The Economy Today: Happy New (Fiscal) Year

The arrival of July brings the start of the fiscal year and a statutory deadline for new budgets in many states. USA Today rounds up action from around the country and notes New Jersey, Massachusetts and Wisconsin were among the states to meet the deadline, using a mix of spending cuts and tax hikes to make up for dwindling revenues. But in other states, including California, lawmakers haven’t been able to reach agreement on a spending plan. The Golden State, facing a $24 billion shortfall, may soon have to resort to issuing IOUs to cover its expenses, reports the Los Angeles Times. The move could cause a downgrade in the state’s credit rating that may cost the state an additional $3.4 billion in interest rates over three decades, the Times reports. But hold your schadenfreude, East Coasters: AP notes that as goes California’s $1.7 trillion economy, so goes the rest of America’s.

A pair of employment-related stories both offer bad news, but with a different spin. Bloomberg reports that job cuts in June fell 9 percent from a year earlier; it’s the first year-over-year improvement since February 2008, “a sign payrolls may be stabilizing,” the story claims. But The Wall Street Journal flags a report from Automatic Data Processing Inc. that estimates private-sector job losses in June of 473,000. The figure is worse than expected “and suggests that layoffs may be worsening,” according to the Journal.

Some interesting news about the geography of the recession: another Journal article reports that cities are growing more quickly while suburban expansion slows. The story opens by focusing on a familiar type: the upper-middle class young professional family attracted to a resurgent city. But the news here seems to be that the worsening economy has apparently kept immigrants and other working class individuals in urban areas, where housing is cheaper and jobs are more plentiful.

Drill down into the numbers and you’ll see that, while the trendlines are moving in opposite directions, the ‘burbs are still growing more quickly than center cities: an annual growth rate of .97 percent in cities of over a million people from July 2007-08, compared to 1.11 percent growth in the suburban sections of those metro areas during the same period, according to a Brookings study cited by the story. Still, the growing population is placing stress on budgets in urban areas, and the LA Times reports that many big-city mayors are complaining about being shortchanged by the stimulus.

Other tidbits from around the country: The Deseret News relays projections that an economic recovery in Utah won’t arrive until the second half of 2010. In Atlanta, the Journal-Constitution reports that the region’s first stimulus-funded road project, a nearly $1 million highway repaving, will save a few dozen jobs. And Forbes offers a Q&A with John Hoeven, governor of North Dakota, which saw growth of over 7 percent in 2008 while the rest of the global economy was tanking. Hoeven credits “value-added agriculture, advanced manufacturing, technology-based businesses, energy and tourism” for his state’s success.

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