The full effect of the stock market crash of October 19th on the United States economy is not known at this juncture. Early indications suggest that the economy was not severely damaged by this event. However, the consensus opinion among economists is that the crash will cause a noticeable slowdown in activity. Estimates of real GNP growth have been reduced. Many forecasters expect real GNP to rise by only 1.0070 to 2.0% during 1988.

     The most widely held opinion is that if the economy is to continue on its record long expansion, it will be accomplished by a rise in production from industries which will benefit most directly from the lower dollar. Consumer confidence was shaken by the crash. As a result household spending will not be such a powerful influence in 1988. Businesses at the national level have been reluctant to commit funds for investment purposes. National surveys which compile information on capital expenditures indicate that the business sector has cut back on its plans for plant and equipment expenditures. Finally, large increases in government spending designed to stimulate the economy are unlikely given the current budget deficit.

     Therefore, it is most likely that 1988 will be a slower year than 1987. The national economy will progress forward, but any significant negative shock could be just enough to push the economy into recession, e.g. sharply rising interest rates. The Central Wisconsin economy is in a better position vis-a-vis other parts of the country, if and when the next recession occurs. This stems from the fact that the area is deeply involved in manufacturing. Given the positive influence of a lower dollar, the effects of a downturn would be moderated. During the recession of the early 1980s, manufacturing was especially hard hit due to the over valued dollar. This condition does not exist in today's economy.