The return of sluggish growth in the first quarter has once again raised fears of an impending recession (Table 1). Real GNP grew at a 1.3% annual rate during the first three months of 1985, raising total output to 3.5% above the year earlier level. The first quarter figure is particularly disappointing because it follows a solid 4.2% growth rate achieved the previous quarter. Industrial production was also at a virtual standstill but price increases remained modest and interest rates declined sharply.

     Economists are finding it difficult to interpret the increasingly erratic GNP figures. The consensus view is that unusual factors are to blame for the irregular quarterly behavior of the GNP numbers. The huge foreign trade deficit has contributed considerable variability to GNP throughout the economic expansion. Abnormally slow delivery of income tax refunds played a part in trimming growth during the first quarter. More fundamentally, the changing structure of the United States economy suggests that some of the statistical varia­tions recorded by government data may be illusory.

     Regardless of the timing or precise magnitude of the economic slowdown, there is considerable evidence that the expansion is moving into lower gear. Such a development is typical for the third year of a cyclical upswing. Most economists feel that the economy is indeed slowing but few foresee a recession emerging in 1985. In fact, most analysts expect the second quarter growth rate to bounce back near 4%. The reasons most commonly cited are falling interest rates, moderate inflation and the arrival of those delayed Internal Revenue Service refund checks.

     Declining interest rates and I.R.S. refund checks are also welcome news to the residents of Central Wisconsin. The regional economy has clearly slowed in recent months and is in need of some outside stimulus. The Central Wisconsin economy, like the nation as a whole, is stronger than it was one year ago. However, also similar to the nation, little growth is evident throughout the region during the first quarter. The Portage and Wood County economies grew at a slower rate during the first quarter while Marathon County, buffeted by major plant closings, struggled to maintain jobs created earlier in the economic expansion.

     The composite regional unemployment rate stands at 8.5%, down sharply from last year's 10.3%. On the other hand, employment gains are a much more modest 1.4% for the region. The rate of job generation has clearly slowed since the robust gains recorded in 1983 and 1984.

     Evidence of growing weakness is apparent in several of the region's major sectors. Employment is lower than last March in the government and construction -sectors while durable goods manufacturing is unchanged. Only the trade sector, which expanded payrolls 8.8%, reported major jobs increases. Deteriorating labor market conditions can also be found in two of Central Wisconsin's key industries. Lumber and wood products employ­ment is down 9.8% while financial services payrolls are off 2.1%. The food processing industry is the bright spot among the regions primary industries, boosting employment 9.1% above the March 1984 level.

     After a year of solid growth, the Stevens Point area economy is considerably stronger than it was in the fourth quarter of 1984. Payrolls have increased in all major sectors of the Portage County economy. However, signs of a much slower expansion are beginning to dominate the local indicators. Although seasonal factors are partly to blame, employment gains during the first three months of 1985 were minimal.

     Other evidence of a moderating local growth rate can be found in rising unemployment claims, flat help wanted advertising volume and a weak residential construction sector. Nonresidential construction, the primary force behind local growth in recent months, tailed off during the first quarter.

     The Central Wisconsin indicators have become decidedly more mixed as the economic expansion moves into its third year. Economic conditions have begun to decline in the Wausau area, while the Wood and Portage County growth rates have slowed. When inter­preting these changes over the last year it is important to remember that economic condi­tions in all three counties are far better than they were two years ago.