Black Friday spawns memory of Black Monday
Part of Our World
Dan Rather

Every year, we are reminded that retailers call the day after Thanksgiving Black Friday in the hope that a strong start to the holiday shopping season will transform the red ink of debt in their ledgers into the black ink of profit. Because consumer spending continues to be such a major driver of the U.S. economy, it's a hope that just about all of us can share. This year, Black Friday arrives in the long shadow of Black Monday.

For those who follow the stock markets, Black Monday means Oct. 19, 1987 - the day the Dow Jones industrial average fell more than 500 points, giving up more than 22 percent of its value. And in the media retrospectives last month that accompanied the approach of Black Monday's 20th anniversary, one question jumped out over and over again: Are we set for a repeat?

When blue-chip stocks dropped 240 points on Oct. 19, 2007, the question began to be asked with a little more urgency. Since then, the Dow has continued to fall, shaving off about 1,000 points, all told, as Wall Street headed into the Thanksgiving holiday.

It is worth remembering that the U.S. economy and the stock markets (let alone the Dow Jones index) are not one and the same. In fact, the 1987 market crash was not accompanied by an economic recession. But most of the prime suspects behind the '87 crash, such as stock derivatives and computer trading, were particular to the equities markets. This time around, the markets seem to be responding to larger economic factors.

The ever-spreading subprime mortgage crisis and skyrocketing energy prices have provided a big one-two punch. Massive losses from bad debt have dragged down the stocks of financial institutions, while oil's flirtation with the $100-a-barrel mark has dimmed profit expectations for just about all sectors of the economy.

The rapidly falling value of the dollar adds its own measure of uncertainty and anxiety to this combination. Congratulations to you if you can find two economists who agree on just what this means

for the shortor

long- term health of the economy, but it has inspired fears in some that a weak dollar could cause inflation, especially when coupled with high fuel prices.

This was the picture heading into this past week, when an additional piece of bad news was stirred into the mix: a report confirming that consumer confidence currently stands at its lowest level in two years.

The credit crisis and the high cost of energy - including home heating oil, heading into the winter months - appear to have spooked everyday Americans as much as they have fi- nancial traders.

Which has, in turn, given these traders yet another thing to worry about. It is not a good sign that consumers are nervous about their own financial health as we head into what are traditionally the biggest shopping days of the year.

As the forecasts for slower growth and even outright recession in 2008 pile up (including the Federal Reserve Board's predictions for the year ahead), one might ask whether consumer pessimism could help to create a self-fulfilling prophecy.

Since it pulled out of recession in late 2001, the U.S. economy repeatedly has shown its resiliency.

Lukewarm and even outright bad news often has been followed by stronger-than-expected performances, such as the most recent unemployment numbers. But now, as stock-market bulls look increasingly bearish, there are signs that the six-year-old expansion may be drawing to a close - on Wall Street's trading floors and in Main Street's retail stores.

Dan Rather, a native of Wharton, was Managing Editor of the CBS Evening News for 24 years. His column appears by arrangement with King Features Sydicate.