The Economy Today: A New New Deal in Tennessee

Economic headlines from New Jersey, Tennessee, Ohio, and elsewhere

The New York Times takes a front-page look today at a throwback approach to fighting unemployment: use government funds to directly create new jobs. In rural Perry County, where unemployment topped 25 percent, the Tennessee government has used a portion of its stimulus funds to subsidize 300 jobs, including some in the private sector. Gov. Phil Bredesen invokes the New Deal-era Works Progress Administration to explain the thinking behind the program. Local residents seem grateful for the help, but as Times reporter Michael Cooper notes, “it is hard to imagine many other places where the creation of so few jobs could have such an immediate and outsize impact.”

The Washington Post, meanwhile, reports on a government initiative that hasn’t worked as well. Efforts to stem the tide of foreclosures have been disappointing, the Post reports, because lenders often don’t have incentives to renegotiate loan terms. The Obama administration is now trying to shift the calculus “in part by offering [lenders] billions of dollars in incentives to modify home loans.”

The wave of foreclosures has put plenty of cheap homes on the market, which helps to explain the surge in home sales in June. The Wall Street Journal writes up data released yesterday by the Commerce Department: “Sales of single-family homes increased by 11.0% to a seasonally adjusted annual rate of 384,000 compared to the prior month… Though, year-over-year, new-home sales were 21.3% lower than the level in June 2008.” Housing starts also rose. Still, the recovery of the real estate market is expected to be slow.

In state level news, New Jersey Gov. Jon Corzine, facing an uphill re-election battle this fall, yesterday signed into law a stimulus bill that provides new incentives to businesses and developers, The Star-Ledger reports. The bill was blasted by the state chapter of the Sierra Club, and also by a watchdog group that said it lacked transparency and accountability measures. A more detailed account of the bill’s contents and its critics, written by ex-Star-Ledger staffer Tom Hester, can be found at the Web startup

Elsewhere on the East Coast, the Times Union takes a look at what a jobless recovery will mean for the Albany region; two promised plant openings, a state Labor Department employee says, “probably aren’t enough to overcome general trends in the economy.” And in Pennsylvania, a state Senate committee that had been holding up a bill to extend unemployment benefits has finally allowed it to proceed, according to The Pike County Press.

In the Midwest, The Detroit News reports again on the wrenching, inexorable shifts occurring in Michigan’s economy, where health care now accounts for more jobs than manufacturing. Papers in Ohio, meanwhile, carry an AP squib reporting that work on a uranium enrichment plant, expected to create “thousands of jobs,” has been suspended; company officials pinned the blame on the federal government’s decision not to provide a $2 billion loan guarantee. (A longer AP story examined the situation, and reported a statement of support from President Obama, last November.)

Finally, out west, the San Francisco Chronicle reports that there is no end in sight to California’s budget woes. Because of the accounting maneuvers and revenue projection’s included in the 2009 budget recently agreed to by state lawmakers, “[n]ext year’s budget will start with a very large shortfall even if there’s a good recovery,” one economist tells the paper.

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Greg Marx is an associate editor at CJR. Follow him on Twitter @gregamarx.