The U.S. economy continued to sputter along during second quarter 1990 and is now teetering on the brink of recession. Six states, Michigan, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont are now considered to be in recession. Moreover, 11 other states are very close to being in recession, with Illinois falling into the latter category. The state of Wisconsin is considered to be in a very sluggish mode with job growth being ever more difficult to obtain. Given this background, the Federal Reserve System recently moved to lower interest rates in an effort to help stimulate the economy. However, many analysts believe that the Fed's preoccupation with inflation has caused the Central Bank of the United States to do too little too late. In other words, any stimulus generated from lower interest rates will have come too late for many parts of the country.

     The consensus view of a blue ribbon panel of economists is that the national economy, taken in its entirety, will continue to avoid recession because of rising exports and lower interest rates. GNP is forecasted to grow at meager 1.6 percent for the remainder of the year. But any growth at all will be very hard to come by for many parts of the country and many states will experience growing unemployment and slip into recession, if they have not ready done so. The forecast for inflation by this group of analysts is around 4 percent for the remainder of the year, with interest rates moderating over the same period.

     The influence of the U.S. economy on Wisconsin and our region is an indisputable fact. Our region, for a variety of reasons, tends to lag the rest of the country in expansions and downturns. The implication is that even if the national economy avoids recession, its sluggish behavior will influence events in Wisconsin in the quarters ahead.