Pub. 11 2012-2013 Issue 4

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 27 new jersey auto retailer w w w . n j c a r . o r g ONE MILLION  continued from page 25 AUTOMOTIVE TAX SPECIALISTS Let our 25 + years of TAX experience guide you and your Automotive Dealership. Call today & mention this ad for a free consultation. (973)790-8800 Alan E. Ginsberg, CPA Sal DiBello, CPA aginsberg@brunodibello.com www.brunodibello.com Federal Reserve to Buy Assets to Tackle High Unemployment The Federal Reserve’s Federal Open Market Committee recently reported that “growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors. Employment has continued to expand at a moderate pace but the unemployment rate remains elevated.” As a result, monetary policy will remain essentially the same, and the Fed will continue to buy financial paper at the rate of about $40 billion per month of newMortgage Backed Securities (MBS) and $45 billion per month of U.S. Treasury securi- ties. The Fed will also reinvest principal pay- ments from MBS they already own, and roll over their investments in U.S. Treasury secu- rities currently owned. All of this keeps the lev- el of liquidity in theU.S. economy very high. And the FOMC restated its position that “if the labor market does not improve substantially” it could engage in ad- ditional accommoda- tive policies to further increase liquidity. At levels of unemploy- ment above 6.5 percent, the Fed promised an “exceptionally low range for the federal funds rate.” The FOMC did not repeat the assurance that rates would not start to rise before 2015, and so the need to see progress by the U.S. Congress and the Administration on reducing federal spending levels. The flat fourth quarter report, with GDP falling 0.1 percent at an annual rate in the fourth quarter of 2012, will keep immediate inflation concerns at bay. However, with the economy awash in liquidity, a significant pick up in the growth rate will trouble the bond markets in the future, particularly if too little progress is made to reduce federal Now is not too early to start devising a plan to deal with higher interest rates in your dealership, because rates are likely to increase for several years once they do start to move upward, whether that is in 2014 or 2015. ONE MILLION  continued on page 29