As 1999 began one major event threatened to cripple growth in the United States. That event was simply changing the date in all computers to 2000. The year 2000 (Y2K) had the potential to devastate the world's technological infrastructure and cause major problems with just about everything from bank account records to getting a loaf of bread at the store.
Some predicted the end of the world, which earned them a #1 vote for the “forecast dud award”. Fortunately Y2K turned out to be uneventful as the United States enjoyed strong growth with low, stable inflation in 1999, extending its on-going expansion and continuing to build up the budget surplus.
Real GDP grew 4.2% from 1998 to 1999, marking it the 8th consecutive year of positive output growth. Inflation and unemployment remained low in 1999 while consumer confidence reached all-time highs and real disposable personal income grew.
Even though the “Y2K bug” appeared to be extinct, Federal Reserve Board Chairman, Alan Greenspan still issued the biggest expansion of money supply in the Fed's history a few weeks before the “dreaded” day came. In the form of M3 money; which includes traveler's checks, bank deposits and money market mutual funds, the Fed injected $194 billion into the economy. The money supply increase, adjusted for inflation, was the biggest in the nation's history. The Fed flooded the nation with cash because of uncertainty many still had about Y2K, which might have led to bank runs if money became scarce.