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. (More US economy stories.)