I live on the beach. No, that doesn't mean I'm out of work. My house is at the beach.
So, there are a group of us, a dozen to be exact, sitting around in a circle on the beach last weekend, discussing the woes of the world, or to be more precise, the terrible status of our stock portfolios, 401k and 403b plans, and other investments. We wrung our hands pretty good.
There wasn't an accountant among the group but guess who was taking the rap? Yup, the most trusted professional was at the short end of the stick, getting all kinds of abuse--being blamed, of course, for the sinking stock market. Heck, they were even being lumped in with lawyers.
What will be the answer? Certainly no one knows although I suspect the profession will survive this. There are just too many good accountants out there who will overshadow the bad apples. Plus government controls will help, as well.
Besides the plight of the practitioner, the conversation was centered on what is happening in the stock market coupled with "consumer confidence," as all the gurus call it these days. People are beginning to say there is a connection between the rise of the stock market and changes in consumer confidence. In fact, Scott Keeter and Michael Dimock of the Pew Research Center at the University of Michigan in Ann Arbor, point out that since 1998, about 20 percent of the attitude in consumer confidence can be attributed to what's going on in the stock market. "Such a linkage has only been apparent once before, at the height of the so-called 'Reagan Recovery' between 1983 and 1985."
One big reason that has arisen is there's a growing relationship between market fluctuations and confidence because more Americans than ever own stock. In fact, the proportion of shareholders has gone from 32 percent in 1989 to 49 percent in 1998. Also, everyone and his dog are zeroing in on the stock market.
How important is this? Extremely so, say Keeter and Dimock. "Consumer spending has been a strong point of the economy in recent months, but consumers may grow cautious if stock market declines continue to erode confidence."
So, what you have is a kind of domino effect: a market heading south triggers a brake on consumer spending that hurts the economy and that will send the market south even more which will trigger….
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