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Phi Beta Delta hosts talk on Economic Crisis

Visiting Assistant Professor of Economics David McClough gave a talk to students and faculty in the Dicke Forum Monday night on the current economic crisis. In his talk, The Current Economic Meltdown, Recession, and Globalization, McClough presented data that indicates the current economic difficulties are global in scope. He pointed out that Japan recently revised its Gross Domestic Product numbers to show that their economy was stronger than previously thought, in that GDP dropped only 12.1% instead of 12.8%. He also told the audience that China’s economy was still growing, but only at 3.8% and they need at least 10% growth to keep up with population growth. The European Union has passed, minor, stimulus programs, as has New Zealand. The only area relatively untouched is Africa, largely because they are already so poor. McClough then showed graphic images of U.S. recessions since 1946, making the point that our recessions have been relatively mild and widely spaced in time. While positive that there have been few recessions, their infrequency makes the impact of slowdowns in the economy frightening when they do occur. He also went through data that indicated GDP, consumption, and investment were all falling in the U.S. economy, and that personal savings were growing, meaning that people are not spending money, which is what will bring us out of the recession. He concluded his talk by looking at the future, seeing China continuing to grow in strength, and arguing that, in the words of Federal Reserve Chairman Ben Bernanke, the U.S. lacks the political will to end the crisis and reform. McClough presented a gloomy picture of the current economy, but tempered his remarks with a great deal of humor, at one point asking the students why they were listening to him instead of going out and spending money. He also compared the current economic woes to his former college roommate who drank more than he needed and then had to suffer from the resulting hangover.