The Economy Today: Back from Bankruptcy

General Motors emerges in its new, smaller shape

It’s a new day for the auto industry: Less than six weeks after it filed for Chapter 11 bankruptcy, General Motors emerged today in trimmed-down, government-owned form. The company has shed much of its debt and half of its brands, not to mention many of its employees: GM’s workforce is expected to drop from 91,000 at the end of 2008 to 68,500 by the close of this year. The U.S. government owns more than 60 percent of the new company, with nearly another 12 percent held by the Canadian government, but the Obama administration hopes to sell its interest next year. The press focuses on the extraordinary speed of bankruptcy proceedings: “Unprecedented, unbelievable, breathtaking,” one observers told The Wall Street Journal.

Unfortunately, the news from the retail sector isn’t new. Same-store year-over-year retail sales declined nearly 5 percent in June, reports The New York Times, citing data compiled by Thomson Reuters. The absence of tax rebate checks this year, the miserable June weather, and a decision by Wal-Mart, which has been performing well, to stop reporting monthly sales figures may have dragged down the overall results. But any way you look at it, the retail numbers point to continuing weakness in consumer confidence brought on by rising unemployment.

The Washington Post examines a new round of debate about those pesky AIG bonuses which caused so much trouble in the spring. Another round of bonuses—including $2.4 million owed to forty top executives—is due next week, and though the company doesn’t technically need government approval to release the funds, it’s seeking the blessing of the Obama administration’s “compensation czar.” For the time being, the Treasury Department is sticking to canned statements on the subject. Given the relatively small sum involved, it’ll be interesting to see how Congress, the public, and the press respond.

In regional papers, a Houston Chronicle story blames some of the sluggishness in the housing market on new layers of red tape. Given all the shady deals that took place over the last couple years, some sand in the gears seems like a good thing; the fact that “attorneys are reviewing closing documents,” as one broker says in a quote in the third graf, probably isn’t something we should be upset about. Neither is a more conservative approach to appraisals, the factor that gets most space in the story. But the delays, which affect even some seemingly qualified buyers, can cause headaches for time-sensitive transactions.

Finally, The Grand Journal Daily Sentinel explores the interesting conundrum of Mesa County, Colorado. While the nation’s economy was tanking in 2008, Mesa County’s was still doing relatively well, adding more than 2,000 jobs. As a result, the county is ineligible for a share of the nearly $250 million in economic recovery bonds the federal stimulus package made available for Colorado. But Mesa County’s status as a bright spot attracted far more job-seekers than local businesses could hire; as a result, the number of unemployed nearly doubled from December 2008 to May 2009.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

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