The Economy Today: Half a Loaf

In national headlines, USA Today notes that federal stimulus spending slowed last week compared to any weeks in May, and compared also to the average amount the government has spent since the stimulus package was signed in February. Federal agencies allocated about $5.2 billion in new stimulus aid for projects last week. This follows complaints about the pace of federal aid and Obama’s promise to “ramp up” that pace.

The Boston Globe, meanwhile, reports that consumer spending was up slightly in May, with personal consumption spending rising about 0.3 percent in May, after a 0.1 percent drop in April. One development limiting growth: individuals are saving more. The personal savings rate was at 5.7 percent in April, which the Globe reports is the highest such rate since February 1995.

In a strongly worded op-ed in today’s New York Times, Paul Krugman wonders if health care will go the way of the stimulus bill. “The point is that if you’re making big policy changes, the final form of the policy has to be good enough to do the job,” he writes. “You might think that half a loaf is always better than none — but it isn’t if the failure of half-measures ends up discrediting your whole policy approach.”

In and around Hollywood, most reports are framing the decision by the Academy of Motion Picture Arts and Sciences to double the number of Best Picture nominees at the Oscars as a stimulus effort for the beleaguered awards ceremony, guaranteeing a ratings boost and more sustained interest in a greater number of movies. And BusinessWeek turns to the late King of Pop’s financial assets, in particular his 50 percent interest in the Sony/ATV music catalog, which it predicts will incite broiling controversy among both “creditors and heirs.”

Maine is the first state to commit 100 percent of the stimulus money it is receiving for bridge and highway projects, the Bangor Daily News reports, putting the state well ahead of the federal benchmark of committing 50 percent of those funds to specific projects by June 29. Within the past week, after much debate among legislators about how to fund repairs to Maine’s crumbling roads, the state’s transportation department announced that it was canceling 130 “maintenance paving” projects—minor street repairs like fixing potholes or reapplying asphalt over deteriorating roads—because “maintenance coffers had run dry.” Because federal money must be used for long-term repairs, Maine cannot use any of its $131 million allotment to pave its roads.


Road projects in Nebraska, worth millions of dollars, will be delayed until next year, the Associated Press reports. The state blames government officials for excessive red tape; but it has also not fully complied with requirements following a 2007 audit that showed insufficient oversight on local road projects. 


Residents of Oklahoma are being encouraged to call a toll-free hotline to report stimulus fraud revolving around the more than $2.6 billion the state is receiving, reports The Oklahoman. Commenting on the potential for fraud, a U.S. attorney remarks, “even a small percentage of fraud would result in substantial taxpayer losses…One percent is $26 million worth of fraud.”

And here’s some varying news on the local police front. In Charlotte, North Carolina, the police chief is asking the federal government for the funds to hire 150 more patrol officers, reports the Charlotte Observer. The police chief says he’s been “calling the U.S. Department of Justice ‘every two weeks’ trying to lobby for additional officers.” The federal stimulus provides up to $1 billion to hire officers, which pays for entry-level salaries and benefits for newly hired officers for up to three years. But the request may be optimistic; in Warren, Ohio, the cops program won’t be receiving enough funds to pay for the salaries of thirty-five officers, as hoped; it is getting enough money only for three.

Jane Kim is a writer in New York.