Biggest Y2K Problem
'What concerns me is the economic impact months into the year 2000,' Webster said. 'It will have a real drag on the economy.'
The reason, he said, is that the U.S. economy is so dependent on inexpensive foreign imports, which may stagger to a halt if overseas computers are not Y2K compliant, which many are not.
'It will be far worse overseas than people realize, and that will have a ripple effect. This could mean retriggering of inflation because companies may not be able to get the inexpensive foreign goods,' he said.
The failures in the supply chain don't have to be great to start the domino effect, Webster said, pointing to the General Motors situation a couple of years ago in which one supplier went on strike and caused GM to shut down several plants.
'For GM that was only one of 100,000 of its suppliers and look what problems that caused,' he said.
Webster is also beginning to see companies stockpiling materials, which will have a detrimental effect on the first quarter of 2000, when companies will slow down their buying. 'This is the classic setup for a recession,' he said.
What people need to do is to expect and prepare for a recession, such as reducing or eliminating debt. 'I'm starting to pay off my credit cards,' he said.
The good news, Webster said, is that that while an economic recession may be imminent because of Y2K, the United States will probably not see a social breakdown and chaos that some predict. 'The more prepared and calm we are about Y2K, the less impact it will have,' he said. 'If people react poorly, even something minor can have catastrophic consequences,' he said.
Contact: Bruce Webster, author, 'The Y2K Survival Guide,' co-chair, Washington D.C. Year 2000 Group, Dallas, Texas, 202-256-1279; web site: www.wdcysk.org .
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