Planned Giving News Magazine

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Durable-Goods Orders Rise 1.3% - MarketWatch 1/26/06
Orders for U.S.-made durable goods rose 1.3% in December despite a large decline in aircraft orders. The 1.3% gain was stronger than the .5% gain predicted by economists surveyed by MarketWatch. Details of the goods report were even stronger, such as the revision upwards of the November data by a full percentage point to 5.4%.

Consumer Prices Dropped in December - NY Times 1/18/05
The consumer price index fell unexpectedly in December as energy prices dropped for the third month in a row, the government reported today, further easing concerns about inflation. The report puts to rest the inflation worries that flared up in the months immediately after Hurricanes Katrina and Rita struck the Gulf Coast.
However, as reported in the Washington Post on the 19th, the index rose 3.4% over the year, the fastest rate since 2000, reflecting higher prices for fuel oil, gasoline, natural gas and electricity.

Industrial Production Increases - MarketWatch 1/17/06
U.S. industrial output increased 0.6% in December while capacity utilization soared to 80.7%, the highest since October 2000, the Federal Reserve said Tuesday. For all of 2005, industrial production increased 3.2%, compared with a 4.1% gain in 2004. Capacity utilization increased by 1 percentage point from December 2004 and is now 0.3 percentage points below its long-time average.

US Economy Slows to Below Trend - MarketWatch 1/16/06
The U.S. economy grew at the slowest pace in nearly three years in the just-concluded fourth quarter, economists estimate. Led by what could be the weakest consumer spending since 1991, the economy likely grew at about a 2.7% annual pace in the fourth quarter after 11 straight quarters of growth above 3%, economists say. The slowdown is just what the Federal Reserve wants at this point in the business cycle. The Fed has boosted its short-term interest rate target 13 times since mid-2004 in a bid to put the brakes on the economy.

US Retail Sales Rose - MarketWatch 1/13/06
Retail sales increased a seasonally adjusted 0.7% in December as auto and gasoline sales strengthened, the Commerce Department said Friday. For all of 2005, sales increased 7.3%, down from a 7.6% gain in 2004. The figures are not adjusted for price changes.

US Economy Stronger Than People Think - MarketWatch 1/9/06
The outlook for the U.S. economy remains "quite favorable for 2006," said Jack Guynn, the president of the Federal Reserve Bank of Atlanta in a speech Monday. "The U.S. economy is doing quite well, even better than many people seem to allow themselves to think," Guynn said in a speech prepared for delivery to the Rotary Club of Atlanta. The economy should grow in the range of 3% to 4%, with inflation expectations anchored.

New US Jobless Claims Hit 5 Year Low - Reuters 1/5/06
The number of U.S. workers seeking new jobless benefits fell last week to its lowest in over five years, the government reported on Thursday and a private group said the services sector grew last month, boding well for the economic outlook. The strong data came one day before the closely watched Labor Department report on employment. Economists expect a solid 200,000 gain in nonfarm payrolls in December, with the jobless rate holding steady at 5 percent.

FOMC: Only few more rate hikes needed - MarketWatch 1/3/06
A majority of members of the Federal Open Market Committee believed that the Fed would only have to engineer a few more rate hikes to keep inflation in check, according to a summary of the discussion at their Dec. 13 meeting released on Tuesday. Most members said the outlook for policy was that "the number of additional firming steps required probably would not be large," according to the report.

THE ECONOMY: SEVEN INDICATORS - From CNN Money (as of 1/26/06)

The Indicator	What It's Telling Us	Next Update
Consumer Confidence	Economic strength leads to surge in December	Jan 31
Retail sales	0.7% gain in December - less than expected	Feb 14
Leading Economic Indicators	Pointing to stronger growth	Feb 21
Manufacturing Activity (ISM)	Much weaker than expected	Feb 1
Industrial Production	Up 0.6%, ahead of forecasts	Feb 15
Job Growth	Well below forecast	Feb 3
Inflation (CPI)	December surprise drop (energy prices), core remains tame	Feb 15

Tax Exclusions, Limits and Credits for 2006
The IRS has released the tax exclusions, limits and credits for 2006. The estate tax exemption for taxpayers who die during 2006 has increased to $2 million, which translates to a unified credit of $780,800. The tax rate above $2 million is 46%. The annual exclusion for gifts has increased to $12,000, which is the amount each taxpayer may give to each non-charitable recipient, without reducing his or her lifetime gift tax exemption, which remains at $1 million for 2006. The IRS provides a good overview of current estate and gift tax rates and facts about these taxes on their website here: www.irs.gov/businesses/small/article/0,,id=98968,00.html
John Ebarre - Planned Giving Consultant - 1/16/06

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Millions Joining Ranks of Wealthy - as far as the Tax Code Goes (AMT)
You may not feel rich, but you are likely going to be taxed as a high-income earner next year. The alternative minimum tax will affect some 20 million taxpayers in 2006, up from four - yes, four-- million this year. The AMT is designed as a check on the wealthy, blocking certain deductions and attaching a levy on things about which few lower income earners worry: a large gain on the sale of art, for example. Because the tax hasn't been linked to inflation since it was devised in 1969, it's affecting the way in which individuals earning more than $40,250 or couples making $58,000 file their tax returns. Next year, the AMT calls for individuals earning $33,750 and couples earning $45,000 to be exposed. Hence, the huge bump in numbers affected.
Congress was set to revise the AMT code this year to provide relief, but the year has gone by without any compromise or legislation. Next year, the issue is set for review and people on Capitol Hill say any reform will likely include a clause making changes retroactive to the beginning of the year. But what limits will be agreed upon is still anyone's guess. The trick is the AMT may account for more tax revenue in a few years than the traditional tax system we have in place today.
Meanwhile that wealthy constituency will find other ways to skirt paying taxes ... and average earners will keep getting stuck with the tab.
Thomas Kostigen, MarketWatch 12/28/05

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Specter of rates uncertainty haunts 2006 investor
Pity the poor investor, entering 2006 pretty much knowing what will happen, but not knowing when. The men and women who steer trillions of dollars around financial markets appear to be in fair agreement that next year will be a similar, if somewhat muted, version of this one. That would see equities outperforming bonds, and regional stock markets such as Japan and the euro zone outshining the United States.
"The overall environment is not going to be all that dissimilar to 2005 and 2004," said Andreas Utermann, chief investment officer of RCM, part of Allianz Global Investors' stable of investment companies. But haunting the background is the specter of change in interest rate policy that may divide the year sharply for investors. They just do not know when it will arrive.
The U.S. Federal Reserve is expected to stop raising interest rates sometime in the year while Europe -- and possibly Japan -- are leaning toward tightening. Those moves threaten to change prospects for many assets.

The dollar could start declining again as the interest rate differential that has boosted it this year dissipates and the U.S. current account deficit begins to weigh again.
Ending the U.S. monetary tightening cycle and raising rates in Europe could make U.S. Treasuries more attractive and Bunds less so, a reverse of recent trends.
U.S. stocks, which have languished this year, could get a fillip when the drag of tighter interest rate policy is removed. Likewise euro zone assets may start feeling pressure from European Central Bank tightening and a stronger euro.

"This is the big debate in markets: how far will U.S. rates go up?" said Ewen Cameron Watt, head of investment strategy and research at Merrill Lynch Investment Managers.
Jeremy Gaunt, European Investment Correspondent LONDON (Reuters)12/16/05

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White House Backs Continuation of Lower Tax Rates on Dividends and Capital Gains
White House Press Secretary Scott McClellan has expressed support for the proposed extension of capital gains and dividend tax cuts in a final budget reconciliation bill. McClellan, at a press briefing on November 30, asserted that permanent tax relief helps individuals and businesses plan better because they are not facing uncertainty about changes in the tax code. Although these provisions do not expire until 2008, McClellan maintained that Congress should approve these capital gains and dividend extensions now. "It's important to move forward on those, because you provide people with great certainty so that they can plan, and so that businesses can grow and hire people," the White House spokesman said.
cchgroup.com news 12/1/05

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