order to really get the growth numbers, it's not just going to be a matter of risk mitigation, it's going to be also about investment, as well as really thinking about technology and some of the gains that we can get from there.

- Dambisa Moyo, thanks so much for joining us.

- Thank you, Ian, thank you.

[soft instrumental music] - And now an issue with huge economic implications, immigration.

Since spring of 2022, Texas has bussed hundreds of thousands of migrants to Democrat-run sanctuary cities, which are now struggling to absorb so many people.

"Gzero"'s, Alex Kliment has this report about grassroots organizers in New York stepping up to fill a crucial gap in the system.

- These people?

- [Alex] It's a busy weekday morning at New York City's Penn Station, and Power Malu is on a very specific mission.

- I'm the executive director of Artists Athletes Activists, and we are the organization that has been helping to welcome the migrants and advocate for them as they come to New York City.

Okay, yeah.

- [Alex] A few hours earlier, Power got word that migrants arriving on a bus from Texas would soon be dropped off in New Jersey and put on a train bound for New York.

The problem?

He doesn't know how many people there are, when exactly they'll show up, or what platform they'll arrive on.

So he has to guess.

He fields calls while his associate, Bashir, runs around the station, checking the platform, the street, the arrivals hall, looking for anyone who looks lost or confused, and asking families if they need help, using Google Translate.

Eventually they find who they're looking for.

[Power speaks foreign language] Power doesn't work for the city.

He's not here in any official capacity at all.

[Power speaks foreign language] He's one of a handful of organizers who have stepped in to fill a crucial gap in New York City's immigration system.

Since the spring of 2022, New York City has absorbed more than 170,000 migrants, most of them sent on buses from Texas in a crisis that Mayor Eric Adams says will cost the city $12 billion.

- This issue will destroy New York City.

We're getting 10,000 migrants a month.

We have to feed, clothe, house, educate the children, wash their laundry sheets.

- [Alex] In October, the city announced it was changing its right-to-shelter policy, forcing everyone in the city-provided shelters to reapply for residence every 30 to 60 days.

For folks already struggling to get settled in a new and unfamiliar country, that kind of upheaval only makes things harder.

- The illusion is that they're in these beautiful hotels and they're getting all of these services, and it's not true.

That's why you have organizations like ours that have stepped up and had to change from just welcoming to now doing case management, social services, helping them with mental health therapy.

- [Alex] One place they do that is at a church on West 40th Street, which has become a vital resource for recent immigrants to New York.

- So right now, we're inside of Metro Baptist Church.

We're serving the immigrants, refugees, asylum seekers that are coming to New York City.

This is more of a community center for them.

- [Alex] Here, Power and other volunteers serve hundreds of people a day from all over the world, helping with asylum applications, ID cards, health insurance, school enrollment, and English classes.

But despite all the chaos, the music, the noise, the crowds, the kids running around, the first thing you notice here is how amazing it smells.

- We help build community by providing food.

We help build community by giving the migrants, the asylum seekers, an opportunity to actually cook food, which they haven't had an opportunity to do that for months, maybe years since they traveled over here.

- [Alex] On today's menu, arepas, kale salad and caraotas, a Venezuelan black bean stew.

Many of the volunteers here are asylum seekers themselves, like Bashir from the train station, and Brandon, who met Power after making the journey here from Venezuela in 2022.

[Brandon speaks foreign language] [Alex speaks foreign language] [Brandon speaks foreign language] Power's organization, Artists Athletes Activists, has been doing this work for almost two years, funded entirely by donations.

But one big source of frustration, he says, is the city government itself.

- The city is not connecting with the real grassroots organizations that are on the ground doing this work.

- [Alex] City Hall says it's doing everything it can to respond to an unprecedented crisis.

- We're not seeing what you see in other cities where there are tent cities or where there are people living on the streets, children and families.

- [Alex] But speaking from the front lines of this crisis, Power says the mayor's office could still learn a thing or two from organizations like his.

- Look at this small but mighty organization helping these thousands of people that are coming here.

If the city just got out of the way and just supported the organizations that are passionate about doing this work.

Get out of the way and let us, the organizations that don't depend on politics, don't depend on bureaucracy, and are all about helping the people, let us lead the way.

- [Alex] For "GZERO World," I'm Alex Kliment in New York.

[soft instrumental music] - That's our show this week.

Come back next week.

If you like what you see, or even if you don't but the vibe is good, 'cause it could be, why don't you check us out at gzeromedia.com?

[energetic music] [energetic music continues] [energetic music continues] [upbeat tune] - [Narrator 1] Funding for "GZERO World" is provided by our lead sponsor, Prologis.

- [Narrator 2] Every day all over the world, Prologis helps businesses of all sizes lower their carbon footprint and scale their supply chains with a portfolio of logistics and real estate and an end-to-end solutions platform.

Addressing the critical initiatives of global logistics today.

Learn more at prologis.com - [Narrator 1] And by... Cox Enterprises is proud to support "GZERO."

We're working to improve lives in the areas of communications, automotive, clean tech, sustainable agriculture, and more.

Learn more at Cox.career/news.

Additional funding provided by Jerry and Mary Joy Stead, Carnegie Corporation of New York, and... [bright upbeat music] [cheerful tune]