The 'R-Word' Surfaces on Wall Street

Wall Street has the recession jitters: Markets are down 10% since October, the S&P 500 is down as analysts predict depressed earnings, and T-bills are down on anticipated Fed rate cuts. But there’s a flip side: Holiday sales gained 8.3% over 2006, unemployment is at 4.7%, and a slowdown doesn’t mean recession, reports the Washington Post.

But don’t try to paint a bright picture for Wall Street. “We believe we are going to see a recession in '08," Merrill Lynch analysts wrote yesterday. In a tail-wagging-the-dog effect, recession expectations could result in one because of how the markets are part of mainstream America. "These things feed off each other,” said one economist.