The name of Edmund B. Cronin Jr., chairman of Smithy Braedon and president of the Greater Washington Board of Trade, was misspelled in a column in the Business section yesterday. (Published 10/24/87)

Now that the volatility of the stock market has been demonstrated with shocking clarity, the overriding question is what effect this week's collapse on Wall Street will have on the economy.

The short answer for metropolitan Washington is very little, if any, in the immediate future.

That's a conclusion based not only on the sentiment of the true believers but also the reasoned responses from a cross-section of business leaders who concede the possibility of a slowdown at some point. But even if uncertainty about the stock market is followed by a slowdown in the national economy, or perhaps a recession, Washington is too insulated for anyone to be overly concerned, say the true believers. That's another way of saying that the area's economy is recession-resistant, if not recession-proof.

Still, the market's collapse this week threw a scare into the most ardent of the true believers. But the market's wild swings don't appear to be reason enough yet to be concerned about the capacity of the local economy to ward off recessionary pressures.

Even though the market's free-fall on Monday sent tremors through Washington's investment community, the true believers and others shrugged it off as just a Wall Street problem.

"People here tend not to get too excited about what happens in New York or elsewhere," observed Harold Nelson, general manager at Neiman-Marcus of Washington.

While that's probably true, it wasn't reflected in the faces of investors who huddled in front of stock tickers Monday to witness the bloodletting. For those who invested in the market with borrowed funds from their brokers, the carnage was anything but a spectator sport.

"It's the people with the margin calls that got killed," said Thomas J. Owen, chairman of Perpetual Savings Bank.

Stocks of Washington-area companies took a battering all last week, nonetheless, as the stock market plummeted toward Monday's crash.

"The {regional} banks have taken a terrible beating. Those are pretty heavy hits," declared the head of trading at a local investment firm.

Heavy indeed. MNC Financial fell nearly 20 points in just one week before recovering along with the market in general. Sovran Financial Corp. dropped 10 points and Signet lost seven in the week-long slide that began Oct. 13.

Bank stocks weren't the only ones, however, to be tossed about in the ill wind that swept through the stock market. The big loser was Dart Group Inc. which plunged 41 points in two days. Martin Marietta Corp. was off 12 and USAir Group dropped 10. Stocks of Giant Food Inc., BDM International Inc. and Marriott Corp. were battered almost as badly. Other leading Washington-area company stocks fared no better, though many, like bank issues, have bounced back.

The Johnston Lemon Index of 30 Washington-area stocks traded on the New York and American stock exchanges and in the over-the-counter market was off almost 13 percent after Monday's collapse on Wall Street and fell more than 232 points between Oct. 12 and Oct. 20.

"The carnage has been indiscriminate," said Charles T. Akre Jr., director of research at Johnston, Lemon & Co. Inc.

But if the long arms of Wall Street's bears reached into Washington's investment community, a psychology that can only be described as bull-like runs deep in the minds of most business leaders here. And with good reason. Not only is the local economy strong but most local publicly traded companies are doing well, many of them having recently reported substantially higher profits.

Consumers may develop some reluctance to make major purchases in the wake of roller-coaster stock movements on Wall Street but nothing's happened yet to take dollars out of their pockets, observed a local retail executive. The local economy "is so well-oiled right now that if a {national} recession occurs we'd follow by a year" insists Nelson who is also chairman of the Greater Washington Board of Trade's retail bureau.

Nelson and other executives contend that several drastic shifts in the local economy would have to occur to affect the retail sector and others. Unemployment, for example, would have to increase substantially. Even though he concedes the shock waves from Wall Street could cause a temporary slowdown in the local economy, Owen insists: "Ours is a pretty skilled labor market, and the people are perfectly capable of generating current income."

If the earnings of local companies continue to look strong, this week's market performance will soon be forgotten, said Edwin Cronin, president of the Board of Trade and chairman of Smithy Braedon Co., a major real estate services firm. Even if there is a recession, "we won't feel it as much" as other areas of the country, Cronin believes.

The obvious reason he advances has been tested in previous recessions, though some segments of the area's economy have undergone significant changes since the last downturn at the beginning of the decade. The federal government is still the major employer and biggest purchaser of goods and services in the area, as Cronin points out. He concedes, nonetheless, that several new companies in the area aren't really dependent on government contracts and could be forced to trim their work forces in a downturn.

If there is a recession, it probably won't show up until some time next year, suggested Johnston, Lemon's Akre. If it does, spending will no doubt decline and nonfood retailers will be affected more than others, he believes.

After assessing the week's events, P. Wesley Foster, president of Long & Foster Realtors, offered the following advice: "I think it would be foolhardy not to have some concern. I think {the market's collapse} shook a lot of people."

It got the attention of a lot of people, at least, even the true believers.