The United States economy is apparently weakening at a rapid rate. Real Gross Domestic Product grew by a scant 0.5 percent during second quarter 1995. In contrast, in first quarter 1995 the economy expanded by 2.7 percent. Thus, the 0.5 percent rate of growth demonstrates how much steam has gone out of the economy. Further, this anemic rate is the lowest in over four years. Inventory accumulation is the prime reason for the slow down. In other words businesses have trimmed production to bring inventory levels back in line. 

     Previous to the release of the GDP figure the Federal Reserve cut the Discount Rate by 25 basis points to 5.75 percent. The Fed indicated that further cuts in short term interest rates were unwarranted. Chairman Greenspan in effect said that the economy needed little or no additional help from the Fed to remain out of recession. Stock market participants who had anticipated that the Fed would repeatedly cut short term rates to bolster the economy reacted by selling off stock and thus causing the market to tumble in mid‑July. Perhaps the Federal Reserve will change is position in light of the decline in GDP growth and acknowledge that the economy is very soft. 

     If the so called soft landing is successfully engineered by the Fed the economy should experience a slow down in its rate of growth without slipping into recession. The soft landing is also consistent with a low inflation scenario which is so dear to Mr. Greenspan. For the year the economy is expected to grow by approximately 2.5 to 2.8 percent but it may have to hurry to do so. The majority of analysts are forecasting the first part of 1996 to be even slower at 2.3 percent growth. 

     The Wisconsin economy has consistently out performed the United States since the mid 1980's. This fad has been amply documented with employment and personal income growth data. For example during 1993 to 1994 Wisconsin ranked seventh in personal income growth. Additionally, the state has posted four straight years of uninterrupted employment growth. The employment growth has averaged 2.6 percent in the state since the mild 1991 recession. However, industrial sector employment growth is expected to slow right along with the United States economy during the latter half of 1995. Employment growth should come in about 2.25 percent. Further, if the national economy continues to slow into early 1996 the pattern will most likely be repeated in Wisconsin. 

     Even with this slowing down in the economy labor markets should remain tight with unemployment rates down in the 4 to 5 percent range for Wisconsin. Simply stated even though the economy is slowing the demand and supply situation for qualified workers will give little relief to employers. In sum, the outlook for the nation, Wisconsin, and Central Wisconsin is for a continuation of the expansion albeit at a much slower rate during the latter part of 1995 and into 1996.