As of November the United States economy is forecasted to grow by approximately 2.5 percent during 1996 as measured by real gross domestic product. Further, most analysts see employment expanding at the national level at approximately 1.6 percent for the upcoming year. In the important area of interest rates economists are saying that long term United States Government debt obligation rates will drop down to about 6.5 percent. Meanwhile inflation is forecasted to hover around 3 percent for the year. In sum, the national economy will continue on its path of steady but unspectacular growth. 

     In more detail, the Federal Reserve policy since early 1994 can be characterized as one of gradual tightening of the narrower measures of money which means abated economic growth. Cuts in short‑term interest rates on the part of the Federal Reserve have only taken place when it appeared the economy was growing too slowly and might fall into recession. Thus, the Federal Reserve has been a major contributor to this period of moderate growth with low inflation. 

     Inflation indicators such as the Consumer Price Index, Producer Price Index, Blue Chip forecast, and household services all indicate that inflation is not likely to be a big problem any time soon. Moreover, these indicators suggest that 1996 should be a period of modest price increases. Further, the yield curve is flattening on bond rates. Long term bond rates are greatly influenced by the expectation of inflation. A flattening or lowering in yields suggest that financial markets are now factoring in a lower long-term inflation rate. 

     Currently the national economy is being moved forward by growth in industrial production, a surge in government purchases, and by private sector spending on capital goods including housing. Relatively low interest rates and the low value of the dollar should allow the private sector activities to continue to grow well into next year. 

     Reports of employment shortages especially in small manufacturing firms nation wide are becoming more frequent. The current expansion is now over four years old and the market for skilled workers has become tight. With labor force participation rates among workers unable to increase much above what they are now, coupled with a demographic stricture of the population which suggests we are not going to see an explosion of a number of workers, labor markets will continue to tighten in the future for skilled workers. 

     It goes without saying that the Wisconsin economy greatly influences activity in Marathon, Portage, and Wood counties. Therefore, it makes sense to look at forecasted state economic activity. The employment level in the state is forecasted to grow by a modest 1.6 percent in 1996 after expanding by about 2.5 percent this year, this is similar to the nation. The health of the state economy should cause personal income to grow by 6.2 percent in 1995; however, the pace in personal income growth should slow to about 4.5 percent in 1996. Relatedly per capita personal income grew at 5.2 percent in 1995 and will abate to 3.5 percent pace in 1996. The most likely scenario for Central Wisconsin is that it will closely follow the economic path set by the state. That is moderate steady growth is the most likely outcome for our area during 1996.