Pauls Valley, OK, Pauls Valley Democrat


August 5, 2011

Focus now returns to the economy


Edmond, Oklahoma —

But at least things are good now because Congress has reached an agreement on how to reduce our deficit, right? Not likely. As I understand it, the compromise calls for $2.4 trillion in spending cuts over the next ten years. We need at least $4 trillion over 10 years to come anywhere near to keeping the debt level from increasing.

Many of the cuts being discussed are not cuts from current amounts being spent, but cuts in projected spending increases.

While there is no question that we need to reduce spending, nobody wants to talk about the effect doing so will have on the economy for at least the next decade.

As my friend and hedge fund manager John Thomas points out, a $2.4 trillion reduction in government spending over 10 years is 16.6 percent of GDP, or an average of 1.6 percent a year. Unless that is somehow offset by an equivalent amount of growth in the private sector, which is not likely, we will guarantee minimal economic growth for at least that period and worse if anything goes wrong.

The Federal Reserve has a current forecast of 3 percent GDP growth. That is highly unlikely. But even if that somehow happens, taking 1.6 percent away from the economy means a paltry 1.4 percent GDP growth rate. A rate that low will do absolutely nothing to reduce overall unemployment.

Keep in mind that an agreement to raise the U.S. debt ceiling and reduce government spending, or kicking the European debt crisis further down the road will not have any effect on the current global economic slowdown. It only provides temporary relief.

What does all this mean for the stock market? While the economy and the stock market are certainly related, they don’t always move together. We may well be experiencing a long overdue correction that may run its course soon, leaving us with a possibility of a year end rally. We’ll see.


Nick Massey is a financial columnist for The Edmond (Okla) Sun. Contact him at

Text Only
  • thermostat.jpg 5 tax credits for wintertime energy efficiency

    If you're looking for ways to lower your heating bill and make your home more energy efficient this winter, now is a good time to act. Make certain home improvements before the end of 2011, and you can claim a federal tax credit when you file next year.

    December 13, 2011 1 Photo

  • DangerousToys10.jpg SLIDESHOW: 10 most dangerous toys As you shop for the kids and grandkids this holiday season, keep an eye out for potentially dangerous toys. The nonprofit consumer watchdog group World Against Toys Causing Harm, or WATCH, has released its annual list of the 10 worst toys.

    December 8, 2011

  • kindle-fire.jpg Guide to this year's hottest gift: The tablet

    Tablet computers and e-readers are extremely popular and are expected to be strong sellers this holiday season despite a weak economy.  But the array of models and brands can confound many potential gift-givers. Check out this guide to tablet-giving on any budget.

    December 8, 2011 7 Photos

  • thanksgiving.jpg So much turkey! Thanksgiving by the numbers

    This Thanksgiving, millions of Americans will gather to eat, celebrate and give thanks. The U.S. Census Bureau has put the holiday in perspective with some key facts and figures about Turkey Day and all its trimmings.

    November 23, 2011 1 Photo

  • candycorn.jpg In sugar shock? 5 things to do with leftover Halloween candy

    When Halloween is over and your kids are still candy-eating zombies, you may want to get the sugary temptations out of their sight (and yours.) So what do you do with the leftover treats? Here are some ideas.

    November 7, 2011 1 Photo

  • Texting, driving Study: Drivers think texting is dangerous, but still do it

    Almost all motorists believe texting while driving is dangerous, but more than a third of them do it anyway, according to a study released Monday.

    October 5, 2011 1 Photo 1 Link

  • 092211_banned-books.jpg Tips to help parents judge books for children

    While the book-protesting actions of motivated parents and school boards make headlines, what gets lost in the shuffle is what goes on in each of our homes. As Banned Books Week begins, one librarian offers tips for parents weighing what kind of reading material to share with their children.

    September 26, 2011 1 Photo 1 Slideshow

  • Bill-Gates.jpg List of richest people in America released

    The economy may be down, but the wealth of America’s richest is up by 12 percent, to nearly $1.53 trillion, Forbes magazine said this week in unveiling its list of the 400 wealthiest people in the country.

    September 23, 2011 3 Photos

  • Let's play ball without scandals

    The Big 12 announced a TV deal with Fox that would bring in more than $1 billion over 13 years.

    Recent scandals reveal college football is ethically challenged and inadequately regulated.

    August 29, 2011

  • Garden sprinkler How to conserve water during drought

    In a time of drought, you can do your part by following these steps to conserve water both indoors and outdoors.

    August 5, 2011 2 Photos

Business Marquee

  • How You Want It When You Want It Today's Pauls Valley Democrat

    Now you can view and download the Democrat right to your desktop on the day the paper is published. Click here to get more information on the Democrat's e-Edition.





    e-mail request to

    April 20, 2011 1 Photo 1 Link

AP Video
Courts Conflicted Over Healthcare Law Holder Urges Bipartisanship on Immigration Raw: Truck, Train Crash Leads to Fireball US Airlines Cancel Israel Flights Obama Signs Workforce Training Law Crash Victims' Remains Reach Ukraine-held City Diplomatic Push Intensifies to End War in Gaza Obama Offers Condolences at Dutch Embassy Cat Fans Lap Up Feline Film Festival Raw: Lawmakers Scuffle in Ukraine's Parliament The Rock Finds His Inner 'Hercules' Michigan Plant's Goal: Flower and Die Raw: MH17 Passenger Remains in Kharkiv, Ukraine Raw: Israel Hits Gaza Targets, Destroys Mosques Veteran Creates Job During High Unemployment New Orleans Plans to Recycle Cigarette Butts