HAVE THE ECONOMY’S BOOM-TO-BUST CYCLES shortened appreciably, or does our mood just make it seem that way? One minute we’re basking in the glow of job growth and reawakened consumerism, and the next we’re pondering a slowdown brought on by Europe’s spending cuts and China’s credit constriction.

The stock market celebrated Europe’s $1 trillion bailout plan with its biggest one-day jump in nearly 14 months, rebounding 4.4% Monday from the selloff in early May, only to cede half that gain by Friday.

Suddenly perception is reality, and we’re back to selling on Fridays. The specter of slowing global growth worried holders of materials stocks, while a widening federal probe into Wall Street’s marketing of mortgage securities hurt financial companies. Crude oil has pulled back 17% in just two weeks, notwithstanding all that oil spewing into the Gulf, while copper is down for a third straight week. The lone standout is gold, burnished to a blinding gleam by investors defecting from paper currencies. Now, those in Abu Dhabi can even withdraw gold bars and coins from an ATM machine. The machine updates prices every 10 minutes, the better to track gold’s surge to an all-time high. It settled Friday at $1,227 an ounce.

The euro slumping to a four-year low against the buck raises concerns about the competitiveness of U.S. exports, even though the four biggest buyers of American goods are Canada, Mexico, China and Japan. In fact, Europe absorbed just 19.6% of our exports this year, versus 32% for North America and 25.8% for the Pacific Rim. “This is not to say that a slowdown in the European Union is not a concern,” says a well known economic strategist. It’s just that Asia looms larger.
Too bad China wasn’t sending out more helpful signals. Last week its government said inflation in April was up 2.8% as food prices surged 5.9%, increasing pressure on the central bank to raise interest rates. Chinese stocks halted, just barely, their five-week slide. The Shanghai Composite Index has slipped 22% since early August, into official bear-market territory (Source: Barrons Online).