The Economy Today: Sorting Out the Stimulus

A roundup of national and regional economic headlines

USA Today and The Wall Street Journal, which have been tracking how the recession and the stimulus affect state and local budgets, stay on the story today. USAT, in an article based on a Bureau of Economic Analysis study, reports that the infusion of federal funds pushed state and local spending up nearly 5 percent in the second quarter, with federal money now accounting for more revenue than sales or property taxes. “The jump in government spending — federal, state and local — was the key reason that the nation’s gross domestic product declined just 1% in the quarter, a sharp improvement from a 6.4% first-quarter drop,” the paper reports. Still, the 12,000 new state and local government jobs created during the quarter is dwarfed by the 1.3 million job cuts in the private sector.

The Journal takes a different tack, reporting that a decent chunk of spending by states and cities is directed to, well, asking the feds for money. The story is a little fuzzy on how the latest state and municipal lobbying expenditures compare to long-term trends—and an accompanying graph doesn’t provide much help—but at the very least, after a first-quarter dip, they’ve picked up again. Relatedly, The Washington Post carries a local story reporting that lobbyists in Maryland seem to be weathering the economic storms just fine. Figures compiled by an ethics commission show “State House lobbying appears to be a largely recession-proof business,” the Post reports.

As the media continues to track the federal government’s “Cash for Clunkers” program, the Los Angeles Times reports on the scene at local dealerships, where buyers’ urgency to get their share of federal cash actually created administrative challenges for overwhelmed salespeople. The Sheboygan Press, meanwhile, carries a brief AP report noting the program has been modified to make sure Wisconsin residents aren’t excluded.

Finally, down in Florida, the Herald-Tribune reports on the startling collapse of the Sarasota construction industry. After business peaked are more than $2 billion in 2006, it plummeted to slightly over $300 million in 2008. “Adjusting for inflation would make Sarasota County’s 2008 worse than any year since at least the administration of President Gerald Ford,” the paper reports. The swan dive has cost 14,000 jobs, and government contracts are now the only source of new work. “We were one of the biggest boom communities in the housing industry,” one contractor says, “and… we’ve become one of the biggest bust communities.”

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