7/20/00 6:25 p.m.
Price Ain't Right at the Fed
Alan Greenspan's departure from the price rule is a policy mistake.

By Victor Canto, La Jolla Economics

or example, Del Monte reported a surge in sales during the fourth quarter. For consumers, there is very little cost in buying additional canned foods, storing them and consuming them the rest of the year. And, the point is, Del Monte's sales are likely to be below trend this year. For computers, the story is the opposite. The Y2K fear led to a slowdown in the purchases of computers as consumers waited until after the century date to purchase — a sensible strategy. The implication was a slowdown in computer sales in the later part of 1999, with a strong first half of 2000. If the Y2K timing issue is as strong as it appears, the question is will the economy, on net, behave like canned pineapples or computers? Based on the performance of the economy during the second half, that question can be answered.