Wall Street's strong rally Monday salved some of the sting of last week's dreadful stock-market performance its worst in 60 years and reminded us that we are key players in the country's economic recovery.
The terrorist attacks on Sept. 11, coming on top of months of bleak economic news, understandably caused many people to further tighten their grips on their wallets. But the beating the stock market has taken since the hijackings provided what many Americans can't pass up: A buying opportunity.
Important, though, the buying on Monday was more than simply a sign that we are a nation of bargain hunters. Even if the market swoons today, the one-day shopping spree shows that we believe in the country's resilience, to such a degree that we are willing to bet on it. It also argues in favor of giving consumers, rather than the government, the next shot at slowing the tide toward recession.
Before the hijackings, the government delivered a series of interest-rate cuts and a tax-cut package to stimulate the economy. Since the attacks, the Federal Reserve Board pushed through another half-percent rate cut. Then, Congress and the administration approved a $50 billion emergency-spending bill, aimed largely at recovery in New York City, followed by a $15 billion bailout for the ailing airline industry.
Now, with a growing number of economists agreeing that we are heading into a recession, there is some sentiment for the government to do more. Among the possibilities: Another tax cut or capital-gains reform. But taking such sweeping steps to provide a quick fix is imprudent. Fed Chairman Alan Greenspan had it right when he cautioned against any far-reaching moves.
"While there is obviously a strong desire to move rapidly, it is far more important to be right than quick," Greenspan told Congress Thursday.
President Bush appears to be heeding that advice, at least for now. At the same time, he's trying to bolster the nation's psyche. In his radio address Saturday, the president said that terrorists who flew hijacked planes into the World Trade Center towers "brought down a symbol of American prosperity, but they could not touch its source."
The American people, not terrorists, will decide our fate, he said. Now is the time to give the people the chance. Those who feel comfortable buying stock, should do so. One market gauge at the end of last week indicated stocks, on average, were cheaper than they had been since 1996.
Those who had planned to make a purchase like a car or a refrigerator or refinance a home before the attacks should do so, unless their financial situation has taken some course that makes it imprudent.
And even those who didn't have big financial commitments planned, can stimulate the economy by doing what they normally do. If it's your regular practice to take the family out to dinner once a week, don't stop now. Consumer spending accounts for two-thirds of all spending nationally, so even those dinners out add up.