Thomas B. Mandelbaum discusses the magnitude and nature of last year’s growth in the District’s business economy in the context of the current recovery period. After an overview of broad trends of the District economy since 1982, the article highlights differences among the major industrial sectors of the regional economy, the states that dominate the District economy, and the District’s four largest metropolitan areas. Projections of economic growth in District states by state universities and agencies provide a view of future trends. Mandelbaum describes 1986 as a year of moderate growth for the District’s economy, the second year of moderate growth following a sharp expansion in 1984. The author found considerable variation, however, in the performance of the District’s sectors and states. The analysis shows that Tennessee’s recent economic growth leads the District states in most categories, while construction, encouraged by declining interest rates, was the most rapidly growing regional sector in 1986. Projections of the pace of regional growth in 1987 suggested that it will be similar to that of the last two years, making 1987 the fifth successive year of expansion for the Eighth District economy.