Little job growth in June, but still positive for the year McClaren appointed new Classic director

Slow growing economy has supported higher earnings

McClaren McClaren U.S. job growth slowed to a crawl in June with just 18,000 jobs created, well below the 100,000 expected. Continuing cutbacks by state and local governments meant that private sector job growth was considerably higher, w ith 57,000 jobs added in June. The unemployment rate edged up to 9.2 percent from 9.1 percent in May.

Despite June’s disappointing jobs report, it only reflects one month. A longer- term view shows that the pace of job growth has nearly doubled since last year. After adding a little less than 1 million jobs in all of 2010, almost 1 million jobs were created in the first half of 2011. This suggests we remain on an encouraging, but slow and bumpy, path toward recovering the 8 million jobs lost during the recession.

The slow pace of job growth is a major issue for all the presidential candidates, and it will undoubtedly stay in the forefront through the November 2012 election. In our view, the pace of economic growth and job creation is improving, but probably not fast enough to dispel overall job worries.

SLOW BUT SUSTAIN- ABLE–The disappointing jobs report rekindled worries about the soft patch in the economy. The economic slowdown is partly due to temporary challenges, including:

High oil prices–However, these have already dropped more than 10 percent, providing consumers with some relief at the gas pump.

Supply- chain disruptions– These stemmed from the Japanese earthquake, but the supply chain is being restored more quickly than expected.

Unusual weather–Storms, tornados and other weather events temporarily slowed construction and transportation.

In addition, the efforts of the Chinese government to slow their economy and combat inflation may be nearing an end, removing another impediment to growth. While temporary disruptions can last a long time, there are several positive signs. Recent reports from the Institute for Supply Management showed improving conditions for both manufacturing and services in early July.

Despite the soft patch, the Blue Chip consensus forecast of economists expects growth to accelerate to 3.3 percent in the second half of 2011. In our view, the economy is likely to continue to grow in a range of 2 to 3 percent, which is slow but still sustainable.

INVEST DESPITE LACK OF JOB GROWTH–It can be difficult to take a longer-term view when faced with disappointing news, but that’s one of the keys to investment success. Although the economy still faces many challenges, including slow job growth, conditions have improved over the past year, and this is expected to continue.

Even a slowly growing economy has supported higher earnings and rising stock prices. We believe these trends will continue, making this an opportunity to add quality stock investments if appropriate. Short-term disappointments frequently create opportunities for investors who can take a longerterm perspective.

Richard Earl Williams Jr., president of Classic Bank, N.A., announced that Robert McClaren has been appointed to the bank’s board of directors.

McClaren, an area businessman, comes to the board with over 25 years of management experience. He is the president and CEO of McClaren Partners LLC, which engages in real estate financing, professional sports ownership, w ireless technology procurement, agricultural operations, and oil and gas ventures.

McClaren’s previous experience includes president/business operations for the Houston Astros and vice president/general counsel for McLane Group and general counsel for McLane Co. Inc.

He brings experience from working as a director on other boards including: McLane Co. Inc.; A&M’s 12th Man Foundation; Memorial Hermann Healthcare System; Second Baptist Church; Houston Baptist University; and the Texas Business Hall of Fame.

McClaren resides in the Marlow community with his wife, Dana. They have two daughters, Bryn and Ryle.

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