The prospects are good that we will have a strong national economy during the remainder of 1994. Data at the national, state, and local levels portend an expansionary situation. Real GDP growth should reach a robust 3 percent or perhaps even higher according to a panel of fifty prominent economists.
 

     If this forecast is correct, the economy would turn in its best performance in approximately six years. Why does so much optimism exist with regard to the economy? There are, of course, a variety of reasons for this rosy assessment. A summary of some of the more important factors in this assessment are as follows.

     Inflation has been and is forecasted to be at a manageable level. The existence of so much excess capacity worldwide and the ability of firms to shift production offshore, make it unlikely that prices and wages will escalate to a significant degree. The ability to accurately anticipate the consequences of inflation makes business planning and decisions less risky. As a matter of record, businesses tell the Commerce Department that investment in factories, plants, equipment, and inventories should grow by approximately 8 percent during 1994. This represents the biggest jump in business investment plans since 1989.

     Nationally consumer confidence rose sharply in March to the highest level in four years. Further, this group of geographically dispersed households, which is polled by the University of Michigan, is most optimistic when asked about the future of the economy. This bodes well for the economy since two‑thirds of all buying activity is conducted by households. Case in point, large retailers throughout the United States report that sales are 6.4 percent higher than a year ago. Further, the very important automobile industry is having and is expected to continue to have a strong sales year. This fact will eventually translate into an increase in jobs and income.

     Even the credit tightening actions on the part of the Federal Reserve System and price fluctuations on Wall Street appear not to have had much of an impact on consumer or business confidence. First, the rate changes by the Federal Reserve are perceived by many to be minor adjustments or fine‑tuning. Second, the country seems to understand that what takes place on Wall Street may be an isolated event, remembering the 500 point crash of October 1987 which had little to no impact on the overall economic situation. And finally, exporting activity should improve when Japan and Europe climb out of their recessions. This is an important economic consideration for this nation and for Wisconsin. For example, Wisconsin exports to the world accounted for an important $7.7 billion worth of business in 1993, an increase of 10.9 percent over 1992.

     The .Wisconsin and Central Wisconsin regional economies should also do well during the remainder of 1994. For reasons detailed in previous quarters and in this quarter's special report, the state should continue to show a higher rate of job generation and a lower unemployment rate than the nation as a whole. Given the upbeat forecast for the national economy and the favorable state variables, it seems reasonable to expect a strong rest of the year in the Central Wisconsin region.