February 6, 2013 - San Gabriel Valley Examiner
February 6, 2013 - San Gabriel Valley Examiner
February 6, 2013 - San Gabriel Valley Examiner
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FINANCIAL / CONSUMER<br />
B4 S.G.V. EXAMINER<br />
<strong>February</strong> 7 - 13, <strong>2013</strong><br />
OUCH!!<br />
In A Nutshell<br />
What’s up in the Economy?<br />
KEN HERMAN<br />
Economic Analyst<br />
& Former Glendora Mayor<br />
In a word, OUCH! No one<br />
on Wall Street even in their<br />
worst case scenarios thought<br />
the Gross Domestic Product<br />
number reported this past<br />
Wednesday would be this bad.<br />
Fourth quarter GDP fell 0.1%<br />
at the end of the year undercutting<br />
even the most pessimistic<br />
of forecasts and hitting a significant<br />
decline compared to the<br />
3.1% growth rate in the third<br />
quarter.<br />
The big surprise was government<br />
spending down 6.6% with<br />
a HUGE 15% drop in federal expenditures,<br />
all of which was<br />
centered on a decline in end-ofthe-year<br />
defense spending, off<br />
22.2%! Defense spending is<br />
poised to be cut again in the<br />
second quarter of this year.<br />
As expected, consumption<br />
was the primary source of support<br />
in the fourth quarter. Personal<br />
consumption rose 2.2%,<br />
in line with expectations and the<br />
fastest rate of growth since Q1<br />
2012. Thanks in part to declining<br />
gasoline prices, consumers<br />
were at least able to maintain a<br />
respectable level of spending<br />
providing support for end-ofthe-year<br />
growth. Goods consumption<br />
contributed 1.5% to<br />
headline growth of which<br />
0.62% came from pent up vehicle<br />
demand. Service consumption,<br />
on the other hand,<br />
contributed 0.44% to Q4 headline<br />
growth.<br />
Total private investment fell<br />
0.6% in the fourth quarter compared<br />
to a 6.6% increase in Q3.<br />
But, fixed investment actually<br />
rose an impressive 9.7% at the<br />
end of the year thanks to a<br />
12.4% increase in equipment<br />
and software investment. Companies<br />
struggling to maintain a<br />
positive bottom line, while hesitant<br />
to invest in structures and<br />
additional employees, continued<br />
to invest to grow productivity.<br />
Non-residential structure investment<br />
declined 1.1% after<br />
flat lining in Q3. Residential investment<br />
rose 15.3%, slightly<br />
above the 13.5% pace in Q3.<br />
Inventories rose just $20bn<br />
at the end the year significantly<br />
less than the $60.3bn increase<br />
in the prior quarter and $10bn<br />
short of expectations. The net<br />
result was a decline of -1.27%<br />
in the headline growth figure.<br />
Heading into the first quarter,<br />
stronger inventory rebuilding<br />
will once again be a net contributor<br />
to growth. Exports<br />
declined 5.7% and imports<br />
dropped 3.2% at the end of the<br />
year.<br />
Bottom line: Final sales rose<br />
just 1.1%, weaker than expected<br />
due to the drop in defense<br />
spending. At the start of<br />
the week the market was elevated<br />
by a better-than-expected<br />
durable goods orders<br />
report. It created fears the Fed<br />
may begin to at least discuss<br />
unwinding accommodative<br />
policy at last week's FOMC<br />
meeting. Given this morning's<br />
downright disappointing end-ofthe-year<br />
growth report, the conversation<br />
at the Fed will focus<br />
on a much broader picture - including<br />
tax increases -- and erring<br />
on the side of longer and<br />
more QE rather than premature<br />
termination or less accommodation.<br />
As Wall Street continues<br />
to emphasize, better-thanexpected<br />
headline growth in any<br />
economic release will continue<br />
to send shock waves throughout<br />
the market and force rates<br />
to test upward bounds. It is<br />
important, however, to keep an<br />
eye on the underlying longer<br />
term trends that the Capital<br />
Markets are tuning out to start<br />
the year.<br />
FEDERAL OPEN MAR-<br />
KET COMMITTEE: AS EX-<br />
PECTED<br />
This past Wednesday, the<br />
Federal Reserve completed their<br />
two day FOMC meeting with<br />
no surprises. The FOMC as<br />
expected decided to continue the<br />
purchase of longer-term assets<br />
at a pace of $85bn a month.<br />
Aside from language describing<br />
the fourth quarter GDP slump,<br />
the announcement's policy section<br />
was unchanged from December.<br />
Within the statement:<br />
>The Fed noted that economic<br />
activity 'paused in recent<br />
months' in large part due to temporary<br />
weather-related disruptions<br />
considered 'transitory.'<br />
That's a downward change<br />
from the Committee's December<br />
assessment that the<br />
economy continued to 'expand<br />
at a moderate pace.' It continued<br />
to note that 'inflation has<br />
been running somewhat below<br />
the Committee's longer-run objective.'<br />
>The Committee reinforced<br />
its commitment to QE and 'will<br />
continue purchasing additional<br />
agency mortgage-backed securities<br />
at a pace of $40 billion per<br />
month and longer-term Treasury<br />
securities at a pace of $45<br />
billion per month,' and maintain<br />
its existing policy of principal<br />
reinvestment.<br />
>The Fed reiterated longerterm<br />
goals specifically reinforcing<br />
the time line for accommodation<br />
to remain in place 'at least<br />
as long as the unemployment<br />
rate remains above 6-1/2 percent,<br />
inflation between one and<br />
two years ahead is projected to<br />
be no more than a half percentage<br />
point above the Committee's<br />
2 percent longer-run goal, and<br />
longer-term inflation expectations<br />
continue to be well anchored.'<br />
However no further<br />
clarification was included regarding<br />
the new threshold<br />
policy.<br />
The market was elated at the<br />
start of the last week with better<br />
than expected headline<br />
growth, sparking fears the Fed<br />
would change the conversation<br />
and begin to think about unwinding<br />
accommodation.<br />
Nothing in the announcement<br />
previewed such a turnaround.<br />
Despite the market's negative<br />
reaction to the December minutes,<br />
the Fed didn't add any<br />
clarification to its reasonably<br />
clear statement last month about<br />
leaving low rates in place until<br />
after the economy begins to<br />
build further strength. At this<br />
point, with inflation well below<br />
the Fed's longer-term objective,<br />
the (intended) benefits of QE<br />
continue to - at least from the<br />
Fed's perspective - outweigh<br />
any risks associated with longterm<br />
zero interest rate policy and<br />
further growth of the Fed's balance<br />
sheet.<br />
UNEMPLOYMENT FIG-<br />
URES FOR JANUARY<br />
The unemployment rate,<br />
which was announced this past<br />
Friday, pushed higher in January<br />
(7.9%), implying a longer<br />
wait for Fed rate hikes now that<br />
the FOMC has adopted its<br />
threshold targeting system. But<br />
because the rate rise was<br />
caused by an increase in the<br />
number of people looking, it<br />
was not an entirely bad thing.<br />
But the rate was up, and January<br />
job growth was disappointing.<br />
As a result, the initial move<br />
in the capital markets was toward<br />
lower yields and higher<br />
equity prices with the DOW<br />
pushing above 14,000. But there<br />
is a lot to digest in the benchmark<br />
revisions. The job market<br />
was healthier than Wall Street<br />
thought back in 2011 before<br />
losing steam last year. And the<br />
picture painted by the last three<br />
months is of an economy losing<br />
steam again after strong job<br />
growth in September, October<br />
and November.<br />
LIVE LOCAL, SHOP LO-<br />
CAL - THIS IS THE TIME<br />
OUR MERCHANTS NEED US<br />
I welcome your questions and<br />
c o m m e n t s :<br />
kenherman46@hotmail.com<br />
Chamber Honors Business/Community<br />
Members and Installs New Officers<br />
IRWINDALE – The<br />
Irwindale Chamber of Commerce<br />
recently held its 33rd<br />
Annual Installation and Awards<br />
Dinner at the Pomona <strong>Valley</strong><br />
Mining Company honoring the<br />
Citizen of the Year, Ambassador<br />
of the Year, Employee of the<br />
Year, Business Person of the<br />
Year, and Business of the Year:<br />
• Citizen of the Year award<br />
was presented to Theresa<br />
Olivares. Theresa was raised in<br />
Irwindale, has a BS degree from<br />
Cal Poly Pomona, and is employed<br />
by the City of Irwindale.<br />
She is involved in her children’s<br />
school, Saint Frances of Rome<br />
and Our Lady of Guadalupe<br />
Church, as well as the Irwindale<br />
Education Foundation. Theresa<br />
assists Saint Frances of Rome<br />
with their Annual Golf Tournament,<br />
Annual Fiesta and helps<br />
out in her children’s classrooms.<br />
At Our Lady of<br />
Guadalupe Church, she volunteers<br />
her time to help at the Fiesta.<br />
Theresa is also a board<br />
member of the Irwindale Education<br />
Foundation where she<br />
has served for over a decade and<br />
is currently the IEF Secretary.<br />
Theresa volunteers her time to<br />
IEF to give back to a program<br />
that once assisted her. Since<br />
2002, the Irwindale Educational<br />
Foundation has awarded over<br />
$360,000 in Scholarships!<br />
• Ambassador of the Year<br />
award was presented to Brenda<br />
Reuter, Sales Manager at Athens<br />
Services. Brenda has been<br />
(and continues to be) a loyal<br />
employee of Athens Services for<br />
more than a decade. As the head<br />
of the “special waste sales division”,<br />
the company relies on her<br />
particular knowledge of its<br />
regulations, policies and unique<br />
procedures in handling customer<br />
needs. When it comes to<br />
customer service, Brenda goes<br />
above and beyond for her customers<br />
and the company. Her<br />
upbeat, cheerful attitude is a<br />
major asset. Brenda has been<br />
recognized previously for outstanding<br />
community service including<br />
Employee of the Year<br />
and Ambassador of the Year.<br />
She gives 100% in all she does<br />
be it for work, family, friends<br />
or volunteering.<br />
• Employee of the Year award<br />
was presented to Nathan<br />
Kirschenbaum, VP-Relationship<br />
Manager at AmericanWest<br />
Bank. Nathan has demonstrated<br />
a consistent commitment to the<br />
bank, its customers, and team<br />
members. The brand image that<br />
is created every time he interacts<br />
with business owners and<br />
community members is very<br />
positive and he is always punctual,<br />
engaging and looking to<br />
learn and improve on a day to<br />
day basis. Customers and community<br />
members hold Nathan in<br />
high regard, his work ethic is<br />
exemplary and the quality of his<br />
work is outstanding. Nathan<br />
volunteers and is a member of<br />
various Chambers and Business<br />
Associations. Nathan also<br />
serves on the Golf Committee,<br />
and is the current Chair of the<br />
Irwindale Business Ambassadors.<br />
• Business Person of the Year<br />
award was presented to Gale<br />
Banks, owner of Banks Engineering.<br />
Fifty-five years of engineering<br />
milestones for Banks<br />
Power president and founder<br />
Gale Banks began at age 14 with<br />
Please turn to CHAMBER / B11<br />
"ASK GEORGE" - Expert Answers<br />
To Common DMV Questions<br />
SACRAMENTO – Do you<br />
have questions about general<br />
driving related requirements like<br />
registration and insurance? Are<br />
you unclear about laws and restrictions<br />
related to driving? The<br />
California Department of Motor<br />
Vehicles has answers. Save<br />
Time. Go Online at<br />
www.DMV.ca.gov.<br />
Q. I was thinking of that the<br />
DMV should offer a breast cancer<br />
license plate as one of the<br />
special interest license plates.<br />
Is this something the DMV<br />
would consider?<br />
A. That is a great idea! However,<br />
the DMV does not have<br />
the power to decide which<br />
plates can be established. An<br />
organization must first get a<br />
state agency sponsorship of the<br />
proposed license plate. The plate<br />
design must contain a message<br />
that publicizes or promotes a<br />
state agency or the official<br />
policy, mission, or work of a<br />
state agency. At least 7,500 preordered<br />
applications for that<br />
special interest plate must be<br />
received by the department before<br />
a new special license plate<br />
George Valverde - Director,<br />
California Department of<br />
Motor Vehicles<br />
can be created.<br />
Q. I went to get a smog check<br />
for my car and it passed, but<br />
the DMV contacted me saying<br />
they never received a certificate.<br />
Now what do I do?<br />
A. You can ask the smog shop<br />
to resend the certificate to the<br />
DMV, but be sure that they have<br />
all the correct vehicle information.<br />
You can also take the smog<br />
test results document into the<br />
DMV yourself (appointment<br />
suggested). For more information<br />
about smog checks, visit<br />
CAR TALK - What You "AUTO" Know<br />
IN CASE OF AN ACCIDENT<br />
Accidents are stressful<br />
enough but here a few things<br />
to keep in mind to help you<br />
through it:<br />
1. No matter if you or the<br />
other vehicle's driver/passengers<br />
are injured, call the police<br />
at once. This is especially important<br />
if serious damage has<br />
been done to a vehicle. They<br />
can also help traffic move more<br />
efficiently to prevent further<br />
accidents should a vehicle be<br />
unsafe to move. The police will<br />
also write up an official accident<br />
report that will be useful<br />
for your insurance claim, otherwise<br />
you have to file an accident<br />
report on your own (the<br />
forms can be found at the Department<br />
of Motor Vehicle's<br />
website.<br />
2. If no one is injured and the<br />
vehicles involved are safe to<br />
move, do so. If they cannot be<br />
moved make sure hazard lights<br />
are turned on and flares or other<br />
noticeable items are placed so<br />
By Gene Morrill<br />
Certified Automotive Specialists<br />
that other vehicles move safely<br />
around you and don't create<br />
more problems.<br />
3. Always exchange information<br />
with the other driver. This<br />
includes license and insurance<br />
information. Name, telephone<br />
number, address, insurance<br />
company, policy number,<br />
driver's license number and license<br />
plate number are essential.<br />
If the owner of the vehicle<br />
A few weeks ago, you mentioned<br />
a 16-percent estate tax.<br />
Please explain further.<br />
Sorry for the confusion.<br />
Some states collect an estate tax<br />
and/or inheritance tax; 16-percent<br />
is the most common rate.<br />
California is not one of them.<br />
Note: Regardless of the fact that<br />
you grew the value of your estate<br />
in a state without estate tax<br />
or inheritance tax, if you move<br />
and subsequently die in a state<br />
that does collect such taxes,<br />
that state will pursue collecting.<br />
Watch for more states to implement<br />
these taxes as federal<br />
funds diminish.<br />
How can I reduce the anticipated<br />
amount of my tax bill?<br />
You have until April 15, <strong>2013</strong><br />
to take action. If you qualify,<br />
(mostly based on income limits),<br />
you might consider putting<br />
up to $5,000 ($6,000 if you are<br />
50 or older) into an IRA (Individual<br />
Retirement Account).<br />
(Roth IRA's don't give you an<br />
upfront tax break.) Some lower<br />
income taxpayers might qualify<br />
for a Retirement Savers Tax<br />
Credit. Note that a tax credit<br />
has a lot more impact on your<br />
tax bill than a tax deduction.<br />
Since my investment income<br />
pushed me into a higher tax<br />
bracket, my CPA suggests I get<br />
a mortgage on my paid-off<br />
house so that I'll have the mortgage<br />
interest deduction. I<br />
worked hard to pay off my<br />
mortgage. Is there another way<br />
to lower my tax bracket?<br />
Financing a paid-off home in<br />
order to get the mortgage-inter-<br />
Julia Yoder<br />
est write-off is throwing your<br />
money away. First of all, it<br />
takes time to recover the costs<br />
involved in getting a mortgage.<br />
Secondly, if you work out the<br />
math, you would be paying<br />
roughly $2 to $3 per $1 of mortgage-interest<br />
deduction. You'd<br />
be better off to just pay the tax.<br />
My recommendation is to reposition<br />
your investment dollars<br />
into a tax-deferred product.<br />
That way you'll only pay taxes<br />
on the earnings when you decide<br />
to use the money.<br />
My friend of many years just<br />
found out that she would not<br />
be receiving the inheritance<br />
she thought she'd be getting<br />
because her relative hadn't<br />
named her as the designated<br />
beneficiary. However, his will<br />
named her. Why isn't the will<br />
being followed?<br />
Beneficiary forms take precedence<br />
over wills. Obviously,<br />
it is very important, and an easy<br />
thing to do: keep your beneficiary<br />
forms up-to-date! Also<br />
note that, excluding spouses,<br />
IRA money goes through probate<br />
unless there's a named beneficiary.<br />
Also, life insurance<br />
proceeds and annuity proceeds<br />
can end up in probate if you<br />
name your estate (your trust)<br />
as the beneficiary.<br />
This is the first year I'll be<br />
filing taxes. Do you know a<br />
good, but inexpensive CPA?<br />
Give Nick Batch and his associates<br />
at Liberty Tax a try:<br />
(626) 852-0321. He's offering<br />
a $50 "Cash-in-a-Flash" discount<br />
on tax preparation fees<br />
through <strong>February</strong> 28, <strong>2013</strong>.<br />
As an Attorney, handling<br />
wills, trusts, and divorces, I<br />
sometimes need someone to<br />
handle the real estate and investments<br />
of my clients. Can<br />
you do that?<br />
Yes, and for the introductory<br />
appointment, I'll meet with<br />
your clients in your office.<br />
(That way, you're there to answer<br />
any legal questions that<br />
arise.) Ask for my free, helpful,<br />
preliminary guide: Financial<br />
Checklist for the Recently<br />
Divorced.<br />
Got a question? Ask Julia<br />
by email or phone.<br />
juliayoder@WiseInvestorsNetwork.com<br />
/ 626-625-5221.<br />
This is your opportunity to<br />
simplify your life by having one<br />
professional working personally<br />
with you to coordinate your finances,<br />
investments, real estate,<br />
mortgage, insurance, retirement,<br />
and estate plans. (CA<br />
Insurance 0C83859/Realtor<br />
01238153/NMLS 248681)<br />
Member of the Nat'l. Ethics<br />
Bureau<br />
http://www.DMV.ca.gov/vr/<br />
smogfaq.htm. Remember to<br />
Save Time! Go Online!<br />
Q. Can I take the driving test<br />
before I take my written exam?<br />
A. No. It is required that you<br />
pass your written exam before<br />
you can take the driving test.<br />
This is to ensure that you know<br />
the rules of the road before you<br />
get behind the wheel. For more<br />
information on the driving test,<br />
visit http://www.DMV.ca.gov/<br />
pubs/brochures/fast_facts/<br />
ffdl22.htm.Remember to Save<br />
Time! Go Online!<br />
The DMV is a department<br />
under the Business, Transportation<br />
and Housing Agency,<br />
which is under the direction of<br />
Acting Undersecretary Brian<br />
Kelly. The DMV licenses drivers,<br />
maintains driving records,<br />
registers and tracks official<br />
ownership of vehicles and vessels,<br />
investigates auto and identity-related<br />
fraud, and licenses<br />
car dealers, driving schools,<br />
and traffic violator schools. For<br />
more information about the<br />
DMV, visit www.DMV.ca.gov.<br />
wasn't the driver, get their information<br />
as well.<br />
4. Year of care, make, model<br />
and VIN number are also a good<br />
idea to jot down and if possible,<br />
take pictures (cell phones come<br />
in very handy at this time for<br />
photos as well as calling the<br />
police). This information is<br />
great when you go to process<br />
the insurance claim.<br />
5. If you have witnesses, get<br />
their contact information as<br />
well.<br />
6. File your insurance claim<br />
as soon as possible and include<br />
as much information as you<br />
can.<br />
We hope you don't need to<br />
use this information any time<br />
soon but just in case, keep it in<br />
your glove box so if an accident<br />
happens to you…you are<br />
prepared.<br />
Please call us with any questions<br />
at 626-963-0814 or visit<br />
our website at<br />
www.CertifiedAutoCA.com<br />
The <strong>San</strong> <strong>Gabriel</strong> <strong>Valley</strong><br />
<strong>Examiner</strong>
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