The national economy has registered growth rates of less than 2% in three of the last four quarters. Real GNP, after rising 1.7% on an annual basis during the second quarter, stands 2.0% above the level of one year ago (see Table 1). Growth of this magnitude is in­sufficient to reduce the unemployment rate. Consequently, unemployment in the U.S. is currently slightly above the rate prevailing one year ago. The more sensitive industrial production index, calculated by the Federal Reserve, shows virtually no improvement during the past year.

     There are some positive signs emerging from the national economic data. Short-term interest rates, and to a lesser degree long-term interest rates, have dropped dramatically in the past nine months. Lower interest rates have already begun to stimulate residential construction and reduce the international value of the dollar. The declining dollar, after a lag, should begin providing needed relief for the nation's hard pressed manufacturing sector. Another positive indicator is the behavior of the Consumer Price Index. The index has risen a modest 3.9% in the past year.

     Moderate inflation has given the Federal government the flexibility to carry out expansionary monetary and fiscal policies. Rapid growth in the money supply, falling inter­est rates and the continuation of extremely large Federal deficits are likely to provide enough impetus to keep the economy expanding at a moderate pace. However, these poli­cies, if continued, increase the risks of rising inflation and disappointing long-term economic growth.

     The central Wisconsin economy also grew at a lackluster pace in the first half of 1985. The region's composite unemployment rate is down a full percentage point from a year ago but overall employment is down slightly. The year to year decline in jobs is the first drop reported since the recession. Moreover, an unusual seasonal employment pattern inflated the June 1985 figures. The food processing industry reported gains over last June which were due to an alteration in seasonal hiring patterns rather than a payroll expansion by the industry.

     Further signs of negligible growth can be found in the employment trends of the region's major sectors. Manufacturing payrolls rose 2.3% but even this small gain is illusory because of the food processing industry. The service and trade sectors each increased a modest 1.3%. Trade had been the fastest growing sector in the regional economy in recent quarters; now, it too has virtually ceased payroll expansion.        

     The flat economy is also reflected in key industry employment trends and the business confidence survey. Employment in central Wisconsin key industries showed no growth when the seasonal problems of the food processing statistics are corrected. The business confidence index, dominated by executives from these key regional industries, showed a noticeable deterioration from the previous quarter.

     Plant closings and layoffs have brought the Wausau area economy to a standstill. Employment growth has been non-existent in the past year. The retail sector, a major source of jobs in recent quarters, shows little gain over last summer. Nonresidential construction in the local economy is down and initial unemployment claims are up compared to last year. All of these indicators are signs of a stagnant local economy.