The Economy Today: Jobless Recovery on the Way

A roundup of national and regional economic headlines

The Federal Reserve has joined the ranks of those predicting a jobless recovery, USA Today reports. The Fed now expects unemployment to crack double digits toward the end of 2009 and remain well above 8 percent through 2011. At the same time, the forecast for overall economic growth has improved, and growth rates of 2.1 to 3.3 percent in 2010 are now projected. That’s not likely to be of much comfort to all the Americans left looking for work.

One of the big finance-related questions in recent days—whether the federal government would provide a second round of aid to CIT, a leading lender to small businesses—has apparently been answered. Officials at the company say the government has denied their latest request for help, reports The New York Times. CIT’s future is now in doubt, and the episode has drawn “a stark dividing line,” the Times reports, between banks that are “too big to fail” and “smaller institutions regarded as too troubled to save.”

One of those “too big to fail” banks is doing just fine now, it seems. JPMorgan Chase reported second-quarter profits of $2.7 billion today, three days after a similar announcement from Goldman Sachs. CEO Jamie Dimon also told The Seattle Times that JPMorgan Chase plans no further cutbacks in its Seattle operations and hopes to add jobs in the region once the economy improves.

In stimulus-related news, Transportation Secretary Ray LaHood yesterday offered an aggressive defense of the Obama administration’s approach, reports The Washington Post. Countering Republican criticisms, LaHood said the stimulus has created thousands of jobs and added that his department is urging states to allocate transportation funds to poor areas. LaHood’s speech may carry extra political weight because he is a Republican—which may be just what President Obama had in mind when he appointed LaHood to his cabinet.

Regional papers continue to report on the arrival of stimulus funds around the country. In New Jersey, work on the state’s biggest stimulus-related road project—reconstruction of a 6.6-mile stretch of highway—has now begun, reports The Philadelphia Inquirer. The story provides plenty of detail, including the tidbit that basd on federal guidelines for estimating job creation, the project should generate about 1,932 jobs in the broader economy. The Des Moines Register, meanwhile, notes that a $1.7 million federal grant will be used to prevent and mitigate homelessness in that city; altogether, seven Iowa cities received $16.7 for that purpose. Meanwhile, back up in the Northwest, a few angry words from Sen. Patty Murray netted Washington an additional $7.6 million in stimulus funds, which will be used to improve ferry service, reports The Seattle Times.

Finally, while the economy’s got everybody down, most Americans can at least be glad that they don’t live in California. The Golden State’s legendarily dysfunctional government still can’t agree on a budget, and when it does, social services are likely to be slashed.

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