Potential Y2K effects on economy?

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[Fair Use, for Educational Purposes]

"The pause that refreshes Recent developments take steam out of economy"

By Dr. Irwin Kellner, CBS MarketWatch Last Update: 2:22 PM ET Feb 8, 2000

"NEW YORK (CBS.MW) -- Economic growth in the current quarter will be but a fraction of the pace reported in the second half of 1999 -- and that's not bad news by a long shot. See related story."

"If the economy has, indeed, slowed markedly, the Fed may well wait for more data before boosting rates further." "First of all, the economy can't expand much longer at the 5.8 percent rate of last year's third and fourth quarters without overheating. You know it, I know it and, most important of all, the Federal Reserve knows it."

"Indeed, that's why the Fed has raised interest rates four times since last June."

"The central bank is widely expected to hike rates again come next month -- but if the economy has, indeed, slowed markedly, the Fed may well wait for more data before boosting rates further. This could mean no change at the May policy meeting."

"Here's the thinking behind the numbers: A good chunk of the fourth quarter's growth was actually borrowed from the first quarter of this year."

"Take consumers, for example. In the fourth quarter, purchases of food and beverages soared well above trend rates."

Reflection of Y2K stockpiling

"Since these numbers are adjusted for the time of the year, this surge does not trace to the usual holiday parties. Rather, it appears to reflect stockpiling in fear of Y2K-related disruptions in the nation's food supplies."

"Anyone need some bottled water or canned beans? Plainly, people are living off those food stockpiles now."

"Don't take my word for it; ask any supermarket executive. For that matter, check a local restaurant; you'll find it's not as full as it usually is at this time of the year."

"Businesses added to their stockpiles as well, in 1999's closing quarter, to accommodate their needs as well as those of their customers."

"Inventory building was responsible for more than a percentage point of growth in the fourth quarter's GDP. Naturally, the pace of stockpiling will slow in the current period."

"And if final demand really softens, it might take even longer than three months for companies to get their stocks into line with sales."

"Government spending also jumped late last year at too high a rate to be sustained; it should also slow in the current quarter."

"All together, by taking some steam out of the economy, these developments will, indeed, be the pause that refreshes."

"Dr. Irwin Kellner, chief economist of CBS MarketWatch, is Weller professor of economics at Hofstra University."

-- Deb M. (vmcclell@columbus.rr.com), February 08, 2000


There is no doubt in my mind that Dr. Kellner is a professional researcher with quality credentials. However, like so many of these reports I can find no relativity to my own life experiences. I have a wide cross-section of friends and family that come from many walks of life. I can count on one finger (myself) the people I know who did any preparing at all for Y2K. I find it hard to imagine that those who did lay-in some extra supplies could have any significant effect on the economy. This forum is populated with preparedness oriented folks but we are a very, very small minority.

-- Sifting (through@the.rubble), February 08, 2000.

Just ask DelMonte.. They had a tremendous quarter - 4th Qtr last year, selling canned veges and fruit. I'm sure their sales are way off now. Some of us did prepare. Our grocery bill for January, 2000 (total) did not exceed $60. Now we are seeing some good prices out there on canned veges and buying a few more!

-- Y2kObserver (Y2kObserver@nowhere.com), February 08, 2000.

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