The national economy is definitely showing signs of softening. GNP growth during the second quarter of 1989 was a sluggish 1.7 percent. Furthermore, job growth is slowing and housing and auto sales have weakened. Many analysts feel that growth will not be significantly higher during the remainder of 1989. Some are even more pessimistic and believe that the economy has already or is about to stall, thus pushing the country into a recession.

     The reason most often given for the slow down is Federal Reserve Board policy. For approximately a year and a half the country's monetary authority has been tightening money and credit conditions with the objective of reducing inflationary pressures. While relatively higher interest rates and tighter credit conditions do dampen economic activity and help prevent the economy from overheating, the danger is that too much restraint may push the economy into .a period of higher unemployment and falling incomes.

     In the past several weeks, data about the condition of the economy seems to have convinced the Federal Reserve that its policy has been successful and that the greatest threat now facing the nation is recession rather than inflation. The outcome of the resulting loosening in monetary policy is difficult to predict. Substantial time lags exist between a change in policy and its effect on the national economy. Therefore, it will be interesting to see if this change in policy can stabilize the situation or if the economy is in an irreversible downturn. The high correlation between regional and national activity assures that these matters will eventually influence Central Wisconsin.

     But the long-term viability of the region depends on many factors such as the availability of natural resources and services and the quality of the labor force. Another crucial element is transportation. Recently announced plans to upgrade Highway 29 and sections of Highways 10 and 54 to four lanes bode well for Central Wisconsin. These proposed improvements in the transportation network are potentially among the most significant economic events in the history of the region. Given the area's natural endowments and strategic location, the improved ability to get inputs into and production out of the region should help ensure Central Wisconsin's future well into the next century.