NEW YORK TIMES: Almost exactly two years after it embarked on what was the biggest financial rescue in American history, the Federal Reserve said on Wednesday that the recession is ending and that it would take a step back toward normal policy. Though the central bank stopped well short of declaring victory, policy makers issued their most upbeat assessment in more than a year by saying that the downturn appears to have hit bottom and that consumer spending, financial markets and inventory-building by corporations all continued to stabilize. The central bank cautioned that the recovery would be slow and that unemployment was likely to remain high for the next year. It reiterated that it would keep its benchmark short-term interest rate at virtually zero for an extended period. MORE
WALL STREET JOURNAL: The Bureau of Labor Statistics will release second-quarter data on nonfarm productivity, the measure of what the economy produces per worker hour. Economists estimate productivity rose at a 5.5% annualized pace, the biggest jump since the third quarter of 2003. Productivity didn’t increase because more stuff was produced — on the contrary, gross domestic product continued to shrink in the second quarter. But businesses squeezed worker input even harder by cutting payrolls and hours, effectively slashing their labor costs. Economists expect the BLS to report that unit labor costs fell at a 2.9% annualized rate in the quarter, reversing a 3% rise in the first quarter. The net result: rising unemployment, stagnant wages, sagging consumer confidence — and better-than-expected corporate profits. MORE