If you drag yourself away from the doom and gloom, you might even want to buy some stock

If you drag yourself away from the doom and gloom, you might even want to buy some stock

EDITOR:

Economists are supposed to tell us why our economy is performing well or poorly. The idea is to tell it like it is, not how we would like it to be.

Over the past several years the federal government has been spending far more than it takes in as tax revenue. Fighting wars, expanding social programs and cutting taxes have contributed to deficit spending and raised the national debt. To finance this spending spree we have borrowed heavily in the international money market. Our public spending has pumped billions of dollars into the hands of foreign banks, governments and individuals. Recently, those who hold our debt seem reluctant to obtain more. As a result the dollar has been falling against the major currencies.

While this may be good for exports, it raises the price of imports which typically far exceed what we sell in the international market. Can anyone envision $4 a gallon gasoline or $8 a pound for coffee? This inflation is forcing the typical consumer to allocate more income to energy and food and cut back on the purchase of housing, automobiles and other discretionary goods. In short, people are finding it harder to maintain their standard of living and are going into debt trying to do so. Is this a scenario for a recession? You be the judge.

Now many Americans have been criticized for living beyond their means. We seem to love to spend, but are reluctant to save. Perhaps we have been to quick to follow the example set by our federal government. With the encouragement of lending institutions we have been aided in buying houses we cannot afford and to max-out our credit cards in order to live the good life. But things are beginning to change. Banks are reviewing credit applications more carefully. People are criticizing ill-advised government spending. Is it too much to hope that pork barrel expenditures will be constrained?

Hopefully, this letter will help explain why the country is going through an economic slow-down. However, we remain a strong competitive economy that will adjust to the excesses discussed above. Indeed, now may be a good time to invest in companies or mutual funds that have a strong record of past performance.

ANTHONY H. STOCKS, Ph.D.

Youngstown