I am Curious about the economic impact of all the IT spending coupled with the added expenditures of GIs preparing. Any thoughts as to the economic effects of these two?-i.e. are they artificially stimulating GDP etc. and what could be the outcome if this is the case. That is if its just a bump!

-- David Butts (dciinc@aol.com), August 10, 1999

Answers

Dave,

It looks like consumer spending will be strong through the end of the year (partly due to Y2K remediation and consumer stockpiling.) If spending tails off after the rollover, it will trim GDP a bit. IT spending is more difficult to assess. It's difficult to define what exactly is Y2K spending. If you purchase a new network server that happens to be Y2K ready, is this a Y2K expenditure or a routine hardware upgrade? I think the IT investment promoted by Y2K concerns may boost productivity a bit... but it's hard to assess the result on GDP. The real issue is consumer and business confidence. Even a bump may be like a bucket of cold water in the face. If confidence is shaken, we could easily tailspin into a sharp recession.

Regards,

-- Mr. Decker (kcdecker@worldnet.att.net), August 11, 1999.