State and local governments are even less prepared, and their ability to respond to emergencies could suffer. Other sectors of the economy, such as utilities, telecommunications and financial services, are in better shape to withstand the Y2K problem. But many small and midsize businesses are unprepared. The National Federation of Independent Business says more than half the nation's small firms that use computers have not adjusted. That could cause payrolls to be delayed.
Many foreign countries lag behind and risk economic disruptions and civil unrest, the report says.
A number of key U.S. trade partners, including oil-producing nations, will not be ready. Though the chance of an accidental nuclear launch is low, the report says, terrorists might take advantage of the confusion to wreak havoc.