Major economic forecasting groups are indicating that the U.S. economy will expand in real terms at about 3070 during 1987. The unemployment rate for the nation should remain in the 6.5% to 7% range. Moreover, the country will see an increase in inflation (about 3% to 4% per year) as energy costs and a rapidly expanding monetary base place upward pressure on prices. The present expansion has been shouldered by consumer spending which comprises approximately two-thirds of Gross National Product. Evidence suggests that consumer debt, as a percent of disposable income, is at historically high levels. Therefore only modest expansionary impetus is seen to be forthcoming from the household sector in 1987.

     The impending tax change gave a boost to fourth quarter activity, i.e. the rush to take advantage of the old laws. The new tax laws in first quarter of 1987 will give some added disposable income to consumers.

     The sharply declining dollar provides American business the opportunity to be more competitive domestically and internationally. This factor must at some point in time contribute to economic growth, all other variables being held constant.

     Central Wisconsin will benefit from a declining dollar, and a firming up of farm prices. However, the state and the region along with Michigan, Indiana, and Ohio, are expected to have growth rates below the national average. These areas are experiencing slow economic growth primarily because their economic structures are based upon trade sensitive industries and agriculture. Central Wisconsin and the state will not see above average growth rates until these problems are resolved or until the fundamental structures of their economies are transformed. In conclusion, Central Wisconsin can expect steady but modest improvement in economic conditions during the first part of the new year.