The performance of the national economy has been sluggish throughout 1986. The consensus among economists is that real growth will come in at about 2.5% for the year. The possibility for better performance during the fourth quarter seems doubtful. Even though a number of favorable variables exist, such as lower interest rates, moderately rising energy prices, and a declining dollar, little stimulus is seen to be forthcoming. Thus, the gains that were predicted earlier in the year have not materialized. The present modest expansion has been fueled by consumer spending. With the bulk of this activity coming from new car sales, it is not likely that consumers will be able to shoulder the expansion into the fourth quarter due to high levels of personal debt. Moreover, various consumer confidence indexes are indicating less optimism than earlier this year. There has, however, been an improvement in the balance of trade. In August, the export-import gap closed somewhat, but foreign producers are resisting price increases by lowering profit margins. As a result the export situation is not forecasted to change. Another possible source of economic stimulus, government spending, is expected to have a flat growth rate in the fourth quarter. Therefore little expansion from this source is expected. One bright spot it that orders for inventory goods have risen.

     Thus, to the extent that the Central Wisconsin regional economy is linked to the national economy, it is not likely to see rapid growth. However, some improvement in the region should develop after several unfavorable shocks have played themselves out, e.g. the weather, layoffs in the transportation sector associated with the Soo Line, and layoffs in the Finance, Insurance, and Real Estate sector during the past twelve months. As noted earlier, the nonagricultural sectors of the region seem to be making headway. However, the farm economy continues to depress local total employment levels, and contributes to higher unemployment rates in the region.