The U.S. economy continued to expand at a modest rate during the last quarter of 1986. The data in Table 1 follows a pattern that was established earlier in the year. Real Gross National Product expanded 2.5% during the fourth quarter of 1986. Thus, the third longest period of economic growth since the turn of the century continues onward. Industrial production reflects a scant improvement of .9% over last year. Evidence to support the high probability of a continued expansion, are the data concerning interest rates, which were down to 5.7% at the end of the year. Moreover, inflation remains under control. During fourth quarter, only a 1.1 % increase was recorded over last year.

     The continued improvement demonstrated during the fourth quarter of 1986 can be attributed to lower interest rates, the falling dollar, and consumer purchases, the latter reflecting an attempt to take advantage of 1986 tax laws. Furthermore, industrial production increased significantly by .5% in December. The healthy performance in December is being linked to the falling dollar and to year-end tax considerations. Operating capacity numbers show improvement toward the end of the quarter. The seasonally adjusted December figures indicate that the factories of the nation were operating at 80.3% of capacity, up from 79% in October. Inflation is expected to pick up during the year. Increasing money supply, forecasted increases in energy costs, and a falling dollar should contribute to a rise in the Consumer Price Index of about 3.0% to 4.0%.

     The Central Wisconsin economy continued to display improvement which began last quarter. The unemployment rate either remained stable, as in Portage County, or declined, as was the case in Marathon and Wood counties. The region fell somewhat behind the improvement experienced state-wide. Moreover, the region and the state did not keep pace with the nation as a whole with regard to the reductions in the unemployment rate.

     Employment in the region has increased by over 4000 positions when compared to fourth quarter 1985. All of the counties in the area showed improvement. Wood County had a particularly good year, as over 2000 jobs were added to its payrolls. Portage and Marathon recorded job expansion of 2.2% and 1.8%, respectively, during fourth quarter. At the state and national levels almost identical percentage increases were recorded, i.e. 2.4% and 2.3%. Regional employment by industrial sector exhibited strength with 3200 more people employed than a year ago. Trade, durable goods and government led in percentage growth rates. The government employment growth figure may be a soft number. That is, the increase in regional government employment can be traced to short-term activities in Portage County. Overall employment in the nonfarm sectors either expanded or remained relatively stable from last year.

     Key sector employment provides a solid basis for optimism for the region's future. These sectors grew at a combined rate of nearly 3.0% during the past year. Of even greater importance, the forecast for these industries is for greater profitability in 1987. Thus, the CWERB expects employment expansion to take place in the region's key industries. Another positive sign is the business confidence index which indicates that regional business leaders expect local and industry conditions to improve during the upcoming year. This level of optimism bodes well for the economic health of the region. This favorable factor should translate into future employment and income gains for the area.

     The economic performance of Marathon County during fourth quarter 1986 surpassed, albeit moderately, the level achieved one year ago.  The county's unemployment rate was significantly lower than fourth quarter 1985.  Total employment increased by 900 positions.  Manufacturing, trade, and services led in nonfarm job creation.  The retailer confidence index, financial statistics, and the regional business confidence index point forward continued modest growth.  Also the help wanted index and residential construction data support the pro-growth forecast for the local economy.  Lastly, the outlook for key Central Wisconsin industries is one of greater profitability.  This will have a positive influence on the local community.