US Commerce Dept eyes Y2K with optimism

The US Department of Commerce gave its assessment of the likely impact of the impending year-2000 date rollover, predicting relatively smooth sailing on the domestic front.

The upbeat Commerce report - which can be found at http://cher.eda.doc.gov/agencies/esa/y2k.pdf - forecasts only a slight dent in the US economy resulting from year-2000-related problems, and no significant long-term effects.

According to the report, US private sector- and government spending on year-2000 remediation between 1995 and 2001 will top out at about $US100 billion.

The redirection of funds to cover those costs is expected to make up the bulk of year 2000-related losses, according to Commerce officials.

The confident findings partly reflect the department's assessment of problems that have emerged in advance of the year-2000 rollover, which officials described as "small-scale and brief."

The report notes that comparatively few problems are expected to become evident at the stroke of midnight, December 31. Rather, most will come to light before and well after that time.

The Commerce department also drew attention to what it sees as good preparedness among foreign-based companies firms with major IT infrastructures, and predicted only a minor impact on the US economy from Y2K-related problems overseas. Furthermore, it characterised public sentiment as positive enough to rule out financial disaster scenarios involving runs on financial institutions and hoarding of resources.

The report is in line with many of the key indicators, according to one year-2000 expert.

"It adds to our understanding of the situation, to the extent that Commerce probably has its finger on the pulse of American business more than any other department, as a whole," said Jim Porter, a partner in the operational and systems risk management (OSRM) group at PricewaterhouseCoopers, in New York. "Day-in and day-out, they deal with all levels of business."

Those US-based multinationals with foreign operations in countries with highly centralised governments will find those operations more closely tied to the fortunes of the local authorities, according to Porter.

While the report spans a broad range of economic conditions, those interested in the veracity and accuracy of businesses' year-2000 disclosure statements should look to the Securities and Exchange Commission (SEC), Porter noted.

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