Cambridge Chamber of Commerce Fall Community Business Forum

Today we stand on the threshold of record economic prosperity. If the current expansion continues until February, it will become the longest in recorded U.S. history. Growth is strong. Unemployment, inflation, and interest rates are low. Asset markets are ebullient. Even the Federal budget has achie...

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Bibliographic Details
Published in:Policy File 1999
Main Author: Minehan, Cathy E
Format: Report
Language:English
Subjects:
Economic policy
Federal Reserve Bank of Boston
Labor force/Employment
Science/Technology/Public policy
Online Access:Request full text
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Summary:Today we stand on the threshold of record economic prosperity. If the current expansion continues until February, it will become the longest in recorded U.S. history. Growth is strong. Unemployment, inflation, and interest rates are low. Asset markets are ebullient. Even the Federal budget has achieved a surplus position after the deficits of the '80s. This outlook appears exceedingly bright to many observers, and in many ways it should. But, as former Fed chairman Paul Volcker recently said, "Central banks [must be mindful of what they are wont to warn others about: excesses of zeal and confidence." Today, then, I'd like to share with you my view of the current economic picture, which, in heeding former Chairman Volcker's counsel, is sprinkled with healthy doses of caution and risk assessment even in light of the solid economic picture we currently enjoy. I also want to address three fallacies that seem to shape how some view the domestic scene: 1) that inflation is dead; 2) that asset prices only go up; and 3) that business cycles are a thing of the past. Finally, I'd like to spend a little time on that now all-important topic, Y2K readiness, and its implications for the economy.