Capital Brief: Fed Governor Predicts Slight Year-2000 Damage

Federal Reserve Board Governor Roger W. Ferguson Jr. said last week that he does not expect year-2000 problems to trigger a recession.

"I do not agree that the year-2000 problem will push the economy into recession," Mr. Ferguson said on Nov. 24. "I believe those statements are overdone."

Efforts to eradicate the year-2000 computer bug could have a "slight negative impact" on productivity, and companies may build up inventories expecting some disruptions in 2000, he said. That could slow growth slightly, but will not sink the U.S. economy, he said.

The comments came during a press conference in Miami after a meeting of the Year-2000 Council, an international group of regulators devoted to sharing information on the bug.

Regulators from 27 countries in North and South America met behind closed doors to discuss their year-2000 efforts. Similar meetings were held in Australia and Germany, and meetings are scheduled for the Middle East and Africa.

Mr. Ferguson, chairman of the Year-2000 Council, praised the efforts of U.S. banks to fix year-2000 problems. "Over all, the vast majority of U.S. banks are at a satisfactory level," he said. "They continue to do good work."

-Jaret Seiberg