The national economy performed above expectations during the first quarter of 1987. The annualized growth rate of Real Gross National Product during the January to March period was 4.3 percent. Real Gross National Product, when compared with March of 1986, grew at a modest 2.2 percent (see Table 1). Thus, it is evident that the economy greatly accelerated during the first part of this year. Industrial production increased by 2.5 percent from a year ago. It should be noted that the surge in GNP and industrial production has been attributed to increases in unsold inventory, and to a mild winter throughout a large portion of the country. The weather prompted activities that usually start later in the spring. Interest rates were down from 6.39 percent to 5.72 percent, which was a stimulus for the economy, but inflation picked up somewhat from first quarter 1986. The general price level has risen by about 3 percent over the past twelve months. This is primarily attributed to rising prices in energy, housing, and clothing. The outlook is for increased inflation as the dollar weakens. Many economists are predicting that inflation will reach 4 percent or more during the year. The Federal Reserve has indicated that it will tighten monetary policy if inflation begins to heat up. This will place upward pressure on interest rates and in the process curb economic growth.

     Unemployment rates throughout the region were greatly improved. Portage, Marathon, and the region demonstrated that economic activity heightened during the first quarter. Moreover, even though the unemployment rate rose in Wood County, the number of people working climbed by over 2000. The unemployment rate for Central Wisconsin remained higher than the state and nation, but none-the-less showed improvement over the. levels reported last year.

     Employment levels were significantly above last year's totals. This encouraging development occurred across all reporting areas. Wood County led the expansion, with Marathon and Portage posting healthy gains. The region did remarkably well as employment expanded to 116 thousand from the 109.3 thousand recorded last year. The state and nation also turned in fine performances, i.e. employment grew by 4.3 percent and 2.4 percent, respectively. Employment data by industrial sector shows that the expansion was broadly based. Manufacturing led the group with a 6.0 percent surge in jobs. Services, trade, construction, and government shared in the prosperity by experiencing varying degrees of growth.

     Key sector employment expanded in all categories. Lumber and wood products registered an increase of 1000 over last year to set the trend. All industries; -except paper products, should see a strong year in 1987, which will lead to more employment. The paper products industry has seen overexpansion which has created some surpluses. Overall, key sector employment grew by 1700 positions or 7.3 percent from last year.

     Regional business executives are expecting local and industry conditions to improve. This favorable outlook will translate into future employment gains for the region.

     The Stevens Point - Portage County area grew dramatically during first quarter 1987. Thus, the favorable circumstances described in the fourth quarter report have had a positive impact on the growth of the local economy, i.e. the leading economic indicators for the region, along with industry and national data pointed in this direction. However, the results for the quarter were no doubt improved by the mild winter. The CWERB forecasts that the expansion will continue into the second quarter of 1987. The reasons for this optimism are based upon the following. First, forecasts for key industries in the region remain favorable. Second, regional business leaders, including retailers, are confident about the outlook for their own industries. Third, the demand for local labor continues to be strong. Fourth, residential construction, a leading indicator of economic behavior, was robust in the first quarter.