August 24, 2009 Issue Posted August 13, 2009, 5:00PM EST

Executive Summary

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Job-hunting in Maryland: The pace of job losses fell sharply in June WinMcNamee/Getty Images

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Recession, R.I.P.?

Looks like it's over. Suddenly, a consensus is taking shape among economists that the downturn is history, or soon will be. Some were persuaded by the labor market numbers released on Aug. 7, which showed the loss of 247,000 nonfarm jobs in June, the smallest hit since last August. (True, the dip in the unemployment rate from 9.5% to 9.4% stemmed largely from 400,000 people who stopped looking for work.) Next came a report that productivity in the second quarter jumped at a 6.4% annual rate, the fastest pace in six years. That, along with a drop in labor costs at a 5.8% annual rate, soothed inflation fears at the Federal Reserve, which left its benchmark rate near zero on Aug. 12. And a near-unanimous chorus from economists—including frequent gloom-and-doom voices such as Paul Krugman and Nouriel Roubini—says that Fed Chairman Ben Bernanke richly deserves a second term.

—Edited by Harry Maurer & Cristina Linblad

Health-Care Wars

Warning: This debate could prove hazardous to people's health. When lawmakers arrived home for the August recess, they got an earful, and some—from Representative Gene Green (D-Tex.) to Senator Arlen Specter (D-Pa.)—braved belligerent, unruly crowds at town hall meetings. Right-leaning groups such as FreedomWorks and Conservatives for Patients' Rights urged their followers to take action, and some liberals cried foul, saying that health-care lobbyists are organizing people to pack meetings with fake constituents. In response, President Barack Obama hosted his own town halls, emphasizing that reform is "just as important" for Americans with health insurance as for those without. Analysts speculated that the increasingly nasty tone of the debate could make it harder for Congress to reach a compromise.

—Edited by Harry Maurer & Cristina Linblad

Derivatives Dodge

In the last major piece of its financial reform campaign, the Obama Administration on Aug. 11 sent legislation to Congress that would regulate the arcane, $450 trillion derivatives industry. The White House aims for the SEC and the Commodity Futures Trading Commission to cooperate in writing rules for derivatives markets and to oversee nonbank dealers, while banking regulators would keep an eye on banks trading the complex instruments. A catfight between the SEC and the CFTC in the 1990s allowed derivatives to remain essentially unregulated right through the financial crisis, but Administration officials decided not to spend the political capital it would take to try to meld the agencies.

—Edited by Harry Maurer & Cristina Linblad

Freddie Looks Fitter

Here's a shocker: Troubled mortgage giant Freddie Mac (FRE), seized by the government last year after tens of billions in losses, made money in the second quarter and won't ask for more funds from Uncle Sam—for now. Freddie posted $768 million in net income, though shareholders suffered a net loss of $374 million after dividend payments of $1.1 billion to the Treasury. Interim CEO John Koskinen cautioned that the operating profit stemmed partly from one-time gains and accounting changes. Still, Freddie far outdid sister Fannie Mae (FNM), which lost $14.8 billion and said it needs $10.7 billion more from the Treasury.

—Edited by Harry Maurer & Cristina Linblad