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Trend of business; United States economy; South Dakota economy.


United States Economy

The recession debate continues into 1991. Nearly three-fourths of the economists surveyed by the National Association of Business Economists feel a recession is imminent. Although real Gross National Product (GNP) has shown some growth through the third quarter of 1990, other indicators point to an economic downturn. Changes in real GNP for the first three quarters of 1990 compared to the preceding period were 1.7%, 0.4% and 1.4% respectively (SAAR). Consumer confidence as measured by the University of Michigan's index of consumer sentiment continues to drop sharply from 88.2 in July '90 to 66.0 in November of 1990. The unemployment rate reached 5.9 percent in November, the highest in three years. Declines in employment have been concentrated in the goods-producing sector--particularly in manufacturing and construction. (1)

The Consumer Price Index (CPI) is expected to be 5.5 percent for 1990--the highest in eight years. The slump in the housing industry continues. "October housing starts were 1.04 million units and are expected to fall below 1 million units before long. Particularly hard-hit are New York, New England, and California where falling home prices and weakening economic growth erode demand." (2)

Car sales in November were 8.7 million, down from 9.3 million in October.

South Dakota Economy

The indicators of economic activity maintained by the Business Research Bureau showed a downturn in several sectors. The employment growth of the first half of 1990 slowed in the third quarter of 1990. This pace may continue into the next few quarters with increasing plant layoffs or closings. Non agricultural employment fell -0.4 percent (seasonally adjusted) from the previous quarter. Construction employment was down -2.3 percent in the third quarter. On a positive note, South Dakota's unemployment rate remained relatively low compared to the national average. South Dakota's seasonally adjusted third quarter figure of 3.9 percent was down from the 4.0 percent rate of the previous quarter. Residential Housing Unit starts for the first nine months of 1990 were 2,242 compared to 1,222 a year ago. Income figures for the second quarter of 1990 dipped slightly. Total personal income was down -0.2 percent. Leading this downturn was farm income which dropped -3.3 percent for the same period.

The sale of automobiles in the third quarter of 1990 were strong. New car sales increased 3.6 percent, while new truck sales rose 4.1 percent. Further comparisons of these indicators can be seen in the following graphs.

(1) The UCLA National Business Forecast, December 1990.

(2) Ibid.
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Publication:South Dakota Business Review
Date:Dec 1, 1990
Previous Article:The University of South Dakota Business Placement Bureau 1989-90 summary.
Next Article:Projected trends to the year 2000.

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