We're beginning to see the signs that the stimulus may be working. —George Bush speaking at the swearing-in ceremony for the Secretary of Housing and Urban Development Steve Preston

The stimulus to which Bush referred of course is the checks in the mail to taxpayers from the Treasury Department, which should help consumers make one last credit card payment. It's the economic equivalent of Bush's surge in Iraq and sure to be as successful.

As Bush was sharing his optimism with the nation, investors were seeing other signs. Here are some lede paragraphs from the major business journals that were being prepared as Bush spoke.

Jeremy Lerner reported for the Financial Times—

Wall street stocks fell the most since February on Friday after oil prices spiked and the unemployment rate jumped by the most in 22 years in May, reviving fears that the economy is heading for a recession."

The jobs data, rocketing oil prices and more bad news from financials dragged all 10 leading industry groups on the S&P 500 into the red.

Neil King, Jr. weighed in for the Wall Street Journal—

Crude oil notched its largest price jump ever on Friday, leaping nearly $11 to more than $138 a barrel, on news of a weakening dollar and continued jitters over the reliability of world supplies.

The surge, coming just as many analysts thought oil prices were set to fall, sent stocks plunging amid fears that the U.S. economy could be in for a combined bout of inflation and slow growth. The skyrocketing price of oil, now up more than 44% so far this year, is battering the airline and auto industries and causing consumers to cut back on driving and nonessential spending.

And Peter Goodman summed it up for the NY Times Business section

The unemployment rate surged to 5.5 percent in May from 5 percent — the sharpest monthly spike in 22 years — as the economy lost 49,000 jobs, registering a fifth consecutive month of decline, the Labor Department reported Friday.

The weak jobs report, coupled with a staggering rise in the price of oil — up a record $10.75 a barrel to more than $138 — unleashed a feverish sell-off on Wall Street, sending the Dow Jones industrial average down nearly 400 points. The dollar plunged against several major currencies.

Investors’ recent hopes that the United States might yet skirt a recession sank swiftly in the face of gloomy indications that the economy is gripped by a slowdown and pressured by record fuel prices.

I am continually astonished by how well the stock market has held up. Do investors not read? Or is it the case, as Grandma Fuse used to say, that they have more dollars than sense?

Tags: news and politics recession depression stagflation