Today's Fed Action Inches U.S. Closer to Possible Y2K Hangover

Business Wire, Nov 16, 1999

NEWARK, N.J.--(BUSINESS WIRE)--Nov. 16, 1999--

The Prudential Insurance Company of America's Chief Economist Susan Hickok expressed "mild disappointment" at today's Federal Reserve decision to raise interest rates, saying current data suggests the soft landing has already arrived. "Today's Federal Reserve action means post-Y2K anxieties could very well turn into a Y2K hangover," says Hickok.

Hickok says current growth is directly tied to Y2K anxieties, and as inventory destocking and consumer spending falls back to pre-Y2K concern levels, growth will be depressed early next year. She notes today's rise in interest rates seems an overreaction to temporary strong growth and could lead to a poor U.S. economic performance at the beginning of next year.

"The numbers on GDP growth, prices, consumer demand and jobs indicate a soft landing has arrived, meaning the rate hike could push us much closer than we should be to a sluggish new year," stresses Hickok.