Real Gross National Product (GNP) measures the amount of final goods and services produced in an economy during a year adjusted for price level changes. This figure for the United States grew by a modest 2.2% when contrasted to third quarter 1985. This suggests that the national economy is still muddling along. Comparing third quarter 1986 to second quarter 1986 reveals that real GNP grew at a 2.4% annual rate. Industrial production improved by only 0.5% from last year. Moreover, the interest rate on three month U.S. treasury bills declined to 5.2%. This is a large reduction since last year. Reasons often cited for the reduction are weak aggregate demand, and attempts by the Federal Reserve System to stimulate the economy by expanding the money supply.

     The Consumer Price Index (CPI) now stands at 330.2. One year ago it was at 324.5. Thus, a relatively small level of inflation, 1.8%, has been recorded over the past twelve months. However, the rate of inflation has increased from second quarter 1986. A 3.6% annual growth rate in inflation was recorded during the past three months. Although this is still a modest rate, the Federal Reserve has indicated that it will keep a close eye on inflation.

     All of the above factors indicate a tired national economy. To place this in context, the historic growth rate of GNP during the past eight decades has been 3.1 %. It appears that a growth rate of around 2.5% will be achieved in 1986. A positive note is that unemployment for the United States has declined from last year, but this appears to result from lower labor force participation.

     The Central Wisconsin economy during third quarter 1986 experienced a modest improvement. Portage, Marathon, and Wood counties all saw their unemployment rates rise above last year's third quarter rates. Bad weather conditions during the month of September may have caused the rates to be somewhat overstated as seasonal hiring was delayed. The unemployment rates in the three counties were almost identical, i.e. only Wood varied from the 6.4% recorded in both Portage and Marathon. This is the first time in over a year that Central Wisconsin has had a lower unemployment rate than the country. However, the region still lags behind the rest of the state by .4% despite the fact that the state unemployment rate rose by 5.2% over last year.

     Total employment in the region increased from last year, i.e. 2.1%. Nonfarm employment improved by a sluggish .8% over third quarter 1985. The phenomenon of rising employment levels with increasing unemployment rates can be explained by the unusual weather conditions for September and the re-entry of discouraged job seekers into the labor market. Manufacturing, trade, and construction all demonstrated some strength. In particular, trade led all sectors with 1400 new jobs being added to Central Wisconsin payrolls. Services and government employment contracted from last year's levels. Much of the weakness in services can be traced to the fall in transportation related activities in Portage County.

     Examining key sector employment elicits optimism for the future of the region. Paper products, lumber and wood products, and food processing expanded their operations by adding 1600 new positions. Only finance, insurance, and real estate experienced a modest decline of 300 in employment from last year. Given that the problems in this sector seem to have been remedied, it is expected that employment figures will stabilize. Thus, overall key sector employment improved by a healthy 5.3% from last year. With regard to expected changes in national, local, and industry conditions, business executives are less optimistic than in June of 1986. However, index values recorded for September can still be interpreted as indicating that no great change is foreseen by the regional executive groups.