The authors develop two coincident indexes that provide a comprehensive measure of economic activity in New Jersey, New York State, and New York City.

Upstate New York may have shown signs of a turnaround in 1997 and 1998, but its economic performance is still well below that of the nation and New York State as a whole.

Employment growth in the New York-New Jersey region in 1998 is likely to match the previous year's pace of 1.7 percent, or 200,000 new jobs. Growth will continue in 1999, but it will slow modestly, to about 1.2 percent, or 145,000 new jobs.

With the approach of the new millennium last year, many market participants resolved to limit their exposure to Y2K-related risks by cutting back normal trading activities. The Federal Reserve foresaw that the widespread adoption of such a strategy could lead to serious liquidity problems in key...