Y2K Stockpiling May Fuel Economic Growth (Time)

Alway wondered WHEN the economists, and stock market, would figure that one out. -- Diane

Time Magazine -- Digital Version
March 1, 1999

http://cgi.pathfinder.com/time/digital/daily/more/0,2845,0,00.html

Y2K Stockpiling May Fuel Economic Growth

Whether or not the millennium bug cripples the world's computers next New Year's Day, it has already altered U.S. economic forecasts, raising growth expectations for late 1999 and dimming them for 2000. "I think there will be some stockpiling and some inventory building and some hoarding" of consumer products and raw materials, said David Blitzer, chief economist at Standard & Poor's. "That leads to almost a miniature economic cycle in the last two quarters of 1999 and very slow growth in the first quarter of the year 2000."

Some economists believe that businesses, fearing that computer errors may hamper distribution systems, will gather a war chest of inventories later this year. And they say nervous consumer purchases of such "survival" items as bottled water, canned food and diesel-powered generators could enhance the effect. "Within the last couple of months I have substantially changed my [Gross Domestic Product] forecast in large part because I'm expecting a human response to all the Y2K mania," Blitzer said.

Bill Witte, an associate professor of economics and fellow of the Indiana University Center for Econometric Model Research, estimates the stockpiling will add a half a percentage point to GDP. "You lose that in the first quarter" as purchases slow, Witte said. "Our feeling is that there's not going to be a lot of economic problems."

-- Diane J. Squire (sacredspaces@yahoo.com), March 01, 1999

Answers

Stocking up is a good thing. Stimulates economy. Populace should be prepared for disasters anyway. If Y2K causes prolonged & serious disruptions, the prep will stave off social unrest for a while.

If Y2K causes just a few, temporary blips, easily recovered, then ppl will be so relieved they'll spend spend spend in an orgy of celebration and renewed confidence, and splurge to indulge in luxuries.

To not encourage preparation at this point is inhumane, dangerous, possibly criminal. Check six for pitchforks, locals.

xxxxxxx xxxxxxx xxxxxxx xxxxxxx xx

-- Ashton & Leska in Cascadia (allaha@earthlink.net), March 01, 1999.

There's also a backside to hoarding and stockpiling. If Y2K is a bump in the road, people will not have to grocery shop for a very long time. That could cause a recession in many sectors of the economy such as the paper industry, food industry, water, and oil. While many industries are jumping on the band wagon and taking advantage of the buying frenzy, they could be out of business come January 2000. Either way, I am in a win-win situation.

-- bardou (bardou@baloney.com), March 02, 1999.

This all leaves manufacturers with a dilemma: do we ramp up production today to answer a short-term surge in demand, or do we continue to meet our current production quotas to stave off a recession in demand later... hmm...

Most businesses, I think, would rather shoot for the long-term approach. Answering "fads," as I'm sure most businesses regard Y2K preparedness, generally isn't good business.

-- Brett (savvydad@aol.com), March 02, 1999.

Brett - The Pharmaceutical industry has taken whining on that point to an art form! (How dare you stockpile essential drugs and blow our manufacturing forecasts! Why, such unAmerican behafior could affect our bottom line!!)

If Y2k preps really do boost sales next fall, the market mood could be really interesting come January - reports filtering in of the best retail quarter ever arriving during a social and economic standstill. If the stock market is still up, I wonder how it will react to that schizophrenia??

-- Brooks (brooksbie@hotmail.com), March 02, 1999.

Brook: Speaking of schizophrenia I would like someone to tell me just a real American is in the context of Y2K prepardness.

-- bardou (bardou@baloney.com), March 02, 1999.