Journalists, economists, and pundits of all sorts have turned to cautious optimism. Sure, stocks are up from their lows earlier this year, and the numbers out there indicate we're past the recession's trough and on our way up. As just one example, the Institute for Supply Management's bellwether monthly report on manufacturing indicated that the organization"s New Orders Index rose in May for the first time since November 2007.
Last week The Economist even put together an 18-page report on why America may emerge from the slump better than other economies, despite our broken health care system and other faults. In fact, some of the greatest firms were born during economic doldrums, including Microsoft and Apple. Downturns in America, the article said, lead to healthy, though brutal, creative destruction. Weak firms have no choice but to lay off talent, who in turn are snapped up by stronger firms. If those firms can continue to sell products during bad times, when consumers are choosy, they will only grow stronger during booms.
Great—so everything's cool, right? Well, not so fast.
Commodity prices also are on the rise, which could stifle recovery. The government stimulus has sparked fears of excessive inflation, as the government floods the economy with liquidity. As today's Wall Street Journal explained,"[This] might force the Fed to buy more Treasurys to keep interest rates low— yields move in the opposite direction of prices—fueling more worries about higher inflation and a de-valued dollar."
On the other side of the coin, "high debt levels, weak banks, and a terrible job market [may] overwhelm government stimulus," the Journal reported, "keeping the recovery weak."
The jitteriness probably comes from the fact we"ve never seen an economy quite like the one we're in, and no one really knows how the government stimulus will work in the long run. Some also have brought up another worry: The size of the market for many products has just plain shrunk, and it may be a permanent adjustment. Just look at the U.S. automobile industry. As a tentative recovery seems to be under way, we"re gearing up to take still more workers off the payroll. Where will all these people go? In the short run, they"ll no doubt have an incredibly tough time. But in the long run, things may be better. Why?
It's because of people like Chunlei Guo and Anatoliy Vorobyev.
These two University of Rochester researchers recently uncovered a way to create a metal that can actually pump liquid uphill. "We're able to change the surface structure of almost any piece of metal so that we can control how liquid responds to it," said Guo, an associate professor of optics. "We can even control the direction in which the liquid flows, or whether liquid flows at all." The two have done this with what's called a femtosecond laser, which produces pulses lasting only a few quadrillionths of a second. A femtosecond is to a second what a second is to about 32 million years.
At the moment this sounds pretty esoteric and unpractical, but this technology could mature to the point where metal components could be used to "[pump] microscopic amounts of liquid around a medical diagnostic chip, [cool] a computer's processor, or [turn] any simple metal into an antibacterial surface," according to a release from the university.
Just imagine the markets this innovation would open up. Of course, it won't happen immediately, and such research probably won't play any significant role in getting the economy out of this recession. But the fact is that research and development during this downturn, like in recessions past (with the exception of the dot-com bust), has continued unabated. The result is that R&D eventually opens up new opportunities and markets that we"ve never even thought about before.