hi, everybody. happy labor day weekend and welcome to "the wall street journal report." i'm maria bartiromo. it's all about jobs, the crucial indicator of the health of our economy. what the jobs number says and what it means to your portfolio and the market. and which cities give you the biggest bang for the buck? where do you get the most value in housing, jobs, and the best local economies? plus, from deficits to downgrades and disasters, a look back at an astounding summer. "the wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report." now maria bartiromo. >> all that coming up. but first, bill griffeth with

some of the stories in the headlines this week. bill? >> here is a look at what is making news as we head into a new week on wall street. a disappointing jobs report for the month of august. nonfarm payrolls unchanged. the economy creating a net of no new jobs for the month, the first time we've seen that since 1945. and it was obviously well below analysts' expectations. the unemployment rate was unchanged at 9.1%, and the june and july numbers were revised downwards to show 58,000 fewer jobs created. it is the weakest jobs report we've seen since september of 2010. and that helped push the markets down early on friday. the major averages had ended a four-day winning streak on thursday. earlier in the week they finished their worst august in ten years, closing down at least 4%. in other news, auto sales surged surprisingly in august. gm was up 18%. ford rising by 11%. chrysler skyrocketed by 31%, outselling toyota for the third

time in four months. and the justice department is saying i don't to that $39 billion marriage between at&t and t-mobile. government lawyers saying the proposed mergers between the number 2 and number 4 mobile phone companies would be anti-competitive and lead to higher prices for consumers. the companies say they will fight that ruling in court. president obama has a new choice to lead his economic team. he has nominated princeton economics professor alan krueger to take the top spot and chair the council of economic advisers. krueger is an expert in labor economics, and he must be confirmed by the senate. so what do the jobs numbers mean for the economy and your portfolio, and is there anything washington can do about them? joining me now is diane swonk, chief economist at mesirow financial. thanks for joining me. why isn't the economy growing jobs at this point? what is going on? >> there are so many things going on. certainly the month of august had a shock to confidence. and what i fear with the volatility that we saw tied to everything from the debt ceiling

debate or debacle, the downgrade by s&p, and the ongoing financial crisis that we're seeing grow in europe, all of that financial market instability really validated the strategy by large corporate america to hold on to their cash. they've been hoarding over a trillion dollars in cash, and why should they redeploy it when they're so uncertain about the future going forward. >> the president gives a major speech this week to outline a program to grow jobs. realistically, is there anything either the administration or the fed can do to grow jobs right now? >> there is not much they can do to grow jobs. there is things they can do to stem the pain. if the payroll tax, which is a low-hanging fruit is not extended, that will add insult to injury to an already fragile situation, one where the recession risks are rise big the minute. if we do see some kind of certainty out of a long-term plan in austerity, that would as bernanke put leigh some room for stimulus -- i don't think this congress has any appetite for that. but at least if there is a plan.

most businesses even if the road ahead is rocky, can deal with it as long as they know what the road looks like. a plan would be very useful with many of the cuts back loaded into that and tax reforms back loaded as well. i think also the fed is certainly on watch. they are ready to do qe3. whether that is a savior or not, it could stem, again, some of the financial market losses. i really think we're risking being on a precipice of another financial crisis. >> do you think the jobs report of friday makes it more likely that we see more quantitative easing from the fed? >> i do think it make it more likely. i think there are still some that are going to be dissenting on that vote be. those who are waiting for more economic data are now more likely to feel more comfortable with it. really, there is a sense that bernanke does have a major core that is in favor of quantitative easing. but they have a significant minority that is opposed to it. and they're opposed for different reasons. some just want to see more data. those certainly can move to the

quantitative easing side. others feel that quantitative easing won't do any good there isn't any efficacy in it. the problem for the fed is by law they're out of their mandate if they're not at least trying. and that fed would like to try and fail rather than do nothing at all given what is at stake. the northeast is cleaning up from hurricane irene. what kind of economic impact do you think it's going to have? >> usually when we had a storm as major of this magnitude, the damages, the rebuilding and stuff that came after it would actually look like a surge in economic activity and help us out a bit. it would drain wealth through insurance and the wealth lost, but then we would recoup it in the near term by seeing a spark in economic activity. that doesn't look to be happening. these state and local governments don't have the money to do it. fema is running out of money. and congress has made very clear they will not further fund fema on the flood insurance program unless they have cuts elsewhere. so it's -- we're almost starting to look like an undeveloped economy when it comes to disasters. now that is something that has

emerged in the 2000s. it's very different from what we've seen in the past. >> europe. we look to europe so often on wall street for direction. and the problems that they're having with their debt situation, their banking issues. where do you think that goes from here? >> you know, that's the real crux of the problem. we need containment with europe. the ecb has already warned this week that we could be on the edge of another financial crisis that looks as bad as 2008-2009. that's not the problem in the u.s. the u.s. has liquidity. we have money on the sidelines. we have a cushion. that's the good news. but contagion is always the risk with europe. italy is having problem passing its austerity program. and the greek bailout. i think they'll band-aid it together to get something to buy some time. but we need to see much more movement in europe toward centralized policy. they need what we had was the t.a.r.p. to recapitalize their banks. their banks are not in as good as shape as our banks are in the u.s. and they cannot take the kind of losses that something that spins out of control in europe, moving

from greece to italy to spain. as we already saw sort of a precursor to early this summer. >> we all know we had unprecedented volatility in the markets in august. it's supposed to be a sleepy time of the year. it didn't happen. so what are your expectations for september, which typically is not a good month for the stock market? >> you know, i certainly don't know. if i knew what the stock market was going to do the next day, in the next month even, i would own my own island in the caribbean, or maybe i would take collateral on santorini for greece. i don't know. but the bottom line is i'm really very concerned about volatility and the direction of the market this fall because of the risk of not only a recession in the u.s., but also the risk of real financial crisis in europe that may not be contained just to europe. >> and the volatility is just a reflection of what is going on right now. so i guess a lot of it will depend on what comes out of washington and what comes from the european central bank, right? >> absolutely, bill. and it's not just the european central bank. it's the governments of europe, the leaders of europe. they need to come together on

some fiscal policy, fiscal consolidation in europe, some unity in terms of rules. how are they going to make the eurozone a really feasible currency zone. and that's something that has yet to be answered. they're inching towards a solution when they need to be sprinting. the sense of urgency in both washington and europe isn't there to solve problems instead of create more problems. >> diane swonk, always good to see you. thank you for joining us. >> thanks, bill. >> now back to maria with the rest of the program. >> thank you so much, bill. up next on "the wall street journal report," this was the august that was. a look back at the summer month that was anything but a few days at if beach for the financial system. and later, living large in some american cities. we'll discuss the top townsfor value, where you'll find the biggest bang for your buck, and maybe a good job too. we'll be right back. so how about this weekend we learn some new tricks of the trade... then break out our doing clothes and get rolling. let's use some paint that helps us get the job done in record time and makes a statement when we're finished. let's find ourselves a new favorite color.

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downgrade of u.s. credit, an earthquake, a hurricane, the market's wild ride. this was one summer of business unusual. >> i want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default. >> it was a mess. when people around the world, investors or businesses are looking and you have got members of the u.s. government saying well maybe it would be okay if the u.s. government defaulted on its obligations for a few weeks, that is a terrible, terrible blow to add. that's literally the last thing we needed. >> i think s&p has shown really terrible judgment, and they've handled themselves very poorly and shown a stunning lack of knowledge about u.s. basic fiscal math. they drew exactly the wrong conclusion from this budget. they like anyone looked at the terrible debate we've had, should the u.s. debate or not. really a remarkable thing for a country like the united states. that was very damaging.

>> going from aaa to aa doesn't mean it's going to default. it just means it's more risky today than it was a year ago. >> do you think the market sell-off is an unintended consequence of the downgrade, perhaps a key event that precedes another major economic downturn? would you take responsibility if that were to happen? >> look. the market reacts in many ways that is sometimes unexplainable. but our ratings really addresses the fundamentals of the credit worthiness. no. the market could be reacting to the fact that there is slowdown in the economic growth. it could be reacting to what is happening in europe. it could be reacting to what is happening in the u.s. there are many multiple factors that sort of really contribute to how the market reacts. >> when you go to sleep at night, think about the following before you get depressed and you see the market down 500 points. this nation is still the greatest nation on the planet. every day 130 million people wake up and go to work. every day 110 million work for private enterprise. there are 30 million small

businesses that every day go to work. right around here, that's going to happen every day. by our nature, americans are entrepreneurs. they want to work, want to grow, want to expand. it will come back. >> is this a new crisis or the aftershocks from the last one? >> this is absolutely the aftershock of the last one. you have slow, grinding, halting growth. that's normal. but especially what is going on in europe, the sovereign debt crisis, that happens almost invariably a few years after a deep financial crisis like we just experienced. definitely europe is the tail rift in the global economy. >> every country has to do a better job in reducing the debt burden and reducing fiscal deficits. and now the challenge of course. that's why markets are really nervous is can politicians at the same time stimulate growth, which is particularly needed in europe and consolidate the financial -- the public finances. and i think that is the big dilemma we're in. >> morgan stanley recently said

that european banks may need 80 million euros, $116 billion by the end of the year in terms of raising capital to address these sovereign issues. how significant is this issue in europe? >> we're bound to continue to have chronic bouts of event risk around the individual countries. so how do we get from where we are today to a more integrated euro bond market, if i can use that phrase? and i think that clearly means we have to move in a much more focused way toward more fiscal integration. >> the people of northern europe simply don't want to pay massive taxes and take on all the liabilities of the periphery in the south and the p.i.g.s and so-called. i think this is going to be hanging over us for weeks. and in short order, we're going to see a structural change in the euro. i just don't see how it continues in the present status. >> so you think some countries will get kicked out of the euro then? >> well, some will opt out or

some will be kicked out. >> it is always important in life to distinguish between what should happen and what is likely happen. in terms of what should happen, i think bernanke realizes and will tell the world that the u.s. doesn't face a problem that can be handled with monetary policy. it's much more structural. so the bev thing monetary policy can do, the best thing qe3 can do is provide a bridge for other policymakers. but if other policymakers remain asleep, there is little point in providing that bridge. >> unfortunately, there is an element of unpredictability when it comes to the weather. >> get the hell off the beach in asbury park and get out. >> it's clear what is needed is credible medium-term fiscal plans that will give confidence to investors and others that the deficit will be controlled and

fiscal policy will be appropriate in the medium term. the more credible the medium-term planning, the more flexibility that will exist to deal with temporary impacts such as potential impact of the hurricane. >> americans open our homes and our hearts to those in need and pull together in tough times to help our fellow citizens prepare for and respond to as well as recover from extraordinary challenges. whether natural disasters or economic difficulties. that's what makes the united states of america a strong and resilient nation. >> up next on "the wall street journal report," how does your local economy compare to the rest of the country? from job creation to cost of living, we're counting down the top value cities in the united states.

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or if you have any muscle pain or weakness. this may be a sign of a rare but serious side effect. lets go... haha. if you have high cholesterol, you may be at increased risk of heart attack and stroke. don't kid yourself. talk to your doctor about your risk and about lipitor. some main street communities across the united states have weathered the economic storm in the last few years better than others. how does your hometown stack up as a vibrant local economy? we're counting down the top value cities across the country with bob frick, senior editor at "kiplinger's personal finance" magazine. bob, good to have you on the program. thanks for joining us. >> thanks, maria. >> you took a look at the number of metro areas across the country. what factors did you find important in terms of which cities offer the best bang for the locals' buck? >> we looked at cost of living first. we looked at places with generally low cost of living and

lohausing cost. some of the fairly big cities if you live in new york or washington like we do, ridiculously lohausing costs. we of course looked at if they're fun places to live, because who wants to live in a place where you're going to commute to your job and home. finally, we really took a look at the economic vitality. who wants to work in a place where you're going to be worried about losing your job. number 10, cincinnati, ohio. tell me about the job prospects and the cost of living in the queen city. >> well, one of the great things about what is going on in cincinnati right now is the economic revitalization. i mean, there is a new stadium for the bangles. there is a new ballpark for the reds. they're building, recreating the downtown. the historical district had really fallen on bad times is being revitalized. but you can get a house in that area for about 15 to 20% less

than the national average right now. cost of food is low obviously. cost of rents are low. so it's a big place. it's the biggest city on our list, but it's a cheap place to live. >> interesting. what about little rock, arkansas. that's experiencing a boom in investment, right? what sort of companies and industries have deepened their roots in little rock? >> well, it all started when the clinton library was built, i don't know, a half a dozen years ago. and a lot of places have decided to relocate there or locate offices there. caterpillar has a big plant there. there is i.t., there is medical, a lot of biotech going on there. it's not really one big marquee company or even a few, it's just a bunch of companies moving into the downtown. and it has a low i think 7% unemployment rate. and if you've ever been there, it's a really cool place. it's got great rivers and mountains, very lovely. >> it sounds like colorado springs. 10% of the local workers are employed by the military and a

big draw for outdoorsy kraut, right? what kind of workers or talents do they need there? >> there are five military bases. when we talk about the creative class, engineers, architects, teachers, and colorado springs is lousy with them there are tons of people who work for the state. hewlett-packard is a big employer. they have a lot of i.t. medical. right now the unemployment rate isn't great, although traditionally it's better than the national average. it's going through a soft spot. but it has such a diverse economy. of all the places on our list, the most wonderful outdoor activities, the most beautiful setting. >> also on the list charlotte, charlotte, north carolina. it will host the 2012 democratic convention. a huge banking center there, right? 27,000 small businesses. what are the other bright spots in this local economy? >> well, banking isn't such a bright spot for charlotte. since we wrote the story, bank of america, which is based there said it's going to lay off 10,000 people. on the other hand, not too long ago, warren buffett said he was going to put $5 billion in there.

10 let's just call the banking industry there a wash. but it has tremendous variety of employment. there is nucor steel there is health care. there is lowe's, big national retailer. but one of the things people don't think about when they think about charlotte is the energy sector. duke energy, sieman's energy plus 125 green energy companies in the area. i believe green energy is going to be the industry for the next generation. and charlotte is poised to really take advantage of that. >> wow, a real business hub there. and speaking of warren buffett, your top value town should be no secret to warren buffett, omaha, nebraska. a four-bedroom house runnious about $275,000. wow. why did that top your list? >> that wouldn't by a shed in suburban -- omaha has fortune 500 companies.

obviously berkshire hathaway, but also southern pacific, conagra. it has a ton of millionaires, thanks in large part to warren buffett's berkshire hathaway. it has a ridiculous unemployment rate of about 4.8%. and the great thing about omaha is the public/private partnerships to keep the downtown revitalized, to keep the kids well educated, to make it a fun, vibrant entertainment city. i went to omaha. we travelled to all these cities for our best cities report. and i actually picked omaha without high expectations, and i came away blown away by the fun you can have in nebraska. >> really fascinating. what a great list. bob, great to have you on the program. thank you so much for the information. it's really helpful. >> you're very welcome. >> bob frick joining us on value cities across the country. up next on the "wall street journal report," we'll take a look at the news this upcoming week that will have an impact on your money. and as we take a break, a look at how the stock market ended the week. back in a moment.

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for more on our show and our guests, check out our website, wsjr.cnbc.com, and i hope you'll follow me on twitter. the handle is @mariabartiromo. now the stories that may move the markets and impact your money this week. monday is labor day. all u.s. markets are closed for

the holiday. following labor day, congress reconvenes after a five-week summer recess. and the president is expected to announce a major plan on american job creation. wednesday the federal reserve's beige book will be out. that gives us a sense of the regional economies across the country. and on thursday the international trade balance will tell us if the u.s. is importing or exporting more goods right now. and that will do it for us today. thank you so much for joining us. next week, ten years after september 11th, 2001. a look back and a look ahead at the new wall street. each week keep it right here where wall street meets main street. have a great week, everyone. have a great week, everyone. i'll see you again next weekend. [ man ] i got this new citi thankyou card and started earning loads of points. you got a weather balloon with points? yes i did. [ man ] points i could use for just about anything. ♪ ♪ there it is. [ man ] so i used mine to get a whole new perspective. ♪

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