Wall Street, its players like to say, bets on the future. So the extraordinary surge in the markets forms a picture of what Wall Street thinks America will be like economically six to nine months away.
Seen from Wall Street, that tomorrow is brighter in all respects. Businesses will rebound from those twin scourges of recent years, high interest rates and high inflation. Goods will be available at prices people can afford. Consumers, their money worth more and their appetites whetted by month after month of self-enforced denial, will start spending. Companies will produce more. Profits will rise. The country will prosper. Everyone will be better off.
Thus, anyway, the expectations fired by the traders on America's street of dreams. No one can wish them to be proved wrong, for if they are correct the United States and its people really will be better off. But to this observer there are troubling signs that all is far from well. And, what's more, that business leaders know it.
A constant refrain heard from business executives in five weeks of traveling throughout the country has been that of worsening economic conditions. No matter where you go or what industry is examined, the comments are strikingly similar. The next six months are critical, people say. If conditions don't improve, they will be facing even more serious difficulties. Then they add that they don't realistically expect their businesses to get dramatically better in that time.
Compared with the frenzied action on Wall Street, with its near-panic buying spree as the presumed vote of confidence in the future, the disparity between the world they see and the one Wall Street observes is startling. Which one is illusion and which reality?
Something else comes through these conversations with business executives. Virtually without exception, they point to worldwide problems affecting them. What the United States is experiencing, they say, is also true of France, Germany, Britain, Japan, Middle East oil states and especially so-called Third World nations. A worldwide recession affects countries and businesses everywhere. It is of long duration, and poses serious problems simultaneously to all, including the United States.
To back up what they see in their own industries, they point to world trade figures or increasing strains on the international monetary system, with entire countries in danger of bankruptcy.
Sam I. Nakagama, a respected economist, in an analysis dated Sept. 28 for the investment house Kidder Peabody & Co. Inc., paints a sobering picture:
"Ever since last winter, we have argued that a second-half upswing was not a sure thing. We took that position even though most observers maintained that increased defense spending, a shift toward inventory accumulation and the 10 percent tax cut made it virtually certain that the economy would be moving up by spring or at least by midyear.
"The most sensitive economic indicators, however, show that private business activity is still falling. Since the economies of Europe and Japan are also either stagnant or declining, the failure of the U.S. economy to stage a real upswing must be viewed as an extremely serious matter."
Nakagama goes on to say:
" . . . A mere statistical rise in the GNP does not warrant the conclusion that the current recession is over. In the last quarter century, the most reliable sign that a recession has hit bottom has been provided by the composite index of coincident indicators as currently compiled by the Commerce Department. That index was still declining in July, and its components for August point to a further sharp decline last month.
"No less significant is the fact that the components for the leading indicator index now add up to a decline for August. Since a rise in the leading indicators usually precedes an upturn in business by one to four months, a downturn in this index after four months of increase must be viewed as highly significant. Combined with other evidence of declining business activity over the past month, a drop in the leading indicators would provide convincing evidence that the recession has not ended."
He concludes: "Unless there is a consumer-led recovery in the United States fairly soon, the current worldwide slump may deepen into a quasi-depression."
Perhaps Wall Street is sending forth the first signals of that recovery. Let us hope so. But seen far from the financial markets, that recovery doesn't seem as assured as recent trading behavior would indicate. And even when the recovery has begun, this country still faces serious problems. Some of them involve feelings about Wall Street.
A local official expressed what is beginning to be heard from many others around the country:
"My sense about the stock market going crazy gets back to a feeling that I am picking up more and more: that those who have money are going to be making more of it and that the poor are going to get poorer. There's no question in my mind that we're going to be seeing a widening gap between those who have it and those who don't in this country."
Coupled with that sort of expression, one often hears strong criticism of corporate takeover battles, such as the recent one involving the Bendix Corp., in which leading strategists vote themselves "golden parachute" financial arrangements so that, even if they lose their merger struggles and damage their companies, they profit.
A strain of economic class resentment runs through these criticisms, and it's one that should be worrisome to business in general and Wall Street in particular. The last thing either needs is a revival of those kinds of class attitudes at a time when millions of Americans really are hurting and increasingly apprehensive about their future, if not that of the big financial players.