As noted in previous Economic Indicators, the national economy was forecast to slip back into recession or experience a very weak recovery by historic standards. The previous assessment was predicated on a number of factors including, but not limited to, high personal and corporate debt levels, cutbacks in military expenditures, a troubled financial services sector, state governments raising taxes and trimming expenditures in order to balance their budgets.

     For the record, the national economy has now registered three consecutive quarters of positive growth in gross domestic product, GDP. Fourth quarter 1991 saw the economy grow by a scant 0.3 percent after growing by a meager 1.8 percent during third quarter and an anemic 1.6 percent in second quarter. Before this shallow recovery began, the economy had contracted for two consecutive quarters from fourth quarter 1990 through first quarter 1991. Thus the data strongly suggest that the economy was in recession, began to climb out, and then the recovery stalled. As a matter of fact, the idling economy had managed to recover only about one‑half of the output lost during the months of actual contraction. For this and other reasons, the economic difficulties of the country may seem more severe than they actually are. In other words, the national economy went into a shallow recession, and as of yet, the recovery has not fully erased the damage. Eighteen months of languid activity coupled with the fact that the recession has tended to be centered near the country's media centers, and has noticeably affected white collar workers, have given the impression to many that this has been a severe recession. However, national output and employment data do not support this conclusion.
 

     Most analysts see a continuation in economic expansion during 1992, albeit at a sluggish pace. Economists are forecasting the GDP to grow at a rate of only 1.5 percent to 2.5 percent. Historically, it is not unusual to see growth rates at the beginning of a recovery explode into the 5.5 percent to 6.5 percent range, however some of the previously mentioned factors will persist in the near term and hold back the expansion, making it one of the weakest on record.
 

     Turning our attention to the political arena, President Bush and the U.S. Congress are likely to work out a compromise plan to stimulate the economy including provisions for some kind of tax rate reduction. Considering that this is an election year, the real danger is that both parties will try to outdo each other in an attempt to woo voters. Many economists, including Federal Reserve Board chairman Alan Greenspan, fear that too much meddling in the economy on the part of Washington could do significant long term damage to the economy. That is, efforts to stimulate the economy may not be needed by the time any of the proposed changes take effect and may just add to inflationary pressures. Greenspan also indicated that data concerning the health of the nation's financial system was encouraging. There are, in his words, signs that the credit crunch is easing, that corporations are restructuring their balance sheets, and that the banking industry has turned the corner. These factors are of crucial importance if the economy is to move forward in the quarters ahead.
 

     Closer to home, the state and region have avoided the worst part of the recession and weak recovery largely because of our diversified industrial base, a strong export sector, and the absence of financial excesses prevalent in other regions of the country.
 

     Another factor, not often considered, is that the current recession, while quite long, has been very mild by historic standards. The implication is that even if the recession were centered here, it would not have had as great an impact as the more severe recessions of the past. Finally, a recent study on the future of the Wisconsin economy predicts that 300,000 new jobs will be created between the years 1990‑2000. This represents an average annual growth rate of 1.2 percent per year. This modest growth rate is predicted to be more a result of demographic factors than the viability of Wisconsin industry, with slow population growth placing significant constraints on workforce and employment growth in Wisconsin.