The Street This Week: Planes, Trains, Automobiles, Malls — Or None of the Above?

The good news — what to be thankful for this week, in an economic sense — is that Monday the stock markets decided anew that this rally we’ve been having, the one that has Wall Street knocking on wood at every closing bell, is a proper and justified thing.

How so? The recovery, stupid. One of the better economic rules of thumb out there is that if you want to know what the economy’s going to do in the next six months, look at stocks and bonds. (yeah, it’s sort of a substitute for economic thinking, but that’s what makes it such a good rule) And since hitting bottom in the 8100 range on Sept. 21, the Dow is back over 9900 and right at the 20 percent cusp of technically being a…bull market. And the charts for the NASDAQ and S&P 500 are sporting the very same V-shapes — and as of Monday the herd hadn’t decided to take any of it back.

All of which means that the same markets that steadfastly refused to presage a recovery all year — making all the economists look stupid — are predicting one right now. Which suddenly makes the same economists, now predicting a two-quarter climb back to 3.5 percent GDP growth for the first half of 2002, look like they might just have it right this time. Finally.

Of course, profit-taking will step in periodically, and we could see it take some big bites now that the indexes are back above where they were before those planes hit. But this steady 8-week run-up has survived anthrax deaths, plane crashes and a war that didn’t seem to want to go anywhere until very recently. (Now that it’s on cruise control, defense stocks are pulling back almost as fast as the Taliban troops.) And if this economic year has taught us anything, it’s listen to the markets. And the markets say things are going to be all right again by summer.

Until then, though, it’s starting to look like one cold winter. Manpower, Inc. said Monday that its survey of U.S. companies’ hiring intentions for the first three months of 2002 barely registered a pulse, a weakness not seen since the recessionary early months of 1991. Unemployment numbers will continue to climb up through the winter and spring even as and if a recovery takes hold. So those who don’t have jobs are in for at least four months of trouble finding a new one, and those who still have one are in for at least six of wondering whether they’re one paycheck away from sweatpants and stubble. That sort of psychology does not normally a quick recovery make.

But then there’s the other good news: Oil is now around $17 a barrel, its lowest level since June 1999, and prices at the pump are down a third since spring and only headed lower in the near term, thanks to an OPEC price war that’s turning the Middle East oil belt into some semblance of the airline industry. Cheap oil is tough on developing countries — who are usually trying to sell it — but it’s tidings of comfort and joy for consumer economies like the U.S. and Europe.

If high energy prices are a virtual tax on consumers, low-and-getting-lower ones are a virtual tax cut, not only for consumers but airlines, shipping and anybody else that uses the ol’ internal combustion engine to get themselves or their products around. Cheap oil is an economic stimulus that takes the teeth out of inflation — as last week’s shrinking CPI number attests — and a sharp dip in pump prices is coming in the perfect winter for U.S. consumers and business alike.

But which wind wins — the icy gusts of uphill unemployment and moribund manufacturing, or the spring-minded zephyrs of priced-to-move go-juice, heating oil and natural gas? This is the week in which not the markets or the Commerce Department but the people are going to cast a potentially decisive vote — or at least spin a potentially self-fulfilling forecast of how low the economic temperature is going to go this winter, and how long this recessionary snap is going to last.

What’s the biggest shopping day of most years? Friday after Thanksgiving — this Friday. And what’s the biggest travel period? Thanksgiving to Christmas — to grandmother’s house we go. In this extraordinary holiday season, there look to be three kinds of Americans: Those who stay home for the holidays, fearing for their jobs. Those who drive somewhere, fearing to fly. And those who behave in the proper patriotic fashion and go ahead and fly, fearing nothing.

How many do what, and how lavishly they do it, has everyone in the destination and shopping businesses sweating bullets and airlines sweating howitzers. (And it’s a cold, cold sweat.) Not to mention the economists and the markets, whose current state of agreement that all this long-cold-winter business will be a sunny memory (and a buying opportunity) by late spring is not an actual guarantee that it will happen.

Projections and predictions always swirl as thick as flakes in Alaska, but it’s important to remember that this thing is still happening in real time, and what American Joes and Janes do with their wallet during the next three days to six weeks, as the original Mr. Frost once said, could make all the difference.