Glancing Back: The Big, Bad Bear Market
1987
Black Monday At various times in the United States’ history the stock market has risen and fallen, sometimes, but not always, signaling an economic slump.
In 1987, between Oct. 14 and “Black Monday,” Oct. 19, the stock market fell dramatically, with the Dow falling by approximately one-third. On Black Monday alone, it fell by 22.6%. It didn’t decline for long, however, and in 1989 the stock market reached the level it had been at on Oct. 13, 1987.
Greg Kowalski interviewed contractors to see if the stock market’s plummet that year had any effect on their businesses, and if so how. Their replies ran in a front-page article in the Nov. 16, 1987 News.
“I can’t measure any effect yet, but I’ve been listening and watching and waiting, talking to everybody I can to see what effect it’s [the stock market drop] going to have in the next few months.
“I wouldn’t expect anything to happen immediately because jobs in our industry start many months before construction actually begins. Business in general has been good, and I hear that the banks have a lot of money to get out. And we’re getting more calls on retrofit than we’ve ever had before,” said Paul Baird, president of Jack Frost Co., Inc., Tacoma, WA.
Jim Cupp, a south Florida contractor, commented, “I think we’re going to have a downturn next year. I moved more than half of our retirement funds into bonds, not because of that one-day crash, but because my personal feeling is that the market can’t always go up.
“We have country clubs and retirees for customers. Many of our residential sales are cash deals, and I’ve noticed that when the market is down, they don’t spend the way they usually do. We’re more susceptible [to market fluctuations] in south Florida.”
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Not everyone felt the effects of the stock market crash of 1987. James Isaac, president and half-owner of Isaac Heating & Air Conditioning, Rochester, NY, stated, “It [the crash] has had no effect. We’re busier than we’ve ever been in 42 years. The business climate is outstanding. The new house market is a tad softer than last year, but now with the drop in the prime rate maybe that will be a shot in the arm for sales.”
Jane Lightfoot of Hunting-Bye Refrigeration Co., Watsonville, CA, agreed. She said, “Business is fine. We’ve felt no effect from the crash.”
Robert Anderson, office manager for Aksarben Heating & Air Conditioning, Inc., Omaha, NE, felt the same way. “It’s been business as usual. People seem to be ordering less furnaces, but I’m not sure that’s because of the stock market. It may be too early to tell what will happen.” Anderson felt that perhaps the crash was “a blessing in disguise. We’re concerned about the [federal budget] deficit, especially the trade deficit. We’re closely aligned with the textile industry and we feel that they’ve been treated unfairly. We hope that this will wake some people up so that the U.S. will open up some of its foreign markets.”