These developments helped keep our economy growing with low inflation. We also clearly had our share of real and potential shocks during 2000 to contend with from a policy perspective. First there was the Y2K threat in January, which we feared might trigger a communications and financial meltdown, and which was behind the buildup of liquidity observed in financial markets at the turn of the year. Fortunately, this turned out to be one of the greatest non-events in history, largely, I believe, because businesses and people heard the message and fixed potential problems so that they didn't occur. At some point earnings must appear.
Significant retrenchment is now in progress in the technology sector.
We also had a roller coaster year as far as energy prices were concerned. The run-up in energy prices has plainly diverted spending from other goods and services, is affecting production costs, and is clearly influencing the path of consumer confidence and spending on other durables and nondurables, at least on the margin. The November election turned out to be a major source of financial uncertainty and contributed to the December decline in the stock market, although the run of reduced earnings reports clearly also was a dominant factor in the market's pullback. By the fourth quarter, it had become more and more apparent that we might be entering a classic inventory-adjustment period. Business inventories accelerated in October and November of last year and inventory sales ratios bumped up, indicating that inventories would detract from growth in the fourth quarter, which they did.