gulf of mexico. residents of mississippi and louisiana got short notice warnings today. get ready for tropical storm lee to hit this weekend. it may not be as powerful as a hurricane, but it's moving at a crawl, which means new orleans canals and levees will be tested by a prolonged rain. up to 15 inches or more are expected plus a storm surge. we'll get a live update on storm preparations in a few minutes. but first, today's stunner from the labor department, the country saw a net gain of no jobs in august. plus no change in the unemployment rate still 9.1%. it is the worst jobses report in a year. wall street crater, the do you industrial, s & p 500 and nasdaq all lost more than 2% today. president obama didn't even try to put a positive spin on the news. no on-camera statement, not even a written one. we did catch one clims of him today as he left for camp david without even turning to wave good by. with us now, the president's former economic advisor, christina roamer, she's now an economics professor at the university of california. professor romer, thank you for being here. let me ask you first off whether you saw any good news inside this report. >> you know, it was pretty hard to find anything. i think the basic view is this is a pretty wretched jobs report. i think if you look deeper, it becomes even worse. when we learn, for example, that hours went down a little bit. not only did we not add any jobs but we were cutting back on hours so that total labor input went down. or discovered that another 400,000 people are working part-time for economic reasons. that's another sign of distress in the labor market. so i think it is very hard to put any kind of a positive spin on this report. >> in fact, americans don't even try. we have a new cnn poll out today, cnn-orc poll. we asked is the economy in a recession. 82% of americans believe the economy is in a recession right now. only 18% believe the economy is not in a recession. convince them that this is not a recession. >> yeah. i think maybe we're too sort of caught up in what the right term for this is. so there's a technical definition of a recession that means the economy is literally falling. and right now it seems to be we're growing at a snail's pace. but the more fundamental point that this is an incredibly distressed economy, i think that's what the poll respondents are saying. and of course they're right. this is a terribly distressed economy. unemployment rate is 9.1%. whatever you call it, it is a tragedy and it's a situation that demands very bold action. >> do you think -- and i want to talk to you about that bold action and what you think it should be. but do you think it is possible technically, because i know you're an economist, technically speaking is it possible we could fall back into recession? >> you know, when growth gets as low as it has been, when job creation is as weak as it is, zero new jobs created in the month of august, of course the chances that you fall into a technical recession go up. i mean, it's not a very big line between no growth and actually losing jobs or actually seeing gdp fall again. so that's not my best guess of what's going to happen. i think like most forecasters, i think that growth is probably going to continue at sort of the snail's pace that it's been going. but of course, the risks of a recession have gone up. >> what does the president need to do? he's giving a big jobs speech coming up to talk to us about what he wants to do to member create more jobs. how does he do that? >> you know, i think there's a lot riding on this speech next thursday. i think the president not only the whole country but i think the whole world is looking for leadership on how do we get out of the mess that we're in? you know, i think what the president needs to give is what i would describe as a very bold, two-part strategy. it obviously has to have some very big, very significant measures, fiscal measures to try to create more jobs. and then it has to reassure everybody that we're going to get our fiscal house in order over the long term, so it's also going to have to talk about how we'll deal with the long-run deficit. and that's a hard message, but it's the right message and it's the one the president needs to convey. >> so he needs to convince people that in the short term to kind of jumpstart the economy we need to spend money and cut taxes. and in the long term we need to stop spending money and raise taxes. is that what you're saying? >> that's exactly right. and you know, it's easy to say that that sounds silly, but it's right. we have an immediate jobs problem. to deal with that certainly the federal reserve could be helping. but the other main tool we have is some kind of fiscal support. so more tax cuts, infrastructure spending, tax incentives for firms to do hiring. all of those things are what we know will create jobs in the short run. and then it's completely sensible to say you take the emergency measures you need to take now, but we're also fiscally responsible. we put on the table what revenues are we going to raise over time, what spending are we willing to cut back, what are we going to do to entitlements. you spell that all out. but that can wait for five years, ten years before that has a big impact on the economy. >> you know, try to put some meat on the idea that we need to spend more money here. where do we need to spend it to do -- make a dent in that jobless rate? and how much do we need to spend? >> i think that's exactly the right question. so i think the big sort of the big picture is, we're not going to do this with 1 billion or $2 billion programs. that with 14 million americans unemployed, what we're talking about is something substantial. so we've heard coming out of the white house that they want to for example extend the payroll tax cut that they did last december. all right? so that's about 110 billion for a year. but you certainly need something i think substantially bigger than that. something -- a new jobs tax credit that might be another $50 billion or even more. a big infrastructure program. so you really are, i think, having to talk about some significant amounts of money if we're actually going to move the dial. there can be wonderful, small programs that could be helpful, but they're not going to put millions of people back to work. >> so if i sort of add that up, you're kind of in the range of $300 billion in new spending. is that about right? >> of new spending and tax cuts, maybe even somewhat above that. you know, i'll give you an example. i've been talking about a bold, two-part plan. one of deficit commissions headed by pete daminici and alex riplin had a $6 billion payroll tax cut and $5 trillion of reductions over the next ten. i don't think i would go that far. but that's the idea of a big, bold plan. and we've seen very responsible, fiscal conservatives put out that kind of a plan as what you do about jobs now and what you do about deficit over time. >> i want to ask you one last question. you all when you were in the government were part of the report, the forecast in january of 2009. and we went back and looked at it. and right now, according to that forecast, with the stimulus plan that was put into place, unemployment should be at about 6.5. we clearly know it's not at 6.5. what went wrong, and what do we learn from that so that the president can do something different next wednesday? >> i think the most important thing is what went right, right? so in that report we certainly made a prediction about what the recovery act would do. it would create 3 to 3.5 million jobs. something i dearly wish the president would go on tv and say with all his heart is, that recovery act worked. it absolutely was an important step. >> but surely not the way you wanted it to work since you thought the unemployment rate would be at 6.5. i don't want to relitigate what you wrote. i'm just saying is there something there that you thought, you know what, we should have dumped a lot more money in? >> oh, absolutely it should have been bigger. so if you ask how did that forecast go wrong, it was all in the baseline. it was predicting where we were going to go without stimulus. and we absolutely got that wrong. the economy -- and it wasn't just us. it was basically every forecaster didn't recognize how severe this recession would be. and so certainly had we recognized that, as it was i was pushing for a larger stimulus. but boy, i'd have laid down and died for even much bigger. because i think what we know now is that fiscal stimulus does work, and study after study is confirming that. it's just that given where the economy was headed, what we did wasn't enough to turn it around as much as it needed. to it was helpful. it helped to stop the bleeding. but we definitely needed more. and i think that's what the president has a chance to enunciate on thursday of, okay, we've now seen this play out. here's the more i'm going to do now to put people back to work. >> thanks to former obama economic advisor christina romer. thank you so much for joining us tonight. >> great to be with you. our next stop is new orleans where they're preparing for a slow-moving tropical storm and localized flooding. we'll see just how bad it could get. ♪ okay, so who ordered the cereal that can help lower cholesterol and who ordered the yummy cereal? 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[ male announcer ] they'll see you...before you see them. cops are cracking down on drinking and riding. drive sober, or get pulled over. it's a lifetime. gone. we'll make it right, john. when the unthinkable happens, we're right there with you to help you get your life back on track. nationwide is on your side. people along the coast of louisiana, mississippi and alabama are preparing to deal with a foot or more of rain. this afternoon new orleans mayor richlandry joked that people have been praying for rain this week to put out a swamp fire, but those prayers are being answered by a tropical storm forecast to come ashore this weekend and just hover. ed lavendera is in new orleans tonight. ed, how bad is it supposed to get there? already looks like it's there. so how much worse is it going to get and what are they doing to prepare? >> reporter: well, it's interesting, this is a really large storm, a tropical storm lee. but from everything we're hearing hear is that people really expect this to be a rainmaker and a very constant rainmaker throughout much of the weekend. this is a massive storm that is not only large, but moving incredibly slow, about two miles per hour. most people walk faster than that, so this will take its time meandering over the gulf coast, parts of the mississippi coast and into texas as well. but the concern will be flooding. this is the beginnings of this. the heaviest and strongest winds are supposed to hit the louisiana coast tomorrow afternoon. so we are anticipating that. but they are expecting a lot of flooding. in some places, expecting perhaps as 20 inches. 12 inches in other parts. so that flash flooding could be very much a big concern as you obviously saw with hurricane irene along the northeast. that is a big concern, and this will be bringing a great deal of rain. candy? >> obviously, ed, the holding of those levees is vital it to the city of new orleans. we know that if we know nothing else after hurricane katrina. how confident are city officials that those levees will hold? >> reporter: they were talking about that today and one thing they're doing is making sure that all of the pumping stations which move waters through the canals here in the new orleans area, the mayor says that all of those pumps stations are working properly, that all the backup generators are working properly. so as of now, i feel confident that everything will hold. i don't hear a lot of people talking about any kind of dangers to the levee system in terms of breaching levees. it would take a great deal of rainfall for that to happen. but obviously pumping this water out and getting it out of here is a big concern and that's why those pumping stations are so crucial. but as far as we know right now, all of that is working properly. >> ed lavendera for us tonight. thank, ed. once it gets beyond the louisiana and mississippi coast, tropical storm lee may wash out labor day for much of the southeast. meteorologist karen maginnis in the cnn severe weather center with me. karen, where is the storm headed? obviously right for new orleans and then where? . >> well, this is forming so close to land, and it does not have typical characteristics of a tropical storm. meaning we don't see kind of that concentric look, we don't have a clearly defined eye. but the computer models are still in very much disagreement as to where this is going to be headed. take a look at this. some have it just kind of swirling around the coast, some have it going off towards the southeast. there were even a few that had it going over towards texas. i see in our latest run that it looks a little bit more defined as to where we anticipate making landfall. perhaps sometime on sunday, maybe the middle part of the day, but somewhere along the louisiana coast. but i say that, but just to be aware, this is a system that is not moving very far. not moving very fast. still at tropical storm intensity. and yet some of these areas are going to get drenched. they need the rainfall. they don't need it all in 24 hours. we'll see for tonight a couple inches of rain for new orleans extending over towards lake charles, violet. all of this coastal communities because this moisture keeps getting pumped in and pumped in. all along the coast. and some areas as i mentioned could see up to 20 inches of rainfall. the computer model is suggesting that. take a look at this. where you see the white shaded area, that's where we're looking at the heaviest amounts. but all across the southeast, this is where we're anticipating some much needed rainfall. three, four, five inches of rain even in northern sections of georgia. maybe as much as ten inches. but a lot much these areas have experienced severe drought. over here in texas, needed rain. desperately. we were hoping this would be a benevolent weather system for texas. it looks like the bulk of that precipitation more towards the northern gulf of mexico. but we'll keep you updated. >> thank you so much. when it rains it powers but apparently not in the right places. thank you so much. new jersey governor chris christie has been dealing with his own hurricane disaster. irene caused chronic flooding throughout the state, but this weekend, the governor will be personally helping the new jersey coast economic recovery. >> i'm heeding my own call. we're at the beach for the weekend. mary pat and i and the kids will be down here. we'll be going to different spots and hoping that everybody follows the lead. coming up, will this be a jobless labor day and are there more fears of another recession? personally helping the new jobless labor day and are there as we head into labor day weekend, at least 14 million of our fellow country men and women don't have jobs. nearly 9 million more have only part-time jobs. either because of cut backs or because they can't find full-time work. today's jobs report raises fears of a second recession and even more people being thrown out of work. is there any end in sight to this? with us now, mark zandi from moody's analytics. and reuters global editor at large, christa freeland. thank you both for being here. what a lousy august this has been for the markets. i realize we're into september, but now they have the jobs report on top of it. how are the markets doing? >> well, august has been a rotten month for the markets. just as it has been for most americans in terms of the economy. i think there had been a hope that the recovery had started and i think august really, you know, solidified the fear that a lot of people had that actually the economy was very weak even if not going into a double dip recession, the recovery was extremely weak. and that made people worry about the value of their companies and, therefore, the value of holding shares. >> and mark, it does surprise me, because often times i think we get bad news and the market goes up. now the market seems to be acting like a normal human being. >> i think the markets are discounting weak economic growth but i don't think they're discounting a recession just yet. american companies' balance sheets are strong. so i think investors looking at individual stocks of companies like those stocks. they really don't want to sell them. so i think that's the key reason why the stock market hasn't fallen more and odds are still that the broader economy will avoid a recession. >> and since you brought it up, these companies are sitting on a lot of money. what is it that's going to induce them to hire? >> they just have to feel more confident. and i think what has happened over the last month or two is that we've lost faith, that the spectacle in washington over the debt ceiling, the s&p 500 downgrade, some of the problems in europe have eviscerated confidence. businesses are shell shocked as are everyone else and they've stopped hiring and expanding. so they need to get back that faith, that confidence. and i think the only way that will happen is if policymakers, the federal reserve board, congress, the administration, european policymakers step up and do roughly the right thing over the next few months because if they don't we will be in a recession. >> i want to ask you what you believe the right thing to do is, but i want to talk about the jobs report. we all know zero job growth in the month of august is now what we're seeing. that's bad enough. is there anything else in there that just sets your hair on fire? >> i'll give you some good news an bad news. the good news is those newspapers are actually a little bit better than they look because the verizon strike is reflected in those numbers and those people have gone back to work. so it's not quite as bad as it looks. the bad news is wages also went down just a little bit. so that's what happens when there is a lot of unemployed people. it's hard to ask for a raise. and i think that is significant because what it says is it's not just the people who are unemployed who are suffering the most, but there are a lot of people who are very insecure about hanging onto their job. and that insecurity is real. it's not just some neurosis. and think it's weighing on the economy overall. if you're worried about whether you're going to keep your job, you're unlikely to go out and spend. and as mark was saying, if you're the ceo of a company, that means that maybe you're going to hold back making big investments because you're not sure that the consumer demand is going to be there to support them. >> there's a bit of a feel of a chicken and an egg thing going on here because consumers aren't buying things because they're worried they're going to lose their jobs and companies aren't hiring people because they're worried consumers won't buy. >> good point. but this is the same chicken and egg problem we always have in the business cycle and it's broken by business people deciding, hey, i can't continue to grow my earnings, maintain my stock price if