BREAKING NEWS: What Happened to the New Economy?

Read why Federal Reserve Governor Laurence Meyer thinks an inflationary resurgence may be in the offing.
Ed ZwirnJune 6, 2001

Is there a “new economy?”

Have the tech revolution and the gains made in productivity as a result meant the end of boom and bust cycles, or has the recent course of economic events given the lie to that proposition?

The answer, according to Federal Reserve Governor Laurence H. Meyer, is “it depends.”

In a wide-ranging speech the Fed official is giving to the New York Association for Business Economics and The Downtown Economists, Meyer discourses on recent U.S. economic history, “the dramatic surge” in productivity since the mid-90s, and the more recent “unwinding of imbalances” that led to the current “sharp slowdown.”

Also, the Meyer speech goes beyond history lessons, predicting that a “convergence” between productivity and capacity some time in 2002 will lead to “something close to trend growth at full employment.”

“We have to be concerned that as we ease to mitigate the risks of a persistent slowdown or recession we do not at the same time create conditions that would lead to higher inflation as the expansion gathers momentum,” he warns.

Click here for the complete text of Meyer’s speech.

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