The national economy continues to move forward. Most forecasting agencies see the economy expanding without interruption into the next year. Almost all indicators of economic performance for the nation are positive with no apparent imbalance existing at this point in time. This of course bodes well for the state of Wisconsin and our regional economy. What are some of the prominent features of this economy that have lead to such universal optimism about the future. 

     Real Gross Domestic Product grew by a blistering 5.9 percent annual rate during the first quarter of the year and by 2.2 percent during the second quarter. Even though the economy slowed during the past three months, the figures remind us how strong the economy has been and how robust it is likely to be in the future. For the record the economy has been expanding since the mild and short recession of 1991. 

     Meanwhile, the Consumer Price Index has been increasing at 2.5 to 3 percent during this extended period. Most forecasters hint that inflation will remain in the same range for next year. The unemployment situation also reflects the vitality of the economy. For example, the unemployment rate for the country stood at 7.5 percent immediately after the recession of the early 90's. By 1997 the unemployment rate has dropped to less than 5 percent nationally. One conclusion to draw from this development is that low unemployment does not automatically mean that inflation will accelerate to unacceptable levels. 

     Many analysts, like Federal Reserve Board Chairman Alan Greenspan, believe that the economy has undergone a fundamental shift or restructuring which allows faster economic growth to take place without kindling inflation. A major reason cited for this fundamental change is the huge amount of capital investment made by corporations in computer related technology during the past decade has taken root in the economy and is creating greater gains in worker productivity than is generally realized. Moreover, even the official statistics on the matter have failed to adequately capture this change. Greater worker productivity means that a firm can raise wages and not have to increase product prices to remain profitable. Thus, inflation can remain abated and profits can rise and in some cases profits can expand even if sales figures are stagnant. 

     Another factor to consider in the restructuring of the American economy is that intense foreign and domestic competition have created conditions which make it very difficult for most firms to pass on price increases to consumers. Again technological improvements in communication, data transmission, and transportation have given the consumer a vast array of alternative sources for the purchase of most goods and services. 

     The list of favorable economic indicators for the country is very extensive. Some examples are as follows. The industrial production index, which measures factory output, is strong, inventory to sales ratios for firms are low meaning that most firms have lean operations, the employment cost index shows that total compensation (wages and benefits) is growing at about 3 percent per year, unemployment duration is trending downward across the country, real disposable income is growing at nearly 4 percent per year, and consumer sentiment is at a record level. These plus a multitude of other indicators suggest that the economy is working about as good as anyone possibly hoped for or have forecasted. With these favorable fundamentals it becomes clear why the future looks so sound for the state and region.