By Rachel Beck
The Associated Press

NEW YORK - Fast-forward to the end of 2003. Things are looking good. Really good.

The business scandals have gone away. The economy is back on track. Investors have stock research they can trust. Stocks are rallying. We are living in the perfect business world.

Maybe too perfect.

All bets are for next year to be better than this one was. But don't count on the tough times to be completely gone. We have just started down the road to recovery.

Still, it is nice to dream. We deserve to do that after what we went through in 2002.

Executives were accused of stealing from their own companies and falsifying financial statements. The economy nearly tumbled into a recession again. Investment firms were found touting stocks they didn't believe in.

Even Martha Stewart made headlines for some alleged corporate misbehavior. No one would have predicted that the domestic design tycoon would get caught up in an insider trading mess.

Everything seemed to be falling apart at once.

It caused investors to panic. They didn't know whom to trust and what disaster would happen next. They fled the stock market, sending Wall Street indexes down to their lowest level in more than five years.

We were battered and demoralized. Now, we will have to wait and see if the worst is really over.

Will we wake up a year from now to find things so different?

The good news is that change has already started.

New laws intended to crack down on corporate crime are forcing companies to be more forthcoming in their financial statements, cut back on all sorts of executive perks and provide greater disclosure on insider trading.

CEOs and corporate boards are now being held more accountable.

Then there is the crackdown on biased stock research. Some Wall Street firms are finally creating giant walls between their analysts and investment bankers to prevent conflicts of interest.

Analysts are actually starting to call bad investments bad and advising investors to sell some stocks, a big switch from the past.

As for the economy, the Federal Reserve's 12 interest-rate cuts over the last two years, including a big half percentage point in November, stopped us from sliding into a recession again.

The lower interest rates spurred businesses to resume spending a little on technology and equipment, kept inflation under control and have been a boon to housing.

The stock market is showing some signs of life, too. Investors are selectively returning, looking for good deals on quality stocks that have fallen steeply over the last few years.

All this feels good. But the problems of the business world aren't close to being fixed, and there is no guaranteeing that some ever will be.

The economy's next challenge will be the possible slowdown in consumer spending and the housing market, which have helped prop up the economy in recent years. A pullback could be devastating.

The bear market on Wall Street left individual investors with deep scars from the huge losses they sustained. That might stop them from buying much again, at least in the near future, and that would temper the overall market's gains.

There is also the chance that investors may forget what they learned in the recent past, get tempted again by "hot" stocks and create another bubble to burst.

Then there are the corporate crooks. It may be harder for them to cheat and steal, but chances are they will find new ways to loot the system. They always do.

Looking ahead to 2003, we can hope for better.

We just need to keep our expectations in check.