Bring back Y2K. (Editorial).

I guess the best things you can say about the year 2002 is that it's over, and it wasn't 2001. But 2003 doesn't look like it's going to be much different, except the word deflation is being used by economists. When you lump that word in with layoffs, plant closures, Chapter 11, record debts, accounting scandals and escalating insurance premiums which have been littering recent economic news, you're ready to reach for the remote and fast-forward to 2004. If it were only that easy.

It looks like this year is going to be difficult as we add a possible war and a huge bureaucracy, the Department of Homeland Security, to the mix. It's hard to imagine these two events adding anything positive to the business climate, unless your market is the defense industry or biological sciences. In fact, these two will get the attention of a good portion of the federal research and development funds.

A recent report by Battelle indicates that R&D spending by the government is expected to increase 10.5% this year, but most of it is due to the buildup in defense expenditures and a continuation of support for the basic sciences and health-related research. The Battelle report says, "Actions have been set in motion that will have long term impact on the structure and operations of the total R&D enterprise. The events of the recent past do not represent a speed bump, they create a detour, one which may not return the system to a more predictable path for several years to come."

Battelle says that industrial support for R&D will increase less than 1% this year, far less than in recent years. A drop off was expected, because it was hard to maintain the level of growth of the previous years. But the size of the reduction is surprising to them, even with the economic factors that have emerged in the past year and the uncertainties inherent in the stock market. Battelle sees the irregularities in bookkeeping by major companies as having a far-reaching impact on U.S. business, including the reported values of R&D investments.

Remember a few short years ago when the main worry at the end of December was the Y2K bug? The specter of Y2K+3 makes Y2K look like a walk in the park. At least in Y2K we had sonic idea with what we were dealing.