Europe’s economic woes, a rough May jobs report (Bloomberg), and a recently growing specter of deflation could increase pressure on the Federal Reserve (WSJ). While one Wall Street economist sees close to even odds for further quantitative easing (WSJ), analysts will closely examine Fed Chairman Ben Bernanke’s congressional testimony this Thursday. Bloomberg Businessweek argues five charts point to growing deflation risk: falling oil and commodity prices, a big output gap, tumbling U.S. Treasury yields, and declining government employment.
Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.
Education and Human Capital
Bleak Job Prospects for High School Graduates
The John J. Heldrich Center for Workforce Development of Rutgers University surveyed 544 high school graduates from the past five years who are not attending full-time college. Twenty-seven percent of these high school graduates were employed full time, while 44 percent were unemployed. Among those who graduated before the recession, 37 percent were employed full time, while only 16 percent of recession era graduates had full-time jobs.
New Standards Often Lead to Plunging Scores
New, rigorous assessments based upon the Common Core State Standards (CCSS) due for implementation in most states in 2014-2015, may lead to plunging scores, if recent changes to state tests are a preview (EducationWeek). Florida’s test revisions may have caused a 27 percent drop in writing proficiency scores among fourth graders. In response, state officials retroactively lowered cutoffs and acknowledged that they did not adequately communicate the heightened expectations to teachers, something they pledge to do before CCSS implementation.
The report of the CFR Independent Task Force on U.S. Education Reform and National Security highlights the importance of the CCSS 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.
Contentious Highway Bill Negotiations
Recent comments by Senate Majority Leader Harry Reid (D-NV) point to escalating tensions in highway bill negotiations (TheHill). Reid said House Majority Leader Eric Cantor (R-VA) is blocking passage of a multiyear bill as part of an internecine battle with Speaker John Boehner (R-OH) and to damage President Obama’s election chances. Cantor and Boehner have strongly rejected Reid’s accusations, and outside observers say that Cantor is not particularly active in negotiations. The previous highway bill expired at the end of September 2009; highway construction has continued under a series of temporary extensions, the ninth of which expires at the end of June.
CFR Senior Fellow and Renewing America Director Edward Alden recently discussed political dysfunction in Washington, including the inability of Congress to expand infrastructure investment despite the support of labor unions and business groups.
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.
Corporate Regulation and Taxation
Geithner Seeks Banker Feedback on Dodd-Frank
Treasury Secretary Timothy Geithner has asked bankers for examples of unnecessary regulatory burdens (Bloomberg). Geithner has offered to use his authority to reduce red tape through better agency coordination and simplified rules on issues he finds credible. At a May 10 meeting of the Federal Advisory Council, Geithner received complaints from bank executives on issues such as stress tests, capital requirements, and restrictions on mortgage servicing.
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.