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[1] BusinessWeek: Highlights From BusinessWeek's May 21, 2001 Issue; On Newsstands Through May 21, 2001.


Business Editors

NEW YORK--(BUSINESS WIRE)--May 11, 2001

THE NEW ECONOMY LIVES ON...Alan Greenspan ignored the warnings of inflation worrywarts at the Fed and kept interest rates low, allowing the New Economy to blossom and grow far faster than anyone had thought possible.

Now the official data are suggesting that the productivity miracle is about to go up in smoke. Once again, though, Greenspan isn't buying what the data seem to be saying. He thinks reports of the demise of the productivity miracle are premature and that tech-led improvements in corporate efficiency are far from over. A lot is riding on Greenspan & Co. being right. If indeed the slowdown in productivity growth is just a blip A mark, line or spot on a medium, such as microfilm, that is optically sensed and used for timing or counting purposes., then the economy should be able to shake off its current bout of weakness and resume growing at a 3 1/2% pace next year, helped, of course, by generous interest rate cuts by the Fed. But if the monetary gurus are wrong, then look out below: The Fed's big dollops of liquidity -- including an expected further half percentage point rate cut on May 15 -- will only serve to pump up inflation by boosting labor costs. The result: an ugly stagflationary brew of weak growth and rising inflation. (page 38)

http://www.businessweek.com/bwdaily/dnflash/may2001/nf20010510_342.htm
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Date:May 11, 2001
Words:218
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