Have We Hit Rock Bottom?

This article at WaPo argues that another recession is unlikely because there's simply no room left for the American economy to fall:

But auto sales have rebounded to only about 13 million a year, meaning that there is not as much room to fall if waning consumer confidence again leads Americans to become ultra-cautious.

This theory makes sense so long as we don't suffer a strong external shock, such as a terrorist attack, an oil shortage or--perhaps more immediately--a sovereign default in Europe.

According to classical economic theory, this is exactly how recessions are supposed to work: 1) economic transactions purge unprofitable concerns from the economy; 2) eventually production and prices stabilize at more sustainable levels; 3) pessimism abates; 4) growth resumes; 5) employment rises.

On the other hand, the Keynesian would argue that these corrections can be so painful as to be disastrous, that they're unnecessary, and that, while this should work out in the long run, "...in the long run we're all dead."

What do you think?

September Evaluation Results

I have gone over the preliminary course evaluations and this is what I have learned so far:

• You seem pleased with lectures, but you wish they could be a bit more dynamic.
• You enjoy the texts.
• You don't enjoy the articles as much.
• You'd like the lectures to parallel the readings better.
• Discussion could be more effective.
• Some of you like the responses, some of you don't.

Going forward, I will work harder to link readings to lectures and demonstrate their relevance. I may also revise some of the future readings so that they are more relevant (and hopefully, interesting). I'll also see if I can find ways to incorporate more multimedia into my lectures to link conceptual ideas with more common topics.

Let me know if you agree or disagree with this assessment, especially if I'm missing something. Feel free to suggest ways that we can improve the class in these areas. You can comment below, anonymously if you prefer.

Raw data is available below the jump if you're particularly interested.