Washington, May 4 (Bloomberg) -- Federal Reserve interest- rate reductions, growth in workerproductivity and declining inventories will help revive the U.S. economy in the second half of thisyear, two regional Fed Bank presidents said today. The economy is at ``an important juncture,'' said Michael Moskow, president of the Fed Bank ofChicago, to an audience at the Valparaiso University College of Business Administration inValparaiso, Indiana. Consumer and business spending should rise as companies work down excess inventories, andreap the benefits of increasing computerization of the economy, Moskow said, echoing remarksfrom his last speech on the economy a month ago. While there are risks that the U.S. economy may slide into recession, there's a ``good chancethat we won't have one declared,'' said Richmond Fed Bank President Al Broaddus told theRetail Merchants Association of Richmond. Broaddus, too, repeated his prior assessment of thestate of the economy. Fed warnings that economic weakness is the biggest risk facing the U.S. ``doesn't necessarilymean we're in recession,'' Moskow said. ``It means that our economy is operating below itspotential.'' Following his speech, Moskow told reporters he wasn't particularly surprised by today's LaborDepartment report that the economy lost 223,000 jobs in April, the most in a decade, and theunemployment rate rose to 4.5 percent, the highest in 2 1/2 years. ``Clearly, I'd rather see employment increasing rather than decreasing,'' he said. ``I think youhave to keep in mind that we are operating below potential growth and we have been belowpotential growth for several quarters now.'' As a result, ``we would expect to see weak labormarkets,'' Moskow said. ``Many people had anticipated that there would be possibly some increase in unemployment,''Broaddus told reporters after his speech. The jump in the jobless rate isn't ``a complete surprisein light of the claims data and some of the other numbers that we have been looking at,'' he said. The Fed surprised investors by reducing its benchmark overnight lending rate to 4.5 percent onApril 18, the fourth half- percentage-point cut this year. Investors are counting on another half-point reduction at the Fed's May 15 policy meeting, judging by trading in fed funds futurescontracts. ``We've taken, I think, strong action and our hope is that (the rate cuts) will help cushion theeconomy from its current weakness,'' Broaddus said. The Fed ``still recognizes that the risk inthe economy remains on the downside,'' he said. Moskow is a voting member of the Fed's rate-setting Open Market Committee this year.Broaddus doesn't vote, though he participates in the group's deliberations. Fed officials are ``cautiously optimistic'' that inflation will remain in check, Moskow told theValparaiso audience. ``I think the most likely scenario is for economic growth to pick up from its current slow butpositive pace later in the year,'' he said.