Welcome 2011!
After all the trouble and difficulties the years 2007, 2008 and 2009 brought along, which could not be solved during 2010, many people are hoping that 2011 will be the year when the economy will find its way back to solid growth to shrink unemployment back to its natural rate and to end the frustration and self-doubt that came with the crisis.
Despite the discouraging developments in Washington D.C. and the burden of high unemployment, it seems that 2011 could indeed be a year of stabilization. There is potential for strong growth, once U.S. companies, which are sitting on around $2 trillion in cash waiting to be invested (http://www.npr.org/2010/12/10/131955624/Business-News), see demand for their widgets grow and utilization rates of their facilities go up. However, it will take more than just a modest recovery to prompt companies to start spending.
On October 15th, 2010, I listened to Nobel Prize winner Paul Krugman speaking to students and faculty at Florida International University in Miami. During his lecture titled “The Crisis: Year Three” he did not sound too optimistic about the state of the economy, given the counterproductive gridlock in D.C. The only hope he voiced was that a technological breakthrough that transforms the entire economy - similar in scale to the IT revolution - would move companies to invest their cash reserves. This would jumpstart the economy as the increase of investment spending with the multiplier effect would increase GDP and household income, which would in turn lead to more consumer spending, which would again lead to more investment spending and hiring on the part of the companies, resulting in a significant reduction of unemployment.
The technological breakthrough will come, it is just a matter of time. This century will be known for the ET (Energy Technology) revolution as New York Times columnist and author Thomas L. Friedman coined the term. Major changes in the way we generate, distribute, store and consume energy are inevitable given global demographic trends. Growing populations and prosperity meet finite resources and climate change caused by the the extraction of millions of years’ worth of stored carbon.
First signs of this new energy era can already be seen. Last month GM started selling its semi-electric Chevrolet Volt, sometimes also called a “plug-in hybrid”. Even though just a few hundred Volts have been sold so far, the market debut in the U.S. could mark the beginning of the electric revolution in the auto industry. If GM manages to turn a profit on the Volt some day, it will only be a matter of a few years until technological progress and mass production bring affordable, powerful electric cars to the streets with competitive driving ranges.
If you like to read more about this topic, take a look at my research paper
NEW ENERGY AGE RESEARCH PAPER
or at my Related Posts:
The Fundamental Transition of the Auto Industry
