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Trend of business.


United States' Economy

Recent developments in the U.S. economy indicate a downward trend. Of serious concern is the uncertainty of the Middle East situation and the subsequent increase in oil prices. There has also been a poor showing in second quarter GNP and stagnant nonfarm job growth-factors that point to a probable recession.

Second quarter real GNP (GNP adjusted for price changes) rose an estimated 1.2 percent. Recently revised figures released by the Bureau of Economic Analysis reveal real GNP "growth at rates of less than 2 percent for the last five quarters-the longest uninterrupted period of subpar growth in postwar history outside an economic recession."' The most recent recessions occurred "in January 1980-July 1980. This was followed by a longer, more severe recession from July 1981-November 1982 which resulted in double-digit unemployment rates, reduced incomes and a decline in output."2

Unemployment climbed in August to a 5.6 percent rate following job losses in manufacturing and construction and the layoffs of temporary census workers. Compared to a year ago, the second quarter unemployment rate of 5.2 percent was unchanged. Home construction has been hampered by tightening lending standards of banks and savings and loans following the S&L crisis.

The August Consumer Price Index increased 5.6 percent from a year ago. The "UCLA Business Forecast" expects rising inflation through 1990 with an estimated fourth quarter rate of 8.9 percent.

South Dakota Economy

The indicators of economic activity maintained by the Business Research Bureau were up in three of the seven categories compared to a year ago. Seasonally adjusted figures for nonagricultural employment continued to expand in the second quarter of 1990 from year earlier levels to a 2.3 percent increase. Second quarter 1990 nonfarm wage and salaried employment averaged 283,167 compared to 276,600 a year ago. Construction employment rose 4.9 percent for the same period, but fell slightly from the first quarter of 1990-(O.6%).

South Dakota's unemployment rate of 3.9 percent is slightly above the 3.7 percent first quarter rate. Boosted by gains in the nonfarm wage and salaried employment-particularly in the government sector with the hiring of census workers and the Summer Youth Program-the seasonally adjusted unemployment rate in the second quarter was well below the 4.3 percent rate of a year ago.

Total personal income fell slightly in the first quarter of the year compared to the previous quarter. Impacting this drop was farm income which fell nearly 20 percent due mainly to a drop in government subsidies. New car and truck registrations were also down in the second quarter of 1990 compared to the previous quarter. Seasonally adjusted new car registrations fell nearly -7.0 percent while truck sales plummeted 17 percent for this period.

Comparisons of the South Dakota indices are included in the table on page 12.

(Tabular Data Omitted)
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Publication:South Dakota Business Review
Date:Sep 1, 1990
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