The economy has gone from a Fast First Quarter to a Sluggish Second Quarter. The question is, will the rest of the year by a Troublesome Third followed by a Flat Fourth?

In retrospect, or with that vaunted 20/20 hindsight that so many of us possess, the bigger surprise is not the 1.1 percent Gross Domestic Product of the second quarter, but the 5 percent rate of the first.

The latest GDP numbers confirm what most of us have known all along. The economic "recovery" that is supposed to be under way doesn't look all that different from the "recession" that preceded it.

In fact, over the past year or so, the economy has been fairly consistent in its flatness -- with the exception of the first quarter of 2002.

The usual suspects for this economic malaise are the bursting of the dot.com bubble in March 2000, along with Sept. 11, corporate shenanigans and accounting irregularities. Add to that lackluster business fixed investment and you have a pretty solid recipe for economic stagnation.

But there is one factor that has received little attention - probably because it received so much attention at the end of 1999. Yes, it is that dreaded "Y2K Millennium Bug."

There was a time when you couldn't open a newspaper or turn on a television news program and not hear about Y2K. On Dec. 31, 1999, there were more than a few partygoers who kept an eye out for any of the predicted problems that Y2K was expected to bring. But since there were no widespread computer-related problems, Y2K has slipped out of our collective consciousness as fast as the loser in last year's Super Bowl.

While there were no devastating computer losses in early 2000, Y2K has had a definite impact.

When we look back at business and economic data from 1998 and 1999, we are struck by the sheer volume of all things high-tech.

Behind all the Y2K hype, something significant was going on. Companies were spending billions of dollars to update, upgrade and protect their computer systems. Hardware and software purchases came at dazzling speeds. Companies that would have been upgrading their systems in 2001 or 2002 took the plunge early to protect themselves from the Millennium Bug.

Fast forward to 2002 and instead of that frenetic pace to "beat" Y2K, companies are holding back on investing in new hardware and software.

Factor in the overall economic atmosphere -- terrorism threats, corporate malfeasance and a volatile stock market -- and it is no surprise that the economy is stuck in neutral.

There are signs that things are moving.

Dell is pushing its new servers in its latest advertising campaign as a model of efficiency that can save money as an enticement to make the investment.

The Fed seems to be leaning toward another interest rate cut, that should make it more attractive for companies to increase capital improvements and investment.

But we are not out of the woods yet.

The back-to-school period was fairly disappointing for the nation's retailers, casting doubts about the upcoming holiday shopping season. And despite strong housing numbers in July, consumer confidence has fallen over the past several months, with few signs of any positive change in the offing.

At least football season is finally here.

Daytona Beach Journal

-- Anonymous, September 07, 2002