The national economy continued its record long peace-time expansion during second quarter 1989. Real Gross National Product, which measures the inflation adjusted value of all final goods and services produced in the economy, grew by a healthy 3.5 percent from last year. (Table 1) Industrial production, which measures factory output, increased by 3.4 percent. Interest rates are higher than a year ago, however, they have been trending downward during the last several months. Inflation, spurred on by higher food and energy costs, grew by 5.2 percent from last year. These variables are characteristic of an economy that has expanded.

     The unemployment situation in Central Wisconsin was not as disturbing as the higher unemployment rates might otherwise indicate, because the increase in rates occurred in the face of rising employment. This means that the number of entrants into the labor force grew more rapidly than the number of jobs.

     Total employment in each county and the region, as a whole, expanded respectably. Nearly 5000 jobs were created in Central Wisconsin in the last 12 month period. Job generation at the state and national levels has been somewhat slower than the regional pace. The manufacturing and service sectors led in job creation, with nondurable goods manufacturing employment showing a 10.4 percent increase. Trade, construction, and government payrolls grew more modestly. Overall, there are now nearly 115,000 people employed in the region.

     The paper products industry continues to expand operations throughout the region. The increased profitability in this key industry has acted as a catalyst for the recent surge in business investment. Combining the paper industry with the three other key Central Wisconsin industries results in an employment figure of 28.3 thousand. This represents approximately 24 percent of all nonfarm employment in the region.

     Business executives indicate that matters have improved nationally and locally but, they feel the situation in the months ahead will remain essentially the same. This means that we can expect no dramatic change in the area over the short-run. However, the Central Wisconsin area transportation network appears headed for a substantial upgrade. This is potentially one of the most important economic developments to take place in the region in the foreseeable future.

     The Stevens Point Area economy performed admirably during second quarter 1989. Nonresidential construction and help wanted advertising support this contention and employment was improved in many categories. However, little progress was made in the area of local family financial distress. It appears that an improved local situation has not and may never reach all levels of the population.

     The national economy is slowing, retail sales and housing are not as robust as in previous periods. The Federal Reserve Board has changed its position on the direction and condition of the economy and is now loosening credit conditions. Only time will tell if the change comes too late to head off a recession.