A $50 Billion `Bug'; Fed Official: Year 2000 Computer Fix Could Slow Economy
U.S. businesses are likely to spend at least $50 billion fixing Year 2000 computer glitches, a Federal Reserve official said yesterday, providing the federal government's first official estimate of such costs.</br></br>The massive effort to reprogram millions of computers to recognize dates in the new millennium and, therefore, continue to function, could trim U.S. economic growth by a tenth of a percentage point in each of the next two years, he added.</br></br>The problem is "real and serious," Federal Reserve Board Governor Edward W. Kelley Jr. told a Senate committee, saying the total worldwide repair bill could top $300 billion. Kelley's projections bolster earlier forecasts by corporate analysts.</br></br>Millions of computers -- some of which are central to running financial markets, air traffic control systems and even elevators in office buildings -- cannot distinguish between the year 1900 and the year 2000 because an old programming practice expressed years as two digits. Unless they are repaired, these systems will process the year 2000 as "00," and the computer will think it's somehow been transported back to 1900, which could cause it to shut down or turn out erroneous data.</br></br>As the year 2000 gets closer, this "bug" is attracting high-level attention in both government offices and corporate boardrooms. The Securities and Exchange Commission is now requiring companies with publicly traded shares to disclose how much they're spending to fix the problem and how far along they are. Businesses have started to question readiness of their suppliers and distributors, while "headhunting" firms have started to offer lucrative signing bonuses for increasingly scarce programmers. And yesterday, the Senate took the unusual step of establishing a committee solely to press for rapid work on the issue.