The force sustaining the economy's extraordinary performance is you. The Y2K fizzle will permit companies to redirect their investments to capital spending, which serves to increase corporate productivity and boost profits. A report by the University of Michigan showed that consumer confidence soared in January to an all-time high, suggesting that the consumer spending binge is far from over. Other fresh signs emerged showing that the scarcity of workers is driving up labor costs, as Federal Reserve chairman Alan Greenspan has long warned it would. That's pretty manageable in the big picture but is nevertheless a warning light flashing that inflation may accelerate as the economic expansion picks up speed.
Money flows out of stocks when rates rise or seem likely to, and did it ever last week.
The Dow Jones industrial average dropped 513 points, to 10,738.87, its lowest level since Nov. 11. That may be true. But as long as the Fed believes the threat is real, the financial markets will react accordingly. Inc. All Rights Reserved. Terms under which this service is provided to you.