U.S. companies are increasingly warning investors that unexpected European weakness is dampening sales (NYT). Declining sales in Europe are expected to pull down corporate profits in the United States, despite previous analyst opinions that the U.S. economy was well insulated. U.S. technology companies have been particularly challenged. A strengthening dollar and reported slowdowns of manufacturing in India and China are likely to compound difficulties for U.S. exporters.
International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.
Education and Human Capital
Investing in Teachers’ Professional Capital
Two educational scholars argue that policymakers need to embrace long-term investment in teachers (Education Week). They explain that professional capital has human, social, and decisional components. Nations such as Finland, Singapore, and Canada have successfully embraced these principles to build a strong profession that provides most students with good teachers throughout their academic careers. Their recommendations include increased attention on social capital, collegiality and midcareer teachers, reduced focus on identifying the best and worst teachers, and having teachers’ unions act as positive change agents.
The report of the CFR Independent Task Force on U.S. Education Reform and National Security highlights the importance of the Common Core State Standards and asserts that fixing the nation’s underperforming K-12 schools is critical to economic competitiveness and national security.
Education and human capital. Read more from experts discussing ways to improve U.S. education and immigration policies.
America’s Gas Edge
The Economist discusses booming U.S. unconventional natural gas production through hydraulic fracturing, or “fracking.” Fracking created an unforeseen energy boom; only five years ago experts believed the United States would become a large gas importer. Though the technology can potentially unlock resources in nations such as China, Australia, Argentina, and Central Europe, U.S. production benefited from several factors many nations lack: strong property rights, “open access” pipeline regulation, and supporting infrastructure including ample drill-rigs.
The transformation of the U.S. energy market created by the new extraction techniques for oil and gas has some predicting a renaissance for U.S. manufacturing based on lower, stable energy costs. Renewing America contributor Steven J. Markovich examined those claims and argued that the impact will likely be modest in last week’s Policy Initiative Spotlight.
Net Metering Under Debate
As plunging solar panel prices decrease installations costs, net metering is attracting debate (NYT). Net metering is the practice of utilities reimbursing homeowners at full retail prices for energy their solar cells provide to the energy grid. This reimbursement makes the installations more economical, spurring development and providing energy during high use periods. Critics argue those benefits are outweighed by the cost of reimbursement at full retail cost, especially in light of plunging solar panel costs due to surging Chinese production and exports that have resulted in retaliatory U.S. import tariffs.
Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.
SpaceX Founder Elon Musk on ’60 Minutes’
Entrepreneur Elon Musk, founder of SpaceX and Tesla Motors and co-founder of PayPal, was interviewed on CBS’s “60 Minutes.” In May, SpaceX became the first private company to send a spacecraft to the International Space Station (ISS), and return it safely to the Earth. The success is expected to secure SpaceX a $1.6 billion contract for 12 supply flights to the ISS. The interview covers SpaceX’s early failures, Musk’s larger goal of human spaceflight, and his response to criticism of NASA’s plans to privatize spaceflight from famed astronauts Armstrong, Lovell, and Cernan.
Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.
Corporate Regulation and Taxation
Federal Reserve Guards Political Independence
The Hill describes the election year pressures on the Federal Reserve and its aversion to appearing politically motivated. Fed officials are likely to engage in aggressive, market moving actions only if they can identify a clear, data-driven justification. Karen Dynan of the Brookings Institution explained: “This is not the time for them to be acting based on hunches. They need to make sure that the data are all lined up behind their decisions… but I don’t think they will hold back from taking appropriate steps simply because of the election.”
Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.
The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.