Today’s news environment has ADD. That’s why business leaders must occasionally disconnect from the tweet-powered media whirlwind and think hard about factors that do not make good SNL sketch material but that will deeply influence our future. So today—inspired by new PWC research finding that by 2050 the U.S. economy will be only the world’s third-largest, after China and India—I invite you to figure out what you really believe about the American economy’s future. Ask yourself two short questions. Don’t check the latest forecasts or opinion surveys. Just call upon everything you know and ask yourself what you truly think.
The two questions:
-Is today’s economic stagnation really secular? Former treasury secretary Larry Summers is the chief proponent of the view that much of the global economy is in secular stagnation: long-term slow growth, low interest rates, and below-target inflation. Others vigorously dispute that view, saying the U.S. economy can bounce back if stimulated by lighter regulation and lower taxes. Since the end of World War II, the U.S. economy has grown at an average annual rate of 3.2%, yet we have now gone 11 years without 3% growth for even one year; last year’s growth was only 1.6%.
So has something fundamental changed, creating a low-growth environment as far as the eye can see? Or does the world just need different economic policies? For reference, President Trump intends to lift U.S. economic growth to 4%. The Fed’s forecast for 2017 is about 2%.
-Must interest rates revert to the mean? Ever since the Fed cut the Fed funds rate from 5.2% to almost 0% during the financial crisis—and the 10-year Treasury rate fell from about 5% to less than 2%—we’ve heard stern warnings that rates must eventually return to average levels. When that happens, our world will change. Interest on the federal debt will become massively crippling, retirees will again be able to earn decent yields on reasonably safe investments, and stock prices will plunge, for starters. Yet after nine years, it still isn’t happening. Yes, the yield on the ten-year Treasury has risen—but only up to a measly 2.4%.
So here too, has something fundamental changed? Does a global economy based on information and services simply demand less financial capital than the old industrial economy did? Do high savings rates in the growing economies of China, India, and Africa supply more capital to global markets, just as demand for capital is weakening, making capital a low-cost resource from now on?
One thing that looks surer by the day is that our old models for predicting the future don’t work anymore. That’s why I’m asking you to consult your own deep instincts. It’s not just what you think. Where do you feel the world is going?
When you’ve achieved a fairly comfortable point of view on the two questions, you can turn cable news back on.
This week’s new Fortune Unfiltered podcast features Las Vegas legend Wayne Newton. What more is there to say, really? Listen here. Danke schön.
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What We’re Reading Today
Senator Warren barred from speaking on Sessions
While reading a critical letter that Coretta Scott King wrote 30 years ago about Sen. Jeff Sessions when he was up for a federal judgeship, the Senate barred Elizabeth Warren from speaking in the confirmation debate. Senate Majority Leader Mitch McConnell put up a vote to bar Warren for denigrating another Senator; Sessions is President Trump‘s nominee for Attorney General. The tactic, rarely used, passed along party lines. But a Twitter backlash with the hashtag #LetLizSpeak has sparked, defending Warren. NBC News
Dow, DuPont offer to sell businesses for merger
In order to secure European Union approval of a merger between the two companies, Andrew Liveris‘s Dow Chemical has offered to unload its acid copolymers and ionomers exposure while Edward Breen‘s DuPont will sell its crop protection business. The EU has extended the deadline to review the merger until early April. WSJ
Appellate judges weigh Trump’s immigration ban
In a succinct session, the three judges in the U.S. Court of Appeals for the 9th Circuit questioned Justice Department lawyers on the limits of the president’s power. They also turned to the state of Washington’s solicitor general to question him on what evidence there is of religious discrimination in the ban. Judge Michelle Taryn Friedland assured a quick decision on the case, likely this week. Washington Post
Sharp to possibly build $7 billion plant in the U.S.
Taking over plans that Sharp’s parent company Foxconn originally proposed, Sharp would begin building the plant as early as the first half of this year. It’s part of a package that includes creating 700,000 jobs for U.S. workers, which Japan Prime Minister Shinzo Abe is preparing for Trump when they meet this weekend. Fortune
Building Better Leaders
When goal setting goes wrong
Sometimes setting goals can narrow your focus too much, which can blind you to other opportunities or solutions. Fast Company
Facebook will begin giving 20 paid days off…
…to mourn the death of an immediate family member. The new employee benefit was announced by COO Sheryl Sandberg, whose husband Dave Goldberg died in 2015. Fortune
Find yourself working 70 hours a week…
…because you’re constantly putting out employee fires? Then it might be time to coach your employees instead of taking over tasks for them. SmartBrief
Dakota Pipeline moves forward
The final approval needed from the U.S. Army will be granted for the development of the Dakota Pipeline. It will create the last section by building under North Dakota’s Lake Oahe and could be operational as soon as June. The pipeline has come under intense protest from Native American tribes and environmentalists, but President Trump ordered an expedited process to approve the project last month. Reuters
Under Armour CEO: Trump a “real asset”
Kevin Plank said that having a president that’s so pro-business is a “real asset for the country” that will allow people to find opportunities. He also supported Trump‘s infrastructure projects, including building a wall on the Mexican border. Fortune
Yemen withdraws U.S. permission
The country will no longer allow the U.S. to run Special Operations missions targeting terrorists in the country. The move comes after a number of civilian casualties were reported following a raid last month. The mission was Trump‘s first authorized raid as president. NYT
Up or Out
Autodesk CEO Carl Bass has stepped down. VentureBeat
Fortune Reads and Videos
Starbucks is giving free legal advice to employees…
…to help with immigration issues. The company is also reaching out to employees who have visas from the countries included in President Trump‘s immigration ban. Fortune
Twitter makes changes to curb abuse
Among the three changes: Users who have been permanently suspended for inappropriate behavior will be barred from creating new accounts. Fortune
Buffalo Wild Wings lags behind rival Panera
In an quarterly duel that has the two companies posting earnings minutes apart, Panera Bread showed stronger sales and has loftier expectations for the year, compared to the struggling wing joint. Fortune
The best and worst cities to celebrate Valentines Day
Go big in San Francisco, but expect a wallet-busting charge for dinner in Cleveland. Fortune
Quote of the Day
“I’ve been really fortunate that being a woman has not defined my career so far. I think that being a smart person who brings good ideas to a room, who has a deep understanding of things, who can drive projects from concept to reality … I’m a driven individual, I can organize groups well, I can lead people well. I think all those characteristics have gotten me the job I’m in today; I don’t think gender has. So, yes, I’m a woman. But I would like to be known as a great leader, not as a great woman leader. When I walk into a room, I don’t care if it’s all men or if it’s half women and half men. I just care about what contribution every person is going to make.” — Nasdaq CEO Adena Friedman discussing her experience as the first woman CEO of a stock exchange. Bloomberg