The pace of economic growth in the U.S. economy picked up modestly during the third quarter (Table 1). On an annual, seasonally adjusted basis, real Gross National Product expanded at a 3.3% rate, which compares favorably with the 1 % growth rate recorded during the first half of 1985. The third quarter performance is consistent with the economy's long run growth potential. However, relative stagnation continues to plague the nation's manufacturing sector as evidenced by a paltry 1.1 % increase in industrial produc­tion during the past year.

     Improvement in the national economy is largely attributable to falling interest rates. Current rates are considerably lower than six months ago. This has led to rising construction activity and consumer spending. In fact, consumer spending has risen enough to push the saving rate to an all time low. Continued high levels of Federal government spending has also expanded economic activity.

     The best national economic news continues to come from price data. The consumer price index stands 3.4% above the year earlier level. Modest inflation has been the norm since the 1981-82 recession and continues in spite of a rapid increase in the nation's money supply. The foremost reason for this solid performance can be found in wage data. During the first nine months of the year, major collective bargaining agreements averaged 2.3%, the smallest rise in 23 years. Wage increases of this magnitude suggest that price increases are likely to remain modest.

     Heightened seasonal activity pushed the Central Wisconsin regional unemployment rate below the Wisconsin and U.S. levels. The regional unemployment rate stands at 5.9%, down .3% from a year ago. The Portage and Wood County economies are near full capacity with unemployment rates of 5.1 % and 5.4%, respectively. Marathon County lags behind at 6.8%.

     For the second consecutive quarter, employment changes in the Central Wisconsin region are negative on a year-to-year basis. Only Portage County experienced job creation. Wood County employment is virtually identical to the September 1984 level, while Marathon County payrolls dropped 3.0%. The decline in jobs in Marathon County indicates continued weakness in the local economy.

     The region's strongest sector during the quarter was manufacturing. Employment in this sector is 5.3% above the year earlier figure. Eighty percent of this gain originated in the food processing industry, which added 1120 jobs. However, no other sector or major in­dustry posted substantial gains. The region's important lumber and financial services in­dustries each reduced payrolls in the past year. Reflecting this mixed record, Central Wis­consin executives detected little change in the regional economy. The business confidence index remains stuck near the 50 reading.

     The Stevens Point area economy returned to a more rapid growth path after two quarters of slackening conditions. The local economy was buoyed by a sharp increase in food processing employment and moderate gains in other manufacturing industries. An additional push came from increased construction activity. Lower interest rates triggered a 10.8% rise in housing starts and apartment building activity caused a large jump in the value of residential construction. Nonresidential construction also picked up as the Woodward Governor project got underway.

     There was some downbeat news for the local economy as unemployment claims and public assistance claims both showed large jumps over last year. However, both figures are lower than the second quarter readings. In another negative finding, the volume of help wanted advertising is down modestly from a year ago.

     Paced by a revived manufacturing sector, particularly the food processing industry, and stepped up construction activity, the rate of growth in Central Wisconsin increased during the third quarter. However, employment gains in manufacturing have not yet spread to other sectors in the region. Weakness in the service and trade sectors combined with the still struggling Marathon County economy to keep regional employment slightly below the level prevailing a year ago.