NEW YORK:
In these bullish days of the mutual-fund-fueled stock market, the
Dow's daily behavior is rarely evidence of
anything other than herd psychology -- even Tuesday's staggering slide of almost 300 points. But this time, take notice: It's Wall Street's way of saying that a recession may be on the way. "Recessions are hard to spot -- you don't know you're in one until it's half over," says TIME Wall Street columnist Daniel Kadlec. "But the market usually sees it first and declines ahead of it."
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Decline it has. At Tuesday's nadir, the Dow had lost 762.87 points from its record high of 9,337.97 on July 17. And although the indicator is still up 8.4 percent on the year, that figure was once 18 percent. Is the boom of the Clinton years finally over? Kadlec says that with so many people with money in the stock market, recession worries could be self-fulfilling. "The effects of Asia are hitting U.S. companies hard, but consumers at home are still spending," he says. "But if the stock market stays gloomy, people are going to stop feeling wealthy." And that will be when the economy dries up. So keep your heads high and your wallets open -- your economy needs you.
