The national economy expanded at a very rapid 4.7 percent rate during the last three months of 1996. At the same time the GDP deflator, the government's broadest measure of inflation, increased by just 1.8 percent. On a year over comparison basis real GDP expanded by 3.4 percent from Fourth Quarter 1995. In conjunction with this, industrial production expanded by a robust 5.1 percent. This indicates that our nation's factories have significantly expanded their output. Short‑term interest rates rose from 4.91 percent to 5.08 percent over the course of the year. The Consumer Price Index, a measure of inflation which pertains to just consumption items, rose by 3.3 percent over the year. 

     Unemployment rates on a seasonally unadjusted basis fell throughout the area, state, and nation. After many years of nearly unbroken economic growth, labor markets are tightening. Evidence of this are the very low rates reported throughout the area. Federal Reserve officials have stated that it is only a matter of time before wages will respond to the situation. Workers up to now have seemed to prefer job security over wage increases, but at some point that trade off will no longer hold and workers will seek higher wage rates and benefits. 

     The flip side of falling unemployment rates are growing payrolls. Employment gains in the region over the past decade have steadily pushed up the ranks of the employed. More recently, over the past twelve months our three‑county region has added 2,800 jobs, pushing total employment to 142.6 thousand. It is clear that our region has benefited from the favorable economic conditions which have prevailed since the mid 1980s. 

     Employment gains in the industrial sectors have also been impressive over this time period. Services has become the dominant employer in Central Wisconsin supplanting the manufacturing sector for this honor. This, however, does not mean that manufacturing is not an important part of our regional economy; in fact, our area remains more heavily dependent on this sector than the nation as a whole. In sum, industrial sector employment has risen from 135.2 thousand to 138.1 thousand or by 2.1 percent since last year. 

     The examination of time series data can reveal what has transpired over the past number of years in Central Wisconsin's major industrial sectors. The growth that has taken place has been steady over the period. Regular increases, even modest ones, on a year‑in‑year‑out basis can add up to some rather large changes. Thus, local payrolls in the five major industrial categories have increased by significant amounts over this time period. 

     Economic activity to a great extent is predicted upon one's expectations about the future. In other words, the notion of the self‑fulfilling prophecy is as valid now as it ever was when it comes to the economy. Therefore, the expectations of business executives are an important indicator of the future direction of the economy. Our panel of regional business executives believes that the national economy, local economy, and their particular industry will continue to enjoy an expansionary period. This of course bodes well for area residents.