October 6, 2004IRS is Hiring 190 agents in the New York City office and expects to increase its workforce by approximately 25% by the end of the year. Just as important as the number of hires is their quality, the agency is insisting on veterans with more than five years of field experience. We are already seeing a dramatic increase in the number of individual tax audits. We suggest you increase the quality of your documentation of deductions. Crain's New York Business 7/4/04 p. 1 Is Now the Time to Invest? There is a political consensus that John Kerry will win the election if voters feel they are less well off now than they were four years ago. Specifically, if they do not have a job or the prospect of one. President Clinton successfully ran on the premise, “It’s the economy, Stupid!” John Kerry paints this economy as one in the doldrums where not enough jobs are being created. The mainstream press and the Bureau of Labor Statistics seem to agree. Just last month the Bureau of Labor Statistics in their payroll survey stated that only 32,000 jobs were created in July (it was later revised upward to 73,000 jobs)(we need at least 150,000 jobs to be created each month in order to meet the current demand). Therefore, the unemployment index should have gone up. Yet the unemployment rate dropped to 5.4%, the lowest since 9/11/01. In fact, one year ago it stood at 6.2%. How can that be? There are two surveys conducted by the BLS. The other one is the household survey. The first survey, the payroll survey, covers only large corporations to see if they are hiring or firing. The second covers households. Select sample households are called to see who is working this month vis a vis last month. The household index showed a rise of 665,000 jobs! What accounts for the difference? The household index covers those who are in small or midsize businesses, sole proprietors and some of those 2,000,000 limited liability corporations that have been set up in the last year. In fact, since the end of the recession in November 2001 the household index has recorded an increase of 3,250,000 jobs versus fewer than 500,000 for the BLS payroll survey. Analyzing this should lead you to two conclusions. The first is that John Kerry may have a problem if he continues to talk dour economics. (Definitions: a recession is when your neighbor is out of work. A depression is when you are out of work). The second is that if President Bush wins reelection it may be more likely than not that the stock market will rise since the stock market has historically favored certainty over uncertainty; the market knows President Bush. If John Kerry wins, the market may continue to drift sideways since it does not yet know who he is, who his advisors are, and what he will do. If you agree with my analysis of the facts you might want to consider committing more money to the stock market. Be aware however, that there are more than economic issues in this election and political surprises may always occur to change the outcome and history is not a certain guide to the future of the stock market. If you want to discuss this idea further, please call Howard Lisch to find out about why dollar cost averaging (investing over time) may be a suitable way to invest in this economic and political climate. AIM Weekly Market Insights 8/12/04, AIM Weekly Market Summary 9/6/04, 9/8/03. Forbes 9/20/04 p. 45. Putnam Economic Commentary 9/20/04 Women Outjuggle Men This will not come as a surprise to most, but a new survey by the Department of Labor shows that the average working woman spends about twice as much time as the average working man on household chores and the care of children. The average working woman spends about 90 minutes per day caring for other members of the family as opposed to 50 minutes for the average working man. The average hours per day spent working, were 8.87 hours for men and 7.74 for women. The same survey found the average adult had a little more than five hours of leisure time a day and devoted about half of it to watching television. In contrast, only twenty minutes were devoted to leisure sports and another twenty minutes to relaxing and thinking. Likewise, the average working woman spends more than 80 minutes on household chores as opposed to 45 minutes for the average working man. NY Times 9/15/04 p. A23 RFID Update Some say that the biggest change in the business world will be the use of RFID (radio frequency identification) chips that will be used to track all inventory and so reduce the need for additional inventory. The most exotic use yet has been that the chips have been implanted in the Attorney General of Mexico and 160 of his employees for security reasons. Talk about not wanting to lose your inventory! Informationweek.com 7/19/04 p.15 IRS Makes More Errors The IRS stated, in testimony to Congress, that last tax season they answered 577,000 more telephone calls than the prior year; that they answered only 85% of the calls that came in. They answered 82% of the tax law questions accurately, about 1% less than the prior year. NYSSCPA.org posted 4/22/04 Compare that to our accuracy rate which must be 100% when you call. Remember, We’re Here For You!!