WASHINGTON - For auto industry leaders trying to come to terms with the so-called Millennium Bomb - the inability of most computers to recognize the year 2000 - a recent message from the Federal Reserve Board is likely to make their palms a bit sweatier.
'It is impossible today to forecast the impact of this event, (but) the range of possibilities runs from minimal to extremely serious,' Fed Governor Edward Kelley said in recent testimony to Congress.
At the least, Kelley said, fixing computer systems so they do not shut down or go haywire on Jan. 1, 2000, will cost the U.S. private sector $50 billion.
The Fed's estimate is based on Securities and Exchange Commission filings by most of the nation's biggest companies.
'While ... remediation efforts may give a temporary boost to economic activity in some sectors, the net effect probably is negative,' Kelley testified.
The problem arises because computers read only the last two digits of dates. Thus, if not readjusted, when '99' flips to '00,' computers will either read the new date as 1900 or not respond at all.
With customary Fed caution, Kelley said U.S. productivity could easily slip 0.1 or 0.2 of a percentage point after 2000 as a result of snarled computer systems.
The Fed's outlook is one of the milder recent forecasts about the problem, commonly called Y2K.
Edward Yardeni, chief economist and managing director of Deutsche Morgan Grenfell, said he now places the likelihood of a recession from widespread computer malfunction at 60 percent, up from his earlier estimate of 40 percent.
'Despite many warnings, the situation has only worsened,' he said in a speech in Basel, Switzerland. 'The time has come to mobilize ... as if for a war.'
Fred Craig, Y2K program manager for the Automotive Industry Action Group, the organization car companies are using to coordinate computer changes with suppliers, said such dire warnings can be valuable because they promote awareness of the problem.
But, he warns, 'For people who haven't started thinking (about the problem), it's pretty late.'