Thursday morning headlines

Market edges higher: More see-sawing, generally on the upside. The Dow is up about 50 points in early trading.

Q1 GDP revised upward: The economy fell at a 5.5 percent pace in the first quarter, a bit better than the earlier 5.7 percent estimate. For the current April-June quarter, economists predict that the GDP is sinking at a pace of between 1 and 3 percent. (AP)

11th-hour budget talks: Now that the Democratic proposal is officially DOA, Senate President Pro Tem Darrell Steinberg vows to "work every day" to pass a budget by July 1. (As opposed to what? Taking the next week off?). He also insists that he won't bend on several key issues, such as protecting in-home care for the elderly. The LAT's George Skelton says there's room for compromise.

State muni market takes hit: More bondholders want out, which means that prices are falling and yields are jumping. What has spooked investors is not so much safety, but steadily declining prices. From Money & Co.:

The annualized tax-free yield on 10-year state general obligation issues was about 5.2% on Wednesday, according to Bloomberg News data. That was up from 4.4% just a month ago and the highest since December, when the global credit crisis was fueling widespread dumping of municipal and other bonds. Yields on muni bonds nationwide generally are up from a month ago, but not like the surge in California issues. When the state goes to borrow again, it will pay painful prices for money.

Full-blown depression?: Seems a bit alarmist, but the UCSB Economic Forecast warns that the budget meltdown weighs heavily on California's economy. Here's how economist Bill Watkins lays it out (via Calbuzz):

"California's budget issues are likely to be made worse by continuing economic decline," he wrote. "Perversely, the budget then negatively feeds back into the economy. "The problem is not likely to see relief, at least in terms of increased revenues, before late 2011. Therefore, it is likely that the uncertainty associated with the budget and the declining spending or increased taxation will be a drag on California's economy for several quarters to come."

L.A.'s biggest industry: International trade gets beaten out by tourism as the county's biggest job generator in a new report by the Economic Development Corp. Part of this is due to a decline in cargo traffic - and part of it is the decision by economist Jack Kyser to include a percentage of other sectors into the tourism column, such as retail and hospitality. From the LAT:

Kyser's approach differs from the methodology used by the state, which still ranks trade as Los Angeles County's top industry based on a more narrow interpretation of job classifications. Still, economists have long worried that the region's employment base is in danger of getting too many low-paying jobs. "A tourist-based economy is not so ideal from that standpoint," said Ed Leamer, a UCLA professor at the Anderson School of Management. He said manufacturing jobs have long been the backbone of a stable middle-class while lower-paying hospitality jobs don't always offer the same opportunities.

More Oscar reaction: Generally the response to having 10 pictures being nominated is not good, though that may have less to do with the idea itself and more with now having to drastically alter marketing strategies (not to mention budgets). From the NYT's David Carr:

Contrary to a report that the industry was pushing for the move, big studios are not thrilled at the idea of spending oodles more money on pictures that would never have been in the running for the top five, but may have an outside chance at the top 10. And the phrase "Nominated for Best Picture," so powerful in ad blurbs, may become as common as an "I participated" certificate for kindergarteners. "Studios are going to have to spend more money at a time when the reward may or may not be there at the box office," said Tony Angelotti, longtime Oscar consultant.

Ruth Madoff slumming it: The NY Post caught her riding the subway, which probably isn't something that the wife of Bernie would be doing in the old days. Ruth has not been charged in connection with Madoff's crimes - and still lives in their luxury East Side penthouse. "Are you having fun embarrassing me - and ruining my life?" she told a Post photog.