A similar dynamic is playing out in the wounded auto industry, in which even small gains in efficiency can produce big economic gains. Simply improving the mileage of the U.S. fleet by one mile per gallon would save 6.1 billion gallons of gas per year, or $17 billion at today's prices. To help the industry respond to a new mandate that the U.S. car and light-truck fleet reach average fuel efficiency of 35.5 miles per gallon by 2016, up from 20.5 today, the Energy Department is providing loans and loan guarantees to large companies—Ford has received $5.9 billion in loans to transform several factories—and to start-ups like Fisker Automotive.
Henrik Fisker, a veteran auto executive born in Denmark, started his eponymous company in August 2007 to produce a premium plug-in hybrid. "The U.S. is traditionally a nation of innovators, but the reason it makes the most sense to be here is because the consumer is also willing to take risks," he says. Fisker raised $250 million in venture capital, snapped up engineering talent on the cheap, and has tapped into the automotive supply chain, which is eager for new business. Last October the company agreed to acquire a recently shuttered General Motors plant in Wilmington, Del., for the knockdown price of $18 million. Armed with a $528.7 million federal loan guarantee, Fisker plans to spend more than $150 million retooling the plant. It's preparing to ship the first Karma (retail price: $87,000) to dealers by the end of this year. But the rollout of electric and plug-in hybrids also has the potential to create its own ecosystem—dealers, charging stations, accessories, software applications. Henrik Fisker says: "The development of this industry will influence how we make electricity in this country."
Such Silicon Valley bravado may ring hollow in a period of diminished expectations. Yet even amid its historic humbling, the United States has shown an ability to bring new ideas to global scale rapidly. At Davos, where the world seemed to celebrate the demise of America as a vital economic force, the hottest ticket was the party thrown by Google. Elites elbowed for position at the bar, danced poorly, and tapped out text messages on their iPhones, made by … Apple. Google and Apple are the nation's third- and ninth-largest companies by market capitalization, respectively, with a combined value of $398 billion. Now consider that in early 2002, in the wake of the last meltdown and the post-Enron crisis in American confidence, their combined value was a few billion, consisting mostly of Apple, which traded for about the cash available on its balance sheet. Google was a privately held company with about 600 employees. Now both are iconic global brands, major exporters, and spurs to innovation and growth—they represent America the way Chevrolet and McDonald's once did.
The last two expansions have been 120 months and 92 months, respectively. If the United States continues to adapt as it has, and if it produces a few more game changers like Google and Apple, there's no reason that the expansion that started in July 2009, against all the odds and predictions, can't last just as long.
Newsweek's Nick Summers and Jessica Ramirez contributed to this story.
A version of this story also appears in Newsweek.
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