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Chicago | 1973-01-10T00:00:00 | /beige-book-reports/1973/1973-01-ch | "Beige Book Report: Chicago\nJanuary 10, 1973\nThe Seventh District economy retains a strong upward momentum. \r\nEmployment is increasing, retail sales have been extremely vigorous, \r\norder backlogs are building, and lead times are stretching out. \r\nInflationary pressures are increasing as indicated by the recent \r\nrise in farm prices, higher prices charged by small firms exempt \r\nfrom controls, and requests of utilities and regulated public \r\ntransport lines for substantial increases in rates and fares. \r\nIncreases in production are impeded by lack of availability of fuel, \r\nskilled labor, parts, and components. The most serious supply \r\nproblems relate to availability of fuel, both natural gas and \r\nheating oil.\nFuel shortages have been reported in all five states of the Seventh \r\nDistrict in the past month. Much colder weather this year has \r\nincreased fuel usage for home heating by 20 percent to 25 percent \r\nover last year. Shortages of propane gas are widespread. Utilities \r\nhave shut off \"interruptible\" natural gas customers in a number of \r\ncases. There have been reports of temporary shutdowns of \r\nmanufacturing facilities and of apparatus for drying corn and \r\nsoybeans. Suppliers of heating oil and diesel fuel have stopped \r\ntaking new customers, and have reduced allotments to established \r\ncustomers. On January 8, the largest supplier of these products in \r\nthe Midwest announced it was cutting deliveries to established \r\ncustomers to 75 percent of last year's January level. Price controls \r\nare blamed, in part, for fuel oil shortages because of an \r\nartificially low price for home heating oil and lack of flexibility \r\nin prices in wholesale markets. The Midwest is a deficit refining \r\narea, and the price mechanism normally allows area oil firms to bid \r\nadditional supplies away from the Gulf region.\nEmployment apparently would be increasing faster and output would be \r\nrising faster if sufficient numbers of qualified workers were \r\navailable. Many firms are having difficulty rebuilding work forces \r\nreduced during the recession. Affected industries include steel, \r\nmachine tools, capital goods components, and furniture. \r\nApprenticeship programs are being expanded, but results will take \r\ntime.\nDistrict businessmen do not appear to worry about a second-half \r\nslowdown. For example, Milwaukee purchasing managers are said to \r\n\"show concern, not for the future, but rather for the deterioration \r\nof deliveries and quality, and the growing list of shortages of \r\nmaterials and skilled labor\".\nSteel firms expect a record year in 1973. One large area firm is \r\noperating at effective capacity and order books are filling for \r\nfuture months. Recent months have seen a revival of orders for \r\nfabricated structural steel, including orders for manufacturing \r\nbuildings.\nCapital expenditures may be heading for a boom as additional firms \r\nincrease appropriations. Foreign demand also has increased \r\nsubstantially in the past several months. The improvement is broadly \r\nbased and includes Communist countries.\nAmong the supplies and components requiring longer lead times \r\ncurrently are electric motors, fluid drives, axles, diesel engines, \r\nbearings, castings, forgings, cutting tools, dies, and molds. In \r\nseveral cases the delivery situation deteriorated very rapidly in \r\nthe final months of 1972. Of course, shortages and delays tend to \r\ncumulate as precautionary measures are taken. There are reports of \r\ngrowing imbalance in inventories of supplies.\nA number of reports indicate that manufacturers are planning \r\nproduction at levels that will permit them to weather strikes in \r\n1973. Examples are construction machinery, farm machinery, and motor \r\nvehicles. Steel firms expect that their orders will reflect these \r\nplans.\nHousing experts are gradually raising their forecasts for 1973, \r\nalthough most still see a significant decline from 1972 to 2.0-2.1 \r\nmillion units. Demand for used homes is strong, and a large Chicago \r\narea real estate firm projects an average rise in prices of existing \r\nhomes of at least 6 percent this year. Supplies of many building \r\nmaterials are tight. Gypsum board is being substituted for high-priced plywood and fiberboard.\nFarm prices continue to strengthen, suggesting a continuance of \r\nrelatively high farm income, and also higher prices at retail, \r\nespecially for meat. Both cattle and hog prices rose even more \r\nsharply than expected in December, reflecting reduced production and \r\nweather-delayed marketings. Wholesale meat prices are now above the \r\npeak reached near mid-1972. About 10 percent of the corn and soybean \r\ncrops remain in the fields, but current reports indicate that losses \r\nwill be small and much less than had been feared.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1973-01-10T00:00:00 | /beige-book-reports/1973/1973-01-cl | "Beige Book Report: Cleveland\nJanuary 10, 1973\nEconomic activity in the District ended the year on a strong upward \r\ntrend. Retail sales surpassed expectations. Manufacturers have been \r\nexperiencing increased inventory building on the part of customers. \r\nPayroll employment continues to expand at a more rapid rate in the \r\nDistrict than in the nation, and residential building remains at a \r\nhigh level. There are, however, some indications of constraints on \r\nproduction stemming from physical capacity limitations, fuel and \r\nlabor shortages, and difficulty in obtaining supplies. Bankers \r\nreport strong deposit flows at the year-end.\nRetail sales over the holiday period are reported to have been very \r\nstrong. The improvement in the Cleveland area was much better than \r\nanticipated by retail merchants. They were particularly surprised by \r\nthe surge in shopping between Christmas and New Year's Day, and by \r\nthe continued boom in sales during the first week of January. The \r\nPittsburgh area also had an excellent volume of retail trade over \r\nthe holidays. According to one bank economist, Pittsburgh's economy \r\ncame back from the recession only in the fourth quarter of 1972. The \r\narea's steel industry is finally showing year-to-year gains in \r\nemployment, while other durable goods industries that had been \r\nsluggish since 1970 are beginning to demonstrate signs of increased \r\nactivity.\nSteel industry economists report strong order demand, with recovery \r\nin those product lines that had been relatively weak. Steel users \r\nare beginning to accumulate inventories more aggressively. One steel \r\ncompany is becoming concerned about their ability to ship all of the \r\norders currently scheduled for March delivery. They are approaching \r\ncapacity limits on some products in certain plants. One of our \r\ndirectors reported that another large steel company in his area is \r\noperating at full capacity. A third steel company mentioned a surge \r\nof inventory accumulation by their customers, stemming partly from \r\nattempts to beat price increases, partly from a greater willingness \r\nof users to hold larger inventories to ensure continuity of \r\nproduction, and partly because the cash positions of their customers \r\nhas improved.\nSeveral of our industrial directors mentioned that the fourth \r\nquarter was outstanding for their businesses, particularly in the \r\nareas of office equipment and motor vehicle equipment. Delivery \r\ntimes are stretching out, and there are reports of difficulty in \r\nhiring skilled employees and in one instance high quality unskilled \r\nworkers. One of our directors, a university president, commented \r\nthat for the first time in years the employment situation is much \r\nbetter for their graduates, based on the increased number of \r\nrecruiters and job offers.\nMachine tool companies in the area are expecting a boom in new \r\norders. Some are having difficulty in getting supplies that could \r\nhave been purchased off the shelf a few months ago. Others are \r\nhaving difficulty in obtaining skilled labor. An economist from a \r\nlarge machine tool firm in Cleveland said they are deliberately \r\nstretching out backlogs rather than attempting to increase output by \r\nhiring more workers (which they are not sure of finding even if they \r\ntried). The firm is running down its inventory of cutting tools \r\nbuilt during the previous slack period, and their customers have \r\nbegun to accumulate inventories in earnest.\nEconomists from several major oil companies headquartered in the \r\nDistrict report bottlenecks in physical plant, with operations \r\nrunning over 100 percent capacity. Even though fuel oil is in short \r\nsupply, oil refineries are tending to concentrate on producing \r\ngasoline, which (because of price ceilings) is more profitable than \r\nfuel oil. One economist expects a shortage of transportation fuels \r\nby spring. The oil companies are having difficulty in satisfying the \r\ndemands of their regular customers, and they are reluctant to take \r\non new customers. In some instances, fuel shortages have constrained \r\nmanufacturing output in the District. In recent weeks, some plants \r\nhave had to shut down and others have had to reduce operations \r\nbecause their supplies of natural gas were curtailed and they could \r\nnot obtain alternative fuel sources such as crude oil.\nBankers report a strong flow of deposits at the year-end, reflecting \r\nthe rapid pace of business activity. Mortgage loan demand continues \r\nto be strong, while the volume of residential construction contracts \r\nin the District (as of November) was only a shade below the record \r\nhigh reached last May. Business loan demand has shown signs of \r\nfurther strength in recent weeks.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1973-01-10T00:00:00 | /beige-book-reports/1973/1973-01-su | "Beige Book: National Summary\nJanuary 10, 1973\nThe overall impression conveyed by the District Banks' reports is \r\nthat the economic expansion of 1972 continued undiminished at the \r\nturn of the year and was perhaps gathering additional momentum. \r\nRetailers generally enjoyed a very good Christmas season, and many \r\nwere reported to be quite optimistic about sales prospects over the \r\nmonths ahead. Business confidence improved further, as evidenced by \r\nincreased actual or planned outlays on plant and equipment. \r\nManufacturing activity has quickened, with increases reported in new \r\norders, shipments and backlogs. And while housing construction on \r\nbalance appears to have peaked out, it remains at very high levels. \r\nThe unemployment situation improved somewhat further, and there were \r\nfrequent reports of a growing shortage of skilled and semi-skilled \r\nlabor. On the dark side, however, concern continued to be voiced \r\nover the outlook for further inflation.\nOne of the brightest spots in the latest District reports was the \r\nstrength in consumer spending over the Christmas season. Moreover, \r\nretail sales were reported as continuing strong during the post-holiday period. To be sure, the phrases used to describe the \r\nstrength of Christmas sales varied somewhat, from the \"continued to \r\nexpand\", \"were generally reported good\" or \"continued strong\" \r\n(Richmond, Kansas and Dallas, respectively) to \"extremely vigorous:; \r\n\"very strong\" and reaching \"record levels\" (Chicago, Cleveland and \r\nSan Francisco). It thus appears that nationwide consumer spending \r\nwas well above that of the 1971 holiday season, frequently \r\nsurpassing retailers' expectations. An optimistic outlook regarding \r\nsales over the months ahead, moreover, was mentioned by a number of \r\ndistricts, including Minneapolis, St. Louis and San Francisco. \r\nBoston also reported an unusually high rate of reordering from \r\nretail stores for this time of the year.\nAnother bright spot was the apparent further heightening of \r\nbusinessmen's confidence, as reflected in reports of increases in \r\nactual or planned capital outlays. The Chicago Bank thus reports \r\nthat capital expenditures may be heading for a boom, as additional \r\nfirms increase appropriations. St. Louis and Boston note that orders \r\nfor capital goods are rising, and Cleveland reports that machine \r\ntool companies in the area are expecting a boom in new orders. \r\nIndications of rising plant and equipment outlays were also \r\nmentioned by other Banks, including Dallas, Philadelphia and New \r\nYork.\nAgainst this background, reports from a number of Banks, including \r\nCleveland, St. Louis, Richmond and Chicago, pointed to a further \r\nimprovement in the industrial production picture, with \r\nmanufacturers' new orders, shipments, and backlogs on the rise. \r\nCleveland reports strong demand for steel, and that output in \r\ncertain other durable good industries that had been sluggish since \r\n1970 is beginning to rise. St. Louis notes that all manufacturing \r\nindustries in that District reported higher levels of output in \r\nrecent months. The Texas production index reached record levels. A \r\nnumber of Districts, including Cleveland, reported constraints on \r\nproduction stemming either from capacity limitations, difficulties \r\nin obtaining supply, fuel shortages (in part due to cold weather), \r\nor from a shortage of skilled labor.\nMost reports on construction suggest that total activity in that \r\nindustry, on balance, has stabilized at or near recent high levels. \r\nIn certain areas, including the Richmond and St. Louis Districts, a \r\nrise in nonresidential construction offset declines in residential \r\nbuilding activity.\nThere were indications that the employment picture has continued to \r\nimprove somewhat. Boston reports tightness in some labor markets in \r\nthe midst of pockets of high unemployment. Cleveland notes that \r\nemployment in that District continues to expand at a more rapid rate \r\nthan in the nation. Richmond reports a severe shortage of textile \r\nworkers, and Chicago, St. Louis and Dallas all note increases in \r\nemployment in their areas.\nConcern over inflation remains in evidence. Philadelphia reports \r\nthat over one-half of the respondents in its monthly business \r\noutlook survey expect to pay higher prices over the next six months. \r\nAtlanta states that the main concern of businessmen is that \r\ninflationary pressures will mount. Dallas, St. Louis and Boston \r\nrespondents voiced expectations of further price increases. \r\nRespondents in a number of Districts remarked that the rise in \r\ncertain farm products would eventually be reflected at the retail \r\nlevel.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1973-01-10T00:00:00 | /beige-book-reports/1973/1973-01-ri | "Beige Book Report: Richmond\nJanuary 10, 1973\nAccording to our latest survey of businessmen and bankers, most \r\nFifth District economic indicators either have recorded further \r\ngains or have shown no significant change. Manufacturers' shipments, \r\nbacklogs, and new orders increased again in the past month, while \r\nretail sales, including sales of automobiles, continued to expand. \r\nFollowing increases in the last several months, manufacturing \r\nemployment and residential construction have apparently stabilized \r\nat high levels. Severe labor shortages, reported in several areas of \r\nthe District, have restricted the output of textiles and furniture. \r\nOptimism concerning the economic outlook remains high among District \r\nbusinessmen and bankers.\nManufacturing activity in the District continues in a strong \r\nadvance, with further gains in shipments, new orders and backlogs \r\nreported. While strength appears to be widespread, textile producers \r\nin particular seem to be benefiting from the economic expansion \r\nunder way. Further declines in inventory levels were reported, but \r\non balance manufacturing respondents believe that inventory levels \r\nrelative to desired levels are now about right. A sizable number of \r\nmanufacturing firms continue to report that current plant and \r\nequipment capacity is at lower than desired levels.\nOur latest survey shows a strong employment picture in the District. \r\nManufacturing respondents indicated no change in employment but \r\nsizable increases in hours worked per week. Trade and service \r\nrespondents reported increases in both employment and hours worked \r\nper week, and most banking respondents believe that employment has \r\nincreased in their areas. A severe shortage of labor, reported in \r\nseveral areas of the District, is particularly troublesome to \r\ntextile and furniture producers and has apparently restricted output \r\nincreases. Both manufacturers and retailers continue to report \r\nincreases in wages and prices received.\nSurvey responses indicate further increases in retail sales \r\nthroughout the District. More than 85 percent of the banking \r\nrespondents reported that retail sales rose on a seasonally adjusted \r\nbasis during the last month. One half of the trade and service \r\nrespondents reported gains in general retail sales, while increases \r\nin automobile sales were reported by three fourths of the banking \r\nrespondents.\nLoan demand at reporting banks appeared to be of greater than \r\nseasonal strength, with increases reported in business, mortgage, \r\nand consumer loans. More than 85 percent of the banking respondents \r\nindicated further increases in consumer loans. One large banking \r\nrespondent reported business loan demand at an all-time high for his \r\ninstitution. For the first time in several months, banking \r\nrespondents reported a slight decline in residential construction in \r\ntheir areas. Increases in nonresidential construction continue to be \r\nreported, however. Nonresidential construction has benefited from \r\nnew industries locating in the District and from sizable plant \r\nexpansions by several manufacturing firms.\nDistrict farmers' cash receipts from farm marketings during January-October 1972 were 8 percent above those a year earlier, compared \r\nwith a 10 percent gain nationally.\nMost businessmen and bankers in the District remain optimistic about \r\nthe general economic outlook. More than 60 percent of the banking \r\nrespondents expect an improvement in business activity in their \r\nareas in the immediate future. Optimism about the business outlook \r\namong textile producers seems especially high.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1973-01-10T00:00:00 | /beige-book-reports/1973/1973-01-ny | "Beige Book Report: New York\nJanuary 10, 1973\nAn optimistic tone regarding the economic outlook characterized the \r\nviews expressed by Second District directors and other leading \r\nbusinessmen contacted recently. Retailers enjoyed a very good \r\nChristmas season. Business confidence was reported to have \r\nstrengthened further, but no signs of an emerging \"boom\" psychology \r\nwere detected. Apart from isolated instances, industrial product \r\nmarkets have not tightened any further of late, and in general \r\nindustrial prices have risen only in response to production cost \r\nincreases. The unemployment picture has improved on balance, and \r\ngrowing shortages of skilled and semi-skilled workers were reported.\nMost respondents reported that holiday sales in their area had been \r\nexceptionally good\u2014well above year-ago levels and also generally \r\nwell above earlier expectations. The president of a large retail \r\nconcern with nationwide outlets said his firm's sales during this \r\nperiod had exceeded expectations which were already \"very high to \r\nbegin with\". One director observed that sales during the week after \r\nChristmas were also unusually good, presumably indicating that \r\nconsumers were still in a bargain-hunting mood.\nThe Buffalo branch directors felt the current well-balanced \r\nexpansion has given businessmen an optimistic outlook, with \r\nexpectations now widespread that growth would continue throughout \r\n1973. A senior official of a large upstate manufacturer, who felt \r\nthat business confidence had improved greatly of late, said this \r\ndevelopment was now being translated into increased orders, \r\ninventories and plant and equipment outlays. The president of a \r\nlarge retail firm also felt that strength in the overall business \r\nsituation was likely to continue over the months ahead. Generally \r\nsimilar sentiments were expressed by other directors and business \r\nleaders. Concern, however, continued to be voiced by some of the \r\nrespondents over the uncertainties surrounding wage-price controls \r\nand Government spending.\nRegarding the raw materials and industrial products markets, a \r\nmajority of the directors detected no widespread tightening in these \r\nmarkets at this time, although there were reports of scattered tight \r\nspots. However, the senior official of the large upstate industrial \r\nfirm did state that while the most outstanding example of tightness \r\nso far was in the lumber industry, conditions in other industries \r\nmight become tighter if price controls prevent normal market forces \r\nfrom expanding supplies. Several other directors also reported that \r\nbuilding materials were in short supply, and an upstate owner-operator of a large agricultural enterprise commented that \r\npaperboard and some textile products seemed harder to obtain. It was \r\nalso reported that delivery of raw materials in the automotive parts \r\nbusiness has stretched out from the normal three to four weeks to \r\nseven to eight weeks. The New Jersey banker reported that several \r\nfirms in his area were adding second and third shifts to keep output \r\nin line with incoming orders.\nOn the price front, respondents expressing an opinion stated that \r\nthey were not aware of any increases in industrial prices which did \r\nnot appear to be directly related to cost increases. With respect to \r\nagricultural prices, however, an upstate director engaged in \r\nagriculture noted that short supply and high demand had resulted in \r\n\"drastically\" increased prices for apples and for livestock and \r\npoultry feeds, the latter being reflected in higher milk and egg \r\nprices.\nAccording to most respondents, there is no general shortage of labor \r\nin the Second District, but conditions are tight in scattered \r\nlocalities and widespread shortages of skilled workers exist. The \r\nlabor market in the Rochester area was said to be quite tight, with \r\na large number of vacancies open for skilled labor. Labor conditions \r\nin Albany also were described as tight, reflecting in part the \r\ncontinued growth in government-related employment. A New Jersey \r\nbanker not only reported a shortage of skilled blue-collar workers \r\nin his area, but noted that there was some difficulty in obtaining \r\nemployees in the banking field as well. Most other directors also \r\nmentioned shortages of skilled workers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1973-01-10T00:00:00 | /beige-book-reports/1973/1973-01-ph | "Beige Book Report: Philadelphia\nJanuary 10, 1973\nMost Third District businesses which were contacted report continued \r\nhealthy expansion. Production activity has leveled off a bit but is \r\nstill moving upward. Employment opportunities are currently static \r\nbut are expected to be better in the months ahead. Retail sales are \r\nhigh. Inventory investment is increasing a bit and is expected to \r\naccelerate, and many firms are increasing their plant and equipment \r\noutlays. Construction activity is progressing at a moderate rate \r\nwith residential building ahead of other types of construction. Area \r\nbankers report rising deposits. Loan demand is good, with consumer \r\nand mortgage loans being the strongest. On the darker side, \r\ninflationary expectations continue high.\nProduction activity has leveled off somewhat at most of the firms \r\nresponding to this Bank's monthly business outlook survey. The \r\nmajority of firms report no current change in new orders and \r\nshipments; most of the remaining firms are experiencing increases, \r\nhowever. Over half the firms have rising production schedules for \r\nthe next six months. This represents slightly less production growth \r\nthan was reported last month.\nCurrent employment demand is holding steady with over three fourths \r\nof the surveyed firms reporting no changes in their number of \r\nemployees or their average workweek. However, almost one third of \r\nthe business outlook survey respondents do expect to hire more \r\nworkers within the next six months. Retail sales are high. Area \r\ndepartment stores and auto dealers both report strong consumer \r\ndemand.\nBusiness inventories are currently being increased at about one \r\nthird of the firms surveyed, while over half of them report no \r\nchange in inventories. During the next six months the picture is \r\nbetter, with 50 percent of the firms reporting plans to increase \r\ntheir inventories.\nAlmost half the firms contacted in this District are increasing \r\ntheir plant and equipment during the next six months, and nearly all \r\nthe rest of the firms are maintaining their present plant and \r\nequipment facilities.\nHome construction activity in the Third District is expanding, \r\nparticularly in the suburbs and at the beach-resort areas. \r\nNonresidential construction remains flat at a high level. Public \r\nworks projects are hardly moving at all. In the Third District, \r\ntotal construction outlays are expanding but at a slower rate than \r\nthe national average.\nInflationary expectations remain high. Almost one third of the \r\nresponding firms report paying higher prices, while only 10 percent \r\nof them are charging higher prices. Looking ahead six months, over \r\none half expect to pay higher prices and almost one third plan on \r\nincreasing the prices they charge.\nLocal banks report that deposits are increasing a bit more rapidly \r\nnow. Some demand deposits are coming in. The local bankers report \r\nthat time deposits can be easily increased if the bank is willing to \r\npay a high enough savings rate. Loan demand is good. Most banks \r\nreport strong demand for consumer and mortgage loans. But, one large \r\nbank reported that its rate of consumer loan delinquencies is at an \r\nall-time high. The senior officer reporting this fact attributed it \r\nto easier consumer loan criteria and a change in public morality. \r\nBusiness loans are increasing at most of the banks contacted.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-cl | "Beige Book Report: Cleveland\nDecember 19, 1972\nThe pace of business activity in the District has become noticeably \r\nstronger in recent months, and some signs of tightening in resource \r\nutilization are apparent. Improvement in the manufacturing sector \r\ncontinues to be robust. Gains in retail sales have been sizable, and \r\nbanks are experiencing heavy demand for consumer loans, especially \r\nfor auto financing. Most of the large banks are highly liquid, \r\nreflecting large deposit flows, and consumer and mortgage loan \r\ndemand remains strong. Business loan demand seems to be following a \r\nnormal seasonal pattern but is short of expectations.\nThe recent behavior of the insured unemployment rate provides some \r\nindication of the increasing tightness in labor markets in the \r\nDistrict. The insured unemployment rate has declined to about 2 \r\npercent in recent months from a high of more than 4 percent that was \r\nreached in late 1971. (The prerecession low was 1 percent.) Gains in \r\nnonfarm payroll employment have been sizable since midsummer, and \r\nthe improvement in manufacturing employment has been more pronounced \r\nin the District than in the Nation.\nPreliminary results of our latest survey of District manufacturers \r\nindicate that the pace of industrial activity in this area is \r\nbecoming particularly strong. For the month of November, our \r\ncomposite diffusion index of eight key items rose to the highest \r\nlevel since early 1966. (The composite diffusion index conforms \r\nclosely to the national index of leading indicators before trend \r\nadjustment.) Responding firms reported substantial gains in new \r\norders, shipments, and backlogs during November but only limited \r\nstrength in inventory accumulation. Extensions in delivery times \r\nwere reported by an increasing percentage of firms in the survey. \r\nEmployment and the workweek rose sharply last month. The diffusion \r\nindex for prices paid, which had remained in the 60 percent area \r\nbetween February and October, jumped to 67 percent last month. Firms \r\nresponding expect a continuation of the strong upward pace in \r\nDecember in all survey items except inventories.\nEconomists from major steel companies in the District report that \r\nshipments will be somewhat stronger than usual in December. Some \r\ncustomers are placing orders now to beat the price increases, \r\neffective after the first of January, on selected products. \r\n(Bethlehem Steel announced they will not change steel sheet and \r\nstrip prices until April 1.) Current orders for steel plates and \r\nstructural steel are showing a seasonal increase, reflecting a \r\npickup in machinery production. Steel orders from consumer goods \r\nproducers are still very strong. One major area of weakness in the \r\nsteel industry stems from the railroad industry. Despite the \r\nshortage of freight cars, the railroads have been unwilling to make \r\ncommitments for new freight cars because of the possibility for \r\nGovernment subsidies. (Congress had considered such legislation.) \r\nThe steel industry economists are projecting 1973 shipments of 96 \r\nmillion tons or better, a gain of 5 percent from this year. (The \r\nsteel industry's previous record year was 95 million tons in 1969.)\nOn the financial side, bankers throughout the District emphasized \r\nthe continuing strength in mortgage loans, with little sign of \r\nslackening thus far. A few reports, however, suggest that bankers \r\nexpect some slackening in residential construction in 1973. One \r\nbanker said the condominium market in Cleveland seems to be \r\nsaturated; another noted that apartment overbuilding is a problem in \r\nColumbus; and a third banker mentioned overbuilding of HUD units in \r\nPittsburgh. (In addition, he spoke of natural gas shortages limiting \r\nhomebuilding in that area late next year.)\nThe observed strength of retail sales is also reflected in heavy \r\ndemand for consumer credit, according to banks contacted. As yet, \r\nnone of the banks are experiencing any abnormal delinquency \r\nproblems, however. According to respondents of some of the largest \r\nbanks in the District, business loans have been growing about in \r\nline with normal seasonal patterns, but somewhat below expectations. \r\nLoans for capital spending and inventory accumulation have fallen \r\nshort of expected paths, in part reflecting the huge cash flow of \r\nmany businesses. Major banks in Pittsburgh, Cleveland, and \r\nCincinnati reported they are in highly liquid or comfortably liquid \r\npositions and that they plan to participate heavily in the \r\nforthcoming Treasury financings.\nDemand, time, and savings deposit flows have been very strong in \r\nmajor centers. One exception, however, is western Ohio, where \r\ndeposit flows were described as moderate. Farmers in that area have \r\nsustained extensive financial losses because extremely bad weather \r\nruined a significant share of corn and soybean crops.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-su | "Beige Book: National Summary\nDecember 19, 1972\nEconomic activity around the Nation is maintaining its forward \r\nmomentum according to reports from the twelve Districts. And, the \r\noutlook for 1973 ranges from optimistic in several Districts to \r\n\"almost universally ebullient\" in the Seventh District. Orders, \r\ninventories, and shipments of manufacturers were reported on the \r\nrise, and manufacturing employment is expanding. Retail sales are \r\nstrong, and the 1972 Christmas season is expected to result in sales \r\nwell above the 1971 level. Construction activity has generally \r\nremained at high levels or expanded further, but signs of weakness \r\nin construction were noted by several Districts. With the economy \r\ncontinuing to expand, shortages of labor and materials were noted as \r\nemerging problems. Wet weather has curtailed the harvest of several \r\ncrops and inflicted some losses, but the overall farm income \r\nsituation remains favorable. Loan demand continues strong at banks, \r\nbut trends in deposits have varied significantly between Districts.\nManufacturing activity was reported on a noticeable upswing \r\naccording to survey results reported by the Cleveland, Richmond, and \r\nMinneapolis banks. Steel shipments were cited as especially strong \r\nin the Cleveland report, and steel economists predicted a record \r\nyear for steel shipments in 1973. Chicago noted that auto and truck \r\nproduction was at high levels and further gains were expected in \r\n1973. However, in the Philadelphia District, manufacturers reported \r\na lull in their December orders while maintaining an optimistic view \r\nabout the next six-month period.\nThe increase in business activity continues to generate expectations \r\nof higher levels of capital spending. Several directors of the \r\nBoston bank anticipated large increases in capital spending in 1973 \r\nbecause of the approach of production to capacity levels. Atlanta \r\nreported that the construction of numerous small plants had been \r\nannounced recently in the Southeast, and Chicago indicated that auto \r\nmakers were accelerating their capital spending plans. However, St. \r\nLouis reported complaints from businessmen in their District that \r\nprofit margins were not sufficient in some industries to stimulate \r\nplant and equipment spending even though utilization rates were near \r\ncapacity.\nAlthough construction activity is still characterized as strong in \r\nmost Districts, there is growing concern about possible overbuilding \r\nof multi-family residential units. Cleveland, Boston, New York, San \r\nFrancisco, and Minneapolis all indicated that apartment and/or \r\ncondominium construction may be excessive in parts of their \r\nDistricts. Although several Districts suggested the possibility of a \r\ndecline in housing activity in 1973, the extent of the possible \r\ndecline was not large. Builders in the St. Louis District were \r\nreported to be optimistic about further gains in construction in \r\n1973, including an increase in single-family housing for the St. \r\nLouis metropolitan area. Atlanta reported numerous large-scale \r\nconstruction projects\u2014both residential and nonresidential\u2014in the \r\nSoutheast, especially in Atlanta and in central Florida.\nRetail sales are rising and the outlook for the months ahead is \r\nfavorable. All of the Districts commenting on retail trade indicate \r\nthat 1972 Christmas sales should be well ahead of last year. San \r\nFrancisco and Chicago noted that luxury and \"big ticket\" items were \r\nselling well. And Kansas City reported that the strong auto sales \r\nincluded many of the more expensive models or models with large \r\namounts of optional equipment. Although reporting retail sales as \r\ngenerally good, Minneapolis indicated that sales of winter \r\nrecreational vehicles had not been up to the earlier expectations of \r\none manufacturer.\nEmployment is expanding in most areas and declines in unemployment \r\nwere mentioned by several Districts. Dallas reported a record level \r\nof employment in the Eleventh District states in October as a result \r\nof widespread gains. In the Third District, Philadelphia noted that \r\nthe unemployment rate had fallen from 5.7 to 4.5 percent in the last \r\nthree months. Atlanta indicated that unemployment rates in several \r\nsoutheastern states were at their lowest levels in years. With the \r\ngains in employment, some signs of labor shortages were reported by \r\nthe Atlanta, St. Louis, Richmond, and Chicago Districts. And Chicago \r\nnoted that turnover rates and absenteeism were rising at firms in \r\nthe Seventh District.\nThe generally favorable agricultural situation has been set back \r\nsomewhat by wet weather in the Midwest, Southeast, and Southwest \r\nthat delayed the soybean, sorghum, and cotton harvests. Kansas City \r\nindicates that the production of soybeans and sorghum will fall \r\nbelow the November crop report estimate, and Atlanta cited a loss of \r\n30 million bushels of soybeans in Tennessee. The extent of the \r\nlosses in the Chicago District was uncertain, but it was noted that \r\nthe overall farm outlook was still the most favorable in many years. \r\nDallas reports that the cotton yield continues to look good, but the \r\ndelay in harvesting may hurt the quality of the crop. While the wet \r\nweather hurt production in most areas, Florida citrus and vegetable \r\ngrowers were aided by the moisture.\nLoan demand was reported to be generally strong by Dallas, Kansas \r\nCity, and Richmond. Consumer installment loans and mortgage loans \r\nwere mentioned as areas of strength by bankers in the Cleveland and \r\nPhiladelphia Districts. The trend of bank deposits varied \r\nconsiderably among the Districts. Cleveland reported a strong rise \r\nin deposits while Kansas City and Philadelphia indicated that \r\ndeposits were largely unchanged. Bankers in the Kansas City District \r\nare trying to attract additional deposits by offering higher rates \r\non CD's than currently prevail in the New York market. Banks are \r\napparently not experiencing a shortage of funds, and Cleveland \r\nreports that most banks in the Fourth District are highly liquid.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-ch | "Beige Book Report: Chicago\nDecember 19, 1972\nThe economic outlook in the Seventh District, as indicated by views \r\nof lenders, manufacturers, retailers, and farmers, is almost \r\nuniversally ebullient. The last residuals of recession psychology \r\nappear to be evaporating. Expectations of further substantial gains \r\nin activity in 1973 are very widely held. Margins of unused \r\nresources of facilities and manpower are shrinking, and many \r\nindustries are operating at effective capacity. Inventories are \r\nuncomfortably low in both hard and soft goods lines. Residential \r\nconstruction is the only major sector that appears likely to show a \r\ndecline in 1973, and overall, such a decline may be small in total. \r\nThe extent of crop losses because of adverse weather remains \r\nuncertain.\nFourth quarter retail sales are heading for a record by a wide \r\nmargin. Purchases of luxury goods and big ticket items are \r\nespecially strong, and customers are using credit freely. In some \r\ncases, low inventories are impeding sales.\nHiring is increasing at all levels including managers, \r\nprofessionals, and manual workers\u2014both skilled and unskilled. \r\nStaffing second and third shifts and filling dirty or hard jobs are \r\nmore difficult. Among the trained workers in short supply are \r\naccountants, experienced engineers, welders, pipefitters, and \r\nmachinists. Employers report higher labor turnover rates and \r\nincreased absenteeism.\nWith ample evidence of a substantial improvement in the job market, \r\nthe problems of central cities continue to increase with high levels \r\nof joblessness (not necessarily \"unemployment\" as defined) and \r\ngrowing welfare rolls.\nProducers of both cars and trucks expect gains in output in 1973 \r\nfrom record levels in 1972. Long waiting lists exist for various \r\nmodels of cars and trucks. Plans for capital expenditures are being \r\naccelerated by motor vehicle companies.\nOther industries operating at virtual capacity are foundries, forge \r\nshops, bearings and other parts and components, lumber, gypsum \r\nboard, color television, furniture, recreational vehicles, petroleum \r\nrefining, paper, some basic chemicals, machine tools, and important \r\ntypes of construction machinery. Some plants have been taken out of \r\nproduction in recent years, and some operations have been scaled \r\ndown for one or more of the following reasons: cost cutting, \r\nconsolidation of operations, pollution standards, OSHA rulings, and \r\nforeign competition.\nShortages, or incipient shortages, are reducing the desire of some \r\ncompanies to compete actively for new business or take on new \r\naccounts. Some are shifting production to the \"top of the line.\"\nProspects for a substantial rise in total capital expenditures in \r\n1973, including manufacturing buildings, appear excellent. \r\nConsulting firms that specialize in product development and long-range planning report sharp increases in new business in the past \r\nmonth or two, after a long dry spell.\nShortages of natural gas and fuel oil are developing in the face of \r\na very cold winter thus far. Local experts view the petroleum \r\noutlook very seriously and are predicting rapidly growing dependence \r\non foreign sources with a large adverse impact on the balance of \r\npayments and the domestic price level. Reports of the enormous LNG \r\ndeal with Russia are viewed skeptically.\nBecause of pressure to keep production moving, some producers \r\ncomplain that quality control problems have increased. At the same \r\ntime, warranty coverage is being extended, and consumer-oriented \r\nlegislation is highlighting the need to avoid defects.\nAccountants are disturbed by the steps some business firms are \r\ntaking to avoid reporting profit margins in excess of the \r\nguidelines. These practices are said to resemble those that \r\ndeveloped when excess profits taxes were in effect.\nThe extent of losses of corn and soybeans caused by adverse weather \r\nis still uncertain. Muddy ground is now frozen hard, but recent \r\nsnows have impeded harvests. Nevertheless, actual losses may yet be \r\nquite small overall. Even if a substantial shortfall occurs, the \r\ntotal effect on farm income may not be adverse because of higher \r\nprices. About three-fourths of the Russian-bound grain is not yet \r\nshipped from U.S. ports. Attempts will be made to move the grain \r\nbefore export subsidies expire next May. In general, the atmosphere \r\nin farm areas is the most prosperous in many years.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-sf | "Beige Book Report: San Francisco\nDecember 19, 1972\nIn the opinion of our directors, economic activity in the Twelfth \r\nDistrict remains strong. Consumer retail spending is expected to \r\nreach record levels during December. With the possible exception of \r\nconstruction, most other sectors are maintaining a steady rate of \r\nexpansion.\nRetail sales are reported to be running at 8 to 12 percent above \r\nlast year's level throughout the District. In some cases, gains of \r\n15 percent are mentioned. The demand for consumer goods is broadly \r\nbased, but it is strongest in such lines as sporting goods, \r\nbicycles, and home furnishings. Some of our respondents also think \r\nthat there is a tendency to buy higher-priced lines and to upgrade \r\nin terms of quality.\nA similar situation exists for automobiles. Sales are generally good \r\nthroughout the District. In a few cases, demand for imported cars is \r\ndescribed as weak, but in other areas foreign car dealers are \r\nexperiencing good sales. The principal problem for domestic car \r\ndealers is obtaining deliveries from the manufacturers, and, as a \r\nresult, low inventories are preventing sales from reaching even \r\nhigher levels. Dealers expect this strong demand to be maintained \r\ninto next year.\nConstruction activity is continuing to hold up, but there are more \r\nsigns of weakness. Multiple unit construction is falling off because \r\nof overbuilding in many areas, but single-family construction and \r\ncommercial projects are keeping overall demand steady. For example, \r\nin Seattle, construction has started on the first large downtown \r\ndepartment store in thirty years. Current rates of construction may \r\nnot be maintained, however, and one large California bank has \r\nforecast a 25-percent decrease in the state's building activity in \r\n1973.\nIn California, recent court decisions requiring environmental impact \r\nstudies on large projects and the passage of a constitutional \r\namendment in November imposing controls on use of coastal areas are \r\ncausing some uncertainty. A few banks are reported to be restricting \r\nconstruction loan funding on affected projects until the legal \r\npicture is clarified. But at the moment, even in California, \r\nconstruction overall is still showing considerable strength.\nThe timber industry is showing no signs of any slackening in \r\nactivity. Lumber prices are higher, and mills in Oregon and \r\nWashington are working full time. According to one director, the \r\ndemand for timber will be maintained in the coming year because of \r\nthe need to build up inventories which presently are very low.\nGood crops and prices are expected in most agricultural areas of the \r\nDistrict. Fall planting has been completed, and the crop prospects \r\nfor wheat are excellent. Beef prices are holding steady, although \r\nthe existing levels may not cover the costs for some feedlot \r\noperations. As a result of record crops and prices in 1972, farmers \r\nare making heavy purchases of new equipment and adding to strong \r\nretail demand.\nDistrict banks report that demand for loans to support inventories \r\nis quite strong, but as yet there are no signs of a general jump in \r\nconsumer installment credit demand. Some banks report record \r\nincreases but others have experienced no major increase. Several \r\nbankers suggest current spending is being financed by heavier \r\nreliance upon past savings than upon credit. On the other hand, many \r\npurchases are being made through bank credit cards and the effects \r\non credit demand will not be fully apparent until January when \r\ncustomers decide upon the proportion of their balances to repay.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-ph | "Beige Book Report: Philadelphia\nDecember 19, 1972\nThe outlook is still optimistic in the Third District; approximately \r\n65 percent of the respondents to this Bank's monthly business \r\noutlook survey report expectations of increased business activity \r\nduring the next six months. However, some area businessmen do expect \r\na temporary lull in production between now and Christmas. Current \r\nemployment opportunities are unchanged, but the longer-run outlook \r\nis better. Over 40 percent of the responding firms are planning to \r\nincrease their investments in inventory and plant and equipment \r\nduring the next six months. Home construction continues at a high \r\nlevel. Most banks' deposits are flat while their consumer, small \r\nbusiness, and mortgage loans continue to expand. On the darker side, \r\ninflationary expectations are on the rise.\nSome lull in production for December is showing up in the responses \r\nfrom businessmen polled in the Third District. Three times as many \r\nfirms report increases as decreases in their new orders and \r\nshipments for November. But, for December, the decreases in planned \r\nproduction slightly exceed the increases. The longer-run outlook \r\nstill remains bright, however, as over half the area businessmen \r\nreport plans for increased production during the six months ahead.\nOver 85 percent of the respondents to the Third District's business \r\noutlook survey report no change in the number of persons they \r\nemployed or the length of their average employee's workweek during \r\nNovember.\nDuring the next six months, over half the firms still report no \r\nchange in their employment plans, but, one-third of them do report \r\nplans to increase the number of persons in their work force. The \r\nunemployment rate in the Third District has just fallen to 4.5 \r\npercent from 5.7 percent three months ago.\nOnly a few more firms report increased inventories for November than \r\nreport decreases, with the majority having no change. Looking six \r\nmonths into the future, however, 40 percent of the firms report \r\nplans to increase their inventory investment. Similarly, over 40 \r\npercent report plans to increase investment in plants and equipment \r\nduring the next six months.\nHome construction activity in the Third District is continuing \r\nstrong at the high levels of past months with very large increases \r\noccurring in the Atlantic City area. Nonresidential construction is \r\nflat. Public works construction in the Third District is off \r\nsubstantially. However, total construction is still rising.\nArea bankers report that demand deposits are flat. Time deposits are \r\nincreasing slowly at some banks. Small business, consumer, and \r\nmortgage loans continue to be in strong demand, but few large \r\nnational corporations are increasing their borrowings at this time.\nNot one respondent to this month's outlook survey reports \r\nexperiencing any decrease in the prices he pays or the prices he \r\nreceives. On the six-month horizon, over half the firms expect to \r\npay higher prices and over one-third expect to receive higher \r\nprices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-ny | "Beige Book Report: New York\nDecember 19, 1972\nReports from our directors and other business leaders recently \r\ncontacted indicate that economic activity remains very strong. \r\nRespondents cited the high and improving degree of business \r\nconfidence and described the outlook for 1973 in generally favorable \r\nterms.\nMost respondents characterized retail sales as very good now that \r\nthe holiday season is underway. The chairman of the board of a \r\nRochester department store, who earlier had been somewhat skeptical \r\nabout consumer spending, said that Christmas sales were likely to \r\noutpace last year's showing by a wide margin, and this view seemed \r\nto be generally shared. A director of the Buffalo branch attributed \r\nthe buoyancy of consumer spending to the expectation of a Vietnam \r\nsettlement, increased personal income, the removal of election \r\nuncertainties, and the stability accompanying wage-price controls.\nThe economic outlook for 1973 was described as favorable by all \r\nrespondents although the degree of optimism varied. In the view of \r\nmost directors, production, sales, and employment are expected to \r\nshow further advances. One director felt that the growth in output \r\nand employment would be almost as rapid as the gains experienced \r\nthis year. Several respondents said that production is likely to \r\noutpace sales because of the need to rebuild inventories. On the \r\nother hand, a director associated with the metals industry commented \r\nthat inventory accumulation by the metals-using industries was being \r\nheld down by the continued presence of considerable excess capacity \r\nand a weak price outlook. A director of the Buffalo branch, who is a \r\nsenior official of a large upstate manufacturer, suggested that \r\nunemployment will average about 5 percent for 1973 as a whole. He\r\nadded that wage increases might moderate a bit but that advances in \r\nprices will probably be about the same as in 1972.\nIn this connection, almost all of the respondents were agreed that \r\nwage-price controls would remain necessary next year. A bank \r\nchairman said the program should be maintained for at least a while \r\nlonger, although he felt that it should not become a permanent \r\nfeature of the economy. Another director said that the program, at \r\nleast in some form, should be continued for another 9 to 12 months. \r\nOnly one director, associated with the metals industry, expressed \r\nreservations about the program. He said that the metals industry \r\nfavors eliminating the controls and noted that fluctuations in \r\nuncontrolled raw materials prices combined with controls on the \r\nprices of final products had resulted in distortions and \r\ninefficiencies in overall pricing.\nAll of the directors detected a high and improving degree of \r\nbusiness confidence in the economic situation, but the current state \r\nof confidence was described in terms that fell short of exuberance. \r\nChanges in inventory spending were variously described as minimal to \r\nrobust. One director said that inventory controls were still very \r\ntight, while another in the automobile parts business said that \r\ninventory spending is increasing sharply as a result of a tightening \r\nsupply situation and slower deliveries. Several respondents noted \r\nthat there was some progress in implementing capital spending \r\nprograms which earlier had been slowed down or held in abeyance \r\npending clarification of the overall economic outlook.\nThe chairman of a large New York bank said there are signs of \r\nserious overbuilding of apartments in some parts of the country and \r\nwas concerned about the proliferation and credit status of real \r\nestate investment trusts and land development companies. He \r\nsuggested that these enterprises may represent the one significant \r\nweakness in our overall credit structure. Another director thought \r\nthat overbuilding would become a national problem if housing starts \r\nremained at their high 1972 level. However, he expected a reduction \r\nin housing starts of about 10 percent during 1973 because of \r\nshortages of building materials and reduced availability of mortgage \r\nmoney and felt that this would prevent overbuilding from becoming a \r\ngeneral problem.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-ri | "Beige Book Report: Richmond\nDecember 19, 1972\nFifth District business conditions continue to improve, according to \r\nthe results of our most recent survey of businessmen and bankers. \r\nManufacturing shipments, backlogs, and new orders continue to \r\nreflect the strength evident in recent months. The retail sales \r\npicture is bright with better than seasonal increases being \r\nreported. Further increases in employment and hours worked per week \r\nwere reported, with labor shortages restricting the output of some \r\nfirms. Widespread increases in wages and prices received were \r\nreported. Businessmen and bankers in the District remain optimistic \r\nabout the prospects for business during the next several months.\nDistrict manufacturers report that shipments, new orders, and \r\nbacklogs continued the strong upward momentum recorded last month. \r\nIncreases in these indicators of business activity were reported by \r\napproximately 40 percent of all manufacturing respondents. While the \r\nincreases appeared to be fairly general, strength was especially \r\nevident among textile and apparel producers. Boxcar shortages \r\ncontinue to plague some District manufacturers, and furniture \r\nproduction is reportedly being restricted by a shortage of both \r\nskilled and unskilled labor. More than one-half of the manufacturing \r\nrespondents indicated a decline in inventory levels, but inventories \r\nrelative to desired levels were reported to be about right by most \r\nrespondents. Over the last several months, a growing number of \r\nmanufacturing firms have reported that current plant and equipment \r\ncapacity is at lower than desired levels.\nEmployment expansion continues and more firms report a shortage of \r\nboth skilled and unskilled labor. Both manufacturers and trade and \r\nservice respondents show increases in employment and hours worked \r\nper week. On balance, bankers report increases in employment in \r\ntheir areas. Both manufacturers and retailers report that wages and \r\nprices received have increased during the last month.\nThe retail sales picture in the District remains bright. More than \r\n50 percent of the bankers surveyed indicated that general retail and \r\nautomobile sales have increased since the last reporting period. \r\nContacts with regular survey respondents, directors and other \r\nbusinessmen, in the District suggest that department store sales are \r\nstrong.\nIn general, loan demand increased at responding banks in the past \r\nmonth. Increases were reported for business, mortgage, and consumer \r\nloans, with more than 50 percent of the banking respondents showing \r\nan increase in consumer loans. Banks also report continued strength \r\nin the construction sector, with nonresidential activity being at a \r\nsomewhat higher level than residential activity.\nDistrict farmers' total cash receipts from farm marketings during \r\nthe first nine months of 1972 were 10 percent above those in the \r\nsame period last year, with gains of 14 percent in crop receipts and \r\n7 percent in receipts from livestock. Record high prices averaging \r\n10 percent above a year earlier highlighted the 1972 flue-cured \r\ntobacco marketing season. Volume of marketings was 5 percent \r\nsmaller, however, so value of sales increased only 5 percent.\nOptimism concerning the economic outlook remains high among District \r\nbusinessmen and bankers. More than \r\ntwo-thirds of the backing \r\nrespondents expect an improvement in business activity in their \r\nareas in the immediate future.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-da | "Beige Book Report: Dallas\nDecember 19, 1972\nThe latest indicators of economic activity in the Eleventh Federal \r\nReserve District were mixed. While total employment, department \r\nstore sales, and new automobile registrations were all higher, \r\nconstruction activity slowed and the Texas industrial production \r\nindex edged downward. The rate of growth of total bank credit also \r\nslowed slightly in November. A recent survey of business economists \r\nin District states, however, revealed them to be quite optimistic \r\nabout economic conditions in 1973.\nOur respondents generally expected economic activity in 1973 to be \r\nhigher for both the Nation and their states. They were particularly \r\noptimistic about the prospects for consumer spending and plant and \r\nequipment investment. They also felt that residential construction, \r\nboth nationally and within their states, would continue strong.\nIn line with this general optimism, the majority of our respondents \r\nexpected employment gains in 1973. Most expected growth in \r\nemployment to be greater in the District than in the Nation. \r\nEmployment advances were anticipated to be particularly strong in \r\nthe service industries. Manufacturing and state-local governments \r\nwere also mentioned as sectors where employment growth was expected \r\nto be more rapid. Despite the outlook for rising employment, less \r\nthan half saw the unemployment rate declining significantly.\nThe majority of our respondents foresaw continued improvement in \r\ncorporate profits in 1973. There was also general agreement that \r\nwage-price controls would be continued, at least in some form, after \r\nApril. In fact, over half the respondents felt that controls would \r\nbe continued into 1974.\nDespite the fact that wage and price controls were viewed as \r\ncontinuing, there was almost unanimous agreement that consumer \r\nprices would be rising at a higher rate in 1973 than in 1972. Those \r\nresponding were also in agreement that the deficit for fiscal 1973 \r\nwould be greater than the Administration's estimate of $25 billion.\nThe seasonally adjusted Texas industrial production index eased \r\nslightly in October after rising sharply in September. Small \r\nincreases in the indexes for manufacturing and mining were more than \r\noffset by a sharp decline in the index for utilities. Expanding \r\ndurable goods production enabled manufacturing to post a small gain \r\ndespite a slowdown in the nondurable sector, notably, petroleum \r\nrefining. Within the durable goods sector, significant increases \r\nwere recorded by the transportation equipment and fabricated metal \r\nproducts industries. Mining also edged higher as increased \r\nproduction of natural gas and natural gas liquids outweighed a \r\ndecrease in crude oil production. The sharp decline in the index for \r\nutilities was due primarily to the decreased output of the electric \r\nutility sector, probably reflecting a larger than seasonal decline \r\nin air conditioning usage.\nHarvest of a good cotton crop has been delayed by cold, wet weather \r\nacross the District in recent weeks. Some loss in quality of cotton \r\nis expected but yield prospects continue mostly good. Otherwise, \r\nagricultural conditions remain optimistic for a year of record \r\nproduction and incomes.\nRegulatory agencies in District states continue to allow maximum oil \r\nproduction. State regulators continue to closely monitor producing \r\nconditions, however, and several fields in Texas have had production \r\nrestricted for conservation reasons. The Texas Railroad Commission \r\nhas also held hearings to determine state priorities for natural gas \r\nin case rationing should become necessary.\nConstruction activity in the District states, as measured by the \r\nvalue of contracts awarded, declined in October for the second \r\nconsecutive month. All major types of construction experienced award \r\ndecreases, but the largest decline occurred in nonbuilding \r\nconstruction.\nBoth the manufacturing and nonmanufacturing sectors recorded gains \r\nin employment in October and helped to push total employment in the \r\nDistrict states to a record level. Still, the unemployment rate \r\nremained at 4.4 percent\u2014the same as in September. All major \r\nemployment categories reported gains except mining. Increases were \r\nthe largest in the construction, durable goods, trade, and service \r\nindustries.\nSales of department stores in the District continued to advance in \r\nNovember. Among major metropolitan areas in Texas, sales were \r\nstrongest in Dallas and Houston. But San Antonio and El Paso also \r\nexperienced modest gains. New automobile registrations in the four \r\nmajor metropolitan areas of Texas increased in October.\nThe rate of growth of total loans at weekly reporting banks in the \r\nDistrict accelerated sharply in November. Reductions in bank \r\nsecurity holdings, however, held the rate of increase in total bank \r\ncredit to a somewhat slower rate than in October. Time and savings \r\ndeposits also rose sharply in November due primarily to a large \r\nincrease in large negotiable CD's outstanding.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-bo | "Beige Book Report: Boston\nDecember 19, 1972\nOur business directors reported business conditions as very strong. \r\nImprovements in machinery and aerospace orders were noted, while \r\norders in the consumer durables area were variously termed as \r\n\"steadily improving\" to \"fantastic.\" Some directors felt that the \r\nPrice Commission's profit margin rules would begin to pinch profits \r\nin the second half of 1973, while others noted current problems.\nA raw material supplier to the tire industry noted that business was \r\nexcellent, with record sales and orders in November. There is some \r\napprehension, however, that retailers are overstocking tires so that \r\nthe high level of manufacturers' sales now may be borrowing from \r\nfuture sales. A high orders backlog was noted by a manufacturer of \r\nsuperalloys who also reported that commercial aircraft engine orders \r\nwere finally getting back to respectable levels. These are \r\nreplacement engines for the 727 and 747 planes. A manufacturer of \r\ngeneral aviation aircraft also noted strong orders. Machine tool \r\norders were also reported as finally really turning up.\nSeveral directors expected large increases in capital spending in \r\n1973. Two directors noted that in a number of lines, production had \r\nalready reached capacity levels, although one director of a large \r\nconglomerate stated that most of his lines still had slack.\nA bank director whose bank does the payroll for a number of firms in \r\nthe Boston SMSA reported no increase in employment in November from \r\nAugust levels, although payrolls rose 18 percent from the previous \r\nmonth's level. Obviously, firms are still relying heavily on \r\novertime rather than new hiring.\nA New Hampshire banker reports a slowing in both savings and demand \r\ndeposit growth. Apartment building remains strong, and the demand \r\nfor mortgages almost exceeds the bank's ability to make the loans. \r\nMortgage rates are up one-fourth percent, but other rates have been \r\nsteady.\nAll our directors were asked to comment on the effects of the Price \r\nCommission's profit margin guidelines. One director said that the \r\nrecent change in the way of calculating costs (allowing the \r\ninclusion of interest on long-term debt and adjustments for divested \r\ncompanies) meant that the guidelines would not affect his firm in \r\n1973. Another director noted that the guidelines had caused some \r\ninequities. For example, a large consumer paper goods producer whose \r\ncosts had risen substantially could not raise its prices because \r\nanother large, diversified consumer goods producer, which also is a \r\nmajor supplier of consumer paper products, could not raise its \r\nprices because the latter company had hit its profit margin ceiling. \r\nThus, the first company's profits were being squeezed. This director \r\nnoted he is aware that this kind of problem is occurring in a number \r\nof firms. Two directors stated that they had recently raised prices \r\nin a number of lines and, therefore, did not expect any profit \r\nsqueeze in the first half of 1973.\nTwo of our academic correspondents this month, Professors Samuelson \r\nand Wallich, stressed that a \"well-behaved, speedy\" expansion has \r\noccurred with inventory accumulation still \"held in reserve\" and \r\nshowing signs of coming to life. Professor Wallich felt the \r\nwholesale price figures confirm an increasing rate of inflation; the \r\nbehavior of the deflator, he argued, was in part a statistical quirk \r\ndue to devaluation. Preferring a more lengthy expansion to speed at \r\nthis stage, Samuelson favored moving toward restraint. Specifically, \r\nhe would like to see a gentle rise in the Federal funds rate\u2014130 \r\nbasis points over the next year\u2014and would not be upset by a 4-percent rate of monetary growth even if it brought a substantially \r\nfaster rise over the next month or two.\nProfessor Eckstein disagreed with this viewpoint, arguing that an \r\nincrease in banks reserves at an annual rate of at least 6 percent \r\nis of critical importance. Unless the Federal Reserve accommodates \r\nthe expansion that much, \"all bets are off\" on the prevailing \r\nhandsome forecasts, as well as the hope of holding the bill rate \r\nunder 5.55 percent and the AAA utility rate under 8.0 percent during \r\n1973. The only serious danger of excess in the current outlook is in \r\nhousing, where rationality may be destroyed by the tax shelter \r\nfeature in apartment building. The bottlenecks which have been \r\nexperienced are mainly a by-product of the housing boom and are not \r\nsurprising for this stage in an expansion. There is still no \r\nprospect of a general excess demand for labor. Eckstein was dubious \r\nabout the projected amount of overwitholding refunds as well as the \r\nstimulative impact of the refunds on consumer spending.\nAll three criticized attempts to hold interest rates down \r\nadministratively. Eckstein felt it would lead to demands for more \r\nrigid interest rate controls and for capital allocation. Wallich \r\nargued it would result in serious distortions, in particular by \r\nforcing borrowing outside the banking system. This would be \r\ninstitutionally damaging and could weaken the Fed's ability to \r\ncontrol the situation. He felt the political trade-off could be \r\nbetter achieved by an increase in the corporate income tax rate. To \r\nSamuelson, the key is to gain the cooperation of labor leaders who, \r\nhe suspected, are more concerned with profits than with the prime \r\nrate. He did not feel there would be serious distortions in the \r\nshort run but suggested the problem will not disappear after the \r\nspring round of labor negotiations since any restraint on the part \r\nof labor would probably be contingent on the continuation of profit-price controls.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-kc | "Beige Book Report: Kansas City\nDecember 19, 1972\nWeather conditions in the Tenth District are adversely affecting the \r\nagricultural harvest, and according to major retailers contacted in \r\na number of large metropolitan areas in the District, slowing down \r\nChristmas shopping traffic as well. Despite this slowdown, however, \r\nsales are described as good, particularly for hard goods, and, \r\nretailers are quite optimistic for sales prospects over the \r\nChristmas season as a whole. This strength in the retail area \r\nextends into new car sales, and the more expensive models or options \r\nare reported to be in strong demand. The strength of retail activity \r\nis reflected in Tenth District banks, where several bankers noted \r\nimproved consumer attitudes toward installment buying. In fact, \r\ndemand in all major loan categories is still reported as strong, \r\nand, in the face of either flat or declining demand deposit figures \r\nin November among larger Tenth District banks, a more aggressive \r\nseeking for funds has emerged. Negotiable CD growth appears to have \r\npicked up, with several District banks paying from one-eighth to \r\none-half a percentage point more than the going New York rates.\nAdverse weather conditions over a wide area of mid-America have \r\ngreatly slowed the harvest of soybeans and feed grains this fall. At \r\nlast report, considerable acreage remains standing as heavy rains \r\nand snow have turned the fields into a quagmire of mud. Temperatures \r\nwithin the District have recently dropped below the freezing point, \r\nand many farmers are now able to move through the fields with less \r\ndifficulty. However, field losses appear to be heavy\u2014particularly \r\nfor soybeans and grain sorghum. Consequently, final production \r\nlevels likely will fall considerably short of the estimates released \r\nin the November crop report coupled with reports about additional \r\ngrain sales abroad. These developments have led to sharp price \r\nadvances in the grain markets. In the period ahead, prices likely \r\nwill remain sensitive to new rumors\u2014pro and con\u2014until the harvest \r\nis completed.\nBad weather also is blamed for slowing down Christmas shoppers, but \r\nmajor department stores throughout the District still expect strong \r\nfinishes to a year of good business. Since Thanksgiving, snow and \r\nextreme cold have cut traffic in many stores, although a few report \r\nthat their sales paces are above last year at this time. Managers \r\nreport little difficulty in finding extra clerks for the holiday \r\nseason, nor do they complain generally of problems with suppliers. \r\nFor the year to date, sales of hard goods have been especially good, \r\nnotably major appliances and furniture. Without exception, store \r\nmanagers expect strong sales into 1973, although one thinks the \r\nfirst quarter of 1972 will be hard to beat.\nNew car delivery times, for all of the big three, have doubled in \r\nmajor District cities. Sales are as good as or substantially better \r\nthan last year. Buyers seem more flush. They have more to put down, \r\nand if they don't buy the top of the line, they buy a lot of \r\noptions. Most dealers expect next year's sales to top this year's.\nAfter recording moderate to sizable gains in demand deposits during \r\nSeptember and October, the larger banks in the Tenth District \r\nreported flat or declining demand deposit figures for November. \r\nInterbank deposits were the weakest category, showing a significant \r\ndecline\u2014perhaps, as a result of the change in Regulation J\u2014but all \r\ncategories apparently were sluggish. In contrast, negotiable CD \r\ngrowth seems to have picked up. Several District banks are paying \r\nfrom one-eighth to one-half percentage point more than the going New \r\nYork rates, with an individual bank's CD inflow reportedly depending \r\non how large a premium it is willing to pay relative to those of \r\nlocal competitors. A few banks expected to add slightly to their \r\nCD's after the issuance of revenue sharing checks.\nDemand is reported still strong in all major loan categories. Local \r\ncommercial customers and consumer installment borrowers (auto paper \r\nand credit cards, in particular) were the most frequently mentioned \r\nsources of loan demand. Several bankers said that they had been \r\nconducting campaigns aimed at increasing installment loans and noted \r\nthat consumer attitudes toward installment buying had improved since \r\nearlier this year. Most agreed that the strength of retail activity \r\nwas probably the major factor. One respondent reported that term \r\nloans have been accounting for much of the strength in the bank's \r\nlending activity.\nFears of disintermediation were rare among District bankers \r\ncontacted. However, all respondents felt that somewhat higher \r\nlending rates would be justified either now or in the near future.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-mi | "Beige Book Report: Minneapolis\nDecember 19, 1972\nThe general outlook for manufacturing and retailing in the District \r\nappears bright, but some slowdown is anticipated in construction \r\nactivity. Sizable manufacturing sales gains are foreseen in the \r\nfourth quarter and the first half of 1973; District manufacturers, \r\nhowever, have yet to encounter capacity constraints and are \r\ngenerally experiencing no difficulty procuring needed workers and \r\nsupplies. District retailers are enjoying a good Christmas season. \r\nConstruction is not very encouraging in the Minneapolis/St. Paul \r\nmetropolitan area, but both residential and nonresidential building \r\nappears to be flourishing in the remainder of the District.\nResults of our fourth quarter industrial expectations survey predict \r\ncontinued expansion in District manufacturing activity. District \r\nmanufacturers reported sales up 12.7 percent from a year earlier in \r\nthe third quarter and estimated comparable gains in the fourth. They \r\nalso anticipate 11.0-percent increases in both the first and second \r\nquarters of 1973.\nThis optimistic outlook can be attributed to the District's durable \r\ngoods industries. After increasing 15.0 percent in the third \r\nquarter, sales of durable goods are expected to be up 17.9 percent \r\nfrom a year ago in the fourth quarter and then advance 14.0 and 11.2 \r\npercent in the first and second quarters, respectively. These sales \r\ngains will occur primarily in the electric and nonelectric \r\nmachinery, primary and fabricated metals, and lumber and wood \r\nproducts industries.\nNondurable goods sales, meanwhile, advanced 11.3 percent in the \r\nthird quarter and are anticipated to increase 7.4 percent in the \r\nnext two quarters, followed by a lO.8-percent gain in the second \r\nquarter of 1973.\nAlthough strong sales gains have been reported by District \r\nmanufacturers, bank directors revealed that District manufacturers \r\nare generally not bumping up against capacity limits or having \r\ndifficulty hiring workers or obtaining needed supplies. According to \r\none Wisconsin director, for example, a large manufacturer in his \r\ncommunity is expanding facilities but anticipates no difficulty \r\nadding 100 people to the work force. Several directors did report, \r\nhowever, that skilled labor is becoming harder to employ. And, one \r\nTwin Cities manufacturer stated that delivery times are lengthening \r\non some items.\nAlso according to bank directors' reports, District retailers \r\ngenerally are having a very good Christmas season. One major \r\nMinneapolis/St. Paul area retailer reported that Christmas spending \r\nso far has been very good; he expects his Christmas business to be \r\nup 10 percent or more from a year ago. One director indicated that \r\nnot only are his area's retailers optimistic about Christmas \r\nbusiness but several also anticipate business to be quite good in \r\nJanuary. A major Minnesota producer of winter recreational vehicles, \r\nhowever, reports that sales have not been up to earlier \r\nexpectations.\nConstruction activity will probably slacken in the Minneapolis/St. \r\nPaul metropolitan area during the first six months of 1973 but \r\ncontinue quite strong in the rest of the District. According to a \r\nMinneapolis/St. Paul area banker, housing sales in the Twin Cities \r\nmetropolitan area have virtually stopped, and large developers are \r\ncurtailing activities until the market improves.\nIn addition, apartment vacancy rates are quite high in this area, \r\nand little apartment construction is anticipated there in 1973. In \r\nother parts of the District, however, several directors reported \r\nquite favorable outlooks for residential construction. This optimism \r\nwas dampened only slightly by a South Dakota director who indicated \r\nthat new home prices in his area have recently risen 10 percent.\nThe prospects for nonresidential construction in the Minneapolis/St. \r\nPaul metropolitan area are not very bright either; the area already \r\nhas a surplus of office and warehouse space. But directors outside \r\nthis Twin Cities region reported a number of nonresidential \r\nconstruction projects. Efforts to meet pollution control standards, \r\nfor example, are spurring construction activity in northeastern \r\nMinnesota. And, although some consider it too early to assess \r\nrevenue sharing's impact, several directors believe those funds will \r\nstimulate public construction in their areas.\nA director associated with the construction industry foresees no \r\npickup in District highway construction during the first six months \r\nof 1973. Looking ahead in another direction, however, this director \r\nfeels that the Administration's allotted funds for sewage treatment \r\nplant construction will significantly bolster this type of \r\nconstruction, if spent, although only 45 percent of the funds \r\nauthorized are to be used in fiscal years 1973 and 1974. Local \r\ngovernments so far have received very little funding from the \r\nEnvironmental Protection Agency.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-sl | "Beige Book Report: St Louis\nDecember 19, 1972\nBusinessmen in the Eighth Federal Reserve District remain \r\noptimistic, foreseeing a vigorous business expansion in the year \r\nahead. Representative firms report sales increased in recent weeks \r\nfor all lines of output. Manufacturing continues to expand. \r\nConstruction activity is currently at a high level and is expected \r\nto rise still further next year. Employment continues to rise \r\nmoderately, and a tighter labor situation is reported over an \r\nincreasing portion of the District. Profits have increased, but some \r\nbusinessmen complain that profit margins are insufficient to \r\nstimulate new investment despite near capacity utilization levels. \r\nLoan demand continues up, and further increases in interest rates \r\nare anticipated. Excessive rain in late October and November has led \r\nto a deterioration of agricultural conditions.\nRising retail sales are reported throughout the District with the \r\nexception of the inner-city stores in St. Louis. Major department \r\nstores report sizable sales gains in November on a seasonally \r\nadjusted basis and expect the higher levels to be maintained through \r\nthe Christmas shopping season. Communities not represented by the \r\nmajor firms report that retail sales are booming. Inner-city stores \r\nin St. Louis, however, report little change in sales volume, and \r\nchains with downtown stores report that their sales growth is in \r\nsuburban stores.\nManufacturing activity continues to expand on a broad front. Major \r\nchemical companies expanded output and deliveries in the fourth \r\nquarter. Orders for plastics, fibers, carpets, chemicals, and \r\nappliances are up. Sales of electrical equipment for new plants are \r\nrising. An increasing number of manufacturing firms report overtime \r\nwork, and delivery dates are lagging further for products in short \r\nsupply. Brick plants in northeast Mississippi are not promising \r\ndelivery on current orders of brick until May.\nEmployment continues to rise, further tightening the labor markets \r\nin most District communities. Most manufacturing firms report an \r\nincrease in production workers despite major efforts to hold \r\nemployment in check. Labor shortages are reported in many of the \r\nsmaller and some larger communities in the District, and the \r\nunemployment rate is generally low. St. Louis, Evansville, and Fort \r\nSmith are exceptions and have shown little improvement in recent \r\nmonths.\nBusiness profits have generally increased with the sharp sales \r\ngains, but complaints are made that profits are still too low to \r\nprovide incentive for major investment expansion in some industries. \r\nSpecific examples include the box board industry and the lumber and \r\nwood industries.\nConstruction remains at a high level, and businessmen in the \r\nindustry are quite optimistic about the outlook for construction in \r\n1973. Reports from Arkansas and Tennessee show a continued high \r\nlevel of housing starts during the autumn months with prospects for \r\nno slowdown next year. The St. Louis Home Builders Association \r\nestimates a 10-percent increase in construction of single-family \r\nunits next year. One exception to this optimistic outlook is the \r\nLouisville area where an excessive number of apartments have \r\napparently been built, and the apartment rental market is reported \r\nto be soft. Also, commercial construction in the St. Louis area \r\nremains at a relatively low level.\nDemand for credit continues to expand, and interest rates continue \r\nto creep up for most types of loans. Home mortgage rates, however, \r\nremain relatively stable, and one of the larger savings and loan \r\nassociations in St. Louis reported a slight decline in its rates in \r\nNovember.\nAgricultural prospects in the Eighth District deteriorated sharply \r\nin November. Excessive rainfall delayed the harvesting of all crops \r\nincluding corn, soybeans, and cotton. In some areas half of the \r\ncrops remain in the field, and the damage to soybeans and cotton is \r\nquite severe. Crop prices are relatively high, but weather damage \r\nmay cause severe losses to farmers in some communities.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-12-19T00:00:00 | /beige-book-reports/1972/1972-12-at | "Beige Book Report: Atlanta\nDecember 19, 1972\nEconomic activity continues to surge, according to reports of \r\nbusinessmen and bankers. The outlook is optimistic, but the \r\nexuberance of the expansion is causing some bottlenecks and is \r\nexerting inflationary pressures. A number of large residential and \r\ncommercial construction projects have been announced. The pace of \r\nnew plant announcements has accelerated. Labor shortages are \r\nreported in some areas.\nResidential construction continues strong. A $100 million planned \r\ndevelopment has been announced for an area south of Atlanta. This \r\ndevelopment will include industrial sites, apartments, single-family \r\nhomes, and retail areas. A 216-unit condominium development also \r\nwill be built south of Atlanta. A $70 million planned community is \r\nto be built on the Gulf in north Florida. Home building continues at \r\na hectic pace in central Florida. A 4,000-unit development has been \r\nannounced for an area near Orlando. This is the sixth major planned \r\nunit development under way in central Florida. A shortage of \r\napartments is reported in the Orlando area. In the Birmingham area, \r\nhowever, there is evidence that home building will soon begin to \r\ntaper off, but 1973 is still expected to be a good year for housing \r\nthere.\nThe outlook for commercial construction is also strong. A $100 \r\nmillion, 2,034-room hotel has been announced for the downtown \r\nAtlanta area. This is the fifth major hotel announced for downtown \r\nAtlanta in the past year. A $47 million complex has been announced \r\nfor an area in north Atlanta. It will include a 29-story office \r\ntower, a motel, and apartments. In the Tampa area, a major retail \r\nfirm is planning a distribution center and an insurance company will \r\nbuild an office complex. A 21-story hotel has been announced for the \r\nOrlando area. A new 18-store shopping center is to be built in the \r\nHuntsville area.\nA group of ten oil companies plans to build a $500 million superport \r\nnear New Orleans. Western electric will build a material management \r\ncenter near Montgomery, Alabama. There has been a rash of \r\nannouncements of relatively small plants in the last month. Most of \r\nthese plants are in the textile and apparel industry, but they also \r\ninclude plants for processing wood, fabricating metals, and \r\nproducing auto emission control equipment.\nRetail sales are reported strong throughout the Southeast, and \r\nmerchants are unanimously optimistic about the Christmas season.\nA shortage of labor is reported in much of Florida. In parts of that \r\nstate, the unemployment rate is less than 2 percent. A bank in the \r\nJacksonville area reports difficulty in finding qualified help. An \r\napparel plant to employ 500 will be built near Pensacola, provided a \r\nlabor survey indicates that adequate labor can be found. The citrus \r\nindustry is worried about finding sufficient harvesting labor if the \r\nprojected huge crop materializes. In areas of Tennessee, Louisiana, \r\nand Mississippi, unemployment rates are at the lowest levels in many \r\nyears. Delta Airlines is adding about 400 employees in the Miami \r\narea to handle increased traffic. However, 600 employees will be out \r\nof work in south Georgia because a poultry processing plant has gone \r\ninto bankruptcy. Two hundred and ninety employees are being laid off \r\nat an unprofitable apparel plant south of Atlanta. A laboratory in \r\nOak Ridge, Tennessee, is laying off 200 employees.\nLand speculation in central Florida is reported to be at its highest \r\nlevel since 1929. In the Ocala area, borrowers with little or no \r\nequity are applying for loans to speculate in real estate. The \r\nhectic pace of construction in central Florida is producing delays, \r\nshortages, and cost increases. For example, sewer pipe is reported \r\nin tight supply. Nevertheless, a pipe producer in central Florida \r\nhas been unable to go ahead with a plant expansion because of the \r\ninability to obtain sufficient natural gas commitments. Attempts to \r\nline up alternative sources of energy have proved unsuccessful. \r\nPrices of homes in the Orlando area are reportedly inflating \r\nrapidly. A director from that area says that homes that a few years \r\nago sold for $30,000 are now selling for between $50,000 and \r\n$60,000.\nWet weather has continued to hamper soybean harvesting.\nIt is \r\nestimated that 30 million bushels have been lost in Tennessee. The \r\nwet weather has been a boom to the citrus industry and to vegetable \r\ngrowers and cattlemen in central Florida.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-bo | "Beige Book Report: Boston\nNovember 14 , 1972\nReports from our directors indicate business is continuing to expand at a rapid pace. New orders are rising, as are expenditures for plant and equipment. A tight rein continues to be exercised over inventories, and new hiring is spotty.\nNew orders were generally reported up substantially in both manufacturing and commercial construction. One supplier of construction materials for prestige buildings indicates the company now has a high level of backlog work, a sharp change from six months ago. Some disappointment in the rate of new orders for can-making machinery has been expressed by two directors in this field. A supplier of white pigment, a widely used industrial material, reports orders as very strong and that this plant is working at capacity. Capacity level operation was also reported by a manufacturer of carbon black, a material used in the manufacture of tires, and by a manufacturer of specialty chemicals.\nLarge capital expenditures are being planned by a firm involved in putting up a liquified natural gas facility. Plant expansion is also reported under way in some sectors now operating at capacity.\nA director from a large commercial bank reports there has been no recent change in business loan demand. While loans are running 19 to 20 percent over a year ago, loans outstanding have not advanced in the past \r\n six weeks. The heavy increase in loans this year mainly represents business from outside of New England. This Bank director said pressure on interest rates has subsided recently, due to a large supply of funds, a slackening of demand (the seasonal demand for funds in October did not occur) and political pressures to hold interest rates level. In effect, the banker stated, we now have rate controls.\nThree academic correspondents available this month, Professors Eckstein, Samuelson, and Wallich, agreed upon a 6 percent target for monetary growth. Eckstein expected a 6 percent rate of growth in nonborrowed reserves in 1973 but preferred a 6 1/2 to 6 3/4 percent average rate. The primary danger in the current outlook, he felt, is for this rate to fall below 5 percent for several consecutive months. Wallich prescribed a 6 percent rate of growth for Ml, under the assumption that velocity, will be rising at 2 to 3 percent rate. He urged the Board to undertake a study of what rate of growth of velocity can be expected to prevail in the future.\nThe three also agreed in their disapproval of the attempt, in Samuelson's words, to \"talk interest rates down.\" Wallich said the current 7 1/2 percent level is too low for an economy with a 3 percent inflation rate. Granting there may be some psychological benefit in \"talking down\" rates, Samuelson insisted the main effect is to increase rationing. Eckstein argued it is impossible to go through an expansion without a rise in interest rates. Holding the prime rate below 6 percent would be an unfortunate, early trigger. He urged monetary authorities to reinforce the trend toward flexible rates and not to back \"administered prices.\"\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-ny | "Beige Book Report: New York\nNovember 14, 1972\nIn the view of most of this Bank's directors and other business leaders recently contacted, the new federal revenue sharing program is likely to result in increased state and local government outlays over the near-term, rather than tax reductions. A cease-fire in Vietnam was expected to have little impact on the current business situation, since that outcome was believed to have already been largely discounted. Respondents in general were optimistic over the retail sales outlook for the Christmas season. Business hiring practices remain on the conservative side, with additions to payrolls still geared to current rather than expected future needs.\nIn the view of most directors, the recently enacted measure providing for substantial federal revenue sharing with state and local authorities could be expected to quickly stimulate increased outlays by these governmental units. Buffalo branch directors felt the measure would have a \"bail out\" effect, enabling state and local governments to meet demands from organized employee groups and other civic pressure groups. They also reported there were indications a number of localities intended to use part of the payments to undertake capital expenditures that had earlier been deferred for lack of funds. One director felt the measure would have a \"substantial\" spending impact that would be reinforced by the current strong cyclical rise in local taxes. Although some of the directors did not rule out the possibility that the program would lead initially to some local tax reduction\u2014or a moderation of increases\u2014the general feeling was that the lion's share of the available funds would be used to finance projects that had been postponed earlier due to a lack of funds. On the other hand, one New Jersey banker felt the revenue sharing measure would neither contribute to increased spending nor reduced taxes in the financially pressed cities in his area, but rather that a good deal of the funds would be used to liquidate outstanding debt.\nMost of the directors agreed that a cease-fire in Vietnam would have little immediate impact on business and consumer spending, since that eventuality had already been discounted. A few of the directors, however, did feel such a settlement would contribute to an aura of stability by finally eliminating the major uncertainty that has adversely affected business and consumer attitudes over the past several years. The consumer sector was viewed as the area where Vietnam agreement would have its major impact.\nConcerning consumer spending, respondents in general continued to express an optimistic outlook. A senior official of a New York City department store, specializing in high-priced, high-quality goods and \r\n having branches in the suburbs, reported that his firm's October sales had been \"very good\" and that he expected a higher level of business during this Christmas season than last year's. The chairman of the board of a Rochester department store, who previously had frequently been rather skeptical over the consumer spending picture, reported that retailers in his area were expecting holiday sales to run well ahead of a year ago. Indeed, he felt that the consumer is likely to spend a larger share of his income in the coming months. The New Jersey banker reported that retailers in his area were looking toward a good Christmas season. The Buffalo branch directors expressed views regarding the consumer spending outlook that, while varying in degree, were unanimously optimistic.\nThe directors were unable to detect any trend toward more aggressive hiring practices in private industry. It was, however, noted that the earlier \"belt tightening\" phase had come to an end and that, with the continued upswing in business activity, the need for additional employees was starting to build.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-sl | "Beige Book Report: St Louis\nNovember 14, 1972\nEconomic activity in the Eighth Federal Reserve District has continued vigorously upward in recent weeks, according to a selected group of businessmen. There is a rising wave of business optimism. Sales continue to rise on a broad front. Manufacturing activity continues to expand, and more industries report their operations are approaching capacity levels. From the businessman's viewpoint, labor markets are tight in most of the district. Employment still trends upward, and the unemployment rate is down. Construction remains at the relatively high plateau attained more than a year ago. Financial institutions report a vigorous loan demand and large savings inflows. Long-term interest rates remain relatively stable, but upward pressure on short-term rates continues.\nSales of goods and services in recent weeks have apparently continued up at about the trend rate of the past year. Retailers report further moderate gains on a seasonally adjusted basis. Manufacturers also report further increases in sales during the third quarter. Some items, including cement and paper, are reported to be in short supply. In addition to developing paper shortages, the packaging industry reports the quality of paper delivered is more varied and less dependable than earlier in the year.\nVigorous expansion in manufacturing activity is reported throughout the district. Paper, construction materials, metals, textiles, food processing and chemical firms all report operations at a relatively high \r\n rate of activity. A representative of a large diversified cigarette manufacturing company reported an increase of 17 percent in sales and 10 percent in employment from year ago levels. Representatives of both paper and cement industries report their industries are operating at capacity. A representative of the packaging industry reported that unless expansion of kraft paper output occurs, rationing will soon be necessary and that there is no incentive to expand capacity at current price and profit levels.\nEmployment expansion continues and more communities report a shortage of labor in all skill groups. Additional workers have been added to payrolls in recent weeks throughout the district. An Arkansas representative reports that the local labor force is fully employed, employee turnover is becoming critical and most Arkansas plants are trying to add to their labor force. In a few areas of the district, such as southern Indiana and St. Louis, where some unemployment pockets remain, employment has picked up and the unemployment problem has become less severe.\nExcluding the St. Louis area, both residential and commercial construction continue at the relatively high rates of the past year. Residential construction is at a high rate in the St. Louis area, but the construction industry here remains somewhat depressed because of a very low level of commercial building.\nCommercial banks and savings and loan associations report continued strong demand for loans, with some slackening in savings inflows in recent weeks. Demand for mortgage loans remains vigorous, but mortgage interest rates remain about unchanged from midsummer levels. Commercial loan demand is expanding and upward pressure on commercial loan rates continues.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-su | "Beige Book: National Summary\nNovember 14, 1972\nAccording to bank reports, economic activity is improving and is expected to remain strong. Retail sales have been increasing and retailers expect Christmas spending to be heavy. Order backlogs are swelling in several areas as the tempo of manufacturing activity picks up; inventory building is also anticipated. Several districts report robust construction activity. Although problems are noted, the agricultural situation is termed \"strong.\" Labor shortages are developing in some areas as the demand for workers strengthens. A moderate rate of inflation and continued gains in loan demand are expected during coming months.\nThe consumer spending outlook can be termed \"favorable.\" Retailers in the New York district are optimistic about Christmas spending and those in the San Francisco district are looking for a 10 percent year-to-year Christmas sales gain. Recent increases in consumer spending are reported by Richmond, Chicago, Dallas and St. Louis. Automobile sales, however, are being held down by inventory shortages in several districts.\nReports disclose improved manufacturing activity. St. Louis reports gains in manufacturing sales and reveals shortages developing in the cement and paper industries. Boston indicates that several of its district manufacturers are operating at capacity. Capital good sales are expanding in the Chicago district and order backlogs are climbing. Increased inventories are planned by several Kansas City district manufacturers. Richmond reports that manufacturing shipments, new orders and backlogs are rising. In the Atlanta district plant and equipment expenditures continue to expand. The seasonally adjusted Texas industrial production index experienced a sharp increase in September with all major industrial sectors advancing. Philadelphia, however, indicates some leveling off in manufacturing activity.\nRichmond, Atlanta, St. Louis, and San Francisco all report strong construction activity. In the Sixth District, several major commercial projects and tourist attraction expansions are planned, and shortages of building materials are evident in some areas. Although national construction activity appears to be strong, there is vacant commercial space in Seattle, and very low commercial construction activity in St. Louis. Richmond suggests that the rate of increase in building appears to have slowed; and Dallas reports that residential and nonbuilding construction awards in the district have declined.\nAgriculture continues strong. It is, however, encountering some apparently temporary difficulties in certain areas and for certain products. In the Midwest, crop damage and harvesting problems were caused by unseasonally wet weather. Recent income from tobacco sales has been disappointing in \r\n the Southeast. Prices for fattened livestock have weakened. But Minneapolis describes farmers, in general, as \"cautiously optimistic\" and cites strengthening loan demand for farm operating investments. Dallas concurs with the optimistic description, citing very high farm receipts, and Kansas City mentions thriving agribusiness industries.\nThe employment picture continues to brighten, leading to increased labor shortages in some parts of the nation. Expanding demand for labor is reported by Chicago, St. Louis, Kansas City and Dallas while New York indicates that the belt tightening period has ended and labor demand is starting to build. Labor shortages especially among skilled workmen, evidenced by increased turnover and absenteeism are reported by Chicago and St. Louis. Availability of nonunion labor, however, prevented trucking and building trade unions from pressing for large wage settlements in the Chicago district.\nThe outlook for wage and price increases differs, to some extent, in each district that reported on inflation. With the exception o\u00a3 Atlanta, where inflationary pressures remain strong, the expected rate of inflation for next year is generally termed \"moderate.\" This assumes that some\nwage-price regulations continue through 1973. Farm prices should, in coming months, exert less upward pressure on consumer prices then they have recently.\nThere are mixed reports on both loan demands and deposit increases throughout the nation. A number of districts report relatively strong or expanding loan growth particularly in the business, mortgage, and consumer credit areas. In the San Francisco district, strong loan demand is reported for mortgage and consumer credit\u2014although the strength of business loans varied throughout the district. St. Louis reports\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-kc | "Beige Book Report: Kansas City\nNovember 14, 1972\nTenth District business continues to improve, with manufacturers planning to increase inventories further in anticipation of more sales growth. The breadth and strength of economic activity is indicated by revenue gains and optimistic outlooks of almost all major district firms contacted, a sample representing a wide variety of products sold across the country and overseas. With strong business and consumer loan demand at commercial banks, and an indication of some flattening of deposit growth, some interest rates have risen and district bankers expect further increases in short rates. Changes in Regulations D and J continue to concern bankers, while businessmen are worrying about the upcoming heavy calendar of labor contract negotiations and their impact on costs and prices.\nMost Tenth District bankers report moderate growth in demand deposits. Trends in time and savings deposits are mixed, with some banks experiencing strong growth and others reporting essentially no change. Most banks have increased rates on certificates of deposit, in some cases to the Regulation Q maximum. One bank has already noted a slight outflow of CD money as a result of the recent rise in competing market issues. Most bankers anticipate a further rise in short-term interest rates over the coming months, with some anticipating significant disintermediation as a result.\nDemand for loans in all major categories has been strong at most district banks. No leveling in construction loans is evident as yet, though some bankers expect such leveling in coming months, particularly due to seasonal factors. Demand for business and consumer loans continues strong.\nDistrict bankers express considerable uncertainty about the effects of changes in Regulations D and J on deposit levels. Officials at several banks expect an adverse impact, but one large bank is sufficiently confident of a 2 to 3 percent increase in deposits and is already extending loans on the basis of the anticipated rise. Even those bankers contacted who anticipate an adverse effect on deposit levels expressed approval of the changes in the regulations.\nSeveral manufacturers plan to increase inventories. Their intentions reflect improved sales outlooks, desires to provide cushions against lengthening lead times for raw materials, and efforts to improve customer service. Other manufacturers, including some who overestimated sales in recent months, feel their current inventory levels will prove adequate for expected sales increases.\nAgribusiness is thriving, thanks to record farm income. Firms selling supplies to farmers report sales increases up to 20 percent over last year. The favorable high price and high production situation includes the sugar beet industry, and two major sugar refineries expect substantial revenue increases this year.\nReviving private demand and new government contracts have pulled the cyclically sensitive Wichita economy up from an 8.1 percent unemployment rate a year ago to its current 4.3 percent level. Wichita's private airplane manufacturers\u2014a key industry in the city\u2014report very good business and expect 1973 to be equally strong or better.\nThe improvement in general business conditions nationwide is also reflected in current sales and optimistic expectations of several other types of Tenth District firms with extra-regional markets. Consumer-oriented firms include a manufacturer of luggage, a large nursery, two big manufacturers of rubber products, a large manufacturer of small home appliances, a leading greeting card company and a manufacturer closely tied to the auto industry.\nProducer-oriented manufacturers, including giant truck, steel drum and water-cooling tower firms, generally have experienced a somewhat less impressive sales increase over last year than have manufacturers of consumer products. But most are optimistic about sales prospects in the months ahead.\nPublications and contacts in the district report an excellent summer tourist season. A good winter sports season already has begun. The recreational land boom continues.\nWhile a discouraging word was seldom heard, a few respondents, ranging from a machine tool manufacturer to a manufacturer of snack foods and one of plastic bags, reported sales not much improved over last year. The worst expected, however, was another year of the same.\nSeveral nonbank businessmen also were asked about their expectations regarding inflation and interest rates and their choice of a continuation or end to wage and price controls. The responses on interest rates were too mixed to permit a conclusive prevailing opinion. As to the price level, most say the bargaining ahead, and the controls applied, will determine the outcome. While two want controls ended and replaced with antitrust action against unions, the others feel some controls must be maintained.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-at | "Beige Book Report: Atlanta\nNovember 14, 1972\nAccording to reports of businessmen and bankers, the region's economy continues extremely prosperous and the outlook is optimistic. The number of new plant announcements has increased. Construction continues at a hectic pace. There are scattered reports of building material shortages. Inflationary pressures continue.\nA pickup in announcements of new plants and plant expansions that began earlier this year continues. It was recently announced that four synthetic gas plants will be built in Louisiana by 1975. One of the plants, representing an investment of nearly $350 million, will be the largest such plant in the nation. The other three plants will cost about $160 million each. An $80 million fertilizer plant will be built near Tampa. A $60 million expansion is slated for a paper mill in north Alabama, and a $15 million weaving plant is planned for southwest Alabama. Western Electric will build a $5 million plant in Montgomery. An aircraft assembly plant in Tampa has been reopened to make subassemblies for small two-engine planes. In addition, there have been a number of announcements of smaller plants or expansions. However, 550 jobs will be lost in the Birmingham area because two firms are phasing out pig-iron production. Reasons mentioned for this action include foreign competition, pollution problems and rising cost of furnace repairs, freight and raw materials.\nThree large residential communities have recently been announced\u2014one near Atlanta, one on lakefront property near New Orleans and one in south Florida. Florida's residential construction boom may eventually be slowed by a pollution board ban on new permits in areas with inadequate sewer treatment. However, effects will not be felt for at least several months because builders have large backlogs of permits. There is a growing cement shortage in Florida, with no relief in sight. A shortage of building \r\n materials is also reported in Tennessee. In addition, a retail food chain executive reports a shortage of refrigeration equipment is delaying the opening of seven new stores.\nConstruction will begin soon on a new plaza in downtown Jackson, Mississippi. A 22-story bank building and adjoining hotel will highlight the plaza. A seven-building warehouse complex has also been announced for Jackson. A 200-room motel will be built near Busch Gardens in Tampa. Three motels totaling over 300 rooms have been announced for Alexandria, Louisiana. A multimillion dollar \"Holy Land U.S.A.\" tourist attraction is planned on a parcel of land between Mobile and Pensacola. Both Disney World and Opryland are planning major expansions. Ground will be broken before the end of the year for a $20 million hospital-medical complex near Pensacola.\nInflationary pressures remain. An executive of a large airline company says that industry is ready to lead a new round of inflation if controls are lifted. A retail food chain official claims his industry could increase prices 7 to 9 percent and still not see the return of reasonable profit margins. TVA is expected to increase power rates in the first half of 1973. A steel company executive claims environmental controls alone may push up the price of steel at a rate of 4.6 percent per year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-cl | "Beige Book Report: Cleveland\nNovember 14 , 1972\nThe thrust of recent statistical evidence and information received from economists, businessmen and directors indicates that economic expansion is continuing at a strong pace in the district with few signs of weakness. The manufacturing sector appears to be gaining momentum, and the near-term outlook remains good. Signs of strength are broadly based, including improved orders and sales in defense and producers' goods and particularly high levels of activity in consumer-related areas. Our directors continue, to be optimistic about the prospects for business next year. In addition, there is sentiment among our board members for continuation of the controls program in view of the crucial labor contracts up for renegotiation in 1973. Bankers are experiencing strong loan demand, especially from consumers.\nSome of the principal economic indicators that describe the continued expansion in activity in the district are: the unemployment rate, which has continued to edge down; payroll employment, which has shown strong gains in recent months (particularly in durable goods manufacturing); our electric power indexes of manufacturing activity, which began to post new highs during the past few months for all major metropolitan areas of the district (after having recouped losses incurred during the past recession); and residential construction contracts, which remained close to a record high in August and September. Nonresidential building, however, still appears to be sluggish. Our most recent survey of district manufacturers shows evidence of strengthening in the pace of the recovery. Key indicators, such as new orders, shipments, backlogs, employment, and the workweek, registered solid gains in October, and firms expect business conditions to be even stronger in November. Our survey also indicates that prices continue to be held reasonably well in check, with the diffusion index for prices paid having hovered around the 60 percent level since February.\nThe strong tone of business conditions in the district is also apparent from comments from our directors. Industrialists associated with consumer-related activities reported excellent business conditions in areas such as automotive parts, paints, glass and rubber. Capital goods producers indicated defense-related business is improving in several firms. A director in the machine tool business reported that new orders were up 50 percent from a year ago, and that his firm, along with others in the machine tool industry, is experiencing difficulty in rehiring the skilled workers they had to lay off when business was poor. On the other hand, several directors whose firms are experiencing sizable increases in orders plan to meet the rising demand without significantly expanding employment. Office equipment business continues to be excellent, and backlogs are rising. Several directors whose firms have had a significant recovery in business reported that total profits had increased, but that profit margins were comfortably under the ceilings of the control program. An exception to the favorable business reports from our directors was the remarks from one director who noted that his firm's specialty construction business, which is almost entirely related to the steel industry, has been poor this year; he expects the steel industry to increase construction spending next year, however.\nSome directors are quite concerned about a possible reemergence of inflationary pressures in 1973. Although the directors were beginning to note some complaints among industrialists because of what were described as unfair rulings of the Price Commission, a number of them seemed to favor continuation of wage-price controls in 1973. The directors were particularly concerned over the implications for wage increases and strike activity if the controls were to be dropped in the face of forthcoming labor negotiations.\nBanking directors reported strong loan demand, especially from consumers, and increasing demand and time deposits. One director from a large reserve city bank, however, noted that the savings and loan institutions in his area were receiving a disproportionate share of the increased savings flow.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-sf | "Beige Book Report: San Francisco\nNovember 14, 1972\nDirectors in the Twelfth District were asked to assess wage and price trends in their area or industry. Their consensus is that increases in both prices and wages would be moderate and consequently there would be less inflation in the coming year. For the economy in general, further expansion is expected in most industries, with the possible exception of construction where some leveling off is foreseen.\nWage increases in the 5 percent range are judged to be likely for the coming year. There are some exceptions, however. For example, one manufacturing firm expects a 6 1/2 to 7 percent increase for the year. Unionization of farm workers is a factor that would add to wage pressures in agriculture, and the expansion of aircraft production in Seattle will create pressure on the wages of some classes of skilled and office workers. Wage controls cause problems for some firms that lose key managers and skilled personnel through their inability to match outside offers. In the view of most directors, maintenance of wage controls will be a major element in keeping wage increases in line through 1973, a year when many major contracts expire.\nAssociated with the lessening of wage increases will be slowing of price increases. In several industries the ceilings have stopped price rises, while in others insufficient demand is a major reason for restraining increases. Therefore, a 5 percent increase in list prices may mean only 1 to 2 percent in effective prices due to competitive pressures forcing price concessions.\nAgricultural prices, which have been very good in 1972, are not expected to be much higher according to directors in agricultural areas. Several directors believe both wheat and cattle prices in particular are not \r\n likely to climb much more. On the other hand, smaller crops elsewhere in the country will maintain prices for western potato growers.\nOne effect of price ceilings has been to narrow profit margins. A large producer of processed foods reports that the inability of several large firms to get approval for price increases on some product lines has prevented others from raising prices. The lower margins exist in such lines as canned beef, fresh milk and ice cream. Firms affected are continuing to watch inventories and to reduce their labor force whenever possible. Another problem, in one director's view, is that price cutting by one major chain is cutting food retail margins to levels that may have a serious financial impact on a number of quite substantial chains throughout the country.\nThe overall performance of the economy remains satisfactory. Retailers in the Twelfth District are expecting excellent Christmas sales at levels about 10 percent above the previous year's sales. As a result, \r\n some stores have been increasing their sales force earlier than usual.\nHowever, a hesitant attitude by wholesalers may lead to inventories that are too thin to meet expected consumer demand for some products and thereby keep sales to a lower level.\nConstruction activity, although high, is causing some concern. In Seattle there remains considerable vacant space in commercial office buildings and warehouses, and in Portland there is some evidence of overbuilding of apartments. A recent court decision in California requiring environmental impact studies for large construction projects is singled out as another factor causing uncertainty about future construction activity in the state.\nBankers in southern California report strong demand for mortgages and for consumer credit. Deposit inflows are also strong. In Portland, business loan demand is described as disappointing, while in Utah and Idaho it is described as very strong. Generally, banks are able to meet foreseeable loan demand with minimal stress.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-ri | "Beige Book Report: Richmond\nNovember 14, 1972\nReports from businessmen and bankers indicate further business expansion in the Fifth District. Manufacturers report sharp increases in shipments, new orders and backlogs. Retail sales remain strong, although delivery problems have apparently dampened automobile sales somewhat. Reports fail to show any sign of an inventory buildup on the part of district firms. Improvements in employment and hours worked per week were reported. Prices received remained relatively stable while wages generally increased. Construction activity remains strong and a general mood of optimism prevails\r\n in the district's business community.\nThere was a sharp rise in the number of manufacturers reporting increases in shipments, new orders and backlogs. Widespread increases were reported by producers of steel, textiles, furniture and chemicals. Some producers are apparently experiencing a delay in shipments because of a shortage of box cards. In our latest survey the number of manufacturing respondents reporting higher than desired inventory levels declined substantially, although a sizable number continue to view inventories as on the high side.\nFollowing a slight decline last month, manufacturing employment appears to have improved somewhat in the current period. Manufacturers in our latest survey report increases in both employment and hours worked and banker respondents indicate general employment gains in their areas. Prices received by manufacturing are reported to have remained relatively stable but both manufacturers and retailers indicate fairly widespread recent increases in wages.\nTrade respondents report further improvement in general retail sales, with all geographic areas of the district now sharing in the improvement. However, the number of respondents indicating an increase in automobile sales declined over the previous reporting period. Several respondents referred to delivery and inventory problems, which have apparently dampened sales of domestic models.\nLoan demand continues to show strength although the rate of increase in the demand for consumer and mortgage loans slowed somewhat over the previous reporting period. Even so, more than 50 percent of the banking respondents reported an increase in the demand for all types of loans.\nThe pace of advance in the construction sector may have slowed somewhat in recent weeks although both residential and commercial building continue strong. In our previous survey 50 percent of the banking respondents indicated that construction activity in their areas had increases whereas in the most recent month only 25 percent reported increases.\nThe situation in district agriculture is little changed since our last report. Weaker demand, declining prices, and poorer quality offerings have marked flue-cured tobacco sales during the past several weeks.\nThe mood of businessmen and bankers in the Fifth District remains distinctly optimistic. The majority of the banking respondents expect further improvement in business activity in their areas in the immediate future. Several bankers reported growth and optimism among their customers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-ch | "Beige Book Report: Chicago\nNovember 14, 1972\nBusiness sentiment has improved further in the past month. Labor markets are tightening; retail trade is strong; order backlogs are building in many industries and lead times on new orders are lengthening. The upswing in capital goods appears to be gathering steam and is spreading to a broader base. More firms are planning on the general business expansion to continue quarter-by-quarter through 1973, with no significant slowdown in the second half. Soybean and possibly corn harvests will be reduced by adverse weather conditions.\nMore firms are finding skilled workers in short supply and shortages of suitable trainees are reported. Labor turnover and absenteeism rates have increased, but remain below the high rates of the late 1960s. A larger volume of want ads and a steady reduction in claims for unemployment compensation also suggest a stronger demand for workers. Nevertheless, unions in some sectors, e.g., building trades and trucking, are not pressing for large settlements. They fear further losses of jobs to nonunion operators.\nRetailers are pleased with recent sales levels, especially of seasonal merchandise, such as apparel and sporting goods. Color television output schedules have been increased again. Output of some household appliances was reduced in September and October, but sales since then have been somewhat in excess of expectations and inventories have declined.\nTrucks continue to lead the general expansion in capital goods. Producers of engines and rear axles for heavy trucks are working three shifts a day, seven days a week. Capacity restraints are limiting sales of most types of trucks. Some orders are being booked for delivery next March and April. Most truck producers are in the midst of programs to expand production.\nAuto sales would be appreciably higher if inventories were adequate. Output has been hampered by a series of \"quickie\" strikes over working conditions. The union treasury is depleted, and strike benefits are not paid for work stoppages that last less than a week. Perhaps more important than strikes in holding down output are the problems producers have been having making body panels of new models fit together properly.\nMany firms are reporting slower deliveries from vendors. Half of the Chicago and Milwaukee purchasing agents report higher backlogs, compared to only 25 percent a year ago. Twenty-five percent of the agents report that production supplies must be ordered 90 days in advance, compared to less than 10 percent in the first quarter.\nOrder backlogs are building for a variety of capital goods. Some producers of components are reporting new orders up 30 or 40 percent from last year, although an improvement was already under way at this \r\n time in 1971. Demand for hydraulic excavators, concrete mixers and environmental control systems is especially strong. Recently, orders for overhead cranes, usually associated with major new plants, have increased from a sluggish pace.\nOrder backlogs of one steel firm are the highest on record, in tonnage terms, except for strike-hedge buildup periods. Lead times are lengthening for steel. The improvement in demand now includes all major product lines. Steel shipments are forecast at 96 million tons for 1973, up from 92 million tons in 1972. Output of some products may be close to capacity.\nSignificant stretchouts in order lead times are reported for such items as plastic molds, metal fasteners and bearings. Producers of these items do not now have the effective capacity to achieve levels of output reached in the late 1960s. They must expand staff and add facilities.\nCrop yields are reported at record levels, but wet fields, especially in Indiana and Illinois, are causing delays in harvesting. Crops of some farmers, especially those raising soybeans, are already damaged. Higher prices associated with a shortfall in the harvest may boost total farm income. Delayed harvests will relieve some of the burden on the transportation industry associated with grain shipments for export. Wholesale prices of cattle have weakened in recent weeks as supplies of red meat have increased. Heavier weight cattle are being marketed. Pork supplies are increasing seasonally.\nBusiness firms are said to be easing restrictions on expense accounts, including first class air travel. Advertising budgets are also being raised. In part, these moves are said to reflect the fact that \r\n some firms' profit margins are approaching the guideline ceiling.\nLoan demand increased at most large banks in the past month. Nevertheless, bankers are reducing their forecasts of the extent of the probable rise in short-term rates next year. In the long-term markets \r\n a large volume of funds are available and most analysts expect level or even declining rates for new corporate bonds in 1973. The volume of funds seeking investment in real estate, especially from S&Ls and insurance companies, is very heavy. Lenders are not able to obtain \"equity kickers.\" Some S&Ls are taking advantage of their new powers to make consumer installment loans, including loans on recreational vehicles and mobile homes, but the movement has not yet gathered great momentum.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-da | "Beige Book Report: Dallas\nNovember 14 , 1972\nMost major indicators of economic activity in the Eleventh District continue to show growing strength. Both Texas industrial production index and total employment in the five district states advanced to record levels in September, and department store sales continued strong in October. Nevertheless, construction contract awards eased slightly in September, and registrations of new automobiles also slipped. In a recent survey, the directors of this Bank and its branches revealed considerable optimism over the outlook for the first half of 1973. The directors generally agreed that the prospects were good for continued improvement in general business conditions, employment, and profits. However, they also expected increasing upward pressures on prices and wages.\nThe responding directors overwhelmingly expected business conditions to improve in the first half of 1973. They were also optimistic about the unemployment rate with almost all of the respondents expecting the rate to be lower, or at worst no higher, than its present level. The consensus was that total construction activity would also be either equal to or above its current level. An unsettling finding, however, was that almost three-fourths of the respondents expected the rate of inflation to increase in the first six months of next year.\nDirectors representing district banks reported that demand for business and consumer loans increased over the past three months. Banking respondents also felt that loan demand would continue to increase over the next six months, with business and consumer loans continuing to show the greatest strength. Although the availability of funds to meet these loan demands was generally described as either adequate or plentiful, there was widespread agreement that short-term rates would be rising over the first half of 1973. Banking directors were about evenly divided, however, in their expectations for long-term rates between those anticipating rates to remain the same and those expecting them to rise.\nDirectors from the nonbanking sector were also confident about the first half of next year. About a quarter of these directors expected their firms to increase employment and over half indicated that their companies \r\n were planning to increase expenditures for plant and equipment. Inventory levels were generally not expected to fall any lower and a good many respondents indicated plans to increase their level of inventories. Almost half of the nonbank directors expected their profit rates to be higher in the first half \r\n of 1973 than in the most recent quarter. These directors were not so optimistic about prices and wages, however. Over four-fifths expected prices and wages in their industry to increase, with wages increasing faster.\nSeasonally adjusted employment in the five southwestern states rose again in September as both the manufacturing and nonmanufacturing sectors recorded gains. Monthly employment gains were reported in every sector except mining, where employment levels were unchanged from August. Despite the increase in employment, the unemployment rate in the five district states remained at 4.4 percent in September as the expansion in the labor force matched the gains in employment.\nThe seasonally adjusted Texas industrial production index rose sharply in September to a record level as all major industrial sectors of the index advanced. Within manufacturing, the production indexes for both durables and nondurables increased over August. The largest gains were recorded in petroleum refining and utilities.\nOil allowables were kept at their maximum rates for November in the district's two largest producing states, Texas and Louisiana. Nevertheless, demand for petroleum continues to outpace domestic production and imports are being depended upon to close the gap.\nRecent indicators of consumer spending were mixed. Sales of department stores continued to show monthly and\nyear-to-year gains through October. Among the four largest metropolitan areas of Texas, Dallas and Houston recorded the most substantial gains. The rate of new automobile registrations in these four centers, however, declined from the rate of a year ago. San Antonio was the only major area to post an increase over last year.\nThe value of construction contracts awarded in the district fell slightly in September as residential and nonbuilding construction awards in the five-state area fell from their August levels while nonresidential building increased slightly.\nProspects for farmers and ranchers in the five district states remain bright. Total agricultural production continues well ahead of last year. Much of the increase comes from a larger cotton crop and the steady rise in cattle on feed. Farm prices also remain considerably higher than a year ago. The gains in both production and prices have combined to boost farm receipts in the first eight months of this year to a level 17 percent higher than in the same period a year ago.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-ph | "Beige Book Report: Philadelphia\nNovember 14, 1972\nThe latest survey of business conditions in the Third District shows that some key indicators remain on the increase. New orders and sales increased at many firms responding to this month's questionnaire. More \r\n firms reported inventory increases than decreases. Outlays for plant and equipment are scheduled to increase at over one-third of the firms contacted. And many firms expect to increase their inventories within six months. In general, most area businesses remain optimistic about the future. On the darker side, however, employment opportunities are flattening out a bit in the Third District. Expectations of increased inflation within six months were reported by approximately one-third of the firms contacted.\nThis Bank's business survey respondents reported their manufacturing activity continued to rise, but the number of increases dropped slightly this month. The vast majority of firms completing the survey's monthly questionnaire report either no change or an increase in their new orders, new shipments and the length of their delivery time. However, a small but growing number do report decreases in orders received, shipments and delivery times.\nEmployment opportunities in the area have leveled off somewhat. Over half of the firms responding to the business survey expect no change in the number of employees or the average number of hours worked during the next six months. Of those firms which are changing their employment schedules, increases predominate on the six month planning horizon. On the one month planning horizon, as many firms reported increases as reported decreases.\nAbout half of the responding firms report no plans to change the size of their inventories for at least six months. However, of those firms which do anticipate inventory adjustments, twice as many foresee increases as decreases.\nPlant and equipment spending plans remain at the slightly higher level reached last month. The majority of firms are evenly divided between those undertaking investment increases and those anticipating no change in their present capital expenditure rate. Very few firms are cutting their investments in plant and equipment.\nMost businessmen responding to this Bank's survey expect to pay and receive the same prices next month as they do now. However, a large minority do foresee rising prices on the six month horizon. This is \r\n essentially the same price outlook reported last month.\nArea banks report little or no growth in their demand and time deposits. Business loan demand is good from small firms but large national businesses are hardly borrowing at all. This holds back growth in the overall business loan category. Consumer and mortgage loans are expanding in the Third District again this month.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-11-14T00:00:00 | /beige-book-reports/1972/1972-11-mi | "Beige Book Report: Minneapolis\nNovember 14, 1972\nAlthough Bank directors foresee no resurgence in inflation, they generally feel wage-price controls should remain past April 30. District farm income is at a record high level and district farmers are cautiously optimistic about the future. Improved farm income has reduced the demand for short-term agricultural credit, but has bolstered the demand for intermediate- and long-term loans. Rising interest rates are not expected to impede the pace of district economic activity.\nAlthough future price increases are anticipated, Bank directors generally foresee no significant pickup in the rate of inflation. One director indicated that farm prices in coming months would not be exerting as much upward pressure on consumer prices as they have recently. Also, according to another report, consumer resistance to price increases was tending to dampen inflationary pressures in one director's area. On the other hand, another director stated that recent advances in wholesale prices made future increases in consumer prices inevitable. One director revealed that some of his area's merchants view the prospect of more inflation as a spur to their current business, as consumers purchase now to avoid future price increases.\nThe consensus among Bank directors was that wage-price regulations should be continued past April 30, even though they dislike controls. Several directors, however, would favor liberalizing Phase II guidelines and gradually lifting controls. One director indicated wage-price controls will become ineffective if continued too long. Another advocated terminating Phase II and holding federal expenditures at $250 million.\nDue to high grain and livestock prices, district farm income has swelled to a record high and district farmers are cautiously optimistic about the future. Two directors stated that livestock prices should remain \r\n generally high. The grain price outlook is also considered favorable, providing export demand continues strong. A director from the South Dakota cattle feeding and feed grain producing area, however, pointed out some weak spots. Corn prices remain relatively low and unseasonably wet weather in South Dakota has caused problems, depressing local prices further. Also, fat cattle prices have recently declined, and currently the margin between fat and feeder cattle prices will not allow cattle feeders to realize a profit. \r\n Canadians recently have been buying fat cattle in South Dakota and this should help raise prices. Furthermore, two directors indicated that hog prices will drop as production increases next spring.\nAccording to our recent Agricultural Credit Conditions Survey, a strengthening farm income situation has produced a disparity between demands for short-term credit and demands for longer-term loans. Demand for short-term loans fell as this year's stronger cash income from higher livestock prices, larger grain marketing receipts and government farm program payments decreased the need for short-term funds. Stronger incomes, however, have recently made farmers and ranchers more confident of investing in their operations and this has bolstered the demands for intermediate- and long-term loans.\nThe survey points toward a resurgence in farmer borrowing in the fourth quarter at some district banks, which will be about evenly balanced by further declines at others. Farmers' and ranchers' incomes are expected to continue strong, displacing needs for short-term funds. Farmer spending will increase as will investment, which will cause some increases in demands for debt refinancings. Comments from respondents indicate that investment plans will lift overall demands for intermediate-term loans. Still, however, only a very small percentage of banks expect problems in meeting loan requests during the next three months.\nDistrict businessmen and bankers generally foresee some advance in interest rates, but don't consider these increases of sufficient magnitude to affect district economic activity. One director reports, for example, \r\n that the prospect of higher interest rates doesn't bother his area's businessmen. Also, two bankers believe jawboning efforts have and will dampen interest rate increases. Nevertheless, a director associated with the construction industry reported that businessmen are currently lining up financing on future projects in order to avoid expected interest rate boosts. Although he doesn't anticipate higher interest rates locally, one director indicated that money in his area will become tighter as local bankers will allocate more funds \r\n to investments in order to take advantage of improved yields.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-ph | "Beige Book Report: Philadelphia\nOctober 11, 1972\nThird District businessmen report that the regional economy is \r\ncontinuing its upward course. The latest business outlook survey of \r\nlarge manufacturers in the area shows that over half of those \r\nsurveyed are chalking up advances in new orders and shipments. \r\nRetail sales are holding up well again this month. Banks are \r\nexperiencing good load demand. Inventories are rising, and plant and \r\nequipment spending is on the increase. However, employment is almost \r\nflat, and expectations of rising prices continue. Industrial \r\nactivity continues upward with just over half the firms contacted \r\nreporting increases in new orders and shipments. This expansion is \r\nexpected to last at least the next six months for a majority of the \r\nfirms canvassed. Employment in the Third District is practically \r\nlevel. Over three-fourths of the firms responding to our survey of \r\nlarge manufacturers report no change in the number of the employees \r\nor the length of the average workweek.\nOf the remaining firms, about twice as many are experiencing \r\nincreases and decreases in the number of employees. The six-month \r\nlabor outlook is only modestly more optimistic. Retail sales \r\ncontinue strong again in September. Area retailers report sportswear \r\nand home furnishings were experiencing stronger than average gains. \r\nAuto dealers report another good month as well. Major banks in the \r\nThird District report continued strong loan demand from most of \r\ntheir departments. Mortgage and consumer credit plus loans to small \r\nbusinesses set the pace. Most major corporate borrowers, however, \r\nare not utilizing their lines of credit very heavily. Business \r\ninventory investment is contributing a little strength to the \r\neconomic advance in the Third District. Almost half the firms report \r\nno change in their inventories. But, among those reporting inventory \r\nchanges, almost twice as many report gains as decreases.\nPlant and equipment spending is turning up among those firms \r\nreporting changes in their capital expenditure programs. There were \r\nsix times as many reporting increases as decreases, an improvement \r\nover last month. Over three-fourths of the firms responding to the \r\nBusiness Outlook Survey report no change in the prices they pay and \r\nthe prices they receive this month. But, during the next six months \r\nthe picture does not appear as favorable. Eight times as many \r\nmanufacturers expect to receive higher prices as expect to receive \r\nlower prices for their products. And, over two-thirds of the \r\nrespondents expect to be paying higher prices six months from now, \r\nwhile almost none expect their input costs to drop.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-cl | "Beige Book Report: Cleveland\nOctober 11, 1972\nThe consensus view of the business economists who attended the \r\nFourth District Economists Round Table meeting held at the Bank on \r\nOctober 6 was that few signs of maturity are apparent in the current \r\nbusiness expansion. There was general agreement among the Roundtable \r\nparticipants that there is sufficient upward momentum in the economy \r\nto sustain a real growth rate in GNP in the area of 6 percent or \r\nmore through the first quarter of 1973. Thereafter, the pace of the \r\neconomic expansion is expected to slow somewhat and move back toward \r\nthe economy's potential rate of growth and more sharply below that \r\nby year end. Most of the economists expected a generally \r\naccommodative credit environment next year, but with some edging-up \r\nof interest rates.\nThe median forecast of the group of about 40 business economists \r\ncalls for a $110 billion increase in GNP for 1973, with real growth \r\nof 5.8 percent and a price increase of 3.6 percent. According to \r\nthis forecast, unemployment is expected to register only slight \r\nimprovement during 1973, with the rate forecast at 5.2 percent for \r\nthe first quarter and 5.0 percent for the fourth quarter. The pace \r\nof the economic expansion is projected to moderate beginning with \r\nthe second quarter, primarily reflecting smaller gains in consumer \r\nspending and diminishing stimulus from business fixed investment and \r\ninventory building. The change in business inventories is expected \r\nto be about $10 billion per quarter in 1973. One bank economist \r\nnoted that the forecasters have consistently been expecting \r\ninventory growth to accelerate because of low inventory-sales \r\nratios. He believes the secular trend toward lower inventory-sales \r\nratios is still with us, and, accordingly, he cautioned against \r\noverly optimistic forecasts of inventory accumulation for next year.\nBy the fourth quarter of 1973, the group projects real GNP to be \r\nrising at a rate of 3.1 percent and prices rising at a rate of 4.3 \r\npercent. Most of the economists assume that some form of wage-price \r\ncontrols will be maintained after April. Indeed, the sentiment of \r\nthe group was that Tier I firms want controls to continue in view of \r\nthe heavy schedule of labor negotiations for next year. One \r\neconomist with a major retailing firm said management was nervous \r\nabout the prospects for consumer spending in the second half of 1973 \r\nif the rate of inflation accelerates.\nAmong other reports submitted by the business economists, the median \r\nforecast of nine economists whose firms depend heavily on the auto \r\nmarket calls for new car sales of 10.8 million units in 1973, with \r\nimports of 1,575,000 units. One auto economist predicted a price \r\nincrease for new cars in January, \"probably not more than 3 \r\npercent.\" The effect of the current price freeze is estimated to add \r\nabout 100,000 units to sales during the remainder of this year.\nAn economist from a major steel company predicted a price increase \r\nin his industry when the current self-imposed price freeze ends in \r\nJanuary. The steel industry is expected to have a better year in \r\n1973, with shipments estimated to rise from 92 million tons this \r\nyear to a range of 94 to 100 million tons next year (depending on \r\nthe intensity of the capital goods upswing).\nAn economist from the Federal Home Loan Bank reported that housing \r\nin at least a dozen major metropolitan areas is now overbuilt or is \r\nheading toward an overbuilt situation. An increase in multi-family \r\nvacancy rates next year is expected to trigger a decline in total \r\nnew housing units, from an estimated 2.8 million in 1972 (including \r\nmobile homes) to 2.3 million in 1973.\nThere was considerable discussion by the business economists about \r\ntheir expectations with respect to monetary and financial conditions \r\nin 1973. Emphasis was on the concern being raised by some financial \r\neconomists that credit conditions are likely to be considerably \r\ntighter and interest rates sharply higher in 1973. The Roundtable \r\ngroup, however, generally expects a better credit environment in \r\n1973 than what was thought to be the commonly held view. As one \r\neconomist put it, \"we are not likely to experience a credit crunch \r\nin an underemployed economy in 1973.\" Another added that, \"the \r\nprobability of even a mini credit crunch in 1973 is extremely low.\" \r\nAlthough the Fed is expected to accommodate a substantial portion of \r\nthe demand for funds in 1973, the economists still anticipate some \r\nedging up of interest rates.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-da | "Beige Book Report: Dallas\nOctober 11, 1972\nIndicators of economic activity in the Eleventh District were mixed \r\nin August. Although the Texas Industrial Production Index eased \r\nslightly from its revised record level in July, the unemployment \r\nrate for the five District states declined, and employment continued \r\nto increase. Department store sales in the District also continued \r\nstrong, and construction activity rebounded sharply. However, the \r\nrate of new car registrations declined slightly.\nA decrease in the production of nonmanufactured goods was primarily \r\nresponsible for the slight decline in the seasonally adjusted Texas \r\nIndustrial Production Index in August. The decline was centered in \r\npublic utilities and crude oil mining. Nevertheless, production in \r\nboth these industries was well above its level of a year ago. The \r\nIndex for manufacturing industries remained essentially unchanged.\nSeasonally adjusted total nonagricultural employment in the five \r\nSouthwestern states rose to a record level in August and helped to \r\npush the unemployment rate down slightly. Both manufacturing and \r\nnonmanufacturing employment increased, with employment in durable \r\ngoods manufacturing and mining showing particularly notable gains. \r\nGovernment employment and employment in service industries also \r\nincreased in August. Slight employment declines were reported in \r\nconstruction and transportation and public utilities. However, all \r\nindustry groups posted year-to-year gains.\nTotal construction contracts awarded in the five Southwestern states \r\nwere up sharply in August. All major types of construction \r\nincreased, but residential building continued to provide the primary \r\nimpetus. The cumulative value of contracts awarded during the first \r\neight months of this year is almost a third higher than in the \r\ncorresponding period last year.\nDepartment stores in the Eleventh District continue to post good \r\nmonthly and year-to-year increases in sales. September sales were \r\nequally strong in the major metropolitan areas of Texas; however, \r\ncumulative figures through September show Houston and Dallas to have \r\nthe largest sales increases over the corresponding period last year. \r\nNew car registrations in the four largest metropolitan areas fell \r\nslightly in August, as declines in Dallas and Houston more than \r\noffset increases in Fort Worth and San Antonio.\nDistrict oil allowables for October were again set at their maximum \r\nrates. However, District production continues to fall behind \r\ndomestic demand, and refiners are increasing their reliance on \r\nforeign oil. With the traditional year-end pickup in drilling adding \r\nto the already strong demand, drilling contractors in East Texas and \r\nsections of the Gulf Coast are operating at close to full capacity. \r\nRegional drilling equipment manufacturers and sellers are \r\nconsequently experiencing a surge in new orders.\nAgricultural production in the five District states is expected to \r\nshow marked improvement over output in 1971. A substantial increase \r\nin crop production, resulting mainly from the prospect of a bumper \r\ncotton crop, is expected to account for virtually all of this output \r\ngain. Although livestock production is expected to be slightly below \r\nits year-earlier level, the cattle feeding industry continues to \r\ngrow, with most of the increase occurring in Texas.\nWith gains in production and improved average prices for both crop \r\nand livestock products, cash receipts from farm marketings in the \r\nDistrict states rose sharply in the first seven months of this year \r\nover the same period in 1971. Even though a recent drop in the spot \r\nprice of cotton is of major concern to cotton producers, prospects \r\nfor farm income continue bright.\nTotal credit at weekly reporting banks in the District rose \r\nmoderately in September, following a rapid advance in August. Total \r\nloans increased more rapidly, however, as commercial and industrial \r\nloan demand continued strong. The demand for business loans was \r\nespecially strong from nondurable goods manufacturers and the \r\nconstruction and service industries. The rate of investment by \r\nweekly reporting banks declined from August. Banks also made some \r\nadjustments in their portfolios, increasing their holdings of \r\nmunicipal securities and decreasing their holdings of U. S. \r\nGovernment securities.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-at | "Beige Book Report: Atlanta\nOctober 11, 1972\nThe economic mood of businessmen and bankers is one of solid \r\noptimism. One Tennessee director actually described the prosperity \r\nin his area as \"almost unbelievable.\" Boom conditions are reported \r\nthroughout Florida. Nevertheless, many businessmen have grave doubts \r\nabout the long-term economic health of the nation because of the \r\nFederal deficit and labor problems. The only weak spots in the \r\nDistrict are areas of aerospace layoffs or work stoppages.\nConstruction continues to highlight economic prosperity in the \r\nDistrict. Shopping center construction is strong in many areas. In \r\nNashville, plans for two savings and loan buildings and for three \r\nmajor motels have recently been announced, and an existing hotel \r\nwill undergo a $5-million renovation. Construction will also start \r\nshortly in Nashville on a $25-million Federal building. Final plans \r\nare being formulated for a $25-million convention center on the \r\nMississippi Gulf Coast. In Atlanta, still another large hotel will \r\nbe built, this one rising 70 stories. In South Florida, an \r\nunprecedented boom in residential construction may be slowed by a \r\ndecision of the Florida Pollution Control Board to reject all sewer \r\nhookup applications in areas of Florida that do not provide adequate \r\nwaste treatment. One Florida real estate economist has predicted \r\nthat some areas of South Florida are overbuilding and due for a \r\nserious shakeout in 1973. Brick is in short supply in several areas \r\nof the District, with delivery taking at least two months. A survey \r\nof three New Orleans savings and loan associations indicates a \r\nshortage of mortgage funds in that city in the face of strong \r\ndemands.\nManufacturing employment is increasing in many areas, and capable \r\nlabor is scarce. A major electronics firm has increased its East \r\nTennessee labor force from 7,000 to 12,000 in the past year. \r\nNumerous plant announcements and expansions should continue pressure \r\non tight labor markets. However, aerospace layoffs are causing \r\nsoftness in the Huntsville, Alabama Area. Huntsville businessmen, \r\nhowever, are confident about their long-term economic prospects. \r\nLabor stoppages have slowed construction and depressed the economy \r\nin the Lake Charles, Louisiana Area. It has been reported that work \r\non a large chemical plant addition in Lake Charles has been slowed \r\nintentionally because of uncertainty concerning the expiration of 17 \r\nseparate construction-related labor contracts in the coming months. \r\nThe huge tufted carpet industry in North Georgia is enjoying record \r\nproduction and shipments.\nBusiness leaders attending a meeting in Birmingham expressed \r\nconsiderable concern about inadequacies of wage and price controls. \r\nOne nonunion firm claims that it is experiencing a labor shortage \r\nbecause it can only raise wages 5.5 percent when union settlements \r\nhave been negotiated at higher rates than permitted under the \r\nguidelines. A manufacturer of coal and coke reported being caught in \r\na profit squeeze because raw material cost increases could not be \r\npassed through. This executive stated that, although the market for \r\nhis product was taxing capacity, he did not anticipate opening any \r\nnew coal mines since, under the present cost and price control \r\nstructure, they would not be economically justified. This apparently \r\nwas the opinion of bankers and others from whom the company had \r\nsought funds to finance expansion.\nPlant and equipment expenditures are being undertaken by some firms \r\npredominantly to reduce costs rather than increase output. A \r\nrepresentative of one firm manufacturing electrical equipment \r\nemphasized that his firm was engaging in capital expenditure \r\nprograms specifically to improve costs, and these programs went to \r\nthe extent of closing some plants and relocating production in lower \r\ncost areas. Capital expenditures are also heavy for projects to \r\nreduce pollution.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-kc | "Beige Book Report: Kansas City\nOctober 11, 1972\nVigorous economic activity in the District is being bolstered by \r\nstrength in the agricultural and construction sectors and in \r\nautomobile sales. Overall activity is being supported by strong \r\ndemands in all major loan categories at commercial banks. At the \r\nsame time, growth in savings inflows and in mortgage loans and \r\ncommitments is sustaining a high level of residential construction. \r\nRecent developments surrounding the export of farm products are also \r\ncontributing to an improved income situation in the important \r\nagricultural sector of the District's economy.\nLoan demand continues strong at District banks, with heavy demands \r\nbeing experienced in all major loan categories. Most District banks \r\nsurveyed increased their prime rate to 5 3/4 percent during the \r\nfirst week of October reflecting both heavy business loan demand and \r\nnational financial developments. The recent run-up of short-term \r\ninterest rates, which has increased the cost of short-term funds, \r\nhas also put upward pressure on the prime rate at District Banks. \r\nDespite the upward adjustment of offering rates on CD's, the volume \r\nof CD's has declined substantially at District banks since the end \r\nof August.\nSeveral District bankers expressed concern about the possibility of \r\ndisintermediation, even though present inflows of time and savings \r\ndeposits have been strong. Rates on consumer-type time deposits are \r\ngenerally at ceiling levels. No consensus has developed regarding \r\nmarket rate levels that will trigger deposit outflows, but many \r\nbankers feel that both consumer-type time deposits and large CD's \r\nwill be affected if present trends continue. In anticipation of this \r\nprospect, several banks are actively attempting to extend deposit \r\nmaturities.\nSavings inflows to District savings and loan institutions were \r\nreported to be down a bit from last year by respondents in Kansas \r\nCity and Oklahoma City, but from \"surprisingly steady\" to \"coming in \r\nstrong\" by institutions in Wichita, Topeka, Omaha, and Denver. On \r\nthe whole, rates offered for savings remain the same, but average \r\neffective rates paid have risen as increasing numbers of depositors \r\nhave been switching from passbook to certificate accounts.\nMortgage commitments and loans of savings and loan institutions have \r\napparently stabilized somewhat, with slight declines noted in some \r\nareas. However, respondents from Omaha and Oklahoma City emphasized \r\nthat the small declines left loan activity very strong because of \r\nthe phenomenal pace of lending earlier. Much the same thing was said \r\nabout construction activity\u2014continued strength in building in most \r\nareas, though somewhat reduced from earlier peaks. Some further \r\nslowing down was anticipated in residential building in the Kansas \r\nCity Area and in apartment starts in Omaha. Respondents from Omaha \r\nand Denver were a little apprehensive about possible overbuilding.\nThe dollar value of residential construction contract awards so far \r\nin 1972 continues to be well above the 1971 level for the District \r\nand for most of its larger cities. Speculative building of single \r\nfamily dwellings continues strong in the Kansas City Area, according \r\nto home construction firms surveyed. Most contractors are not \r\nconcerned with overbuilding at this point, although several \r\nmentioned \"hearsay\" comments that demand is slowing. Nearly all of \r\nthe homebuilders were of the opinion that there were plenty of funds \r\navailable to both builders and buyers.\nContract awards for nonresidential building and for public works and \r\nutilities have also shown increased strength across the District \r\nthis year, except for Western Missouri. General contractors in the \r\nKansas City Area are expecting an improvement in 1972, however, \r\npartly due to an expected increase in highway construction activity \r\nin both Kansas and Missouri.\nSales of domestic automobiles by District dealers are very strong. \r\nIntroductory sales of new models are reported to be better than last \r\nyear, almost without exception. \"Hold-the-line\" pricing on 1973 \r\nmodels is given some of the credit, because many customers believe \r\nthat higher prices are just a matter of time. Many dealers, however, \r\nare convinced that price increases will not retard sales increases \r\nvery much. Nearly all dealers expect 1973 model-year sales to be \r\noutstanding. At the same time, clean-up sales of 1972 models have \r\ngone exceptionally well, and inventories of 1972 cars are very low. \r\nSales of imported autos are not sharing the buoyancy in domestic car \r\nsales, although later introduction of new models is undoubtedly a \r\nfactor.\nNet farm income for the United States for 1972 is now expected to \r\nreach $18.6 billion, or $500 million more than reported earlier, \r\naccording to the U. S. Department of Agriculture. The change is due \r\nprimarily to the huge grain sales to the Soviet Union, amounting to \r\nroughly $1 billion. The projections for wheat and feed grain exports \r\nhave also been revised sharply upward for the 1972-1973 marketing \r\nyear. District states produce approximately 40 percent of the wheat \r\nand 20 percent of the feed grains that are exported from the United \r\nStates each year. Thus, these new developments in the farm income \r\npicture should boost the final figures for 1972 District farm \r\nincome, although many farmers forfeited higher incomes by selling \r\ntheir wheat before the sharp price jump in August and September. \r\nHowever, historical records in Kansas indicate that, even after \r\nallowing for heavier than usual marketings in June and July, \r\nprobably 50-60 percent of the new crop was still under farmer \r\ncontrol when the full magnitude of wheat sales to Russia became \r\napparent.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-bo | "Beige Book Report: Boston\nOctober 11, 1972\nFor the first time in a long while, all our directors from \r\nmanufacturing and construction firms reported that business was very \r\ngood. New orders were reported rising in all sectors, and there were \r\nscattered reports of new hirings. No strong inventory building, \r\nhowever, was noted. The local fishing industry, which has been badly \r\nhurt by the red tide scare, is an exception to the generally \r\nimproving pace of economic activity.\nOur business directors had no bad news to report. Orders were up in \r\nall areas for consumer goods, industrial materials, capital goods, \r\nand aerospace. While capital goods and machinery orders are rising \r\nand backlogs improving, one broad-based manufacturer noted that the \r\ngains are much more moderate than the national statistics on capital \r\nspending would indicate. Our directors' firms are themselves, \r\nhowever, trying to expand capacity now, although they still have \r\nample capacity in most lines. One director mentioned that his firm \r\nis building two new plants to manufacture campers, a product line \r\nwhere demand is very high. Another announced the construction of a \r\n$100 million facility to handle imported liquefied natural gas. \r\nCapital spending to more fully automate plants was also mentioned.\nAll our directors mentioned that they were increasing their work \r\nforce. Workers who were laid off in the machine tool division of one \r\ncompany have all been recalled. A bank director from Martha's \r\nVineyard noted that young women were finding employment in new \r\noccupations like fishing and carpentry.\nThe red tide scare has severely depressed the entire New England \r\nfishing industry, not just firms selling infected shellfish. New \r\nEngland fish sales are reported 75 percent below normal levels. Our \r\ndirector from Martha's Vineyard reports that the island, which \r\nusually exports its fish heavily at this time of year, can find no \r\nmarket for its uncontaminated catch.\nOur directors continue to show concern about a reemergence of \r\ninflation. They seem to be equally worried, however, that anti-\r\ninflationary measures taken by a reelected Nixon administration \r\nwould clamp down hard on profits or cut spending to the point of \r\nbringing another recession. They noted that these fears are very \r\nwidespread on Wall Street. They also show concern over the large \r\nbudget deficit. In anticipation of higher interest rates, one of our \r\ndirectors has already undertaken his long-term financing needs now. \r\nOne director mentioned that he felt more relaxed about inflation \r\nthan he has in a long time because controls have worked so well. \r\nHowever, he strongly expressed the opinion that controls should not \r\nbe removed before the end of next year, if inflationary expectations \r\nare to be effectively dampened.\nOur four academic correspondents, Eckstein, Samuelson, Shapiro, and \r\nWallich, agreed that the economic outlook, both domestic and \r\ninternational, is good. The latter, according to Shapiro \"has never \r\nlooked better.\" Professor Wallich expressed concern over the current \r\nrate of money growth in light of the 5.9 percent trend which \r\nprevailed over the inflationary period from late 1966 to late 1971. \r\nHe granted that there may be a tendency for velocity to diminish \r\nalong with inflationary expectations. Wallich and Shapiro would like \r\nto have monetary growth taper off to a 6 to 7 percent annual rate; \r\nSamuelson hoped for 7 percent for the rest of the year.\nThere was a general anticipation that neither the proposed budget \r\nceiling nor the refunding of overwithholding would have a strong \r\neconomic impact. On the other hand, Shapiro believed that the \r\nceiling would have a favorable psychological impact on the financial \r\nmarkets. He felt that failure to enact the ceiling could add as much \r\nas 50 basis points to the 7 1/2 percent corporate new issue rate he \r\nexpects to prevail by the end of 1973. He foresaw no credit crunch \r\nin 1973\u2014a bill rate of 5 1/2 and a long-term government rate of 6 \r\n1/4 by year end.\nEckstein did not think there would be a budget ceiling. He regarded \r\nthe proposal as only pre-election political maneuvering, although he \r\ngranted that there is a budget problem. Eckstein was less concerned \r\nabout the budget than about the future course of bank reserves. He \r\nadvocated a \"modest 6 to 8\" percent rate of growth of RPDs. He \r\nargued that it would be dangerous at present for the monetary \r\nauthorities to go outside of this range, regardless of the perceived \r\ndegree of fiscal restraint or stimulus.\nThere were no strong opinions on discount rate policy, although \r\nSamuelson and Eckstein stressed the need for flexibility.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-mi | "Beige Book Report: Minneapolis\nOctober 11, 1972\nHigher livestock and grain prices this year have stimulated District \r\neconomic activity and helped spur third quarter retail sales. \r\nHowever, no significant reduction is expected in District \r\nunemployment.\nAccording to Bank directors, this year's higher livestock and grain \r\nprices are stimulating District economic activity. A Montana \r\ndirector revealed that recent high wheat prices will increase \r\nMontana farm income by $16 million and result in greater farmer \r\nspending. In a North Dakota director's opinion, almost every \r\nbusinessman in his state will benefit from this year's high grain \r\nprices, and a South Dakota director was optimistic about the \r\nprospects for retail spending in his state. Furthermore, Bank \r\ndirectors unanimously expect an increase in farm machinery sales. A \r\nTwin Cities banker also believes that this year's improved farm \r\nincome will increase the cash inflow to country banks this fall and \r\nincrease correspondent balances at his bank. Although the Port of \r\nDuluth did not benefit from the recent wheat sales, a Duluth \r\ndirector believes additional sales to Russians would aid his area.\nPartially reflecting the improved farm income situation, District \r\nconsumer spending advanced in the third quarter, and District \r\nretailers look for further gains in the fourth quarter. Four out of \r\nfive Twin Cities Area retailers revealed that their third quarter \r\nsales were quite good, two noted a definite pickup in August and \r\nSeptember. In addition, Gamble Skogmo's business economist indicated \r\nthat their business in the District's rural areas had improved in \r\nthe third quarter. These retailers revealed that their third quarter \r\nsales had generally matched earlier expectations, although one Twin \r\nCities discounter stated that his third quarter sales only matched \r\nlast year's level. These retailers unanimously expected good to \r\nexcellent business in the fourth quarter.\nThe anticipated stimulus from farm spending, however, is not \r\nexpected to significantly reduce District unemployment. A survey of \r\nState Employment Security Offices in 16 of the District's largest \r\nlabor areas revealed that, although employment growth is expected to \r\nimprove in many areas, no substantial reduction in unemployment is \r\nanticipated. When asked to characterize the outlook for employment \r\ngrowth during the next 90 days, two respondents termed it \r\n\"excellent,\" seven called it \"good,\" six considered it \"fair,\" and \r\none referred to it as \"poor.\" Nine of the respondents foresee job \r\nopenings in their areas to be up from a year ago\u2014seven said only \r\n\"slightly,\"\u2014while five respondents expect employment opportunities \r\nto match last year's level and two anticipate drops. Since most \r\nrespondents also look for normal to above normal labor force growth \r\nin the fourth quarter, no significant reduction in unemployment is \r\nexpected. Seven respondents look for fourth quarter unemployment to \r\nbe down slightly from a year ago, three foresee no change, and six \r\nanticipate some increase in joblessness.\nIn the Minneapolis/St. Paul Metropolitan Area, which accounts for a \r\nthird of District employment, job openings are expected to be up \r\nfrom a year ago, and a modest fourth quarter increase in employment \r\nis anticipated. However, unemployment is only expected to be down \r\nnominally from a year earlier.\nBank directors' opinions varied with regard to the labor market \r\noutlook in their respective areas. In Northeastern Minnesota, \r\nunemployment is up, and no significant reduction in joblessness is \r\nforeseen. LaCrosse, Wisconsin's unemployment rate, however, is at \r\nits lowest level since September 1969, and further improvement is \r\nexpected. And in the Upper Peninsula of Michigan, the construction \r\nof an iron mining facility is expected to stimulate employment \r\ngrowth next spring. Furthermore, a South Dakota director anticipates \r\na modest gain in his area's employment, and a Montana director \r\nattributes more jobs in his area to a pickup in construction \r\nactivity. In North Dakota, meanwhile, the employment situation was \r\ncharacterized as \"pretty good,\" with few married men out of work.\r\nOne director revealed that his firm is finding common laborers \r\nplentiful, but not skilled workers. Another director indicated that \r\nemployers are advertising for additional workers but are being very \r\nselective in hiring them.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-ri | "Beige Book Report: Richmond\nOctober 11, 1972\nOur most recent survey of District businessmen indicates that \r\neconomic conditions in the Fifth Federal Reserve District continue \r\nto improve. Manufacturers report increases in shipments, new orders, \r\nand backlogs. No change was reported in manufacturing employment, \r\nbut there was an increase in hours worked per week. The demand for \r\nall types of loans remains strong, with consumer loan demand \r\nespecially strong. Further increases in construction activity were \r\nreported. Businessmen and bankers continue to be optimistic about \r\nthe Fifth District economy.\nResponses from District manufacturers indicate increases in \r\nshipments, volume of new orders, and backlogs. On balance, \r\nmanufacturing inventory levels were reported to have decreased, \r\nalthough inventories relative to desired levels remain high. There \r\nare indications that production is beginning to press on capacity in \r\nsome industries as an increased number of manufacturers report that \r\ncurrent plant and equipment capacity relative to desired capacity is \r\ntoo low.\nA strong upward trend in retail sales continues to be reflected in \r\nreports from bankers and trade and services respondents. Increases \r\nin retail sales excluding automobiles and in automobile sales were \r\nreported by more than three-fourths of the banking respondents.\nManufacturers reported no change in employment, while hours worked \r\nper week increased somewhat. Industry reports indicate pronounced \r\nshortages of labor and growing overtime in the important furniture \r\nindustry. Trade and service respondents indicated an increase in \r\nboth employment and hours worked per week. On balance, both \r\nmanufacturing and trade and service respondents reported an increase \r\nin wages paid, but no change in prices received.\nAccording to reports from District bankers, residential and \r\nnonresidential construction activity continues strong. Nearly one-half of the banking respondents indicated that construction activity \r\nhas increased in their areas since the last reporting period.\nBankers report strong demand for all types of loans. The demand for \r\nconsumer loans appears to be especially strong with more than 70 \r\npercent of the banking respondents indicating an increase in the \r\ndemand for this type of loan.\nDistrict crop conditions improved slightly during August, but \r\nproduction prospects in early September were generally below those a \r\nyear ago. Output of only three of the chief money crops\u2014peanuts, \r\nsoybeans, and corn\u2014is expected to be sizably larger than in 1971. \r\nJanuary-July cash receipts from farm marketings were 5 percent above \r\na year ago, but the increase was below the national gain. Demand \r\nremains strong, and record breaking prices for better quality grades \r\ncontinue to prevail on flue-cured tobacco markets.\nBusinessmen and bankers in the District continue to be optimistic \r\nabout the economic outlook. More than three-fourths of the banking \r\nrespondents believe that business activity in their areas will \r\nincrease in the next 90 days.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-ch | "Beige Book Report: Chicago\nOctober 11, 1972\nThe strong momentum of the business expansion and the improved \r\npsychology of businessmen, lenders, and the public are increasingly \r\nevident in the Seventh District. The job market continues to improve \r\ngradually, consumers are spending and using credit more freely, \r\norder backlogs are rising, and output of some industries will not \r\nshow the usual seasonal decline in the winter months. Capital \r\nexpenditures are advancing further. Inventories continue under tight \r\ncontrol, but apparently are increasing at a faster pace.\nEmployment has not increased as fast in the District as in the \r\nnation. Moreover, employment in the Chicago Area, almost 30 percent \r\nof the District total, is estimated by state agencies to be no \r\nhigher than a year ago, while the manufacturing sector is below last \r\nyear. In this expansion, some smaller plants have been closed in the \r\ncentral or near suburban areas of large cities. Commonly, output is \r\nexpanded, and new facilities are located in remote suburbs or \r\nsmaller centers far from the headquarters. The implication for the \r\nfuture of the large cities is ominous.\nDespite slower than average growth in employment, unemployment in \r\nmost areas is estimated to be below last year. Local employment \r\nservice offices frequently refer to withdrawals from the labor force \r\nsince last year. But these views may not be based on adequate \r\nevidence.\nDemand for appliances, furniture, television sets, motor homes, \r\nsnowmobiles, and other \"recreational vehicles\" has been excellent. A \r\nnumber of producers of these items have announced plans to expand \r\ncapacity in new, or existing, facilities. Consumers are continuing \r\nto use installment credit freely. Nevertheless, savings inflows, \r\nespecially at S&Ls, continue at a high level.\nSales of mobile homes remain very strong, and local experts \r\ncontradict reports that the market is softening. HUD acquired \r\nthousands of mobile homes for disaster relief following floods in \r\nSouth Dakota and Pennsylvania. As a result, mobile home producers, \r\nwho customarily keep abreast of demand, now have order backlogs. \r\n(Some smaller mobile home producers are not sharing in this \r\nprosperity, however.) Modular housing, on the other hand, is doing \r\npoorly, and some District plants have been closed.\nHuge new shopping centers are accounting for a substantial share of \r\nthe increase in retail sales, particularly in the Chicago Area. In \r\nrecent months, many stores have lengthened their hours to include \r\nSundays and/or evening operations to 9 or 12 P.M. They report \r\nwidespread use of these extended hours, especially on Sundays.\nIn the capital goods sector, farm machinery producers are very \r\npleased with demand, here and abroad, and are planning to continue \r\noutput at a higher level than normal in the winter months. Producers \r\nof components for capital goods\u2014including dies, forgings, \r\nelectrical apparatus, drives and couplings, and controls\u2014report \r\norders up 20 to 50 percent from last year's level, which was still \r\nquite depressed in some sectors. In part, this reflects the need to \r\nbuild inventories. Other strong areas include forklift trucks, used \r\nmachinery, solid waste disposal systems, and safety equipment. \r\nCapital goods producers are hampered in expanding output by \r\nshortages of skilled workers, especially for second shifts.\nThe strength of the auto and truck markets is well publicized. \r\nShortages of truck engines and other components have spurred \r\nexpansion plans.\nSteel orders are proceeding at a good pace, with demand for sheets \r\nespecially good. Lighter structural steels also are showing \r\nstrength. Ford is expanding its steel capacity at Dearborn.\nAmong the weaker capital goods sectors are coal mining equipment \r\n(which had been excellent), railroad equipment, the oil industry, \r\nand pipelines. Paradoxically, these are among the sectors where \r\nneeds are the greatest.\nProspects for another record year in construction in 1973 are \r\nexcellent, although the pace of residential construction is expected \r\nto be down\u2014perhaps by 10 percent. Housing permits surged again in \r\nthe Chicago Area in August after slowing earlier in the year. \r\nCommercial construction (other than office buildings), manufacturing \r\nbuildings, and water and sanitary facilities are expected to provide \r\nstrength.\nPrice Commission rulings are quite effective in many industries. \r\nFirms unable to justify price increases commonly notify suppliers \r\nthat they must also hold the line. In some major industries where \r\nthe leading firm cannot justify price increases because of the \r\nprofit margin rule, competitors who could justify increases must \r\nalso hold back.\nPrivate forecasters now estimate midwest soybean and corn production \r\nat somewhat higher levels than the recent government estimates. \r\nThese private estimates take into account heavy rains that have \r\ndamaged some crops and delayed harvesting.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-sl | "Beige Book Report: St Louis\nOctober 11, 1972\nBusinessmen in the Eighth Federal Reserve District report vigorous \r\neconomic growth. Retail sales at major stores continue up on a \r\nseasonally adjusted basis. The construction industry maintains its \r\nhigh rate of activity established late last year. All types of \r\nmanufacturing are expanding. Employment continues to expand, and \r\nshortages of qualified labor are reported on a wide front throughout \r\nmost of the District. However, fears that inflation is likely to \r\naccelerate in the near future have increased. Demand for credit is \r\nrising rapidly, causing upward pressure on interest rates. A larger \r\nnumber of firms are now planning for additional capital investments. \r\nHowever, there appears to be less optimism than during the summer \r\nthat the inflation is under control.\nMajor stores report a sharp increase in sales during recent weeks. \r\nPart of the gain is attributed to cooler weather, but part is \r\nattributed to generally rising consumer demand. Stores in the \r\ncentral cities were losing sales and operating at a loss last year \r\nand early this year, but reports indicate that sales in these stores \r\nhave now stabilized and they are operating at a profit.\nConstruction continues at a high rate throughout the District with \r\nthe exception of the St. Louis Area, where excessive labor costs and \r\nnumerous labor disputes have been a significant retarding factor. In \r\nmost of the District, construction activity and output in the lumber \r\nindustry is at 100 percent capacity. Directors of the Little Rock \r\nBranch report that in a recent week there were 110 job openings in \r\nStuttgart for unskilled laborers and only four jobs were filled. \r\nThey further reported that excess demand for building materials is \r\ncausing prices to rise to the top of the permissible range. \r\nSuppliers of building materials are unable to keep pace with demand, \r\nand allocation by rationing has resulted. Current brick orders are \r\nfor spring delivery. Prices in the future market for plywood and \r\nlumber have jumped the permissible percentage on opening trade in \r\nrecent months.\nManufacturing in the District continues to expand vigorously on a \r\nwide front. Production of capital goods such as machinery, big \r\nmotors, and power transmission is picking up. Production of \r\nplastics, fibers, and agricultural supply manufactures is also \r\nhigher in recent weeks than heretofore.\nEmployment expanded further in recent weeks at most reporting firms. \r\nA shortage of qualified labor is developing on a wide front \r\nthroughout the District. Department stores in St. Louis report that \r\ngood labor is hard to get despite the fact that the City still shows \r\na relatively high rate of unemployment.\nLending agencies report that demand for loans is rising, while the \r\nrate of savings remains unchanged. Negotiated CD rates have moved up \r\nin recent weeks, but inflows of savings are still at a lower rate \r\nthan credit extension. Large St. Louis banks recently announced a \r\nprime rate increase, but upward pressure on most rates continues.\nConcern for inflation, which had subsided somewhat earlier in the \r\nyear, is beginning to revive. A larger proportion of respondents \r\nexpressed reservations as to the future of wage-price controls in \r\nview of the rising demand for and higher prices of goods and \r\nservices in the uncontrolled sector. In many instances, the \r\nincreased prices in the uncontrolled sector become higher input \r\ncosts to the larger firms in the controlled sector of the economy.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-sf | "Beige Book Report: San Francisco\nOctober 11, 1972\nRecent sales of wheat to Russia and China have created a very \r\nfavorable situation for growers; with no crop carry-over, good wheat \r\nprices are expected to hold next year also.\nRetail spending is maintaining its previous rate of advance and is \r\nnow well ahead of the same period last year. Retailers are \r\noptimistic that this trend will continue for the rest of the year. \r\nAutomobile dealers are very optimistic for sales of the '73 models, \r\nalthough current sales are being held down by slow deliveries. Even \r\nin those areas where unemployment remains a problem, consumer \r\nspending is described as noticeably stronger.\nDistrict bankers report stronger loan demand by business. One large \r\nOregon bank, despite a slight downturn in commercial loans last \r\nmonth, expects further growth over the next few weeks on the basis \r\nof the present volume of loan applications. Commercial banks \r\ngenerally report good demand for loans, along with steady growth in \r\ndeposits. Time-deposit rates have climbed somewhat, and the prime \r\nrates of most banks have been raised in accord with national trends. \r\nAlso, conventional mortgage rates in Southern California are \r\nreported to have risen 1/4 percent or higher. Banks are reasonably \r\nliquid and are in a position to meet increased loan demand without \r\nmajor increases in interest rates.\nOur directors report that economic activity is continuing to \r\nregister solid gains in most sectors of the Twelfth District. \r\nInvestment expenditures should rise strongly during the rest of this \r\nyear and into 1973. Retail sales in most areas are maintaining a \r\nsteady growth. Construction is holding up well despite certain signs \r\nof weakness, and this in turn is contributing to a high demand in \r\nthe District's forest-products industry. Agriculture similarly has \r\nexperienced a good crop year.\nAgainst this background of activity, our directors report that \r\ninvestment expenditures are expected to be higher in the rest of \r\nthis year, and that they will grow further in 1973. In forest \r\nproducts, high demand for housing justifies modernization and \r\nexpansion of capacity. In aircraft, rising demand for air-transport \r\nequipment will stimulate further investment. Pollution control is \r\nrequiring heavy expenditures; in Washington, for example, one \r\ncompany is planning $22 million in control facilities, and a \r\nsmelting company will spend $18 million to reduce smoke emissions. \r\nGeneral manufacturers in Los Angeles and machinery producers in \r\nOregon are expanding to meet increased consumer demand, expenditures \r\nby public utilities to expand capacity will be important in \r\nmaintaining construction spending. Although some directors again \r\nreport overbuilding of apartments and office buildings, construction \r\ngenerally shows no serious signs of weakness.\nAssisting these higher levels of investment are favorable cash flows \r\nand recent tax changes, particularly the investment tax credit. The \r\nlatter was singled out as a major factor influencing current \r\ninvestment plans in both industry and agriculture.\nOur directors (except in Utah) generally expect a sizable and \r\nbroadly-based rise in investment expenditures. A major California \r\nbank forecasts a 14-percent increase in business fixed investment in \r\n1973. Associated with this spending on fixed capital will be a \r\nhigher rate of inventory accumulation, above the current sluggish \r\npace, through the first half of 1973.\nAgriculture has had an excellent year, and the high income received \r\nby farmers has led to heavier investment in new equipment and \r\nfacilities. Many farmers are turning to larger machinery and are \r\nalso spending to improve their irrigation systems. According to a \r\nWashington director, the rising cost of farm labor is another factor \r\ngenerating higher investment. Efforts to reduce labor costs have led \r\nto expansion of capacity in hydroponic grown crops, as well as more \r\nefforts to mechanize in field crops. Even where there is no \r\nexpansion, there is at least constant replacement of equipment.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-su | "Beige Book: National Summary\nOctober 11, 1972\nComments from the District banks uniformly emphasize the strong pace \r\nof the current economic expansion. Near-term prospects for both \r\nconsumer spending and business investment continue to be excellent. \r\nStrong income gains in the agricultural sector are bolstering retail \r\ntrade and outlays for farm machinery and equipment. Construction \r\nremains at a high level in most Districts. Signs of overbuilding in \r\ncertain areas, however, suggest an adjustment in 1973. Labor market \r\nconditions generally continue to show improvement, and some \r\nDistricts are experiencing labor shortages. Businessmen and \r\neconomists expressed concern over the possibility of renewed \r\ninflationary pressures in 1973, and over what public policy measures \r\nmight be taken to counteract those pressures. Reports were mixed on \r\nthe effectiveness of wage-price controls and their future prospects. \r\nCommercial banks are experiencing strong loan demand, especially \r\nfrom the consumer sector.\nConcern about the reemergence of inflation during 1973 was the most \r\nfrequently mentioned problem on the economic horizon. Banks \r\nspecifically commenting on the problem of renewed inflation include \r\nBoston, New York, Philadelphia, Cleveland, and St. Louis. On the \r\nsubject of controls, Atlanta mentioned that businessmen are \r\nconcerned about the inadequacies of wage-price controls, while St. \r\nLouis reported reservations among businessmen regarding the future \r\neffectiveness of controls. A comment picked up by New York was that \r\ncontinued wage controls (but presumably not price controls) seem to \r\nbe a \"necessary evil\" if the problem of cost-push inflation is to be \r\nsolved. Chicago underscores the effectiveness of Price Commission \r\nrulings in many industries, and business economists in Cleveland \r\nmaintain that sentiment among large firms is for a continuation of \r\ncontrols next year.\nBanks generally reported that retail sales continued to register \r\nstrong growth in recent weeks. Higher livestock and grain prices \r\nhave contributed importantly to retail trade in Minneapolis and have \r\nstimulated sales of farm equipment. Chicago, Kansas City, Dallas, \r\nand San Francisco also commented on bright agricultural income \r\nconditions. In Richmond, however, the gain in agricultural income is \r\nbelow the national average.\nThere are signs that the upswing in business fixed investment is \r\ngaining momentum. Philadelphia reported businessmen's plans for \r\ncapital spending are being stepped up, while Richmond noted an \r\nincreased number of manufacturers whose current plant capacity is \r\ntoo low relative to desired levels. Atlanta mentioned heavy capital \r\nspending on projects for pollution control and that investment is \r\nbeing undertaken primarily to reduce costs rather than to increase \r\ncapacity. In Chicago, excellent consumer demand for recreational \r\nvehicles has spurred producers to expand capacity. Farm machinery \r\nproducers in the Chicago District are pleased with domestic and \r\nforeign demand and plan to operate at a higher level than normal \r\nduring the winter. San Francisco sees plant and equipment spending \r\nrising strongly in 1973, with heavy outlays required for pollution \r\ncontrol.\nOn the financial sides, commercial banks are experiencing strong \r\nloan demand, particularly for mortgages and consumer credit. \r\nBusiness economists in the Cleveland District do not expect a credit \r\ncrunch to materialize in 1973, although they anticipate some edging \r\nup of interest rates. In Kansas City, bankers are concerned about \r\nthe possibility of disintermediation. San Francisco reports that \r\nbanks are reasonably liquid and in a position to meet increased loan \r\ndemand without major increases in interest rates.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-10-11T00:00:00 | /beige-book-reports/1972/1972-10-ny | "Beige Book Report: New York\nOctober 11, 1972\nThe relatively optimistic mood of this Bank's directors regarding \r\nthe current general business outlook remained in evidence this \r\nmonth. The Directors felt that residential construction activity \r\nwould remain at a high level in 1973 and that consumers' outlays \r\nwould continue on the upswing. The consensus was that there had been \r\nlittle change in the rather conservative inventory buying practices, \r\nbut this was largely attributed to more efficient management, with \r\nthe help of computers. Concern, however, continued to be expressed \r\nover the inflationary implications of the Federal budget and labor \r\nunions' large wage demands.\nRegarding the overall current economic outlook, the directors in \r\ngeneral felt that the current and prospective business situation had \r\nundergone little change recently and reported a generally optimistic \r\nmood among themselves and their associates. Indeed, the president of \r\nan upstate bank reported some heightening of optimism in his area as \r\na result of a reduction in local unemployment. And another upstate \r\ndirector noted that, apart from certain segments in agriculture and \r\ntourism that had been adversely affected by poor weather, all other \r\neconomic sectors in his area looked \"very strong.\" Concern, however, \r\ncontinued to be expressed over the inflationary implication of the \r\nfiscal and wage situation. A Rochester retailer thus noted the \r\nnecessity for additional taxes to finance even current government \r\nexpenditures, and another director referred to the urgent need to \r\ndevelop new federal budget controls. An upstate manufacturer \r\nremarked that continued wage controls seemed to be a \"necessary \r\nevil\" if the problem of cost-push inflation were to be solved.\nConcerning residential construction, the directors expressing an \r\nopinion on the topic all felt that homebuilding would continue to be \r\nrelatively strong in 1973. Some of the directors forecast a \r\ncontinuation of the popularity of multiple-dwelling units and \r\nstrength in apartment building activity. One director noted that the \r\ndamage caused earlier this year in his area by a hurricane and \r\nfloods was generating an unusually large amount of construction of \r\nnew homes and of reconstruction of existing structures. Another \r\ndirector reported that homebuilders in the Rochester Area felt that \r\nexpected ample availability of mortgage funds would contribute \r\nsustained strength to home construction next year.\nRegarding consumer outlays, most respondents characterized the \r\npicture as good but not spectacular, and about in line with \r\nexpectations. One director\u2014the president of a large container \r\nmanufacturing firm\u2014felt the situation was \"very good.\" A senior \r\nofficial of a large upstate firm also felt that a boom in consumer \r\nspending, while not as yet evident, might materialize next spring.\nThe directors, however, in general saw little if any strengthening \r\nin the current inventory picture, in either trade or manufacturing. \r\nAn upstate director associated with the automotive parts business \r\ndid state he detected an upward trend, and the Rochester retailer \r\nalso felt the overall pace of inventory spending looked a bit \r\nstronger. The latter director, however, suggested that some of the \r\naccumulation in the retail sector in the Rochester Area might be \r\ninvoluntary. Another director suggested that recent published \r\nstatistics pointing to a climb in inventory spending might be \r\nmisleading because such increases may, in part at least, reflect the \r\nimpact on the book value of inventories of rising prices.\nAnother director stated that the high cost of carrying inventories \r\nwas tempering the demand for additional stocks. Also, a number of \r\ndirectors noted that computer-based control systems enabled \r\nbusinesses to carry inventories at lower levels.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-at | "Beige Book Report: Atlanta\nSeptember 13, 1972\nBusinessmen generally report that spending and production are \r\nadvancing. Business sentiment is bullish. One of the leading sectors \r\nis construction, especially in Florida and Atlanta.\nAccording to one report, \"there has never been a housing boom to \r\ncompare with the current statewide boom in Florida\". There have been \r\na number of large projects announced such as a 31,500-acre community \r\ndevelopment in southwest Florida, a $600 million residential-hotel-industrial complex to be build on 2,700 acres south of Orlando near \r\nDisney World, and two beachfront condominium projects in northeast \r\nFlorida totaling $16 million. Building permits in the Miami area are \r\nreported to be running 20 percent over previous record levels.\nThe construction outlook is strong elsewhere, especially in Atlanta \r\nwhere several large projects have been announced, including a 1,200-\r\nroom hotel, an $80 million planned community, a 600-unit high-rise \r\ncondominium, two fifteen story office buildings, a large second-home \r\nand resort community, and a community of 950 single-family homes. \r\nCommercial construction is also setting the pace in New Orleans \r\nwhere two skyscrapers have recently been announced, one to be the \r\ntallest in the southeastern addition. The mobile home industry \r\nreports to be booming throughout the District.\nAll indications are that the summer tourist season was very strong \r\noutside Miami. Most central Florida attractions had good attendance, \r\nand most of these attractions are planning to expand their \r\noperations. Opryland near Nashville projected that its first season \r\nattendance would be one million, but it had an attendance of 0.7 \r\nmillion by Labor Day and is planning to spend $3 million on \r\nincreased entertainment. The Tennessee Walking Horse Festival this \r\nyear was attended by 133,000 versus 123,000 a year ago. In \r\nKnoxville, it is reported that a company has bought land with the \r\nidea of building another large amusement park. Oddly enough, a study \r\nby the state of Florida following the Democratic convention found \r\nthat \"delegates spent virtually no money on activities which are \r\nfollowed at typical conventions and their presence kept away the \r\nusual summer tourists.\" Large numbers of vacant hotel and motel \r\nrooms have been reported, and many of the so-called \"glamour night \r\nspots\" have reported a low average summer season.\nThere have been a number of new plant announcements, the largest \r\nbeing a $280 million oil refinery in Pascagoula, Mississippi. When a \r\nplastics plant recently opened in Jackson, Mississippi, the company \r\nannounced that it would be adding a facility twice the size of its \r\nnew plant. Other recent plant announcements include a mobile home \r\nplant in north Florida, a plastics plant in Nashville, a plumbing \r\nfixtures plant in Knoxville, and a cement plant in the Miami area.\nThere is a labor shortage in several areas of the District, \r\nevidenced in central Florida by an increase in help-wanted \r\nadvertising on television and radio.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-kc | "Beige Book Report: Kansas City\nSeptember 13, 1972\nThe strength in consumer spending which was reported in the most \r\nrecent GNP data does not appear to be uniformly reflected in the \r\nperformance of a number of Tenth District large department stores. \r\nReports of strong recent sales were less frequent than were reports \r\nof only modest to little improvement, with poor weather or discount \r\ncompetition usually cited as reasons. On the price front, retailers \r\nwere about equally divided in their reports of further price \r\nincreases from their suppliers, although even those who have \r\nexperienced such increases reported that both competition and price \r\ncontrols have served to restrain the degree to which they could pass \r\nthese on to their customers. During the month ended August 15, the \r\nindex of prices received by farmers advanced to a new high, a factor \r\nwhich should underscore the sharp rise in Tenth District farm income \r\nreported in the last Red Book. However, the softness that has \r\nprevailed in slaughter cattle markets up until last week may dampen \r\nsome of these gains despite the strong uptrend in grain prices. Loan \r\ndemand continues strong at Tenth District member banks, and the \r\ngeneral consensus of those banks interviewed is that the present \r\nlevel of loan demand will hold steady or increase somewhat over the \r\nremainder of the year. Unlike the near consensus which emerged last \r\nmonth in conversations with Tenth District manufacturing firms \r\nreporting much improved sales, discussions with a number of large \r\ndepartment stores in the Tenth District elicited mixed opinions. \r\nWith one exception, all respondents reported that sales were up, but \r\nthe degree of recent improvement varied from city to city. Generally \r\nspeaking, the Kansas City and Oklahoma City sales picture was \r\nstronger than was the situation in Denver. In Omaha, a large \r\nnational outlet reported very strong sales while a local independent \r\nreported sales below a year ago-the only respondent to do so, citing \r\nstrong competition from new shopping centers which has hurt their \r\nsales.\nStrength in furniture sales figured prominently in most reports of \r\nimproved overall sales. Inventory behavior at the retail level still \r\nremains conservative. No stockpiling appears to be in evidence, as \r\ninventory investment is reported keeping pace with the current level \r\nof sales. Most respondents expressed optimism regarding the \r\nprospects for sales during the remainder of the year. When asked \r\nabout price increases from suppliers, the replies were about evenly \r\ndivided among those who reported further price increases and those \r\nreporting that their suppliers were holding the price line. Even in \r\nthose cases where supply prices had been raised, those firms \r\nindicated that their ability to pass these increases on to their \r\ncustomers was constrained by their local competitive situation or by \r\ncurrent price regulations.\nThe index of prices received by farmers advanced to a new high \r\nduring the month ended August 15. Since then, grain prices have been \r\ngenerally stronger-reflecting large sales to the Soviet Union as \r\nwell as growing demands elsewhere-while livestock prices have \r\naveraged lower until very recently. Slaughter cattle prices, in \r\nparticular, have been unusually soft, falling almost $5 per \r\nhundredweight from early July to late August with only a moderate \r\nincrease in slaughter rates. Cattle prices so far in September have \r\nbeen stronger. Although cattle prices will probably remain \r\nreasonably stable, showing perhaps some firmness between now and the \r\nyear-end, hog prices are expected to decline seasonally from the \r\nnear-record high levels that currently exist, as the volume of \r\nmarketing increases this fall and winter. Thus, the recent abatement \r\nof wholesale meat prices, together with the prospects for some \r\nfurther decline, likely will remove most of the pressure on food \r\nprices during the remainder of the year.\nLoan demand continues strong at Tenth District member banks. Among \r\nlarger banks, where detailed data are available, demand is \r\nespecially strong for business real estate and consumer installment \r\ncredit. Tenth District weekly reporting bank statistics show this \r\nstrength, and it is confirmed by interviews with banks throughout \r\nthe District. Several banks report increases in loan commitments \r\nparticularly to finance companies. In Kansas City, grain sales to \r\nRussia have also produced increased commitments. Commitments for \r\nreal estate construction, agriculture, and international trade are \r\nalso reported to have increased at one Denver bank. In response to \r\nthe strength in loan demand, some banks have instituted changes in \r\nlending policies. A respondent in Tulsa and one in Denver report \r\npreferences for lending at shorter maturities. Another Denver bank \r\nis attempting to hold real estate loans at their current levels in \r\norder to increase loans in other lines. The general consensus of \r\nthose banks interviewed is for the present level of loan demand to \r\nhold steady or increase somewhat over the remainder of 1972. In \r\norder to obtain additional loanable funds, many District banks have \r\nalso become more aggressive in their attempts to attract CDs. In one \r\ninstance, a bank in Oklahoma City has set its rates above those \r\nobtainable in money market centers. While the aggressiveness partly \r\nreflects the strength of loan demand, it is also in response to \r\nweakness in demand deposits that has produced outflows in total \r\ndeposits.\nWith only one exception of the banks contacted, the prime rate now \r\nprevailing is 5 1/2 percent with about half of the respondents \r\nhaving raised the rate in the last week of August. The lone \r\nexception carries a prime rate of 5 3/4 percent which is justified \r\non the basis of local loan demand.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-ph | "Beige Book Report: Philadelphia\nSeptember 13, 1972\nArea businessmen continue to be optimistic about the Third District \r\neconomy. Production activity is continuing to increase. The \r\nemployment picture is practically unchanged but is expected to be \r\nbetter in six months. Retail sales are brisk and expected to hold up \r\nthrough the fall. Seasonal doldrums which are said to be typical for \r\nSeptember are holding bank deposits back. Loan demand from national \r\nborrowers is weak, but consumer, real estate, and small business \r\nloan demand is good. Business investment in inventory and plant and \r\nequipment is seen rising slowly in the months ahead. Over half of \r\nthe businessmen contacted look for rising prices in early 1973.\nMost manufacturing firms in the Third District responding to the \r\nBank's monthly business outlook survey report new orders and \r\nshipments are either constant or increasing. The survey also \r\nindicates that manufacturing activity is expected to rise for the \r\nnext six months. Employment prospects are improving. A growing \r\nminority of firms have expanding payrolls. The six-month outlook is \r\npromising; 40 percent of the firms foresee increased hiring by \r\nspring. However, the majority of firms still foresee no particular \r\ngrowth in their payrolls. Over half of the firms surveyed are not \r\nchanging the number of employees or the length of the average \r\nworkweek, and they don't plan to do so in the next six months.\nRetail sales have been \"particularly good\" since tropical storm \r\nAgnes, which kept shoppers at home earlier this summer. Sales have \r\nmoved up nicely on a broad front and are expected to continue strong \r\nthis fall.\nPhiladelphia bankers report that deposits are coming in slowly, but \r\nthat this is normal for September. One banker stated that he could \r\nget all the time deposits he wanted by raising interest rates but \r\nthat demand deposits were hard to increase. Business loan demand \r\nfrom large national borrowers is sluggish at the contacted banks; \r\none banker attributed this to the large corporation's easy access to \r\nthe commercial paper market. In contrast, loan demand from local \r\nbusinesses, real estate buyers, and consumers is reported strong.\nArea businessmen are not contributing to inventory expansion; the \r\nnumber of firms reporting inventory increases is about equal to the \r\nnumber of firms cutting their inventories. However, six months from \r\nnow half the responding businessmen expect to be increasing \r\ninventories, compared with 17 percent who plan decreases.\nNew plant and equipment expenditures within the next six months are \r\nexpected to increase, but the number of firms planning such \r\nexpenditures dropped slightly from last month's survey.\nThe responding businessmen expect inflation to be more of a problem \r\nin the future. The percentage of respondents expecting more \r\ninflation increased slightly from last month's survey. About one in \r\nfive are paying and receiving higher prices this month; over half \r\ncurrently expect prices to rise within six months.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-su | "Beige Book: National Summary\nSeptember 13, 1972\nIn general, the District banks report continuing business expansion \r\nand a good measure of optimism about future prospects. With few \r\nexceptions, retail sales are reportedly doing well. Home building \r\nnationwide has fallen back from peaks earlier in the year, but \r\nremains very strong in selected areas. Commercial banks are \r\nexperiencing good loan demand from consumers and small business, \r\nwhile demand from national corporations is more restrained. The \r\nemployment picture appears to have strengthened a bit further, and \r\nexpectations of further employment gains were variously noted. The \r\nagricultural situation was almost uniformly described as bright, \r\nwith farm output, income and investment up.\nRetail sales were said to be \"particularly good\" in Philadelphia; \r\nstrong or improving in the Richmond, Chicago, Minneapolis and San \r\nFrancisco and Dallas Districts, but only moderate or mixed in St. \r\nLouis, Kansas City, New York, and Cleveland. Atlanta and Boston \r\nreport that the summer tourist season had been strong, but Boston \r\nsaid that vacationers had been \"quite careful\" with their money. \r\nChicago noted a significant rise in domestic airline traffic.\nThere was some evidence of increased capital spending. Philadelphia \r\nDistrict businessmen expect to increase plant and equipment \r\nexpenditures within the next six months. Chicago reports that most \r\nDistrict producers of capital equipment have been experiencing \r\nhigher sales and orders, with good prospects for the future. New \r\nYork also cited some evidence of a strong capital spending outlook \r\nfor 1973, and Atlanta reported the announcement of several large \r\ncommercial construction projects, including hotel and office \r\nbuildings. A survey by Minneapolis found a significant increase in \r\nlocal firms reporting plant capacity as \"less than needed\".\nConstruction activity remains at a high level, but District trends \r\nare mixed. Atlanta characterized building activity in its District \r\nas being of boom proportion. A generally favorable construction \r\npicture is also reported by the Richmond and San Francisco Banks. \r\nSt. Louis reports that while construction activity has apparently \r\nleveled off, it has done so at a relatively high rate. Similarly, \r\nthough the Dallas Bank reports a decline since June, it notes that \r\nsuch activity remains well above last year's level. Cleveland states \r\nthat residential contracts appear to have peaked in the May-June \r\nperiod and to have declined sharply in July.\nThe nationwide employment situation appears to have improved further \r\non balance. Richmond reports increases in employment and hours \r\nworked per week, and both Richmond and Atlanta found shortages of \r\nlabor in some areas of their Districts. New York noted shortages of \r\nskilled construction workers, and Chicago reported both an increase \r\nin help wanted advertising and inadequate supply of quality workers. \r\nThe unemployment rate is down further in San Francisco. Some other \r\nreports pointed to little current change in the job market but, \r\namong these, Philadelphia and Dallas found some evidence pointing to \r\nfuture improvement.\nReports from some Banks indicated that concern over inflation \r\nremains strong. A number of New York's directors cited the \r\ninflationary implications of the large and widening Federal budget \r\nand of the heavy calendar of wage negotiations in 1973. Businessmen \r\ncontacted by Philadelphia expected inflation to be more of a problem \r\nin the future. Encouragingly, however, Kansas City found evidence in \r\nthe agricultural situation that the pressure would be off food \r\nprices for the remainder of the year. In this connection, most Banks \r\ndiscussing agriculture-Chicago, St. Louis, Kansas City, Dallas and \r\nSan Francisco-all reported good agricultural prospects as a result \r\nof both higher prices and high production, though Richmond said the \r\noutlook in that District is for reduced crops and farm income.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-ri | "Beige Book Report: Richmond\nSeptember 13, 1972\nNo important changes in current and prospective conditions in the \r\nFifth District have occurred since the previous survey. \r\nManufacturers report a slight decline in shipments and increases in \r\nnew orders and backlogs. Increases are reported in employment and \r\nhours worked per week. Construction activity remains strong and the \r\ndemand for all types of loans is up. In general, businessmen and \r\nbankers remain optimistic about the economic outlook for the \r\nDistrict.\nThe diffusion of responses from District manufacturers indicates a \r\nslight decline in shipments, while new orders and backlogs are up \r\nsubstantially. Increases in both orders categories were reported by \r\nmanufacturers in such important District industries as textiles, \r\nelectronics, and steel. For the first time in several months, \r\nincreases in manufacturing inventories were reported. Inventory \r\nlevels relative to desired levels also increased, however, \r\nsuggesting that some of the increase in inventories may have been \r\nunanticipated.\nRetail sales continue strong in the District. Nearly three fourths \r\nof the banking respondents reported increases in general retail \r\nsales in their areas, and more than one half reported increases in \r\nautomobile sales. Contact with several District retailers indicates \r\nthat they continue to experience sales increases.\nIncreases in employment and hours worked per week were reported by \r\nDistrict manufacturers. Trade and services respondents indicated an \r\nincrease in employment but no change in hours worked per week. On \r\nbalance, responses from manufacturers show an increase in wages paid \r\nand a decrease in prices received. More than one fifth of the \r\nmanufacturing respondents reported declines in prices received. \r\nSeveral respondents mentioned a shortage of both skilled and \r\nunskilled labor in their localities.\nReports from District bankers, while showing increases in both \r\nresidential and nonresidential construction, indicate that the pace \r\nof the advance in construction activity has slowed some, compared \r\nwith the previous reporting period. Even so, approximately one third \r\nof the banking respondents report increases in construction in their \r\nareas.\nIn general, reports from bankers indicate that loan demand remains \r\nstrong. More than one half of the banking respondents reported \r\nincreases in the demand for business, consumer, and mortgage loans.\nCrop prospects, as of August 1, were generally not as good as those \r\nin 1971. The outlook for reduced crop production reflects both \r\nsmaller acreages for harvest and lower yields per acre. Total cash \r\nreceipts from farm marketing during the first half of 1972 were 4 \r\npercent above a year ago, but the gain was only half the size of the \r\nnational increase. To date, the 1972 flue-cured tobacco marketing \r\nseason has been marked by strong demand, good quality tobacco, and \r\nunprecedented record-setting prices.\nBusinessmen and bankers in the District are optimistic about the \r\neconomic outlook. Nearly 80 percent of the banking respondents \r\nbelieve that business activity in their area will increase in the \r\nimmediate future.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-ch | "Beige Book Report: Chicago\nSeptember 13, 1972\nThe view that a vigorous business uptrend will continue through mid-\r\n1973, with possibly slower growth in the second half of the year, is \r\nbecoming increasingly common in the Seventh District. Employment \r\ncontinues to edge up, and unemployment is becoming less burdensome, \r\nexcept for some centers in Michigan. While some manufacturers are \r\nnot satisfied with the degree of improvement in their orders, we do \r\nnot know of any sectors where demand is weakening. (Apartment \r\nbuilding in the Chicago area may be an exception.) Retail sales \r\nappear strong, both hard and soft goods, but savings inflows to \r\nfinancial institutions remain at a high level.\nHelp-wanted ad volume in major newspapers has increased \r\nsubstantially this year but remains well below the levels of the \r\nlate 1960's. Some employers find the supply of quality workers to be \r\ninadequate. Night shifts are hard to staff, despite the offer of \r\npremium pay. Many employers are hard pressed to satisfy standards \r\nfor \"affirmative action\" in hiring more women and minority group \r\npeople in the face of company policies to hold down total \r\nemployment. Companywide ceilings on total employment, particularly \r\nfor \"overhead\" types, are common. Adding employees requires more \r\n\"red tape\" than in other upswings. Aside from arbitrary ceilings, \r\nrequirements for new hirings include: (1) approval at a higher level \r\nof management, (2) written justifications, and (3) more frequent \r\nreports on the employment status of individual departments. Partly \r\nbecause of price controls, manufacturers are prepared to let \r\ndelivery times lengthen rather than incur the costs associated with \r\nadditional hirings of recruits of doubtful quality.\nObviously, the tight policy on new hires is a major factor favoring \r\nlarge increases in productivity. These conditions presumably will \r\nchange if the general upswing continues at the rate anticipated.\nThe prospective rise in the minimum wage would not affect starting \r\npay in most District industries, except for retailing. (Not all \r\nretailers would be affected.) However, a substantial rise in the \r\nminimum wage is expected to \"ratchet\" pay scales for relatively low-pay jobs that are above the minimum.\nGas, electric, and telephone utilities report strengthened demand \r\nfor their services. There is little threat of electric power \r\nshortages in this region, in the short run, but prospective supplies \r\nof fuel oil and gas for heat appear to be inadequate. A large \r\nMichigan utility has warned \"interruptible\" industrial customers \r\nthat they will receive no gas in the fourth quarter of 1972, and \r\npossibly not in the first quarter of 1973.\nAttitudes toward price and wage controls vary greatly by industry. \r\nTruckers claim that they are in a wage-price squeeze. Oil firms warn \r\nof \"incipient\" shortages of both gasoline and home-heating oils, \r\npartly because of price controls. At the other extreme, the chief \r\nexecutive of a large Chicago-based airline thinks that the controls \r\nwere an absolute good, and have made it \"possible for his firm to \r\nmove from large deficits to a modest profit\". Incidentally, domestic \r\nairline traffic is now well ahead of last year, after a pause in \r\nMay. A fairly steady annual growth of 9 to 10 percent in passenger \r\nseat miles is foreseen for the rest of the decade.\nMost producers of capital equipment report higher sales and orders \r\nand good prospects for the future. Outlays for pollution control \r\nhave top priority and sometimes displace other items in capital \r\nspending budgets. Some District firms are negotiating sizable deals \r\nwith the USSR. Russians are among the large attendance at the ten-\r\nday international machine tool show that opened in Chicago on \r\nSeptember 5. (Officials believe this show to be the largest \r\nindustrial exposition ever held in the United States.) Foreign \r\ndemand for a variety of types of producer equipment has improved, \r\nwith the United Kingdom the only soft spot among major nations.\nAmong the sectors that are not participating in the rise in capital \r\nspending are petroleum, the railroads, and industrial construction. \r\nThere is little likelihood of a pickup in these sectors in the \r\nremainder of 1972 or in early 1973.\nApartment building has slowed significantly in the Chicago and \r\nIndianapolis areas in 1972. (More apartment buildings would be built \r\nin Chicago suburbs if zoning restrictions were relaxed.) In Detroit \r\nand Milwaukee, on the other hand, apartment building has \r\nstrengthened relative to single-family homes in 1972. Overall, \r\nresidential construction is strong. Where permits have declined, it \r\nis lack of effective demand rather than credit stringencies.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-mi | "Beige Book Report: Minneapolis\nSeptember 13, 1972\nThe economic outlook for the Ninth District appears bright, according to bank directors and area manufacturers. Continued high retail sales expectations are reported by bank directors, who also describe the one-year results of the New Economic Policy as beneficial to their respective areas. Aided by the policy and greater demand for farm products, the District's agricultural sector is experiencing greatly improved income and optimism as well as increased investment. The results of our latest quarterly industrial expectations survey suggest continued expansion in District manufacturing activity.\nBank directors unanimously believe that retailers in their respective areas are expecting very good sales for the rest of 1972. Although a temporary slowdown occurred in August (two directors cited unusual weather conditions as the cause), most directors report that retailers' optimism has increased in the past four to eight weeks.\nDirectors from nonurban areas explain this stronger outlook partially as a result of strengthened income and overall financial situations in the agricultural sector. But two local developments are also seen as contributing factors: the construction of a large open-pit iron ore mine in upper peninsula Michigan and a gathering momentum in the development of fossil fuel production in southeastern Montana.\nAn improving business climate or noticeably rising general confidence is extensively reported by directors, most of whom feel that the past twelve months' experience with the New Economic Policy has been a major factor in creating this situation. Price-wage controls have apparently had noticeable effects throughout the District, and most directors feel that in their areas the greater effect has been on wages. According to a director from La Crosse, Wisconsin, restraint on the advance of labor costs has promoted greater economic activity locally and, without it, some significant cutbacks would have occurred.\nAgriculture has also been aided by the New Economic Policy, states a director from Billings, Montana. Since farm product prices were not controlled, increased demand was allowed to pull them upward considerably while the policy restricted the advance of agricultural input prices.\nAgricultural developments have been especially encouraging recently, according to all directors from agricultural areas. Regional beef markets demonstrated their strength, as prices received for feeder and partially fattened cattle held steady at very high levels despite an August decline in the price of fattened cattle. In addition, the price of wheat, another important District product, has risen rapidly, which increases the value of much District wheat held over from last year's production and a large crop now being harvested. A director from a wheat-producing area reports that, since the beginning of Russian purchasing, the price received by farmers for lower protein wheat has advanced from $1.16 per bushel to $1.46; for higher protein wheat, from $1.38 to $1.88. Throughout the District, wheat yields this year apparently are near last year's record highs.\nAgriculture also appears to be the main beneficiary of another part of the New Economic Policy: according to three bank directors, the investment tax credit has greatly stimulated the purchasing of farm machinery and equipment this year. A director from South Dakota does not feel that investments induced by the tax credit have been confined to agriculture, yet urban directors are not able to identify any they feel have been significantly encouraged by it. Those reporting major construction projects in their areas, however, feel that investment related to these projects may have been accelerated.\nContinued expansion in District manufacturing activity is foreseen by respondents to our third-quarter industrial expectations survey. The value of goods sold by District manufacturers surpassed last year's level by 9.5 percent in the second quarter and is expected to increase at a slightly faster rate during the last half of this year before recording a 7.5 percent gain in the first quarter of 1973. Durable goods producers were more optimistic than they were in the previous survey, but manufacturers of nondurables did not significantly revise their earlier sales expectations.\nDistrict manufacturers' favorable sales outlook is also reflected in their attitudes toward the adequacy of their inventories and plant and equipment. In the current survey, 20 percent of the respondents considered their inventories \"low\", 10 percent termed them \"high\", and the remaining 70 percent described them as \"about right\". One year earlier, 23 percent referred to their inventories as \"low\" and 11 percent \"high\". In addition, considering anticipated sales gains, 27 percent termed their plant and equipment capacity as \"less than needed\" and 12 percent regarded them \"excessive\". These percentages were reversed in the survey conducted in the third quarter of 1971 but, in both surveys, about 61 percent of the respondents felt their plant and equipment were \"about right\".\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-sl | "Beige Book Report: St Louis\nSeptember 13, 1972\nEconomic activity continues to advance in the Eighth Federal Reserve \r\nDistrict, according to a selected group of business representatives. \r\nFactory output continues to show moderate gains for a wide range of \r\nproducts. Retail sales have risen further in recent weeks on a \r\nseasonally adjusted basis. Construction has apparently leveled off \r\nbut at a relatively high rate. More firms reported moderate \r\nincreases in employment in recent weeks than heretofore. Some \r\nbusinessmen reported plans for increased investments next year but \r\npointed out that current profit levels are not sufficient to provide \r\nincentive for major investment programs. Farmers continue to view \r\nthe current year's prospects with optimism, as higher gross and net \r\nincomes are in prospect.\nSales at most major District department stores have continued to \r\nincrease moderately on a seasonally adjusted basis. Increases are \r\nbeing recorded throughout all departments. All the gains in the St. \r\nLouis metropolitan area, however, are at stores located outside the \r\ncentral city. Sales at central city stores have not increased during \r\nthe current upswing in economic activity.\nAn increasing number of firms report moderate gains in number of \r\nemployees. Specifically mentioning additions to their labor force \r\nwere agricultural supply, chemical, and corrugated paper \r\nmanufacturers. The unemployment rate has declined to relatively low \r\nlevels throughout the District with the exceptions of St. Louis and \r\nsome small areas in southern Indiana.\nConstruction continues at a very high level throughout the District \r\nwith the exception of the St. Louis SMSA. Businessmen in St. Louis \r\nreport that excessively high labor costs are inhibiting new \r\ncommercial construction in the area. Home building has generally \r\nstabilized but at a relatively high level throughout the District.\nWhile most of those interviewed believe that we have passed the \r\ntrough in new investment, few major investments are reported by \r\nlarger manufacturers. A representative of a corrugated paper and box \r\nboard firm reported that this industry is operating at capacity, but \r\nlittle new plant investment is contemplated at current profit \r\nlevels. Other businessmen also expressed the view that the low level \r\nof profits in relation to sales was inhibiting new investment. Most \r\nof the Eighth District investment in new plants is outside the St. \r\nLouis SMSA. The metropolitan areas and the smaller cities and towns \r\nin the southern portion of the District are attracting most of the \r\nnew manufacturing plants. Commercial expansion in St. Louis is \r\ngenerally limited to investments in new shopping centers in the \r\noutlying areas.\nAgricultural conditions remain favorable to producers, weather \r\nconditions have been satisfactory, crop prospects are generally \r\ngood, and prices are sufficient to provide for profitable incomes to \r\nefficient producers. Many cotton farmers have already contracted \r\ntheir 1972 cotton crop at higher prices than they received in 1971. \r\nNeat animals are selling at relatively high prices, the quantity of \r\nfeed available is adequate, and the potential profits from feeding \r\nare excellent. Farm supply industries are increasing their sales to \r\nfarm customers as a result of the higher farm incomes.\nDemand for credit is rising somewhat faster at District financial \r\nfirms than the inflow of savings. As a result, there is upward \r\npressure on interest rates. Some increases have already been \r\nreported in the prime rate. None of the larger banks have raised the \r\nrates paid on savings, but bank representatives report that the \r\nsupply of available funds for lending has declined and rates on \r\nsavings may be raised at any time in order to increase the savings \r\ninflow. Rates on mortgages have remained fairly stable, but longer \r\nterm rates did not decline so precipitously as short-term rates \r\nduring the recession.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-da | "Beige Book Report: Dallas\nSeptember 13, 1972\nMost of the major indicators of economic activity within the \r\nDistrict were weaker in July but were still well ahead of their \r\nyear-earlier levels. The Texas industrial production index edged \r\ndownward from June, and the District unemployment rate rose \r\nslightly. Moreover, construction activity in the District was well \r\nbelow its peak reached in May. Department store sales continued to \r\nimprove, however, and a survey of executives of large retail stores \r\nin the District indicated that they are optimistic about business \r\nconditions in the near future.\nNearly 90 percent of the large District retailers that responded to \r\nour questionnaire indicated that they expected their sales to be \r\nbetter during the second half of 1972 than in the corresponding \r\nperiod of 1971. Moreover, a third saw their sales being much better \r\nin 1972. At the same time, over 35 percent said they expected to \r\nincrease their work force moderately in the next six months (after \r\nallowance for usual seasonal change). The majority of those \r\nresponding also expected their profits to be higher in the last half \r\nof 1972, compared with 1971.\nLooking back over the past six months, 93 percent of these firms \r\nnoted higher sales in 1972 than in the corresponding period in 1971 \r\nand sales at one third of these stores in 1972 were much higher than \r\nin 1971. For the majority of these firms, \"big ticket\" items were \r\nmore important in the past six months than in the same period last \r\nyear. Profits were also higher during the first half of 1972 at \r\nthree fifths of the responding firms, with about 15 percent \r\nrecording much higher profits than during the similar period in \r\n1971.\nCompared with a year ago, almost three fourths of these retail firms \r\nindicated that the present level of their inventories was greater. \r\nCurrent inventory levels were categorized as too high, however, by \r\nalmost half of the firms surveyed, while 40 percent said their \r\ninventories were about right. Nevertheless, disregarding seasonal \r\ninfluences, 43 percent of these firms revealed they planned on \r\nincreasing their inventories over the next six months. In response \r\nto a question on inventory procedures, well over half of these \r\nretail firms said that their inventory practices had changed over \r\nthe last five years. Of this group, slightly less than half \r\nindicated that these changes meant lower inventory sales ratios \r\nwhile about 30 percent said that their inventory procedure changes \r\nhad led to higher inventory sales ratios.\nIn assessing the impact of last year's currency realignments, one \r\nfifth of those responding noted substantial increases in the prices \r\nof their imported merchandise, while two thirds reported that the \r\nprices of imported goods had increased moderately. Two thirds of the \r\nmanagers of the firms surveyed said they also expected retail prices \r\nto increase somewhat in the next six months, but none said they \r\nexpected substantial increases.\nThe seasonally adjusted unemployment rate for the states in the \r\nDistrict rose moderately in July despite an increase in total \r\nemployment. Decreases in employment in both durable and nondurable \r\nmanufacturing apparently were responsible for the rise in the \r\nunemployment rate. The seasonally adjusted Texas industrial \r\nproduction index also declined in July but still remained 10 percent \r\nabove its year-ago level. All industry sectors share in the decline, \r\nas only a few individual industries showed month-to-month increases. \r\nAmong those declining the most were the transportation equipment, \r\nfood and kindred products, and apparel goods industries.\nTotal construction activity also fell sharply in July for the second \r\nconsecutive month, as both residential and nonresidential building \r\ndeclined. Construction activity appears to be reaching more \r\nsustainable levels after reaching a peak in May and still remains \r\nwell above last year's level.\nDistrict oil producing states continue to produce at maximum levels. \r\nNew Mexico has made some revision in its market demand pro-rationing \r\nsystem in light of the continuing full production situation. The \r\nmaximum production schedule has also encouraged drilling operations, \r\nparticularly in Texas and Louisiana. The strong demand for gasoline \r\nfrom increased car sales and lower efficiency of car engines, due in \r\npart to anti-pollution equipment, has put pressure on refining \r\ncapacity.\nThe upland cotton harvest in the southern ranches of the District is \r\nproceeding well ahead of last year's rate. Total production for the \r\nfive District states is projected at 5.5 million bales, over a third \r\nhigher than last year's crop, from a 12 percent increase in acreage. \r\nBoth domestic and world prices of cotton are beginning to weaken, as \r\ntotal production is expected to exceed consumption this year. \r\nDistrict crops in general are looking very good, and significant \r\nincreases are expected for nearly all crops. Cattle on feed in Texas \r\nand Arizona on August 1 totaled nearly 2.7 million head, about one-fourth higher than last year. Reflecting these improved conditions, \r\nDistrict farm income is expected to reach a record high this year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-cl | "Beige Book Report: Cleveland\nSeptember 13, 1972\nKey indicators of economic activity in the District reveal some \r\nsigns of hesitation in recent months. Nonfarm payroll employment \r\ndeclined slightly in June and again in July; the insured \r\nunemployment rate continued to improve in August, however. \r\nResidential construction contracts appear to have peaked in the May-June period, and declined sharply in July; nonresidential \r\nconstruction remains sluggish. Our electric power indexes of \r\nmanufacturing activity are reflecting temporary leveling tendencies \r\nor slower rates of increase in a number of metropolitan areas. The \r\nperformance of the manufacturing sector should begin to improve as \r\ninventory building gathers momentum. Steel-industry economists see \r\nevidence of near-term improvement in their industry.\nPreliminary returns from our monthly survey of manufacturers \r\nindicate that new orders, shipments, and backlogs continued to rise \r\nin August, but at somewhat slower rates than earlier in the year. \r\nInventory accumulation continued for the fourth consecutive month, \r\nwith the largest percentage of firms reporting higher stocks since \r\nearly 1970. (Our survey has detected no decline in new orders in \r\nmore than a year, no decline in shipments since the end of the \r\nrecession, and no decline in backlogs since last autumn. \r\nInventories, however, were being liquidated through the month of \r\nApril.) Firms also reported little change in labor utilization in \r\nAugust, a lengthening in delivery time, and no easing in price \r\nincreases.\nAn economist from a large retail concern headquartered in the \r\nDistrict reported that areas producing consumer durables have \r\nexperienced very strong department store sales in recent months, \r\nwhile areas specializing in producers' goods have had sluggish \r\nretail sales. In general, sales of sportswear, cosmetics, and \r\nhousehold furnishings have been good, recreational goods mediocre, \r\nand air conditioning terrible. His opinion is that consumers are \r\nhighly price conscious and appear to be displaying much resistance \r\nto price increases.\nSeveral major machine tool companies in the Cleveland area indicate \r\nthat orders are rising sharply, although they have a long way to go \r\nbefore reattaining previous peak order levels.\nAccording to several steel industry economists in the District, \r\nthird-quarter shipments are registering only the normal seasonal \r\npattern-a disappointment to some analysts who expected a pickup. \r\nOrders have not been outstanding. Steel ordering for heavy \r\nconstruction and industrial construction (still below normal) seems \r\nto have bottomed out. There are signs of a modest improvement, but \r\nthe real strength from this sector is not expected to come until \r\n1973. The economists say the order outlook from the consumer sector \r\npromises to be very strong for the fourth quarter. Some hedge buying \r\nin anticipation of a steel price increase on or after January 1 \r\ncould occur over the next few months. According to one steel \r\nindustry economist, competitive factors, rather than the Price \r\nCommission, have held down steel prices. The industry is in a \r\nposition to raise prices on January 1 (when its self-imposed price \r\nfreeze ends) if market conditions are favorable. The economists \r\nexpect the steel industry to have a better year in 1973, with \r\ncapital goods providing the stimulus and consumer goods demand about \r\nlevel with this year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-sf | "Beige Book Report: San Francisco\nSeptember 13, 1972\nAccording to our directors, economic activity in the Twelfth \r\nDistrict continues to grow at the rates established in recent \r\nmonths, and no slowing is foreseen in the rest of this year. Among \r\nthe more important sectors in stimulating this advance are retail \r\nsales-including automobiles-construction, and agriculture. As a \r\nresult, unemployment rates have been lowered still further. Bankers \r\nreport steady loan demand and little change in interest rates.\nConsumer spending is strong throughout the District. In Tacoma, \r\nretail sales in July equaled the previous 1968-69 peak despite a \r\nlocal unemployment rate of 10 percent. Southern California merchants \r\nare described as experiencing much better business than in 1971, and \r\nthey expect continued improvement in the rest of 1972. Automobiles, \r\nin particular, have benefited from the greater consumer spending. In \r\nTacoma, the number of automobiles sold was 13 percent above the same \r\nperiod in the previous year and, in Los Angeles, dealers describe \r\ntheir sales as excellent. Some dealers had a \"sell-out month\" in \r\nAugust for 1972 models, and they are going into the new-model year\r\nwith low inventories and optimistic expectations. Both domestic and \r\nimported cars are sharing in these gains.\nAgricultural prospects similarly are good in most District states. \r\nLivestock prices are expected to remain high, and the only problem \r\nfor ranchers appears to be a shortage of feeder cattle in some \r\nareas. Potato prices are reported at being at an \"all-time high\", \r\nand good crops are being harvested in Idaho and Washington. Above-average prices exist for other vegetables and fruit crops. In some \r\ncases, the prices reflect smaller plantings, and in others, such as \r\nfruits, the higher prices are due to smaller crops caused by bad \r\nweather. Good yields are in prospect for such crops as wheat, corn, \r\nand sugar beets.\nLumbering activity remains high in the Pacific Northwest, as the \r\nleveling-off in national construction activity is being offset by \r\nstronger demand for wood products from other sectors of the economy. \r\nThe continued strength in the timber industry has been an important \r\nfactor in lowering unemployment, especially in Washington.\nConstruction in most parts of the District remains at a generally \r\nhigh level. There are, however, variations by region and by type of \r\nconstruction activity. Residential construction is buoyant in most \r\nareas, and in some cities, such as Salt Lake City, is at record \r\nlevels. One exception is Alaska where a decline in residential \r\nconstruction has occurred, but this has been offset by more \r\ncommercial projects. Commercial construction, with the possible \r\nexception of office buildings in some cities, is continuing to rise. \r\nGovernment construction is strongest for highways but relatively \r\nweak for public buildings and schools. Apartments are the only \r\nconstruction category which appears to show signs of weakness. Our\r\ndirectors in the Los Angeles area, Idaho, Spokane, and Portland \r\nreport various signs of overbuilding. Vacancy rates are climbing, \r\nand in one city several savings and loan associations have stopped \r\nmaking loans for apartment construction. The overall consensus is \r\nthat construction will maintain its current levels for the rest of \r\n1972.\nLittle change has occurred in District banking conditions. Loan \r\ndemand especially for business loans remains strong, and moderate \r\nincreases in deposits, with a few exceptions, are reported. Some \r\nbankers expect a slight increase in interest rates but not a major \r\nchange.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-bo | "Beige Book Report: Boston\nSeptember 13, 1972\nBusiness conditions were generally described as good, if not \r\nexuberant, but no one was experiencing either a general building of \r\ninventories or heavy capital spending.\nWhile our director from Martha's Vineyard reports that that resort \r\narea had a busy season, he noted that vacationers were quite careful \r\nwith their money. Take-out places and moderately priced restaurants \r\nfared much better than the expensive restaurants. Higher consumer \r\nspending was evident, however, by the increasing numbers of \r\nvacationers with their own boats.\nOur bank directors experienced different trends. A New Hampshire \r\nbanker reported that his savings deposits were up 20 percent in \r\nAugust, while a director from a large Boston bank stated that his \r\nsavings deposit flows have been stable for the last three months. \r\nNeither reported a softening of residential mortgage interest rates. \r\nBoth banks were experiencing heavy business loan demand. In New \r\nHampshire, this came from a seasonal buildup of shoe inventories. \r\nThe Boston banker reported that loans to local businesses were \r\nstable and that his sharp growth in loans came from other areas of \r\nthe country, mainly from real estate and REITs, finance companies, \r\nand some national businesses.\nBusiness orders were reported as very good for carbon black (a raw \r\nmaterial used in manufacturing tires), with a big pickup in the last \r\nten days of August. Despite the good orders, the company may be \r\nforced to close a thermo-black plant in Louisiana because that plant \r\nhas become unprofitable owing to a 100 percent increase in natural \r\ngas prices. The company cannot raise its prices because the company \r\nas a whole would not meet the Price Commission's profit margin test. \r\nIn part, this is because of the Commission's rule which does not \r\nallow the inclusion of interest payments in calculating costs. Since \r\nthis firm is a major factor in this field, no other company \r\nproducing thermo-black can raise its price either.\nProfessors Samuelson and Wallich, the two academic respondents \r\ncontacted this month, both expressed concern over the possibility \r\nthat the rapid second-quarter growth will be continued. Both were \r\nprepared to let interest rates tighten under the stimulus of a \r\ngrowing economy. Wallich noted that higher short rates would have \r\nthe benefit of strengthening the dollar. He proposed a 6 to 7 \r\npercent ceiling on the rate of growth of the money stock.\nNeither respondent found an economic reason not to raise the \r\ndiscount rate. Expressing surprise that the rate has not been raised \r\nalready, Samuelson stressed his general philosophy of two-way \r\nflexibility for both reserve creation and discount policy. He would \r\nfind no inconsistency in tightening now when economic conditions \r\nseem so favorable, but remained prepared to reverse this policy in \r\nthe future in the event that prospects deteriorate.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-09-13T00:00:00 | /beige-book-reports/1972/1972-09-ny | "Beige Book Report: New York\nSeptember 13, 1972\nThe views of this Bank's head office and Buffalo Branch directors on \r\nthe economic situation and outlook remain about unchanged. On \r\nbalance, the directors believe the recovery is continuing, and they \r\nremain reasonably optimistic about the outlook. The primary concern \r\nvoiced about the future was the prospect for worsening inflation. It \r\nwas stressed that the collective bargaining calendar for 1973 is \r\nheavy, the Federal deficit is large and widening, and that wage and \r\nprice controls might be dismantled prematurely. On the brighter \r\nside, several directors cited evidence of a strong capital spending \r\noutlook for 1973, and there were a number of comments that indicated \r\nfurther improvement in the local employment picture.\nThe performance of retail sales were generally pictured as little \r\nchanged from the recent past. Retail demand was described as strong \r\nin New York City, Rochester and Jamestown. One banker director did \r\nsay his information indicated a somewhat mixed picture in the \r\nupstate area, but went on to attribute that to special local factors \r\nsuch as bad weather. Several directors also observed that retail \r\nsales are generally stronger in the suburbs than in the central \r\ncities, and that back-to-school buying had been encouraging.\nConcerning prospective business plant and equipment outlays, several \r\ndirectors felt such outlays would rise rapidly in 1973. An upstate \r\nbanker said he expected \"very strong\" capital spending on the basis \r\nof his bank's loan commitments for \"pay out\" in the first half of \r\nnext year. A senior official of the largest upstate firm also \r\nexpressed confidence that capital spending would show \"an impressive \r\ngain\", in part as a result of the ample availability of both \r\nexternal and internal funds. The president of a major oil company \r\nsaw the possibility for an improvement next year in his industry's \r\ncapital spending picture, following the drop that had occurred in \r\n1972. Another director also foresaw continued rapid growth of \r\ncapital outlays by municipal governments. On the other hand, one \r\nupstate banker stated that he did not look for a significant \r\nupgrading of existing capital spending plans, and an upstate \r\nmanufacturer pointed to the current level of unused capacity, as \r\nwell as to the uncertainties related to the election, as factors \r\ncurrently inhibiting the expansion of capital spending plans. Also, \r\nthe president of a large metal producing firm stated he was \"not \r\nbullish\" with respect to plant and equipment spending in the metals \r\nindustry, in part because of continued excess capacity and depressed \r\nprofits.\nThe directors, with some exceptions, felt the current demand for \r\ncommercial and industrial bank loans was not particularly strong. \r\nThe major exception was the chairman of the board of a large New \r\nYork City bank, who stated that there had been a substantial pickup \r\nin commercial and industrial loans at his bank since mid-year. An \r\nupstate banker reported some strengthening in connection with a \r\ncontinued rapid growth of capital outlays by municipalities. The New \r\nJersey banker reported a good loan demand from local businesses, but \r\nnoted that borrowings at his bank by national corporations has as \r\nyet remained modest. Also, several upstate bankers characterized \r\ncurrent commercial and industrial loan demand as \"quite soft\". One \r\nof these bankers, however, said the current weakness might be \r\nseasonal, and that he was expecting a strengthening in demand in the \r\ncoming months. The senior official of the largest upstate firm also \r\nfelt loan demand was picking up, but not as rapidly as might be \r\nexpected in the light of the pace of the economic recovery\u2014a fact \r\nhe attributed in good part to the current highly liquid positions of \r\nmany large corporations. Similarly, an upstate manufacturer observed \r\nthat current industrial cash flow seemed sufficient to fill normal \r\nfinancial needs. The president of the major oil company reported \r\nthat bank credit to the petroleum industry had been declining since \r\nmid-1969, partly because of increased reliance of those firms on the \r\ncommercial paper market.\nThe responses concerning the employment picture were encouraging. \r\nContinued strength was reported in the Rochester area, where there \r\nis now a shortage of skilled personnel, especially in the \r\nconstruction industry. A similar assessment was made by the New \r\nJersey banker who, as an example, reported that his bank has had \r\ndifficulties in obtaining people to build a new bank building. And, \r\nthe president of the major metal producing firm noted that the \r\nemployment situation in the coal industry has continued to improve.\nFinally, broad concern was expressed by the directors over the \r\noutlook for wage and price inflation. References were made variously \r\nto the \"unhealthy\" Federal budget situation, to the heavy collective \r\nbargaining calendar for 1973 and the possible pace-setting effect of \r\nlarge wage settlements recently negotiated in Canada, to the \r\nprospect for higher gasoline and heating oil prices later this year \r\nas supplies run short, and to fears that existing wage and price \r\ncontrols might shortly be scrapped.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-kc | "Beige Book Report: Kansas City\nAugust 9, 1972\nThe vigor in the economic recovery reflected nationally in the most \r\nrecent GNP figures appears to be mirrored in the sales reports of a \r\nnumber of Tenth District manufacturing firms as well as in comments \r\nelicited from bank directors. Increased sales were reported quite \r\ngenerally, and although little evidence of stockpiling is evident, \r\ninventory spending is keeping pace with recent sales improvements. \r\nSome firms reported longer delivery times to their customers, and \r\nthere were scattered reports of lengthening lead times for inventory \r\npurchases from their suppliers. Despite sales increases, however, \r\nfew of the firms contacted have added net to their work forces, and, \r\nas a consequence, there were a number of firms which reported \r\nnoticeable productivity gains. Tenth District farm income rose more \r\nsharply than for the nation as a whole in the first six months of \r\n1972, and income prospects for all of 1972 appear to be quite strong \r\nvis-a-vis last year. Strong loan demand continues at Tenth District \r\nbanks, and, with few exceptions, District banks have experienced \r\nlarge increases in total deposits.\nA near-consensus emerged as to improved business sales among those \r\nmanufacturing firms and directors queried. Comments such as \"best \r\nyear on record,\" \"up substantially,\" and, \"business sales are beyond \r\ntargets,\" characterized the kinds of responses received. Although \r\nseveral firms indicated that delivery times to their customers had \r\nlengthened as sales continued to improve, it was interesting to note \r\nthat most respondents felt that they were maintaining their normal \r\ndelivery times. In a few cases, firms cited improved delivery times \r\nover last year, even in the face of increased sales.\nThe inventory picture presented somewhat of a paradox. Most firms \r\ncontinue to pursue relatively conservative inventory investment \r\nbehavior. Few outright attempts at stockpiling were reported; \r\nrather, inventory outlays were geared to keeping pace with the \r\ncurrent sales picture. Although firms generally reported that stocks \r\nwere readily available, some lengthening in the lead time from their \r\nsuppliers was noted, particularly for such items as heavy equipment \r\nfor handling materials. Presumably when lead times become further \r\nextended, and as business sales' strength gathers added momentum\u2014an expectation held by most respondents\u2014inventory spending may \r\nbecome more expansive. For the time being, however, those pressures \r\nhave not yet become sufficiently persuasive to cause District firms \r\nto abandon their cautious inventory approach.\nThe \"close-to-the-vest\" inventory behavior of Tenth District firms \r\nextends to hiring behavior as well. Despite the sales increases \r\nreported, few firms have added net to their work forces. Apparently, \r\nthis has not had any appreciable effect on their ability to \r\naccommodate their customers, although a sizeable minority of firms \r\nreported an increase in scheduled delivery times to their customers.\nOne respondent indicated that they had actually managed to reduce \r\ndelivery times over last year. With business improving and new \r\nhiring being held down, it was not surprising that a number of firms \r\nreported noticeable gains in productivity. In one case, it was \r\nreported that productivity gains were responsible for an actual \r\ndecline in product cost this year versus last year.\nFor the first six months of the year, U.S. farm income was up \r\napproximately 10 percent over the comparable year's-earlier period. \r\nHowever, District cash receipts from farm marketings registered a \r\nmuch sharper gain than the national average because of the \r\npreponderance of the livestock sector and very favorable prices. \r\nWith livestock sales\u2014principally cattle\u2014accounting for about 80 \r\npercent of the total, District farm income for the first half was an \r\nestimated 16 percent above the comparable 1971 level. In view of the \r\nlikely continuation of strong livestock prices, as well as the \r\nrecent spurt in wheat prices resulting from the new trade agreement \r\nwith Russia, District farm income for the year is expected to show a \r\nsharp gain over last year since the volume of farm marketings will \r\nalso be higher than in 1971.\nTenth District bankers report continued strong loan demand in recent \r\nweeks. Business loan demand, which gained strength in June, \r\ncontinued to increase during July. Most of the increased demand is \r\nfrom local and regional businesses, as national accounts are still \r\nnot utilizing their lines of credit.\nThe nature of the borrowing needs range broadly from working capital \r\nto plant expansion. Real estate and consumer installment lending \r\nalso continue to be sources of strength, but signs of a leveling off \r\nof the recent upward trend in these categories are appearing. Much \r\nof the real estate lending has been for commercial purposes and for \r\nmultifamily dwellings. Auto loans have been a major component in \r\ninstallment lending. Some banks are experiencing especially heavy \r\ndemands for agricultural loans.\nWith few exceptions, District banks have experienced large increases \r\nin total deposits. Although the distribution of the deposit inflow \r\nbetween time and demand varies from bank to bank, most banks possess \r\nadequate funds to meet loan request. Continuing a recent \r\ndevelopment, Tenth District banks have not aggressively pursued \r\nlarge CD money.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-su | "Beige Book: National Summary\nAugust 9, 1972\nOverall, district banks report a quickening economic pace and an \r\nincreasing degree of optimism about the business expansion. \r\nIndustrial activity is continuing up on a wide front. However, \r\nlittle or no change in unemployment is reported by most districts. \r\nRetail sales are up substantially, with automobile sales \r\nparticularly brisk. Construction continues at a high level with \r\nhousing starts strong in many districts. Most districts are \r\nexperiencing slow or negligible increases in inventories. Commercial \r\nbanks are experiencing strong loan demand. In the coming months \r\ninterest rates are generally expected to rise, with short-term rates \r\nleading longer rates upward. Prices are continuing up in most areas.\nOn the production front, order backlogs, new orders, and shipments \r\nare generally up. Atlanta, St. Louis, and Dallas report strong \r\nincreases while New York, Philadelphia, Chicago, and Kansas City are \r\nexperiencing significant but less noteworthy rises. Richmond reports \r\na slight decline in the backlog of orders for some firms in that \r\ndistrict but shipments are at a constant rate.\nIn general, the employment picture appears to be improving only \r\nslightly at best. In Dallas the unemployment rate recently fell as \r\nlow as 4.3 per cent. And, Chicago and St. Louis report modest \r\nimprovements too. Most districts, however, report no change in their \r\njob markets. Serious pockets of joblessness are reported in parts of \r\nthe San Francisco and Richmond Districts.\nMost districts report fair to strong increases in retail sales. Auto \r\nsales are mentioned as a leading gainer in the reports from \r\nRichmond, Chicago, Dallas, and San Francisco. Chicago commented that \r\nsome retail trade analysts are becoming disillusioned with the \r\nsurveys of consumer intentions to which they subscribe; at least two \r\nof these surveys have issued forecasts of lackluster consumer \r\nspending in recent months.\nIn most districts the demand for loans is strong. Boston reports its \r\nloan demand is \"very strong\" in the real estate and consumer areas. \r\nBusiness loans \"grew substantially\" at Cleveland. \"Loan commitments \r\nare heavy\" in Chicago. At Kansas City local businesses are the \r\nleading borrowers. All loan categories are up sharply in Dallas with \r\nbusiness loans up the most. Deposits are increasing in St. Louis, \r\nKansas City, and San Francisco. About the only questions raised \r\nconcerning interest rates are how much interest rates will rise, and \r\nexactly when the rise will start.\nThe various districts are having a mixed experience with respect to \r\nthe business investment sector. No areas are reporting general \r\nincreases. Cleveland and New York referred to faster inventory \r\naccumulation. But, most districts discuss cautious inventory \r\npolicies as reasons for lack of investment in this area. Capital \r\nspending for machine tools was up \"dramatically\" in Chicago. But no \r\nbroadbased upward trend in plant and equipment outlay is reported.\nMost of the reports indicate that construction activity appears to \r\nhave leveled off at the high plateau attained in late 1971. Total \r\nconstruction is being sustained by strong residential housing \r\ndemand, while non-residential building is performing less \r\nimpressively in several Districts.\nNew York's Directors expressed concern over possible increasing \r\nrates of inflation, and one of Boston's academic consultants voiced \r\nsimilar views. But, most districts had little or no comment about \r\nexpected changes in the general price level. In the agricultural \r\nsector, Philadelphia finds that some crop prices are rising. \r\nRichmond reports tobacco prices are at an all time high. Increasing \r\nprices for corn, soybeans, wheat, cattle, potatoes, and some fruits \r\nwere mentioned in the reports issued by Chicago, St. Louis, Kansas \r\nCity, Dallas, and San Francisco.\nFarmers are enjoying increased incomes in the Richmond, Chicago, St. \r\nLouis, Minneapolis, Kansas City, and Dallas Districts. Although the \r\ncosts of farming are higher than last year, farm receipts are \r\nexpected to be up even more because of higher commodity prices and \r\ngood harvests. In spite of higher farm incomes, Minneapolis \r\nfurnished some data suggesting that farm spending was decreasing. \r\nBad weather hurt fruit growers and canners in Utah and many farmers \r\naround the Harrisburg, Pennsylvania area. Some bankruptcies are \r\nlikely to result from these unfortunate local weather conditions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-sf | "Beige Book Report: San Francisco\nAugust 9, 1972\nOur directors report that the regional economy is expanding rapidly \r\nand is generating a strong demand for bank loans. They also note \r\nseveral signs of weakness, such as the topping off of the \r\nconstruction boom and the tendency for many firms to restock \r\ninventories only on a replacement basis. Generally speaking, \r\nhowever, they agree that the strong pace of forward planning by \r\nbusiness firms reflects both the favorable tone of the recovery to \r\ndate and a rising level of confidence in the overall economy. All \r\nareas of the District report a continued high level of construction \r\nactivity, but all express fears about the continuation of the \r\nhousing boom, especially the apartment-building boom. Firms tied to \r\nthe construction industry have encountered a noticeable decline in \r\nnew orders over the past several months; one such firm, in builders' \r\nhardware, expects to reduce production and employment as its order \r\nbacklog decreases.\nMost forest-product facilities in the Pacific Northwest continue to \r\noperate at or near capacity. Although some producers foresee a \r\nfalling-off in demand from the residential construction sector, they \r\nalso expect overall demand to remain high because of the strength of \r\nthe nonresidential sector.\nProspects for other manufacturing, meanwhile, continue to look \r\nfavorable: Southern California, for example, expects at least a mild \r\nemployment boost from the award of the space-shuttle contract. \r\nAlaska, on the other hand, continues to suffer from high \r\nunemployment because of the premature arrival of hopeful oil-\r\npipeline workers.\nRetail sales of consumer goods (especially autos) expanded rapidly \r\nin recent weeks\u2014except for the Los Angeles area, where a record-breaking heat wave cut into retail sales during July. Retail sales \r\nremained high in the Pacific Northwest, even in the face of the \r\nPuget Sound area's continuing unemployment problem.\nMost farming areas of the District are in a reasonably profitable \r\ncondition despite drought conditions in the Southwest and last \r\nspring's freeze damage to fruit crops in the Mountain States. (In \r\nUtah, practically all fruit canning factories are now closed because \r\nof the loss of the fruit crop.) The Northwest in particular has \r\nbetter-than-average prospects, with steady-to-rising prices expected \r\nfor wheat, potatoes, and cattle.\nAlmost all areas report strengthening demand for business loans, \r\nalthough some firms do not need to resort to the banks because of \r\ntheir strong liquidity position derived from internal cash flow or \r\nexternal bond financing. As for the banks, their currently available \r\nfunds and the expected inflow of savings seem sufficient to \r\naccommodate a strong loan demand throughout the rest of the year. \r\nLoan-deposit ratios have been rising, however, originally because of \r\nconsumer loan and mortgage demand, and more recently because of \r\nbusiness loan demand.\nDuring the remainder of the year, bankers expect that business firms \r\nwill borrow increasing amounts for handling receivables, for \r\nexpanding inventories throughout the manufacturing-distribution \r\nchain, and for activating plant equipment expansion plans that had \r\nbeen laid aside during the recession. Some large firms say that they \r\nhave not borrowed short-term and that they do not intend to do so \r\nfor the remainder of the year, but these firms, by and large, are \r\nexceptions to the general trend.\nIn the Northwest, encouraging crop prospects have led farmers to \r\nborrow for equipment replacement and expansion. In the Mountain \r\nStates, a strong business expansion has created credit demands for \r\nfinancing motels, manufacturing plants, shopping centers, and \r\nresort-type homes. In Southern California, further business-loan \r\nexpansion is expected because of inventory investment and the rapid \r\ngrowth of capital spending. Most bankers expect that prime-rate \r\nincreases will go along with this increase in loan activity, but \r\nthey doubt that rate increases will dampen the underlying buoyant \r\ndemand for credit.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-ny | "Beige Book Report: New York\nAugust 9, 1972\nAccording to the directors of this Bank and of the Buffalo branch, \r\nthe recent business inventory picture on balance has become \r\nmoderately brighter, and there have been scattered signs of a \r\nfurther strengthening in business plant and equipment spending \r\nplans. The directors, however, saw little recent change in the \r\nunemployment situation, except for a sharp improvement in those \r\nareas of the District where repairs of the extensive damage caused \r\nby Hurricane Agnes were underway. Most expressed concern over the \r\nwage-price outlook, particularly if the controls are allowed to \r\nexpire.\nRegarding business inventory policies, the respondents felt that the \r\nlong-awaited rise in business inventory accumulation appeared to \r\nhave gathered some, if limited, momentum over the past month. While \r\nin the view of some of the directors, business inventory policies \r\nhave remained on the cautious side, others reported some rise in \r\nboth manufacturing and trade inventories. The president of a large \r\nmetal-producing firm characterized the rate of accumulation among \r\nmetal users as \"moderate.\" He said most manufacturers in this field \r\nfelt that the current level of unused capacity in the metal-producing industry would make it possible to meet any rise in demand \r\nthrough increased production. Other directors, while reporting some \r\nincrease in inventories, felt that the buildup was not commensurate \r\nwith the rise in economic activity. They attributed this to improved \r\ninventory control spurred, in part, by the relatively high level of \r\ninterest rates, and to the fact that business had \"learned to live\" \r\nwith lower inventories. Thus, the vice president of the largest \r\nupstate New York firm stated that both trade and manufacturing \r\ninventories were on the rise, although not rapidly enough to keep \r\nahead of sales. Similar views were expressed by the chairman of a \r\nsizeable New Jersey bank.\nAlthough most of the respondents saw no dramatic change in the \r\nrecent past in business plant and equipment plans, the overall \r\nassessment of developments in this sector apparently continued to \r\nbrighten on the whole. Among the Buffalo branch directors, a banker \r\nreferred to the announcement of a major steel corporation that it \r\nwas planning fairly large capital spending at its upstate \r\nfacilities, while another banker pointed to relatively large \r\nexpansion programs in his area by two corporations. The senior \r\nofficial of the largest upstate firm was the most optimistic, \r\nindicating that his firm's capital budget might rise substantially \r\nin 1973.\nResponses regarding the unemployment situation were mixed. The head \r\noffice directors, in general, saw little improvement in a generally \r\n\"soft\" job market, particularly with respect to the availability of \r\nsummer jobs for students. However, a director did point to one \r\nexception-the coal industry-where he felt the employment outlook for \r\nexperienced workers was very good. An upstate banker saw some \r\nfirmness in the employment situation in his area, while some of the \r\nBuffalo branch directors reported a pronounced improvement in the \r\nemployment picture in those areas where extensive repairs of damages \r\nresulting from Hurricane Agnes were underway.\nMost directors expressed concern over the price and wage outlook, \r\nbased, among other things, on the pending increase in social \r\nsecurity benefits, the impact of the proposed rise in the legal \r\nminimum wage, the heavy 1973 calendar of union negotiations, and \r\neven on the upcoming union election in the coal industry which a \r\ndirector\u2014the president of a large metal producing corporation\u2014felt would result in \"wholly unrealistic\" wage increase demands. The \r\nBranch directors did feel that under Phase II,\r\nprice and wage increases were at a lower rate than previously. \r\nHowever, they expressed concern over what would happen when the \r\ncontrol expired, unless some other \"ground rules\" to curb labor \r\ndemands were adopted.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-da | "Beige Book Report: Dallas\nAugust 9, 1972\nThe economy of the Eleventh District continued to show strength in \r\nJune, although indicators were generally mixed. Texas industrial \r\nproduction continued to rise, and retail sales and automobile \r\nregistrations grew substantially. Construction activity in the five-state region eased slightly in spite of a sharp increase in Texas. \r\nWhile the unemployment rate for the five states continued to edge \r\ndownward, the level of employment also declined.\nThe seasonally adjusted Texas Industrial Production Index continued \r\nto rise in June, pushing the index to a level nearly 10 percent \r\nhigher than it was in December 1971. All three sectors of industrial \r\nproduction-manufacturing, mining, and utilities-contributed to the \r\nJune advance, but mining provided the main impetus, as production of \r\ncrude oil rose sharply. In manufacturing, output of durable goods \r\nincreased moderately over the previous month, with the largest \r\nadvances occurring in transportation equipment and stone, clay, and \r\nglass products.\nTwo related industries-primary metals and fabricated metal products-\r\nshowed declines in June but were still ahead of their outputs a year \r\nbefore, as were all manufacturing industries. Manufacturing of \r\nnondurable goods also rose only moderately in June, in spite of \r\nsubstantial gains in two industries-textiles and paper and allied \r\nproducts.\nSeasonally adjusted total employment in the five southwestern states \r\nfell slightly in June. As a result of a sharp decline in the number \r\nof people looking for jobs, however, the unemployment rate continued \r\nits gradual decline started last October, falling to 4.3 percent of \r\nthe labor force in these states, compared with 4.7 percent in June \r\n1971. Employment fell below month-earlier levels in most categories \r\nof both manufacturing and nonmanufacturing. Finance was the only \r\nmajor reporting industry group to show a rise in employment. All \r\nother industries showed declines, the largest being in construction, \r\ntransportation, and public utilities. In spite of the June drop, \r\nhowever, all industries continued to show year-to-year gains with \r\nthe exception of mining, which was down slightly from June 1971.\nRegistration of new passenger automobiles in Dallas, Fort Worth, \r\nHouston, and San Antonio rose substantially in June. Total \r\nregistrations were 11 percent higher than in June 1971. Cumulative \r\nregistrations through the first six months of the year were 12 \r\npercent higher than in the corresponding period last year. All four \r\nmetropolitan centers showed substantial increases in cumulative \r\nregistrations.\nDepartment store sales in the Eleventh District increased \r\nsubstantially in the four weeks ended July 22 over the corresponding \r\nperiod last year. Cumulative sales through that date were also much \r\nhigher than in the corresponding period a year before.\nTotal construction activity for the five southwestern states fell \r\nslightly in June after two months of record-breaking activity. A \r\nsharp decline in nonbuilding construction accounted for most of the \r\nJune drop, as well as for the sharp rise in April and May. \r\nResidential building continued to play a major role as it increased \r\nin June for the fourth consecutive month. Nonresidential building \r\ndeclined slightly. The cumulative value of contracts awarded in the \r\nfive-state area for the first six months was 37.1 percent higher \r\nthan in the comparable period in 1971. Texas's construction \r\nincreased its already dominant role among the five southwestern \r\nstates, as it rose in June to a level over 38 percent higher than in \r\nJune of last year. Both residential and nonresidential building in \r\nTexas rebounded sharply in June after declining in May.\nThe winter wheat crop in states of the Eleventh District is expected \r\nto be nearly a third higher this year than in the below average 1971 \r\nseason. The projection, revised upward July 1, is based on yields \r\nthat appear better than previously expected. Texas feedlots had a \r\nrecord 2.1 million head of cattle on feed at midyear-a fourth more \r\nthan a year before. Higher prices for meat animals boosted the index \r\nof prices received by Texas farmers and ranchers in the month ended \r\nJune 15, to a level 18 percent higher than a year earlier. The index \r\nof prices paid by U.S. farmers moved up slightly from a month \r\nearlier to a level 5 percent higher than a year before.\nAlthough District oil allowables continue to permit maximum \r\nproduction, U.S. crude supplies are apparently in tight supply, \r\ncausing Gulf area imports to surge. A special supplemental quota is \r\nnow in effect for the second half of the year. Drilling in the \r\nDistrict states is showing continuing strength and should be \r\nbolstered still further by lease sales of the Louisiana coast \r\nscheduled for December. The industry is, however, suspicious of tax \r\nreform that could significantly reduce incentives for exploration.\nTotal credit at weekly reporting banks in the Eleventh District \r\ndeclined slightly in the five weeks ended July 26, as a rapid \r\nexpansion in loans was more than offset by an even sharper decline \r\nin bank holdings of government and municipal securities. Total \r\ndeposits increased moderately, and banks reduced their net purchases \r\nof Federal funds. An abnormal rise in business loans paced the \r\ngrowth in total loans and probably reflected further improvements in \r\nDistrict economic activity. Consumer loans D, the highly volatile \r\nloans to nonbank financial institutions also registered unusual \r\nstrength. The expansions in total deposits resulted from larger \r\ninflows of both demand and time and savings deposits. The volume of \r\nlarge-denomination CD's outstanding rose moderately, and bank \r\nborrowing from nondeposit sources was virtually unchanged.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-ph | "Beige Book Report: Philadelphia\nAugust 9, 1972\nDirectors and other area businessmen remain optimistic about the \r\nThird District economy. While most of the key business indicators \r\ndisplayed no large changes in July from their June levels, signs \r\nstill point to an accelerating economy. New orders and shipments are \r\nexpected to rise, causing further gains in employment. Planned \r\nincreases in business investment have about leveled off. Residential \r\nconstruction and mortgage loan demand are strong. However, consumer \r\nand business loan demand is mixed. On the darker side, prices \r\ncontinue to remain a source of worry to many area businessmen.\nOver 90 percent of the respondents to the Bank's Business Outlook \r\nSurvey expect new orders and shipments to hold steady or increase \r\nduring the next few months. Although the majority of these \r\nrespondents see no change in sight, the number which anticipate \r\norders and shipments to increase is up slightly from a month ago. \r\nThere is also a small but noticeable upward trend for unfilled \r\norders and delivery times.\nAs a result of the increased business activity, employment prospects \r\ncontinue to improve. About three out of ten of the firms responding \r\nto our Business Outlook Survey plan to add to their payrolls in the \r\ncoming month. This represents a small improvement in the local \r\nemployment situation compared to recent months.\nCapital spending plans seem to be holding steady. Area firms are \r\ndivided about evenly on whether to increase their capital spending \r\nor hold it constant. Less than five percent of the surveyed \r\nmanufacturers expect to reduce their investment outlays during the \r\nnext six months.\nRetail sales have been brisk recently. However, it's too soon to \r\ntell if this is only the result of pent-up demand which accumulated \r\nduring the heavy rains of Hurricane Agnes or whether it is a result \r\nof a real upturn in consumer optimism. One director reports, \r\nhowever, that recreation spending will be down about 10 percent this \r\nyear along the Jersey shore. He attributes this mostly to Hurricane \r\nAgnes which has caused many people from flooded areas in \r\nPennsylvania to cancel vacation plans.\nResidential construction in this area continues at a high rate. As a \r\nresult, even the least aggressive area banks appear to be \r\nexperiencing strong demand for mortgage credit. However, the reports \r\nabout consumer and business loans are somewhat more checkered. Banks \r\nwhich have well-developed consumer loan departments are seeing large \r\nincreases in these loans. And one large bank which aggressively \r\nseeks business loans reports it is able to obtain all the loans it \r\nwants. But, few banks seem to be doing well in both the consumer and \r\nbusiness loan departments.\nInflationary expectations are still present. Over 10 percent of the \r\nexecutives polled expect their firms to pay and to receive higher \r\nprices within one month. Within six months about one-third of the \r\nfirms expect increases in the prices they pay and the prices they \r\ncharge. And as a result of crop destruction associated with the \r\nheavy rains and floods in the Third District, some farm prices are \r\nup. In the industrial sector, however, a director sees indications \r\nthat profit margin controls will have an increased effect on \r\ndampening price hikes in coming months.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-cl | "Beige Book Report: Cleveland\nAugust 9, 1972\nReports from businessmen, directors, and economists indicate that \r\nrecovery is continuing in the District, but remains short of BOOM \r\nproportions. Construction continues to lend support to overall \r\nactivity, and the manufacturing sector now appears to have entered a \r\nclear-cut phase of inventory accumulation. Steel industry economists \r\nexpect greater inventory building by their customers during the \r\nsecond half and a strengthening in new orders stemming from the \r\ncapital goods sector. Business loan demand at District banks has \r\nbeen good.\nAmong the principal economic indicators for the District, \r\nresidential construction contracts remained at near-record level in \r\nJune, following a temporary setback earlier in the year: \r\nnonresidential construction contracts are still at a relatively low \r\nlevel, but are recovering. Insured unemployment remained unchanged \r\nin July, following a slight reduction in June (the first monthly \r\ndecline of the year). Preliminary results of our monthly survey of \r\nDistrict manufacturers indicate that new orders, shipments, and \r\nbacklogs continued to rise in July. Manufacturers reported inventory \r\naccumulation for the third consecutive month. Gains in employment \r\nand hours showed signs of tapering off. Thus far this year, our \r\nsurvey has detected no easing in the percent of firms reporting \r\nhigher prices paid. For the month of August, survey participants \r\nexpect gains in most key series, but little change in employment and \r\nhours.\nSeveral of our industrial directors mentioned improvement in labor \r\nutilization. One director noted a lot of overtime at his office \r\nmachinery company and that they are now hiring people after having \r\nhad a labor surplus.\nAnother director in the machine tool business stated they are \r\nbeginning to rehire, but nothing major yet. An appliance firm in \r\nDayton, whose union recently agreed to forego wage increases in \r\norder to keep the company competitive, has started to recall laid-\r\noff workers. Elsewhere, continuing efforts are being made to end an \r\n18-week-old strike at the Chevrolet assembly plant in Cincinnati. \r\nSeveral directors commented on the growing toughness of the Price \r\nCommission, and they felt it would have an adverse impact on \r\nbusiness sentiment.\nThere was some discussion at a recent meeting of our branch \r\ndirectors that businessmen have made great efforts to reduce \r\ninventories and they have better management tools today to keep \r\ninventories low. Therefore, we should not expect to see a return to \r\nprevious normal inventory-sales ratios.\nEconomists from three major steel companies in the District report a \r\nseasonal pickup in new orders, although there is little sign of an \r\nupturn in orders for heavy construction. (One economist noted that \r\nif heavy construction had been normal, 1972 would have been a record \r\nyear for steel shipments.) The steel companies are beginning to see \r\nincreased buying of plates and structurals from the capital goods \r\nindustry, and further impetus from that sector is expected during \r\nthe second half. Recent high levels of steel consumption have \r\nconcentrated in farm machinery, appliances, and motor vehicles. \r\nThese manufacturers will probably have to increase their inventories \r\nthis fall to maintain their high consumption rate. As the steel \r\nmills become busier and delivery time is extended, customers tend to \r\ncarry higher inventories. The economists believe that if a steel \r\nprice increase is announced for January 1, there may be additional \r\ninventory building during the fourth quarter.\nNet imports of steel are likely to be higher in the second half than \r\nin the first half. Because of dock strikes, Japanese steel exports \r\nto the U.S. during the first half were 700,000 tons below the year-earlier level, but their quota for the full year calls for a \r\nreduction of only 400,000 tons from 1971. Japan is expected to make \r\nup the 300,000 ton differential during the second half. Steel \r\nimports from the EEC and UK were off 1.1 million tons in the first \r\nhalf compared with the year-ago level. Their quota calls for a \r\n500,000 ton reduction for the entire year. (Steel price increases in \r\nthe European countries have contributed to the decline of imports.) \r\nThe economists generally did not expect the EEC and UK to make up \r\nall of the quota differential during the second half.\nOn the financial side, large banks report that growth in loan demand \r\nduring July was slightly stronger in the District than in the U.S. \r\nBusiness loans grew substantially at District banks, with the \r\nincrease concentrated in the trade and services industries; loans to \r\nmanufacturers were weak.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-ri | "Beige Book Report: Richmond\nAugust 9, 1972\nThe recent uptrend in economic activity in the Fifth Federal Reserve District continues. Manufacturers report a slight decline in backlogs of orders and no change in shipments and in volume of new orders. Retail sales continue strong. Employment and hours worked per week have changed little since the last survey. Activity in the construction sector remains strong, and bankers generally report increases in loan demand. Bankers and businessmen in the District continue to be optimistic about the outlook for District business activity.\nReports from manufacturers in the District indicate a further slight decline in backlogs of orders and no change in shipments or in the volume of new orders. Inventories remain virtually unchanged, but there was an increase in the number of manufacturers who regard inventory levels as too high in relation to sales prospects. In general, current plant and equipment capacity is reported to be adequate.\nGeneral retail sales continue the upward trend evident in recent months. On balance, banking respondents report increases in both general retail sales and automobile sales, although the proportion reporting increases is not as great as in the previous survey. Automobile sales continue stronger than general retail sales. Approximately 50 percent of the banking respondents indicated that automobile sales in their area were up.\nSlight declines in employment and hours worked per week were reported by manufacturing, trade, and service respondents. The fire in a West Virginia coal mine which resulted in several deaths led to a strike idling some 3,000 workers in West Virginia. Increases in wages paid were reported by about 35 percent of survey respondents, but most respondents reported no change in prices received. About two-thirds of the manufacturers reported inadequate supplies of skilled labor, and about a third reported that supplies of unskilled labor were less than adequate.\nActivity in residential and nonresidential construction remains very strong in the District. More than 50 percent of the bankers reported increases in construction activity in their areas. Nonresidential construction seems to have strengthened sharply in recent weeks.\nAll banking respondents reported that demand for all types of loans had either remained at recent high levels or increased. More than half reported increases in the demand for business and mortgage loans and about two-thirds reported increases in the demand for consumer loans.\nThe District's January-May cash receipts from farm marketings were 5 percent above a year ago, with gains in crop and livestock receipts about equal. Strong demand and the best quality tobacco in years have resulted in history-making prices in Border Belt flue-cured tobacco markets during the first two weeks of the 1972 season.\nThe level of optimism concerning business activity in the District remains high. Most banking respondents believe that business activity in their area will increase in the immediate future.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-ch | "Beige Book Report: Chicago\nAugust 9, 1972\nIn the past month the Seventh District has witnessed a further \r\nstrengthening of confidence in the vigor and duration of the \r\neconomic uptrend. In part, improved sentiment reflects the \r\nsubstantial increases in profits reported for the second quarter by \r\nmany firms. In addition, order backlogs have been rising for most \r\nfirms since early spring, and delivery times have gradually \r\nstretched out. In a growing number of cases inventories are \r\nincreasing, or are expected to increase, to support the sustained \r\ngrowth in activity. Employment is rising in most centers and \r\nunemployment is declining\u2014but these trends are gradual. Demand for \r\nbusiness loans and most other types of credit is strong, and \r\ninterest rates, especially \r\nshort-term rates, are expected to \r\nincrease moderately from now until year-end.\nFor the past six months groups of purchasing agents in major centers \r\nhave reported increasing orders and order backlogs, higher \r\nproduction, and slower deliveries. In the past three months more \r\nfirms have been reporting higher employment and larger inventories. \r\nMore than half of these firms have been paying higher prices and \r\nreports of lower prices are rare. These reports suggest that price \r\ninflation is about as serious as last year, but not as bad as in \r\n1970 or 1969.\nAir conditioners apparently provide the only example of merchandise \r\nin excess supply. Inventories of other appliances are well above \r\nlast year, but are about in line with sales. Auto inventories are \r\nrelatively low. Producers of some capital goods and capital goods \r\ncomponents are beginning to plan inventory increases as delivery \r\ntimes have lengthened.\nVarious types of lumber are in short supply. Some builders have \r\nsubstituted gypsum and fiber board for plywood because of high \r\nprices, but these products are on allocation.\nIt is clear that auto producers are very pleased with the situation \r\nof their industry, including the slide in sales of imports. Output \r\nof 1973 models will rise rapidly, because stocks of 1972's will be \r\nlow relative to sales when new models are introduced.\nThe truck market continues to exceed expectations, and sales of 2.6 \r\nmillion trucks are now believed to be a certainty for 1972. There is \r\nno sign of any slackening in demand.\nSome producers of heavy construction equipment maintain that this \r\nmarket remains slow, but there are contradictory reports that sales \r\nof these products are very strong and that output and employment \r\nwill have to rise.\nProducers of capital goods components\u2014bearings, drives, and \r\ncontrols\u2014report the continuance of a rapid expansion that began, \r\nin some cases, a year ago. The upward trend in machine tool orders \r\nin the past six months has been dramatic, but experience of \r\nindividual companies has shown marked differences.\nSome industries\u2014notably residential building materials and \r\npetroleum\u2014have been reluctant to increase outlays for plant \r\nexpansion despite high operating rates. Incidentally, complaints \r\nabout price controls are most vigorous in the case of the petroleum \r\nindustry. In most other industries the effect of controls on profit \r\npositions appears to be neutral overall.\nSteel order trends are favorable, including demand for \"light \r\nstructurals.\" New heavy construction work is slow, and demand from \r\nproducers of railroad equipment has not increased. The agreement to \r\nrestrict imports apparently is working well in the case of nations \r\nthat are included in the agreement, but imports from nations not \r\ncovered have increased.\nSales of consumer goods of most types are strong. Customers are \r\nusing credit freely, but delinquency experience has improved. Most \r\nretail trade analysts in this area have become increasingly \r\ndisillusioned with consumer surveys as aids to predicting consumer \r\nbehavior.\nResidential construction activity has continued at a high level in \r\nthe Chicago area, but permits for apartment buildings have fallen \r\nbelow last year's very high level. In some areas, notably Detroit, \r\nhome building has been hurt by adverse experience with subsidized \r\nmortgages.\nCrop conditions in this region, for both corn and soybeans, are good \r\nto excellent. Cattle feeders, despite higher profits, are displeased \r\nwith the proposed restrictions on hide exports, and the proposed ban \r\non the use of DES, a growth hormone. Prices of \"good\" farm land were \r\n3 percent higher than a year ago in July, according to reports of \r\nrural bankers.\nSome banks found that savings inflows were significantly lower in \r\nrecent months as compared to the early months of the year. In the \r\ncase of S&Ls, however, savings inflows rose again in May and June \r\nafter slowing in April. About two-fifths of the new money obtained \r\nby S&Ls is in the form of 6 percent certificates. Their loan \r\ncommitments are heavy.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-bo | "Beige Book Report: Boston\nAugust 9, 1972\nOur directors report that the economy is advancing in line with \r\nexpectations and that business activity is now at a good pace.\nOur directors saw little change in business conditions in the last \r\nmonth. If anything, they reported that businessmen were a little \r\nmore bullish on expansion but also a little more worried about \r\nwhether inflation was going to be a problem again. While orders to \r\nmanufacturers were generally reported as good, a manufacturer of \r\nboats, campers, and other recreational vehicles stated that business \r\nwas fantastic. This director's firm foresees next year as very good \r\nand is planning to start production for next year earlier than \r\nusual, thus building up larger inventories than normal earlier in \r\nthe season. A bank director located on Martha's Vineyard, a resort \r\narea, also reports that business is better than last year.\nA director of a large Boston bank reports that loan demand is very \r\nstrong, but that the funds are not going into traditional areas. \r\nReal estate and consumer loans, not business loans, are rising most \r\nrapidly. Business loan activity is being restrained by the very slow \r\nbuilding of inventories. In addition, corporate treasurers were so \r\nburnt by the last credit crunch that they have built up a great deal \r\nof liquidity and, therefore, do not need bank funds.\nProfessors Eckstein and Samuelson agreed that recent monetary policy \r\nhas been very sound. While some tightening for a month or two would \r\nbe acceptable, a return to the orthodoxy of monetary restraint at \r\nthis time would abort the recovery. Although there have been three \r\nconsecutive quarters with real growth over 6 percent, Samuelson \r\ncautioned, \"We should not conclude we're having too much of a good \r\nthing.\"\nNeither Samuelson nor Eckstein saw signs of demand-pull inflation.\r\nEckstein expressed concern about the inflation outlook, however, \r\nobserving that imports held down the second quarter GNP deflator, \r\nthat wholesale industrial prices are rising too fast to achieve \r\ninflation goals, and that the controls are slipping away. In \r\nEckstein's view, the leading indicators in the labor market show \r\nsigns of weakening. Eckstein argued that it is not the Fed's job to \r\nsolve a structural inflation.\nSamuelson feels that continuation of the 8.5 percent rate of \r\nmonetary growth recorded so far this year would result in \r\novershooting the optimal output path. On the other hand, he doubted \r\nthat a 5 to 6 percent rate of monetary growth would be sufficient to \r\nfinance the anticipated expansion since the income velocity of money \r\nhas been increasing at a decreasing rate.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-sl | "Beige Book Report: St Louis\nAugust 9, 1972\nThe trend in business activity in the Eighth District continues moderately up, according to a selected group of businessmen. Factory output has expanded further in recent weeks. Construction activity remains unchanged at a relatively high plateau. Retail sales have tended to level off in the past two months following sharp gains during the first five months of the year. Unemployment remains relatively high in some parts of the District, but firms are less reluctant to add employees than they were in late 1971 and early this year. Savings flows into financial firms and demand for longer-term credit continues to grow at a rapid pace, and little change has occurred in interest rates on mortgages. The farm sector remains optimistic as to both price and production expectations.\nOutput from the District's factories continues to expand on a wide front. Reports indicate that output of steel, appliances, machine tools, chemicals, and a number of soft goods is on the upswing. A major appliance manufacturer reported that business was up considerably from a year ago, largely reflecting sales for new residential building. The outlook for steel is reported to be the most promising in recent years. Machine tool orders have been on the upswing for several months, and output of industrial chemicals has in recent weeks resumed an uptrend.\nConstruction in the District continues at a relatively high plateau which was reached in late 1971. Residential construction activity is at a high level throughout the District. Most of the commercial and industrial expansion, however, has taken place outside the St. Louis metropolitan area. Retail sales have apparently leveled off somewhat in the summer months, although they rose rapidly throughout the District with the exception of the St. Louis area in the early part of the year. Major department stores in St. Louis report that sales have changed little in recent months and are only slightly above last year's levels.\nProfits are up somewhat at most District firms, and the outlook toward investment is improving. Nevertheless, most managers still feel that costs are excessive and they are hopeful of widening the profit margin before initiating major expansion programs.\nWith the improvement in profits, a number of firms reported a moderate increase in their work force. The chemical, electrical, and textile industries report some small employment gains. Some metal fabricating firms report that their employees are working overtime. Numerous new manufacturing plants in the smaller centers in Arkansas, Mississippi, and Tennessee have added to the District's total payroll employment. Unemployment, however, still remains relatively high in part of southern Indiana and in St. Louis.\nWhile short-term interest rates have been edging up, little change in the mortgage rates has been observed. Representatives of financial firms believe that short-term rates will rise further before the end of the year. Savings, however, continue to flow into financial institutions at a fast pace. PME Savings and Loan Association reported a record gain in savings in July. Rates on mortgage loans, however, remain unchanged reflecting the high demand for such funds.\nThe agricultural outlook remains optimistic throughout most of the District. Crop conditions are good with the exception of small pockets that have suffered from lack of rainfall. Prices are sufficiently high to provide profitable returns to efficient producers of most farm products.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-at | "Beige Book Report: Atlanta\nAugust 9, 1972\nThere have been no important changes in current and prospective \r\nconditions in the Sixth District from those reported a month ago. \r\nHowever, a special survey of a cross-section of prominent \r\nbusinessmen located in the Atlanta, Nashville, and New Orleans areas \r\nyielded the following conclusions: support for the NEP remains \r\nstrong, but has diminished somewhat over the past year; the NEP has \r\nbeen effective in checking at least some price increases; wage \r\ninflation has been effectively checked by the NEP, inequities have \r\nnot been so great as to jeopardize the program; some form of \r\ncontrols should be continued beyond April 1973; inflationary \r\nexpectations have diminished slightly; and the only economic \r\nresource that is in short supply is competent labor.\nGeneral economic activity remains very strong in most areas of the \r\nDistrict. Construction is mixed. Residential construction activity \r\nhas stabilized or diminished slightly, although it still remains at \r\nhigh levels. The pace of new plant and plant expansions has been \r\nstable.\nMost survey respondents thought that the NEP has been effective in \r\nreducing the pace of inflation. Several respondents mentioned that \r\nprices of their products and prices of some of their suppliers have \r\nbeen held down. The NEP was claimed to be responsible for holding \r\ndown price increases on the following goods and services: \r\nconstruction, raw materials, autos and appliances, services supplied \r\nby Stevedore companies, steel, telecommunication products, and \r\nplastics.\nThe respondents were nearly unanimous in their opinion that wage \r\ncontrols have been effective in scaling down the rate of wage \r\ninflation. This has evidently been particularly true in the case of \r\noffice and service workers.\nRespondents did not complain seriously of inequities in the NEP, \r\nalthough many were cited, and one respondent said that the longer \r\nthe program is continued, the greater the inequities will become. \r\nSeveral respondents thought that office workers and executives were \r\nbearing the brunt of the program, while union workers were gaining. \r\nOne soft drink bottler and one retailer complained about not being \r\nable to pass on increased costs of glass bottles and merchandise. \r\nAnother respondent complained that there were so many \r\ninterpretations, exceptions, changes, and reports that the program \r\nwas incomprehensible and burdensome. One respondent said that profit \r\nrestrictions were inequitable and that they were discouraging \r\nefficiency.\nOnly one respondent felt that the controls should be abolished \r\nimmediately. Most felt controls were a necessary evil that should \r\ncontinue as long as necessary. The Federal deficit and the \r\nforthcoming period of heavy labor contract negotiations were \r\nmentioned as reasons for continuing controls beyond April 1973. \r\nSeveral thought that controls should be put on a standby basis after \r\nApril 1973.\nThe only shortage that has resulted from the economic expansion so \r\nfar is competent labor. Almost half the respondents specifically \r\nmentioned difficulty in finding competent clerical and skilled \r\nlabor. One respondent mentioned a shortage of plastic materials, and \r\nanother expected credit to tighten up in supply next year. However, \r\nthe respondents evidently foresee no critical supply bottlenecks in \r\nthe near future.\nAlthough there was no strong consensus, it was judged that the \r\ninflationary expectations of those surveyed have diminished \r\nslightly. Several thought that inflation would diminish in the \r\nremainder of 1972 and in 1973.\nOne thought that built-in wage increases would cause prices to rise\r\nmore next year. Another respondent said his price outlook would \r\ndepend on the size of the federal budget deficit.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-08-09T00:00:00 | /beige-book-reports/1972/1972-08-mi | "Beige Book Report: Minneapolis\nAugust 9, 1972\nAlthough some improvement in economic activity was noted by bank \r\ndirectors, they do not expect any significant reductions in \r\nunemployment in their areas. Cool and rainy weather disrupted \r\nDistrict tourist activity in June and July, but District tourist \r\nspending can still be said to be good this year. District crop \r\ndevelopment appears to be ahead of normal, despite late weather-\r\ndelayed crop plantings. In addition, according to the results of our \r\nlatest agricultural credit conditions survey, District farm earnings \r\nimproved in the second quarter, while farmers' willingness to spend \r\ndeclined. Several bank directors, however, reported some increase in \r\ngeneral capital spending in their areas.\nThe District's unemployment rate averaged 6 percent during the \r\nsecond quarter, as compared to 5.6 percent a year ago, and bank \r\ndirectors generally foresee no sizable reduction in their areas' \r\nrates of joblessness. A Wisconsin director revealed that his area's \r\nunemployment rate was above the state's rate and no significant \r\nreduction is expected. Favorable developments in construction, \r\nmanufacturing, agricultural, and trade employment were reported by \r\none South Dakota director, but accompanied by a sharp curtailment of \r\njobs in the beef packing industry. The effects of recent \r\nadministration pressures to curb meat price increases were partly \r\nresponsible along with structural changes in the industry. A bank \r\ndirector associated with the District's construction industry \r\nanticipates no job expansion in that industrial sector. In Montana,\r\na branch director foresees little improvement in that state's rate \r\nof unemployment because of cutbacks by the Anaconda Company and a \r\ncessation of work on the ABM site. However, the construction of a \r\nlarge power plant is expected to ease that state's unemployment \r\nproblem. In addition, a director from Billings revealed improved \r\nemployment conditions in that region. Unemployment in the upper \r\npeninsula of Michigan was reportedly improved due to the \r\nconstruction of a large mining facility.\nAccording to both bank directors and resort and motel managers, \r\nDistrict tourist spending so far this summer can be characterized as \r\ngood, although not as good as expected. Despite cool and rainy \r\nweather in June and July, directors from the upper peninsula of \r\nMichigan, Minnesota, and South Dakota anticipate good tourist \r\nseasons. Tourist traffic was said to be ahead of a year earlier in \r\nMontana, but a branch director noted that both Glacier and \r\nYellowstone National Parks were experiencing generally slower-than-\r\nexpected concession activity as well as motel vacancies in both \r\nareas. A telephone survey of 22 resort and motel managers throughout \r\nthe District confirmed these observations on tourist spending. When \r\nasked to describe business so far this summer, 5 managers replied \r\n\"excellent,\" 2 responded \"good,\" and 6 said \"fair.\" According to 9 \r\nrespondents, however, business has not been up to expectations. With \r\nregard to their outlook for the remainder of the tourist season\u2014through August and September\u20146 respondents anticipated business to \r\nbe \"excellent,\" 13 termed their expectations \"good,\" and 3 foresaw \r\n\"fair\" tourist business.\nPilots have been on strike against Northwest Airlines since late \r\nJune, and this has hurt both tourist and business travel in the \r\nDistrict. North Dakota and Montana have been left without adequate \r\nair service and, according to a newspaper article, North Dakota's \r\ntravel industry has lost more than $1 million worth of business. The \r\nstrike has also curbed air travel into and out of the Minneapolis-\r\nSt. Paul metropolitan area.\nThe weather this spring delayed District crop plantings, but more \r\nfavorable conditions in late June and early July advanced crop \r\ndevelopment ahead of normal. Most crops in Minnesota progressed \r\nfaster than usual, and their outlook for this year was termed \r\n\"excellent.\" In addition, a South Dakota director indicated that \r\nyields from his state's corn crop should also be \"excellent,\" but \r\nthose from the small grain crops he termed only good,\" for the wet \r\nweather reduced crop quality. The late plantings may still result in \r\nproblems near the end of the growing season, however, and in some \r\nisolated areas, fields are still wet enough to retard crop growth.\nAccording to the results of our latest agricultural credit \r\nconditions survey, Ninth District farm income continued to \r\nstrengthen during the second quarter, but farmers' general \r\nwillingness to spend declined. Spending on investment items slumped, \r\nas respondents reported that farmers were more cautious and inclined \r\nto use less intermediate-term credit. The demand for long-term loans \r\nalso softened in the second quarter while short-term borrowing \r\nremained unchanged. This combination of increased farm earnings and \r\ndecreased spending resulted in greater fund availability at District \r\nagricultural banks during the second quarter.\nSeveral bank directors reported some pickup in general investment \r\nspending in their areas. In the upper peninsula of Michigan, small \r\nconstruction projects increased somewhat and residential building \r\nexpanded because of a large mining construction project. Another \r\ndirector reported increased business confidence and a modest pickup \r\nin capital spending in his area. Businessmen's attitudes had \r\nimproved in another director's region, and he expected increases in \r\ncapital spending. Construction activity in Billings was reportedly \r\nvery strong, but a Twin Cities area director reported no recent \r\nincrease in requests for loans to finance capital expenditures.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-ny | "Beige Book Report: New York\nJuly 18, 1972\nOpinions on the current economic outlook expressed recently by the \r\nBanks' directors and other business leaders were mixed but on the \r\nwhole gave a somewhat more optimistic overall picture than last \r\nmonth. Despite the adverse effects of bad weather conditions in \r\nJune, including widespread damage in the District area as the result \r\nof Hurricane Agnes, a number of respondents felt that consumer \r\nconfidence was strengthening further and that somewhat more liberal \r\ninventories buying policies were being pursued. There were also \r\nreports of improvements in the unemployment situation in some areas. \r\nIn general, little concern was expressed over the current \r\ninternational monetary disturbances, nor over the uncertainties \r\nrelated to the developing discussions of Federal income tax reforms.\nConcerning the current business outlook, most of the head office \r\ndirectors did not change their recent assessment. In general, they \r\nforesaw continued expansion of economic activity over the coming \r\nmonths, and some\u2014if not altogether satisfactory\u2014success of Phase \r\nII in curbing the wage-price spiral. One director, an upstate \r\nbanker, pointed to the adverse effect of the hurricane on the \r\ntourist trade in his area and to the extensive crop damage which he \r\nfeared would have a definite effect upon food supplies later in the \r\nyear. A Rochester retailer felt that the recent flooding would \r\nadversely affect retail sales for one or two months, but he expected \r\na resumption of normal activity thereafter. The responding Buffalo \r\nBranch directors, on the other hand, all indicated a more sanguine \r\nview, in different degrees, of the business outlook in their areas.\r\nThey based their revised outlook, variously, on increased retail \r\nsales, heavy construction activity, loan demand, and-in the view of \r\none director-\"inflationary fiscal policies\" that at least in the \r\nshort run were exerting upward pressures on the economy. Repairs of \r\nthe flood damages were also mentioned as a stimulating factor.\nA distinctly more optimistic outlook was also evident in the tone of \r\nthe responses of the senior officials of retail firms we usually \r\ncontact in New York City. To be sure, in their view the bad weather \r\nconditions in June had temporarily acted to slow down the gradual \r\nrate of growth in consumer outlays that has been underway over the \r\npast year. In general, however, they felt that consumer confidence \r\nwould continue to strengthen, and they looked toward a good year. \r\nWhile still closely controlling inventories, they were now gradually \r\nincreasing them. (One official, who a few months ago reported that \r\nhis firm would rather risk losing some sales because of \"stockouts\" \r\nrather than increase inventories, now stated that current policy was \r\nto be reasonably certain an adequate supply of merchandise was on \r\nhand in order not to lose potential business.)\nA few respondents showed some concern over the latest upheaval in \r\nthe foreign exchange markets, but the majority did not feel that the \r\ncurrent international monetary situation was having any serious \r\nimpact on current domestic economic developments. Some of the \r\nretailers, however, did mention encountering some difficulties as a \r\nresult of the uncertainties regarding the exact dollar cost of their \r\nimported lines of merchandise.\nWith respect to the possible decision-making impact of the \r\ndeveloping discussion over Federal tax reforms, most respondents \r\neither expressed no opinion or felt it was too early to affect \r\nbusiness decisions. Some directors discounted this discussion as \r\n\"election rhetoric.\" One director felt that instead of inhibiting \r\nbusiness capital outlays, the reverse might be the case as \r\nbusinesses sought to take advantage of favorable tax treatment now \r\nwhile it was still available. Some Buffalo Branch directors, \r\nhowever, reported continued concern on the part of businessmen over \r\nthe heavy and increasing burden of New York state and local taxes.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-ph | "Beige Book Report: Philadelphia\nJuly 18, 1972\nIn general the overall business climate continues to improve in the \r\nThird District. New orders and shipments continue on an uptrend. \r\nFirms are expecting to hire more workers, and many expect to \r\nincrease their plant and equipment outlays. Area banks are \r\nexperiencing rising demand for loans. However, inflation appears to \r\nbe a yet present concern of manufacturers, and retail sales in the \r\nThird District suffered recently because of adverse weather \r\nconditions.\nResults of the Bank's monthly business outlook survey indicate that \r\nindustrial activity is still rising, although at a slower rate than \r\nlast month. Half the companies contacted expect no change in new \r\norders and shipments in the next month while slightly more than a \r\nquarter expect an increase. The six-month picture is a bit better \r\nwith 60 percent of the firms expecting increases in new orders and \r\nshipments by Christmas.\nThis continued expansion in business activity is having an \r\nincreasingly favorable effect on employment. During the next month, \r\n13 percent of the firms expect to hire more workers and 5 percent \r\nplan to increase their average workweek. Within the next six months, \r\nover 25 percent expect to increase both hiring and the length of \r\ntheir average workweek, while less than 3 percent plan cutbacks in \r\nthose employment areas.\nCapital spending plans appear to have stabilized in recent months. \r\nAbout 45 percent of the firms contacted in each of the past two \r\nmonths reported plans to increase their capital spending in the next \r\nhalf year. This is up only slightly from 41 percent which indicated \r\nthey planned to increase their capital expenditures in April.\nThe outlook for inflation is less optimistic. Although roughly half \r\nof the businessmen contacted expect no change in prices from now \r\nuntil Christmas, some indicate expectations of rising prices over \r\nthat time period. And virtually no firms reporting in the survey \r\nexpect decreases in either prices received or prices paid during the \r\nnext six months.\nLoan demand at commercial banks in the Third District is advancing \r\nsteadily. Consumer, real estate, and business loans are all \r\nincreasing and are expected to continue on their upward trend. One \r\nlarge bank reported that it had all the business loans it wanted as \r\na result of an aggressive recruiting program.\nJune was a disaster for retail sales in the Third District due to 22 \r\ndays of rain. Summer goods just did not sell, and, surprisingly, \r\nhome furnishings were also down slightly. However, retail executives \r\nare optimistic about sales for this fall.\nThe flood which hit the Third District late in June caused great \r\npersonal suffering and financial loss to residents of the Harrisburg \r\nand Wilkes Barre areas. But, viewed in the perspective of the entire \r\nDistrict, the effects were less pronounced. Philadelphia and New \r\nJersey suffered only minor transportation delays, property losses \r\nalong their river fronts, and depressed retail sales due to the \r\nrainy weather. Crop destruction may result in slightly higher \r\ncommodity prices this fall.\nBefore Third District activity was temporarily depressed by the \r\nflood, strong demand for recreational services was reported by one \r\nof this Bank's directors. Motels and restaurants along the New \r\nJersey shore were very busy.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-su | "Beige Book: National Summary\nJuly 18, 1972\nReports from the twelve Districts indicate that economic activity \r\ncontinues to strengthen and the outlook of most businessmen and \r\nbankers is optimistic. Consumer spending, especially for tourism, \r\nrecreational vehicles, and autos, appears to be a major source of \r\nstrength. Capital spending and plans for future outlays still appear \r\nto be gathering momentum, and orders and shipments of heavy capital \r\ngoods producers are reported to be on the upswing. While \r\nconstruction activity is at a high level, signs of some slowdown in \r\nconstruction are becoming apparent in several Districts. Inventories \r\nare still being held closely in check with most manufacturing and \r\ntrade firms reporting no change or only a modest increase in \r\ninventories. In general, agricultural conditions are good to \r\nexcellent. However, heavy rains in some areas have set back crop \r\nconditions. Loan demand is on the increase, but banks apparently \r\nhave adequate funds to meet the expected near-term loan demand. \r\nInterest rates on most loans are reported to be little changed or \r\nslightly higher in the last month.\nOptimism on the part of businessmen and bankers is evident in most \r\nof the District reports this month. Atlanta notes that descriptions \r\nof the economy generally run from good to booming. Richmond reports \r\nthat their directors are optimistic, and Kansas City notes that \r\nbusinessmen seem \"unguardedly optimistic\" about the economic \r\noutlook. And the consensus at Chicago's annual Business Outlook \r\nConference was that the current economic expansion would last at \r\nleast through the first half of 1973. New York directors were \r\ncharacterized as mixed on the economic outlook but were more \r\noptimistic than in the previous month.\nStrength in the demand for consumer goods was noted in most regions. \r\nMinneapolis reports yearly sales gains of 5 to 10 percent in the \r\nTwin Cities area in the second quarter and a strong demand for meat \r\nat the retail level. Retail firms in New York were more optimistic \r\nthis month about consumer confidence and outlays; consumer spending \r\non nondurables appeared to be good in the Boston District. Brisk \r\nauto sales were cited by Richmond, Dallas, and San Francisco while \r\nChicago reported an optimistic forecast for autos in both 1972 and \r\n1973 at their Business Outlook Conference. Cleveland, however, \r\nreported that car sales in that District had risen less than in the \r\nnation. And St. Louis noted a decline in retail sales at major \r\ndepartment stores in June, following a strong uptrend earlier in the \r\nyear. Although the recent heavy rains depressed retail sales in the \r\nPhiladelphia District, retail executives there are optimistic about \r\nsales this fall.\nImproved consumer demand is also indicated by increased spending for \r\nrecreational activities. The Boston, Chicago, and San Francisco \r\nDistricts all report booming sales of recreational type vehicles. \r\nAtlanta reports heavy attendance at Florida's Disney World, with the \r\nbenefits of this visitor attraction apparently spilling over to \r\nother parts of the Southeast. Businesses catering to vacationers in \r\nthe Kansas City District were doing very well although tourists were \r\nreported to be avoiding luxury items.\nPlans for increased capital spending were noted by St. Louis and \r\nChicago as a source of further economic strength. And announcements \r\nof new plants and plant expansions continue to be numerous in the \r\nAtlanta District. However, the percentage of firms reporting \r\nincreased capital spending plans in Philadelphia's regular survey \r\nhas stabilized at about 45 percent in the past two months.\nThe upturn in capital spending this year is beginning to have a \r\nnoticeable impact on the sales of some heavy goods manufacturers. \r\nChicago cited increased sales of heavy construction equipment and \r\nover-the-road trailers while Boston reported an increase in orders \r\nfor oil field equipment and aircraft parts. Steel companies in the \r\nCleveland District are experiencing a strong and steady order pace \r\nwith the prospect of some pickup in orders from the auto industry \r\nfor August deliveries.\nInventory levels are generally unchanged or only increasing \r\nmoderately. Manufacturing respondents to the monthly Richmond survey \r\nreported little change in their inventories and judged their \r\ninventory levels to be about right. San Francisco reported no sign \r\nof major inventory building at the retail level in that District, \r\nand Richmond noticed no change in trade inventories. New York and \r\nBoston, however, saw some evidence of moderate inventory building at \r\nthe retail level. The Minneapolis Bank directors cited high finance \r\ncosts, better management, and better-than-expected sales as possible \r\nreasons why inventory-to-sales ratios were remaining relatively low.\nCrop conditions are generally good to excellent in the St. Louis, \r\nChicago, Kansas City, and San Francisco Districts. However, cool \r\nweather and excessive rainfall have hurt crops in the Richmond \r\nDistrict, and New York and Philadelphia report some crop damage due \r\nto flood conditions. Rain also slowed the Kansas wheat harvest, but \r\nthe 1972 crop may still rank among the largest on record. Prices for \r\nboth crops and livestock are reported to be favorable for increasing \r\nfarm income this year, especially in view of generally high levels \r\nof production.\nWhile employment gains were reported in some Districts, the uptrend \r\nis apparently still rather slow. Some manufacturers in the Richmond \r\nand Philadelphia Districts expect to increase their employment and \r\nlengthen workweeks. Nonfarm payroll employment is expanding \r\nmoderately in the Cleveland District, and the insured unemployment \r\nrate has turned down. The unemployment rate for the five \r\nsouthwestern states in the Dallas District is at a low 4.4 percent, \r\nbut employment analysts there are not optimistic about gains in \r\nemployment during the rest of 1972.\nThe demand for all types of loans is apparently strong in nearly \r\nevery District and advancing at a steady pace. Cleveland did note, \r\nhowever, that business loan demand over the June tax date was less \r\nthan a year ago in their District. The supply of loanable funds at \r\nbanks is adequate, but in the Chicago District the volume of \r\noutstanding CD's has been rising. While interest rates are \r\napparently little changed, St. Louis and San Francisco noted a \r\nslight rise in rates.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-ri | "Beige Book Report: Richmond\nJuly 18, 1972\nBecause of the holiday, the number of responses to our regular \r\nsurvey was considerably less than normal, and the results should be \r\nread with this in mind. Although the uptrend in District business \r\nactivity reported in recent surveys continues, manufacturers report \r\nsome decline in shipments, new orders, and backlogs of orders. \r\nFurther increases in retail sales\u2014especially automobile sales\u2014are \r\nreported. Employment and hours worked per week in the manufacturing \r\nsector are reported as increasing. District bankers also report \r\nincreases in employment. Construction activity continues to \r\nincrease, and bankers report increases in the demand for all types \r\nof loans. In general, businessmen and bankers are optimistic about \r\nthe outlook for economic activity in the District.\nResponses from manufacturers indicate some decline in shipments, \r\nvolume of new orders, and backlogs of orders. Declines were reported \r\nby producers in such important District industries as chemicals and \r\nsynthetic fibers. Manufacturers report little change in inventories, \r\nand inventory levels relative to desired levels are rated as about \r\nright by most manufacturing respondents. On balance, current plant \r\nand equipment capacity is reported to be inadequate.\nBoth banking and retail respondents report continued increases in \r\nsales. Reports from bankers indicate that automobile sales are \r\nespecially strong. Twelve of 16 bankers reported increases in \r\nautomobile sales in their areas, and the remainder reported no \r\nchange. Trade and service respondents indicate no change in \r\ninventories.\nIn general, manufacturing respondents report increases in both \r\nemployment and hours worked per week while trade and service \r\nrespondents report little change. Both trade and service and \r\nmanufacturing respondents reported increases in wages paid. Prices \r\nreceived are reported as down in manufacturing and unchanged in \r\ntrade and services.\nBankers report that activity in residential and nonresidential \r\nconstruction continues strong. Approximately one-half of the banking \r\nrespondents reported increases in construction activity. Bankers \r\nreport that the demand for all types of loans remains strong, with \r\nthe demand for consumer and mortgage loans being especially strong.\nCool weather and excessive rainfall are reported to have caused \r\nsubstantial damage to agricultural crops in the District. Many farms \r\nand other businesses also suffered severe damage from the recent \r\nflood.\nBankers and businessmen in the District continue to be optimistic \r\nabout the outlook for District business activity. More than 80 \r\npercent of the banking respondents report that they expect business \r\nactivity in their area to increase in the next three months.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-sf | "Beige Book Report: San Francisco\nJuly 18, 1972\nAccording to our directors, business activity is continuing to \r\nexpand at a satisfactory rate. Consumer spending is climbing with \r\nhigher than usual increases in June reported for retail sales in \r\nmany areas of the Twelfth District. Automobile sales in particular \r\nare doing very well. Construction activity continues to be an \r\nimportant factor in the expansion, although signs of weakness are \r\nappearing that indicate a slowing later in the year. Agricultural \r\nprospects are generally good in most District states. Financial \r\nconditions are little changed with only minor movements in interest \r\nrates reported.\nRetail sales are higher in June throughout most of the District, and \r\nin a few cases increases of 12 percent and more occurred over the \r\nprevious month. For example, in Oregon, appliance sales are 12 to 15 \r\npercent above last year's level, and Southern California department \r\nstore sales rose an impressive 12 percent in June to stand 8 percent \r\nabove the previous year. There are exceptions reported for \r\nindividual dealers in Oregon and Seattle, but the consensus seems to \r\nbe that aggressive retailing efforts are producing higher sales.\nAutomobile sales are running as high as 20 percent for some dealers, \r\nand most dealers expect current trends to continue. American made \r\ncars and trucks seem to be doing best, for there is some indication \r\nthat foreign car dealers are actually experiencing declining sales. \r\nOne factor in this latter trend is the advantage of domestic car \r\ndealers in having better resale facilities for trade-in cars. Sales \r\nof recreation-type vehicles and trailers are reported 20 to 30 \r\npercent higher by some local manufacturers.\nDespite the satisfactory level of sales and a feeling of optimism by \r\nretailers about future sales prospects, there is no sign of any \r\nmajor rebuilding of inventory. Retailers, both small and large, are \r\nstill operating with inventories at a minimum level. They are still \r\ntrying to keep inventories down, and, if anything, many are \r\nattempting to find ways to reduce them further. Optimism about sales \r\nis combined with caution about inventories.\nOther factors are helping retailers operate with lower inventories. \r\nA major reason, according to several directors, is that suppliers \r\nare quick to fill orders, thereby reducing the need for inventories. \r\nAppliance dealers in the Los Angeles area are described as relying \r\non the close proximity to suppliers to cut down their inventories. \r\nFinally, retailers foresee no shortages developing that would \r\nrequire a change in their current policy.\nA good year is expected for District agriculture. Cattle prices are \r\nhigh and in turn are keeping up the demand for feed grains. Crop \r\nconditions in the Pacific Northwest, Idaho, and Northern Utah are \r\ngood, with the notable exception of fruit crops in parts of \r\nWashington and Idaho which had suffered from late frosts. Southern \r\nUtah has been experiencing a drought, and recent storms have brought \r\nonly a slight improvement; in this area livestock and crops have \r\nsuffered.\nConstruction activity remains good, especially for single family \r\nhomes. Suppliers for the construction industry remain optimistic, \r\nand employment in the wood products industry is high in Oregon and \r\nWashington. These industries related to construction provide the \r\nonly example where inventories are being built up. Yet there is \r\nevidence in the recent leveling off of California dwelling unit \r\nauthorizations that declines in total activity can be expected later \r\nin the year. Overbuilding of multi-units in Oregon also may present \r\nproblems. These elements of weakness are not general, and no \r\nimmediate decline appears to be likely.\nMost bankers see little change in financial conditions. Demand for \r\nloans is strong in the Seattle area and rising in Oregon after a \r\nperiod of stability. Trends in deposits in most states are mixed, \r\nwith both increases and decreases reported. Only minor increases in \r\ninterest rates have taken place.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-sl | "Beige Book Report: St Louis\nJuly 18, 1972\nThe uptrend in business activity continues in the Eighth Federal \r\nReserve District but at a moderated pace, according to a sample of \r\nleading businessmen. Factory orders continue to expand, and a few \r\nfirms have hired some additional help. An increasing number of firms \r\nreport that output is approaching capacity levels and that plans are \r\nbeing made for plant expansion. Construction has apparently leveled \r\noff. Retail sales at major department stores have declined in recent \r\nweeks in contrast to a fairly strong uptrend from January through \r\nMay.\nMost manufacturing firms in the District report rising sales and \r\nproduction. Chemical firms, for example, report large increases in \r\nfiber and plastic sales in the second quarter of this year and some \r\ngain in industrial chemicals for the first time in more than a year. \r\nDefense plants and textile and electrical equipment manufacturers \r\nreported further gains in output and sales in the second quarter.\nOutput relative to capacity has been inching up for several \r\nquarters, and managements at most District firms are beginning to \r\nplan for increased investment. One of the largest manufacturing \r\nfirms headquartered in the District reported that new investment had \r\ndeclined for two years, but that 1972 would be the low point as a \r\nmajor increase was planned for next year. A number of smaller firms \r\nalso reported plans for investment in new plants and plant \r\nenlargement.\nAlthough those surveyed reported employment as stable, their \r\nestimates of employee numbers reveal that employment has actually \r\nincreased. Nevertheless, some areas of the District report a \r\nrelatively high rate of unemployment. Included among such areas are \r\nSouthern Indiana, with an unemployment rate ranging from 6 to 12 \r\npercent, and the inner-city portion of the St. Louis metropolitan \r\narea.\nConstruction remains high throughout most of the District, but it \r\nhas apparently leveled off in recent weeks. Residential construction \r\nremains at a high rate throughout the District. Commercial \r\nconstruction is at a high rate in most of the District, except for \r\nthe St. Louis area where such construction is at a lower rate, and \r\nan excess of office supply space is reported.\nMajor department stores in St. Louis report a sizable decline in \r\nsales during June. Part of the decline is attributed to cooler and \r\ndrier than normal weather conditions. These conditions resulted in \r\nreduced sales of air conditioners, lawn mowers, and other garden \r\nequipment. Some pickup in sales is expected as soon as weather \r\nconditions return to normal.\nCrop conditions in the Eighth District are generally good. There are \r\na few areas where crops are suffering from drought, but such \r\nconstitute only a small percent of the farming community. Corn \r\nproduction is expected to be down from the very large crop of last \r\nyear, but soybean production should be well above year ago levels. \r\nThe outlook for farm income is very good, with higher prices and a \r\nhigher level of production in prospect.\nSavings inflows into District savings and loan associations have \r\ncontinued strong in recent weeks, but time and savings deposit \r\ngrowth at commercial banks has tapered off, following very rapid \r\ngains earlier in the year. Loan demand at District member banks \r\ncontinues sharply up. Short-term interest rates have begun to rise, \r\nand long-term rates are expected to rise in the near future.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-bo | "Beige Book Report: Boston\nJuly 18, 1972\nBusiness conditions are generally described by our directors as \r\ngood, and in the recreational area as exuberant. All indicators show \r\na very respectable rate of expansion, with the demand for funds from \r\nbanks continuing to be fairly good.\nCapital goods orders to machine tool manufacturers were reported as \r\nrecently strengthening. Orders will have to rise substantially more, \r\nhowever, before profits are good, according to one director. Orders \r\nfor machinery connected with oil fields were described as very good \r\ndue to the 100 percent oil allowances currently in effect in Texas. \r\nNew orders to industries connected with aerospace were reported as \r\nimproving. This was indicated both by a manufacturer of superalloys \r\nand by an aircraft builder, who pointed to a pickup in commercial \r\norders, especially for parts. A moderate level of activity in new \r\ncontracts for Government and commercial building was also reported.\nManufacturers reported that they were still keeping inventories down \r\nbut noted the beginning of replenishment of stocks at the retail \r\nlevel, and in some cases in manufacturing. One manufacturer of a raw \r\nmaterial input to the tire industry stated that he felt that tire \r\ninventories, now at a three-month supply, were too high and thought \r\nthat cutbacks in inventory levels would be very possible.\nConsumer spending on nondurables appears to be good, but not \r\nbubbling. Consumer spending on recreational equipment\u2014boats, \r\ncampers, and recreational vehicles\u2014were reported by one large \r\nmanufacturer to be booming. This manufacturer noted that there had \r\nbeen some price increases recently in recreational vehicles, but he \r\nalso added that he thought price controls had been very effective in \r\nslowing price increases. A Bank director located on Martha's \r\nVineyard reported that the area is having a very busy season, with a \r\ntremendous boom in housing on the island.\nOnly one director mentioned that recent flooding had affected his \r\nbusiness. A manufacturer of small commercial and pleasure aircraft \r\nsaid that his Pennsylvania plant would be out of operation for 90 \r\ndays because of flooding.\nOne director settled a new wage agreement with the United Steel \r\nWorkers Union. The contract, which called for a 7-8 percent increase \r\nin the first year and lesser gains in the following two years, was \r\nsubstantially below other recent settlements. The company \r\nsuccessfully resisted inclusion of cost-of-living adjustments. In \r\nother labor developments, construction workers in Manchester, New \r\nHampshire are on strike, raising new fears about inflation in the \r\nbusiness community. (They are asking for wage increases above the \r\nPay Board guidelines.)\nProfessors Eckstein and Samuelson agreed that the economy is moving \r\nalong the lines of the consensus forecasts and that the performance \r\nhas been good but not excessive. Eckstein felt it would be a mistake \r\nto react strongly to the June wholesale price and unemployment \r\nfigures. He said the Fed's job is not \"to solve problems it can't \r\nsolve.\" Samuelson warned that the floating of the pound, while not \r\nimportant for the U.S. trade position, can psychologically have \r\nimportant implications for capital movements. If speculators turn to \r\nthe dollar, the Smithsonian Agreements may be in jeopardy. This is \r\nnot the occasion for tremendous tightening but instead some \"pious \r\nmovement\" toward \"operation twist.\" He urged contingency planning on \r\nhow the domestic expansion could be preserved if the agreements do \r\nbreak down.\nEckstein recommends a continuation of smooth, modest growth in RPD, \r\npermitting interest rates to \"fall where they may.\" He would not be \r\ndistressed by a 5-1/2 percent prime rate. Neither Samuelson nor \r\nEckstein would favor a higher discount rate at this time. Samuelson \r\nnoted the stock market is \"queasy\" and would react better if an \r\nincrease were to be made later.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-da | "Beige Book Report: Dallas\nJuly 18, 1972\nThe economy of the Southwest is somewhat stronger than a year ago in \r\nthe opinion of economic analysts with the Southwest Regional Office \r\nof the U.S. Department of Labor, the District states' Labor \r\nCommissions, and Directors of Business Research at five southwestern \r\nuniversities. District economic indicators also suggest an improved \r\neconomy. Industrial production, construction contracting, and \r\nconsumer buying are all moving upward from relatively advanced \r\nlevels. However, only a slim minority of the analysts contacted feel \r\nthat labor market conditions will improve by year-end.\nMost of the respondents view the present level of employment as \r\nabout the same as it was at the end of last year. But a few analysts \r\nreporting on Oklahoma and Louisiana feel that the situation has \r\nworsened in those states. Most respondents indicate that the \r\nunemployment problem in their region is concentrated in the larger \r\ncities with the smaller cities being relatively unaffected. However, \r\ncounties with defense industries, Indian reservations, or large \r\nnumbers of migratory farm workers are also feeling the pinch. For \r\nthe District as a whole, defense and oil and gas industries are \r\ncited as ones in which unemployment problems are most severe. \r\nHowever, a number of other industries are also reported as \r\ncontributing to the unemployment problem in the various District \r\nstates, including construction, retail trade, and transportation \r\nequipment and electrical machinery manufacturing.\nMoreover, the respondents' outlook for employment in the Southwest \r\nis not particularly optimistic. Only 11 percent of the respondents \r\nfeel that the situation will improve by year-end, with 67 percent \r\nanticipating no change, and 22 percent feeling that there will be \r\nsome further increase in unemployment by year-end 1972. Respondents \r\nfeel that the closing of established plants is the greatest source \r\nof unemployment while stating that expected growth in employment \r\nwould come primarily from the opening of new plants in their \r\nrespective areas.\nThose that expect some improvement in the unemployment situation \r\nfeel that it will be selective\u2014likely to occur principally in \r\nconstruction, trade, state and local government, and apparel, rubber \r\nand plastics manufacturing. Those anticipating no change or a \r\nworsening in unemployment emphasize the anticipated growth in the \r\nlabor force. They point out that the labor force has increased \r\nsubstantially since a year ago, reflecting in part returning \r\nveterans, entering youth, and migration.\nDistrict economic indicators continue to reflect growing strength. \r\nThe seasonally adjusted Texas industrial production index edged \r\nfurther upward in May to a new record level. All durable \r\nmanufacturing industries posted gains from April to May to provide \r\nmost of the strength in the index. Oil allowables in all four \r\nproducing states of the Eleventh District were left unchanged again \r\nfor July at maximum levels.\nDepartment store sales posted significant month-to-month and year-\r\nto-year gains in June. Registrations of new passenger cars in \r\nDallas, Fort Worth, Houston, and San Antonio rose significantly in \r\nMay over the previous month. Cumulative figures for the first five \r\nmonths show auto registrations in these four metropolitan areas more \r\nthan 12 percent above the 1971 level. Total employment in the five \r\nsouthwestern states rose only slightly in May, however, and was \r\naccompanied by an expansion of the labor force. All industry groups \r\nshowed year-to-year increases in employment with the largest advance \r\nregistered in construction. The seasonally adjusted unemployment \r\nrate for the five southwestern states held steady at 4.4 percent for \r\nthe third month in a row.\nTexas regained its standing as the nation's leading cattle feeding \r\nstate on June 1. The index of prices received by Texas farmers \r\nduring the month ending June 15 rose to a level 18 percent higher \r\nthan a year ago. Higher prices for cattle, hogs, lambs, wool, \r\nmohair, and cotton accounted for the increase. Total credit at \r\nweekly reporting commercial banks in the Eleventh District rose \r\nsignificantly in June with sizable increases in both loans and \r\ninvestments accommodated by \r\na substantial expansion in time and \r\nsavings deposits.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-mi | "Beige Book Report: Minneapolis\nJuly 18, 1972\nMost bank directors and major Minneapolis/St. Paul retailers \r\nreported favorable gains in second quarter retail sales and are \r\noptimistic about consumer outlays in the third quarter. In the Black \r\nHills, tourist traffic has returned to normal after being disrupted \r\nby flooding in early June. Bank directors suggested a variety of \r\nreasons for recent low business inventories. Meanwhile, labor \r\ndisputes have disrupted economic activity in Minnesota. In the \r\nopinion of the bank's directors, a tax increase will be necessary \r\nnext year.\nA telephone survey of large Twin Cities area retailers indicated \r\nthat most second quarter sales met earlier expectations. Four out of \r\nfive respondents reported sales up between 5 and 10 percent from a \r\nyear ago, and they expect comparable third quarter advances. Two \r\nretailers did report, however, that cool weather had restricted \r\nsales of seasonal merchandise. The sales of one discount store chain \r\nfailed to achieve expectations, and its year-to-year second quarter \r\nsales gain was slight. This retailer attributed his poor second \r\nquarter to continued softness in the economy and increasing \r\ncompetition.\nA telephone survey of Twin Cities area meat and grocery firms \r\nrevealed strong consumer demand, especially for meat. Food retailers \r\nalso indicated that future meat prices will depend on overall \r\nsupplies, as consumer demand is assured, and most felt that higher \r\nprices would not significantly reduce sales. This survey, taken just \r\nbefore the announcement of the President's limits on food handler \r\nmargins, revealed that, in this area, margins were already being \r\ncurtailed\u2014especially at the retail level.\nOutside the Minneapolis/St. Paul metropolitan area, Bank directors \r\nreported that most retailers had realized their earlier optimistic \r\nexpectations and had a good second quarter. Directors from both \r\nSouth Dakota and Montana attributed favorable second quarter sales \r\nto high livestock prices and look for further retail sales gains in \r\nthe third quarter. A North Dakota director reported his area's \r\nsecond quarter retail sales matched expectations and stated that \r\nprospects of a good grain crop in his area denoted a strong third \r\nquarter for consumer spending. Although retail sales in his area \r\nwere high, however, one director indicated that second quarter sales \r\ndid not meet expectations, but he is optimistic about retail \r\nspending in the third quarter. A director from the upper peninsula \r\nof Michigan said that cool weather had curbed second quarter \r\nspending in his area.\nTourism, a major source of retail sales in South Dakota, dropped off \r\nsharply after the flooding in the Black Hills on June 9 and 10. \r\nAccording to a state tourism official, visits to Mount Rushmore \r\ndropped from a normal daily average of 18,000 to 3,000 a day during \r\nthe week after the flood. However, by the end of June, tourist \r\ntraffic was back to normal. Although this June tourist loss is not \r\nexpected to be regained, improved activity is anticipated for the \r\nremainder of the summer.\nBank directors had mixed reasons why their areas' inventories have \r\nbeen low in relation to sales. Small businesses in one area were \r\nsaid to be keeping inventories down because of the high cost of \r\nmoney. Other directors mentioned improved management techniques and \r\nrecent innovations by farm machinery dealers as attempts to hold \r\ndown inventories. A South Dakota director attributed his area's low \r\ninventories to the fact that business had been much better than \r\nexpected. According to another, inventories had been low and would \r\nremain so because businessmen no longer speculate on them. Due to \r\ncool weather in May and June, however, two directors indicated that \r\ninventories of summer seasonal merchandise had risen in their areas.\nLabor disputes in late June and early July have disrupted District \r\neconomic activity. In Minnesota, contractors imposed a lockout \r\nagainst workers, and work on major construction projects throughout \r\nmost of the state has therefore stopped. In addition, the Northwest \r\nAirlines pilots are on strike, thus idling about 4,500 Minnesota \r\nworkers. Non-wage issues are the source of both of these disputes. \r\nAn additional 1,400 workers are on strike against the Hanna Mining \r\nCompany because of mine safety conditions at three Minnesota \r\nlocations.\nGiven the prospects of a large budget deficit in fiscal 1973, bank \r\ndirectors believe that a tax increase would be necessary next year. \r\nOne director stated that Phase II would not be sufficient to contain \r\nnext year's inflationary pressures. Two directors did indicate, \r\nhowever, that a tax boost would probably not be enacted next year, \r\nthough another considered it politically feasible.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-at | "Beige Book Report: Atlanta\nJuly 18, 1972\nDescriptions of economic activity and the economic outlook generally \r\nrun from good to booming. Out of the many reports received, only \r\none, from an Alabama director, reported sluggish economic \r\nconditions. Economic strength appears to be widely based in \r\nconstruction, manufacturing, and commercial activity. Only one \r\ndirector reported apprehension over the inflationary consequences of \r\nelection-year spending and the increased Federal deficit.\nTourist activity is up strongly. Disney World has upped estimated \r\n1972 attendance from 10 to 12 million and is expanding its labor \r\nforce by another 1,700 to handle the flood of visitors. Disney World \r\nis partly responsible for increases in motel occupancy and increased \r\nattendance at tourist attractions throughout the Southeast. Hotel \r\noccupancy on Miami Beach was 84 percent in the first five months of \r\n1972, compared with 80 percent in the comparable period last year. \r\nAttendance at other Florida tourist attractions is up from 20 to 40 \r\npercent. An auto-train service, which transports people and their \r\ncars from Washington, D.C., to a town near Orlando, is proving \r\npopular, and the company providing this service has recently \r\npurchased 33 domed passenger cars from a West Coast railroad.\nA special survey of the Georgia tourist industry indicates that \r\nbusiness is up at least 10 percent this year. Visits to Georgia \r\nWelcome Centers were up 29 percent in the first five months of 1972. \r\nThe historic Savannah Foundation reports tours up 50 percent above a \r\nyear ago. Atlanta's Stone Mountain Park has experienced a 12- to 15-\r\npercent increase in attendance. However, attendance is up only \r\nmarginally at Six Flags Over Georgia, an amusement park offering \r\nservices in competition with Disney World. Rock City, a tourist \r\nattraction in Chattanooga, Tennessee, reports that attendance in the \r\nfirst two weeks of June was 25 percent above a year ago.\nBoth residential and commercial construction are strong. All areas \r\nof Florida report a construction boom, and there are numerous \r\nreports of new motel, residential, and industrial construction. \r\nConstruction is slated to begin in August on a 31-story, 500-room \r\nhotel in Atlanta. The size of this hotel is a major change from \r\nearlier plans that had called for a hotel about half that size. The \r\ncity of New Orleans has swapped land with a development firm that \r\nplans to construct a $150 million riverfront hotel complex.\nAnnouncements of new plants and plant expansions continue to be \r\nnumerous. Plans were recently announced in Mobile, Alabama, for a \r\n\"mini-port\" to handle general and containerized cargo trade with the \r\nCaribbean and South America. A major agribusiness firm is building a \r\nplant in Florida to process mushrooms. Insulating wallboard will be \r\nmanufactured at a new plant to be built on the Georgia coast. A \r\nmachinery manufacturing firm is building a plant in Meridian, \r\nMississippi, and a business machines company is locating a \r\ndistribution center in a planned community southwest of Atlanta. \r\nPlant expansions have been announced for a brewery in Jacksonville, \r\nan electric range manufacturing plant in Tennessee, and a water \r\nmeter plant in Alabama. However, an on-again off-again $100 million \r\nexpansion of a Lake Charles petrochemical plant has been \r\nindefinitely shelved, reportedly because of a shortage of natural \r\ngas and a negative legislative attitude by the State of Louisiana.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-cl | "Beige Book Report: Cleveland\nJuly 18, 1972\nOutput and employment in the District are continuing to expand, and \r\nunemployment is beginning to decline. New car sales have not risen \r\nas much as in the nation, but activity in residential construction \r\nhas recently accelerated. Steel firms are experiencing a strong and \r\nsteady order pace; and large banks reported relatively slack loan \r\ndemand over the June tax date.\nNonfarm payroll employment in the District is continuing to expand \r\nat a moderate pace from the trough of last fall, but it is still \r\nbelow the previous peak reached in late 1969. The overall employment \r\nperformance in the District is influenced by the large proportion of \r\nmanufacturing employment, which is 11 percent below the previous \r\npeak. The District's insured unemployment rate began to decline in \r\nJune, following a sustained plateau from January through May.\nIn other areas of activity, new car sales thus far this year in the \r\nDistrict have risen only about one-third as much as in the nation. \r\nIn the Greater Cleveland Area, new car sales for the first half of \r\n1972 were down 4 percent from the year-earlier level. Residential \r\nconstruction contracts in the District were exceptionally strong in \r\nApril and May, following weakness earlier in the year; and \r\nnonresidential construction contracts are beginning to strengthen.\nPreliminary results of our latest survey of District manufacturers \r\nindicate that the recent strengthening in business activity \r\ncontinued during June. Respondents indicated strong gains in new \r\norders, shipments, and backlogs. Moderate inventory accumulation, \r\nwhich began in May, was sustained last month. Employment and hours \r\nalso continued to rise in June. The percent of firms paying higher \r\nprices rose slightly in June to a level just below that prevailing \r\nprior to Phase I. Survey participants expect no slackening in the \r\npace of business or in the rate of inflation during July.\nOne director, whose firm produces industrial equipment, mentioned \r\nthat his company has not increased employment even though new orders \r\nin the second quarter were up 20 percent from the first quarter \r\n(following a \"disastrous\" second half of 1971). During the slack \r\nperiod, production workers were diverted to maintenance and repair \r\njobs. This director also indicated he felt \"apprehensive\" about \r\norders for the third quarter and noted that there was no indication \r\nof inventory building by his firms' customers.\nEconomists from three major steel companies in the District report a \r\nstrong and steady order pace, but they expect the usual seasonal dip \r\nin July. Appliance industry demand for steel is still strong \r\nalthough the auto industry's steel orders have been lower than \r\nexpected, given the production rate. One economist thought the auto \r\ncompanies were importing more steel than usual. The economists \r\nreported that they expect a step-up in demand from the auto industry \r\nfor August delivery, however. Steel demand for oil pipes remains \r\nweak, and heavy construction demand is well below the seasonal norm. \r\nCustomers' stocks of steel are still very low, but as yet there is \r\nno rush to rebuild inventories.\nOn the financial side, the increase in business loan demand at large \r\nbanks was less than a year ago over the June tax date. Bank contacts \r\nsuggested that improved corporate liquidity and competition from \r\ncommercial paper contributed to this pattern. The bank respondents \r\nexpect loan demand to strengthen as inventory building begins and as \r\nthe economic expansion proceeds. One country bank director reported \r\nthat his bank was experiencing strong loan demand and that the bank \r\nwas buying Federal funds for the first time in years.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-kc | "Beige Book Report: Kansas City\nJuly 18, 1972\nRecord high cattle prices, a near record wheat harvest with \r\nprospects for improved world prices, and generally favorable crop \r\nand livestock prospects are helping this District's important \r\nagricultural sector contribute to regional economic growth. Summer \r\ntourists appear likely to continue their habit of spending more than \r\nlast year, just as winter sports enthusiasts did this past season. \r\nLoan demand continues strong and is expected to remain so, but \r\nbankers foresee only a moderate increase in interest rates during \r\nthe coming months. Businessmen seem unguardedly optimistic about the \r\neconomy, pointing to construction activity as a key indicator.\nRecent rains, while adding valuable moisture for pastures and \r\ngrowing crops, have had a disruptive effect on the wheat harvest. \r\nThough virtually complete in Oklahoma\u2014where yields averaged \r\nsomewhat better than expected\u2014the harvest in Kansas has slowed with \r\nconsiderable wheat still in the fields. Because of the delays, total \r\nproduction in the nation's leading wheat state may fall a little \r\nshort of earlier projections. Nevertheless, barring further delays, \r\nthe 1972 crop will rank among the largest on record. Generally, the \r\nprospects for the other cash crops in the District are excellent. \r\nThe recently announced sale of grain to Russia undoubtedly will \r\nprovide firmer world grain prices than otherwise would have \r\nprevailed.\nMeat prices at both the farm and retail level again have been \r\nattracting national attention. Since early May, slaughter steer \r\nprices have risen from about $34.50 per hundredweight to more than \r\n$40, despite a sharp increase in beef production in May. Hog prices \r\nspurted more than 20 percent to reach the $30 mark, and with \r\nfarrowings remaining low the longer-run price outlook continues \r\nstrong. These price developments contributed heavily to the recent \r\nincrease in the wholesale price index and likely will create further \r\nupward pressures on the consumer price index. In the months ahead, \r\ncattle marketings are expected to remain moderately above year-earlier levels, but prices likely will remain strong due to \r\nunprecedented demand not only in the United States but throughout \r\nthe world. The lifting of import quotas on meats is not expected to \r\nresult in significantly larger meat supplies, and import supplies \r\ncould even decline providing meat prices in world markets do not \r\nweaken substantially. Both hog and slaughter cattle prices, other \r\nthan for seasonal changes, can be expected to remain strong during \r\nthe remainder of the year.\nAttendance at popular Tenth District recreation areas this summer \r\npromises to continue the upward trend of recent years. Although cool \r\nweather and a new daily camping fee may have discouraged some visits \r\nto Yellowstone National Park, most popular tourist areas report \r\nlarger crowds than last summer. Contacts in Colorado, Wyoming, and \r\nNew Mexico say that businesses catering to vacationers are doing \r\nvery well and total spending is up considerably. In spite of the \r\nincreased popularity of camping, the motels and lodges are doing \r\nwell. Gasoline sales have increased sharply. Some respondents feel \r\nthat vacationers are still avoiding expenditures on luxury items \r\nsuch as expensive entertainment and souvenirs. On balance, however, \r\nbusinessmen expect this to be \"an excellent tourist season.\"\nTenth District bankers report continued strong loan demand in recent \r\nweeks. Real estate and consumer installment lending are still areas \r\nof steady growth, and higher feeder-animal prices are boosting \r\nagricultural loan volume. Business loans seem to have firmed after \r\nsome weakness in May; national accounts are still not a significant \r\nfactor, but strength in construction activity and consumer spending \r\nis maintaining local credit demand. Most respondents foresee little \r\nslackening in loan demand during the second half of the year, \r\nalthough real estate and construction loans may soften in some \r\nlocales where overbuilding\u2014particularly in the multi-family sector\u2014is in prospect.\nSeveral bankers report rather sluggish demand deposit growth in \r\nJune, but most report further moderate inflows of time and savings \r\ndeposits. Deposit inflows\u2014especially in the time and savings \r\ncategory\u2014have been strong enough in recent months to provide \r\nadequate funds for lending needs. Most banks contacted have not \r\naggressively pursued large CD money of a very short-term nature. \r\nWhile one banker is worrying about disintermediation, most \r\nrespondents feel that with the funds they have now and reasonable \r\ninflows in coming months, there will be no great difficulty meeting \r\nloan demand at interest rates not too much higher than current \r\nlevels.\nDirectors say their conversations with other businessmen indicate \r\nalmost no remaining clouds of economic pessimism. Among the commonly \r\ncited indicators of vigor, major construction projects are \r\nemphasized. The most recently announced of these include a $30 \r\nmillion fertilizer plant in Oklahoma and a major expansion (cost not \r\ndisclosed) of the GM Assembly Plant near Kansas City. The president \r\nof a large corporation says that the Price Commission setup is \r\nbecoming a nightmare\u2014that he has five people working full time on \r\nprices and is considering hiring another to work in Washington \r\nkeeping track of things.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-07-18T00:00:00 | /beige-book-reports/1972/1972-07-ch | "Beige Book Report: Chicago\nJuly 18, 1972\nBusiness optimism is growing stronger in the Seventh District, and \r\nthe view that the economy is in a vigorous expansion seems \r\nwidespread. It appears to be taken for granted that this expansion \r\nwill continue at least through the first half of 1973. Firms \r\ncontinue to report they need higher prices because of upward \r\npressures on costs, but they are constrained by the Price Commission \r\nand competition. Companies are cautious about adding to payrolls, \r\nand most are planning to hold employment stable or to raise it only \r\nmodestly. The pattern is similar in inventories, with most firms \r\nintending to hold inventory increases to moderate amounts. Restraint \r\nis less pronounced in the capital spending area, with most companies \r\nplanning to boost capital spending this year. The demand for \r\ncommercial and industrial loans is moderately strong.\nIncreased optimism, evident from conversations with individual \r\nbusinessmen, was the general theme of the speakers at a recent \r\nannual Business Outlook Conference which drew attendance from all \r\nover the District. The primary difference of opinion among the \r\nspeakers discussing the overall outlook was with regard to the \r\nsecond half of 1973. For that period, forecasts ranged from \r\nincipient recession to continued, even accelerating, growth. \r\nVirtually all commentators expected higher interest rates by the end \r\nof 1972, particularly short-term rates, and that rates would hold at \r\nthese higher levels or climb further in 1973.\nIn specific areas in which detailed forecasts were made, the outlook \r\npresented for plant and equipment expenditures was the most \r\noptimistic. It was predicted that a capital spending boom was now in \r\nits initial stages and would show no significant signs of tapering \r\noff until early 1974. Forecasters predicted auto sales for 1972 to \r\nbe 10.6 million units, and that 1973 would see a slightly higher \r\nlevel, with domestic manufacturers holding on to the gains in market \r\nshare which have been evident in recent months. The forecast for \r\nhousing was for a general slowing down, but with starts still \r\nexceeding 2 million units this year and only slightly below that \r\nlevel in 1973. Continued but slower growth was forecast for the \r\nmobile home market. The outlook presented for retail sales\u2014other\r\nthan autos\u2014also was strong. However, the expectation was that this \r\nstrength would be concentrated in durable goods. Nondurables would \r\nshow little gain except for that resulting from price increases.\nThe participation of District producers of capital goods in the \r\nimprovement seems to have broadened in the last month. Increases in \r\nsales are beginning to be noted in heavy construction equipment and \r\nover-the-road trailers\u2014trends not evident earlier in the year. The \r\none capital goods area reporting no sign of improvement was railroad \r\ncars. A local manufacturer reported that if it were not for a small \r\norder received in January, they would have closed down everything \r\nexcept repair operations. This firm has not received enough requests \r\nfor quotations to give them any hope of significant improvement \r\nbefore the last quarter of the year, if then.\nAmong the various consumer durable products, sales of recreational \r\nvehicles at both the retail and manufacturing levels have been very \r\nstrong. One area manufacturer reported that his company's sales were \r\nnearly double last year's, and that shipping facilities to meet \r\npromised deliveries were becoming a bottleneck.\nStrikes by various crafts have slowed construction in the Chicago \r\narea. The elevator constructors' strike was concluded July 9 after \r\n100 days, and short strikes by the masons and carpenters have caused \r\ndelays on several major projects, with one major building now about \r\nthree months behind schedule.\nLivestock prices continue at exceptionally high levels in response \r\nto strong consumer demand. Although meat supplies will be increasing \r\nseasonally over the next several months, recent estimates of \r\nlivestock numbers have caused many observers to expect only modest \r\nprice declines during the remainder of the year.\nCrop conditions generally are reported \"excellent\" across the \r\nMidwest, suggesting a near record fall harvest. Nevertheless, crop \r\nprices generally are near their highs for the year. The pending \r\ngrain agreement with Russia (announced over the weekend) has \r\nprovided considerable support to the market. Settlement of the dock \r\nstrike in Japan would provide further support.\nConversations with bankers in this District suggest that the demand \r\nfor commercial and industrial loans is moderately strong, but there \r\nis no indication that an upsurge is developing. Except in Detroit, \r\nwhere demand has been sluggish all spring and remains so, the banks \r\nthat were reporting the strongest demand earlier have experienced \r\nsome weakening recently, while the others seem to be doing better. \r\nBorrowing over the June tax date generally was less than had been \r\nexpected, and lack of inventory building is widely mentioned as a \r\nsource of weakness. Competition for loans appears to be very strong \r\namong bankers, and we hear many comments that national customers are \r\nstaying in the commercial paper market. We have heard a number of \r\ncomments from banks about the aggressive operations of the largest \r\nChicago banks via \"cap\" term loans. While loanable funds are still \r\ngenerally adequate, the major Chicago banks added substantially to \r\ntheir outstanding CD's last month, and one bank indicates that it \r\nmay have to seek CD money much more aggressively if inventory \r\ninvestment is stepped up as expected.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Minneapolis | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-mi | "Beige Book Report: Minneapolis\nJune 14, 1972\nDespite the fact the unemployment rate in the Minneapolis/St. Paul \r\nmetropolitan area remained unchanged this spring, the district's \r\noverall rate of joblessness rose as unemployment increased in other \r\nareas. District businessmen doubt Phase II can achieve its goals, \r\nbut do believe the Administration's efforts are helping curb \r\ninflation. A recent newspaper poll disclosed Minnesota residents \r\nwere far from unanimous in their economic outlook.\nThe results of our second-quarter Industrial Expectations Survey \r\nsuggest continued improvement in district manufacturing activity. \r\nAlso, district resort and motel managers are looking forward to a \r\ngood tourist season this summer. District crop development has been \r\nretarded, however. Weather-caused delays are forcing farmers in some \r\nareas to plant less profitable crops on remaining unseeded acreages.\nAfter averaging 5.3 percent in January and February, the district's \r\nunemployment rate, seasonally adjusted, jumped to 5.7 percent in \r\nMarch and rose to 5.9 percent in April. Much of the recent rise in \r\nunemployment can be traced to northeastern Minnesota. In addition to \r\nU.S. Steel closing a plant in Duluth, a banker there reported the \r\ndelayed opening this year of the Great Lakes shipping season had \r\nalso retarded employment expansion in his area. Furthermore, \r\nMinnesota this spring experienced its smallest seasonal rise in \r\nconstruction employment in ten years. Unemployment is also a problem \r\nin Montana, and a branch director reported the Anaconda Company this \r\nyear is laying off approximately 1,500 people in that state. In \r\naddition, cessation of construction on the ABM site at Malmstrom Air \r\nForce Base has already cost the Great Falls area 1,000 construction \r\njobs.\nOn the other hand, the unemployment rate in the Minneapolis/St. Paul \r\nmetropolitan area has not risen this spring and a Minnesota \r\nDepartment of Manpower Services spokesman reported jobs were more \r\nplentiful this spring than twelve months earlier. Directors from \r\nNorth Dakota, South Dakota, the Upper Peninsula of Michigan and \r\nnorthwestern Wisconsin reported some improvement in labor market \r\nconditions this spring.\nAlthough district businessmen are skeptical of whether or not Phase \r\nII will be able to achieve its goals, bank directors indicated their \r\ncontacts believe the Administration's efforts have slowed the rate \r\nof inflation. In addition, one director reported district \r\nbusinessmen currently were more optimistic about expected price \r\nperformance than they were at the beginning of the year. Another \r\ndirector stated his area's recent pickup in business activity had \r\nlessened concern over wage-price controls. No directors foresaw any \r\nshift this year in the Administration's program to combat inflation. \r\nOne director, however, reported the Pay Board was getting tougher in \r\nits rulings.\nA recent Minnesota poll revealed district residents have mixed \r\nexpectations about economic activity during the next six months. In \r\nassessing the overall economy, 50 percent of the respondents looked \r\nfor \"good times\" while 44 percent anticipated \"bad times.\" When \r\nasked to comment on labor market developments, 35 percent expected \r\nemployment to increase, 41 percent foresaw no change and 23 percent \r\nanticipated the number of people holding jobs would decrease. Survey \r\nrespondents were more optimistic about curbing inflation than they \r\nwere a year ago. In this current survey 50 percent indicated they \r\nexpected the prices of most things they buy to increase as compared \r\nto 73 percent who gave this reply a year ago.\nResponses to our second-quarter Industrial Expectations Survey \r\nsuggest continued expansion in district manufacturing activity. The \r\nstrongest year-to-year sales increase in ten quarters was achieved \r\nin the first quarter, when district manufacturing sales advanced \r\n12.2 percent. This gain surpassed the 6.5 percent sales advance \r\nexpected last February and resulted from an unexpected strengthening \r\nin both durable and nondurable goods sales. Despite their heartening \r\nfirst-quarter performance, however, district manufacturers only \r\nmodestly revised upward their expectations for the second and third \r\nquarters.\nDistrict motel and resort managers, according to a telephone survey, \r\nare optimistic about this summer's tourist business. When asked to \r\ncharacterize their outlook for this summer, eleven respondents \r\nexpected their business to be \"excellent,\" three termed their \r\nanticipations \"very good\" and eight foresaw a \"good\" tourist season. \r\nIn the western portion of the district, Yellowstone National Park's \r\ncentennial is expected to attract additional tourists.\nCrop development has been retarded throughout the district. \r\nGenerally, spring weather was late, but the greatest delays were \r\ncaused by recent excessive rainfall in feedgrains-producing areas of \r\nsouthern Minnesota and eastern South Dakota. Estimates of the degree \r\nof lateness are greater in the western portions of this region. A \r\ndirector from east-central South Dakota places the overall stage of \r\ncrop development at three weeks behind normal and reports much of \r\nthe acreage prepared for corn (principal crop of the region) is \r\nbeing switched to less profitable grain sorghums. Other reports \r\nindicate switching to soybean production in southern Minnesota.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Cleveland | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-cl | "Beige Book Report: Cleveland\nJune 14, 1972\nReports from our industrial directors and from business economists \r\nin the area indicate current expansion of business activity in the \r\ndistrict is gathering momentum. Market demands for both consumer \r\ngoods and capital goods generally are improving, although the steel \r\nindustry has yet to register an across-the-board recovery. Both \r\nmanufacturing and nonmanufacturing employment are rising, but \r\ninsured unemployment remains on a plateau.\nComments by our industrial directors about improving business \r\nconditions in their firms or industries were nearly uniform, \r\nreflecting strong consumer spending, a continued high level of auto \r\nparts production and a pickup in capital goods and aerospace \r\nbusiness. One director noted that although his machine tool business \r\nhas yet to experience a significant upturn, he remains optimistic \r\n(his firm's specialized type of machine tools tends to be among the \r\nlast to show improvement). Several directors mentioned top \r\nmanagement was providing strong pressures to hold down capital \r\nspending, and another pointed out that although capital \r\nappropriations in his firm will be up substantially this year, \r\ncapital spending will not exceed last year's level.\nOur latest survey of manufacturers supports the view that economic \r\nactivity continued on a strong upward course during May. In fact, \r\nfor the first time in many years firms reported the increase in each \r\nof our eight survey items was stronger than expected one month ago. \r\n(Survey items are new orders, shipments, backlogs, inventories, \r\ndelivery time, employment, hours and prices.) Another significant \r\nfact revealed in the survey results was that there was a net \r\ninventory accumulation in May-the first time in many months. Survey \r\nparticipants expect strength in manufacturing activity to be \r\nsustained in June and do not anticipate a slowing in the rate of \r\ninflation. (Thus far this year, our diffusion index for prices paid \r\nhas been running slightly below the level that prevailed prior to \r\nPhase I.)\nEconomists in the steel industry report steel orders are increasing, \r\nbut not uniformly among major customers. The strength is mainly in \r\nsteel sheets, reflecting rising demand from auto and appliance \r\ncompanies. Steel orders for agricultural machinery and equipment are \r\nup sharply, as is demand for wire and wire products. The weakness is \r\nmainly in orders for heavy plates and structurals, reflecting lack \r\nof strength in high-rise commercial building and industrial \r\nbuilding. The steel industry itself has not been using those \r\nproducts to any great extent because its capital spending programs \r\nhave been reduced this year. The economists mentioned steel users \r\nare showing little inclination to build inventories; they seem to be \r\noperating on a \"hand-to-mouth\" basis. Our contacts also indicated \r\nthere is considerable speculation in the steel industry about \r\nreasons for the sharp decline in steel imports during April; some \r\nindustry analysts apparently are doubtful the recent low level will \r\nbe maintained.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Philadelphia | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-ph | "Beige Book Report: Philadelphia\nJune 14, 1972\nManufacturing activity in the Third Federal Reserve District remains \r\non the upswing and employment continues to expand. Increased capital \r\nspending plans are frequently reported by area firms. Industrial \r\nprices are, for the most part, stable in the district, although \r\nnear-term price increases are anticipated by some firms. The longer-term price picture, however, has improved somewhat over the past few \r\nmonths. Loan demand continues to be strong on a broad front, \r\nalthough a flattening in activity is expected during the next few \r\nmonths.\nArea business executives report the regional economy is continuing \r\nits upward course. The business outlook survey of large \r\nmanufacturers in the district shows approximately four times as many \r\nresponding firms experienced increases in new orders and shipments \r\nas recorded decreases during May. Area firms expecting increases in \r\nthese key indicators outnumber those forecasting decreases by about \r\nthree to one for the month of June.\nThis increased activity continues to have a favorable impact on the \r\nemployment picture in the district. During May over 15 percent of \r\nthe responding firms added workers to their payrolls while nearly 5 \r\npercent lengthened their average workweek. Forecasts for June show \r\nnearly 20 percent expecting to add workers, with over 15 percent \r\nstretching out the average workweek.\nLooking ahead six months, three-fourths of the manufacturers believe \r\nthe level of general business activity will be higher. Two-thirds of \r\nthe respondents foresee increasing new orders and shipments a half \r\nyear ahead for their own firms. In anticipation of increased \r\nbusiness tempo, many of these firms plan a pickup in hiring during \r\nthe next six months. Nearly 30 percent expect to add workers during \r\nthat time span. Also, plans for capital investments six months ahead \r\ncontinue at a high level. Over 45 percent of the firms expect \r\nincreases in capital outlays while only 5 percent anticipate \r\ncutbacks.\nThe price report from manufacturing firms gives mixed signals. The \r\nmonth of May appeared to be one of relative stability, with over 70 \r\npercent reporting no change in prices paid and over 90 percent \r\nreporting no change in prices received. Forecasts for June show a \r\nsimilar report for prices paid, but more firms expect to increase \r\nprices they are charging. Nearly 20 percent anticipate price \r\nincreases on their own products during June. This compares with only \r\n7 percent of the firms that reported price increases for May.\nThe six-month outlook for prices, however, is becoming more \r\noptimistic. In March, over 70 percent of the firms were forecasting \r\nincreases in prices paid during the following six months; over 60 \r\npercent were forecasting increases in prices received. By May, less \r\nthan 55 percent were predicting increases in prices paid while only \r\napproximately 40 percent were expecting to raise their own prices \r\nover the ensuing six months.\nArea bankers report continuing strength in loan demand. Commercial \r\nand industrial loans are growing steadily, although demand for funds \r\nto finance inventories has been relatively weak. Real estate loans \r\nremain stable while consumer loans show some signs of improvement. \r\nThe outlook is for a flattening in loan activity during the next few \r\nmonths, although construction is expected to remain a source of \r\nstrength.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
New York | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-ny | "Beige Book Report: New York\nJune 14, 1972\nAccording to directors of the head office and the Buffalo Branch and \r\nother business leaders, Phase II on balance has been relatively \r\nsuccessful in curbing the wage-price spiral. New developments in \r\nVietnam have had little or no impact on business and consumer \r\nconfidence; the recent retail sales picture seemed somewhat less \r\nbright than last month's and businesses continue to follow very \r\ncautious inventory policies.\nConcerning Phase II, respondents' current assessments varied \r\nsomewhat but can perhaps best be summed up by the view of a head \r\noffice director, chairman of the board of a New Jersey bank, who \r\nstated it had both its good and bad aspects and while a wage problem \r\nstill existed, it was not as serious as last year's. Among other \r\nhead office directors, a senior official of a large New York City \r\nbank gave the program \"'A' for effort and 'B' for performance\" and \r\nfelt there would be a Phase III. The president of a large nonferrous \r\nmetal-producing corporation thought the program was \"hurting\" \r\ncorporate profits and thus making return on investment inadequate by \r\ncontrolling prices more effectively than wages. A senior official of \r\na major metal container firm, however, felt Phase II has helped slow \r\nthe inflationary spiral and, on the basis of his firm's experience, \r\nhas been a definite factor in curbing the magnitude of wage \r\nincreases. A Rochester department store official stated that but for \r\ncontrols, wages in his area would \"skyrocket.\" Buffalo Branch \r\ndirectors generally agreed controls had been \"reasonably\" effective, \r\nand given the number of labor contracts expiring next year, such \r\ncontrols would probably be required for at least another year. Among \r\nother respondents, the chairman of a large nonbank financial firm \r\ncharacterized Phase II as a \"brilliant stroke,\" but \"regretfully\" \r\nfelt it to be but the \"first step\" toward more controls. A former \r\nsenior official of this Bank, while not assessing the program as \r\n\"brilliant,\" stated he was surprised by how well it was working.\nAccording to most respondents, recent military developments in \r\nVietnam have had little or no impact on business and consumer \r\nconfidence. As will be noted below, however, some respondents \r\nmentioned the situation as a factor possibly slowing the gradual \r\nrise in retail sales that has been under way since last fall.\nIndeed, the current consumer spending picture that emerges from the \r\nviews expressed by respondents appears less bright than last \r\nmonth's. Buffalo Branch directors viewed retail sales in western New \r\nYork as \"holding steady,\" with only minor seasonal fluctuations. A \r\nleading Rochester retailer characterized the current retail sales \r\npicture in his area as \"indifferent,\" and reported only \"guarded\" \r\noptimism among retailers regarding the outlook for the next few \r\nmonths. He felt consumers still lacked confidence, perhaps because \r\nof Vietnam or because of the wage controls. The container \r\nmanufacturer also was not optimistic over near-term retail sales \r\nprospects for a number of reasons, including the uncertainties \r\ncreated by Vietnam, the effects of Phase II and the coming\r\nelections. He felt the adverse impact of these factors on consumer \r\nconfidence being accentuated by the manner in which they have been \r\nhandled by the news media. The president of a nationwide chain of \r\nvariety stores stated consumer spending had not been \"buoyant\" this \r\nspring, and \"the consumer is not carrying the economy yet.\" This \r\nfeeling was shared by the president of a \"popular priced\" textile \r\nmanufacturer who, however, looked for a gradual pickup over the \r\nbalance of the year. A senior official of a high priced, high \r\nquality New York City department store reported his firm's business \r\nhad been fairly good in May and had picked up further in early June. \r\nHe expected a continued moderate increase in sales over the coming \r\nmonths, but felt consumers remained restrained and reported his firm \r\nwas only cautiously optimistic.\nThis relatively lackluster consumer spending picture found its \r\ncounterpart in reports of a continued lack of strength in business \r\ninventories. Some businessmen commented that with the help of \r\ncomputers to determine the minimum required, users and retailers did \r\nnot wish to tie up working capital to carry excess inventories. The \r\ndepartment store official mentioned above stated his firm's \r\ninventories were currently somewhat \"heavier\" than at this time last \r\nyear, but they were not \"crazy\" over this situation and were \r\nactually trying to reduce them. The Rochester retailer reported \r\nstores in his area also were \"continually\" attempting to control \r\ninventories. The nonferrous metal producer reported no increase in \r\ncopper inventories; the container manufacturer also saw no inventory \r\nincreases in that industry. A New York City banker saw little \r\nevidence of strength in the inventory picture in his bank loan \r\ndevelopments: while its total loans are well ahead of last year's, \r\nthe increase has not been accounted for by \"industrial and \r\ncommercial\" loans. Similar views were expressed by the New Jersey \r\nbanker. And Buffalo Branch directors almost all felt there appeared \r\nto be no strengthening in business inventories. The only exception \r\nwas the director of the upstate food processing firm who reported a \r\nbuildup of food packaging material in that industry.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Dallas | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-da | "Beige Book Report: Dallas\nJune 14, 1972\nRecent economic indicators reflect growing strength in district \r\neconomy. The Texas industrial production index rose in April for the \r\nfourth consecutive month. Construction contracts in the district \r\nreached a record level, and the unemployment rate declined slightly. \r\nA survey of head office and branch directors revealed a clear \r\nmajority expect economic activity in their community and industries \r\nto increase moderately over the rest of 1972. However, directors \r\nbelieve the improving economic conditions will be accompanied by \r\nrates of price increase about equal to or somewhat faster than \r\nrecent rates. Despite the expectation of improved economic \r\nconditions, directors from district industries anticipate levels of \r\nemployment, plant and equipment expenditures and inventory \r\ninvestment at their firms to remain about unchanged during the \r\nremainder of 1972. Banking directors now expect a moderate increase \r\nin market interest rates.\nAlmost three-fourths of the directors feel economic activity in \r\ntheir area was somewhat stronger in May than during the first \r\nquarter, and two-thirds of the directors foresee a moderate further \r\ngain in activity during the next six months. Directors from \r\ncommercial banks were more optimistic about economic conditions \r\nduring the rest of 1972 than were directors from business firms in \r\nthe district. The outlook for prices by both businessmen and bankers \r\nwas not optimistic. Eighty percent of the directors expect prices to \r\nbe rising at the end of 1972 at about the same rate or somewhat \r\nfaster than in recent months. Only 20 percent of the directors felt \r\nprices would be rising at a somewhat slower rate by the end of 1972.\nDirectors associated with nonbanking business were surveyed with \r\nrespect to the outlook for their firms and industries. A majority \r\nanticipated employment, plant and equipment expenditures and \r\ninventories for their firms will remain about the same between now \r\nand the end of the year. None of the respondents was anticipating \r\nhigher employment by the end of the year, and one was anticipating \r\nsubstantially lower employment. Only two directors rated summer \r\nemployment opportunities for students at their firms as good or very \r\ngood, and this was offset by two who rated summer employment \r\nopportunities as bad or very bad. The majority indicated summer \r\nemployment opportunities at their firms were marginal. While the \r\nmajority of business directors anticipated inventories at the end of \r\nthe year would be about the same as the present level, two directors \r\nanticipated moderately higher inventories. Most of the directors \r\nfelt actions of the Price Commission would have a moderate or \r\nmarginal effect on slowing price increases in their industries. \r\nHowever, only three directors felt the Pay Board would have any \r\neffect in slowing increases in wage rates in their industries during \r\nthe remainder of the year. Two-thirds of the business directors did \r\nnot expect their company profits to be affected in 1972 by Phase II \r\ncontrols, while the other one-third expected a slight negative \r\neffect on profits.\nCommercial banking directors were asked about recent loan demand at \r\ntheir banks and their expectations about interest rates. The \r\nmajority felt the demand for business loans, consumer loans and \r\nmortgage loans was much higher at their banks in May than in the \r\nfirst quarter of 1972. While demand for agricultural loans was \r\nessentially unchanged, loan demand was particularly strong in the \r\nconstruction industries. Moreover, the overwhelming majority of bank \r\ndirectors stated their banks' willingness to make loans had remained \r\nessentially unchanged from the first quarter. Funds at their banks \r\nwere judged to be moderately available or very available to meet \r\nloan demand at the present time. Not a single banking director \r\nexpects a moderate increase in short-term rates during the next six \r\nmonths: half feel long-term rates will also rise moderately, but \r\nthe other half feel long-term rates will remain at about present \r\nlevels. The banking directors believe the prime lending rate will be \r\nbetween 5 1/2 and 6 percent by the end of the year, with 5 3/4 \r\npercent the most frequently mentioned rate.\nThe seasonally adjusted Texas industrial production index rose in \r\nApril for the fourth consecutive month. In manufacturing, all \r\nindustry groups reported monthly as well as year-to-year gains. \r\nPetroleum refining, a significant industry in the index, increased \r\n14.1 percent over last April. Oil allowables in the district's four \r\nproducing states were left unchanged for June. Seasonally adjusted \r\ntotal employment in the five southwestern states receded slightly in \r\nApril, but nonfarm payroll employment remained at the March level \r\nand the unemployment rate edged downward. All industry groups showed \r\nyear-to-year gains in payroll employment. Construction activity in \r\nthe five southwestern states continued its fast pace. The total \r\nvalue of contracts awarded rose to a record level in April. Sales of \r\ndepartment stores in the district continued to show monthly and \r\nyear-to-year gains, but automobile registrations dropped \r\nsignificantly in April from March levels.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-ch | "Beige Book Report: Chicago\nJune 14, 1972\nEach passing month has been accompanied by a shrinkage in the number \r\nof Seventh District residents who remain skeptical that a broad \r\nrecovery of activity is indeed under way. In fact, interest in the \r\ngeneral business outlook has subsided to its lowest ebb in years, as \r\nmore and more firms observe improved demand for their own products \r\nand services and business loan demand picks up. Remaining doubters \r\ncommonly cite the national unemployment rate\u2014prominently featured \r\nin newspapers and by television commentators\u2014which they accept as \r\nan equivalent substitute for the trend of employment.\nMore firms are adding workers or stretching workweeks. The volume of \r\nhelp wanted advertising has increased in the Chicago area in recent \r\nmonths from a low plateau in 1971. But the overall supply of \r\nworkers, including most skills, remains ample. City governments in \r\nDetroit and Milwaukee are much concerned about the extent of \r\nunemployment in their central areas. Many students and teachers are \r\nexpected to fail in their search for summer jobs.\nVigorous demand continues for trucks, trailers and some types of \r\nconstruction equipment. Orders for smaller machine tools have \r\nimproved substantially. Some district producers of defense equipment \r\nare hiring again on a modest scale. Shipments of all types of big-ticket consumer\ngoods\u2014household durables, recreational equipment, \r\nlawn and garden equipment, power tools\u2014are very strong and above \r\nforecasts. Record sales of autos are creating shortages of some \r\nfavored models\u2014\"the worst in many years,\" according to one large \r\nChicago dealer.\nSteel producers are somewhat more optimistic. Imports are less of a \r\nproblem than had been feared, with currency realignments and new \r\ntrade agreements partly responsible. Steel output in the Chicago \r\narea has moved closer to the high level of a year ago than is the \r\ncase for the nation. Demand for steel sheets is far outrunning \r\ndemand for heavy grades, reflecting the level of usage in the motor \r\nvehicle and consumer goods fields.\nPermits granted for apartments in the Chicago area have been running \r\nwell below last year, but real estate circles report a recent \r\nimprovement in demand for apartments from both renters and buyers. \r\nSales of moderate-priced existing homes are completed in very short \r\nperiods after being placed on the market, but sales of high-priced \r\nhomes (over $100,000) are quite slow.\nMajor construction projects in the Chicago area have been held back \r\nby strikes. The elevator constructors' strike continues, halting \r\nsteel erection. A lathers' strike stopped most work for two days as \r\nother trades honored picket lines. A masons' strike is threatened. \r\nConstruction laborers in Indiana and Illinois recently settled for \r\nan immediate boost in total compensation to about $7.50 per hour. \r\nWhile huge office buildings will add substantially to the supply of \r\noffice space when completed, the vacancy rate for office space in \r\nthe Chicago loop is two and one-half times the relatively low rate \r\nof two years ago.\nRetail beef and pork prices are being pushed up as the volume of \r\nmarketings of cattle has lagged expectations. One large district \r\nretail food chain recently announced a boost of 6 to 8 percent in \r\nbeef prices, citing higher wholesale prices. Poultry and eggs are in \r\ngood supply. Crop prospects are favorable with growing conditions \r\n\"better then average\" despite a late start.\nSome of the largest district banks report loan demand higher than \r\nanticipated \"across the board.\" The reversal in business loans has \r\nbeen \"dramatic\" with a substantial year-to-year decline in 1971, \r\nreplaced by a substantial increase this year. A large share of the \r\nrecent rise in business loans has been in term loans\u2014three to \r\nseven years to maturity\u2014in competition with capital markets. These \r\nloans feature many variations in rate terms and other features, \r\ndepending on preferences of the various banks and their customers. \r\nSavings inflows are holding up well in view of the improved level of \r\nretail sales. Two large Chicago banks are outrunning competitors for\r\nsavings by offering stuffed animal \"mascots\"\u2014a lion and a kangaroo\u2014as premiums for opening new accounts.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-ri | "Beige Book Report: Richmond\nJune 14, 1972\nResults of our latest survey of businessmen and bankers indicate a \r\ncontinuing uptrend in business activity in the Fifth District. In \r\ngeneral, shipments, new orders and backlogs of orders are increasing \r\nin the manufacturing sector. Retail\r\nsales\u2014especially automobile \r\nsales\u2014continue to reflect the strength evident in our last several \r\nsurveys. Employment and hours worked per week are reported unchanged \r\nin the trade and services sector and increasing in the manufacturing \r\nsector. Banking respondents also report increases in employment in \r\nmost areas of the district. Residential and nonresidential \r\nconstruction activity continues strong. Banking respondents indicate \r\nthe demand for all types of loans is increasing. Businessmen and \r\nbankers continue to be optimistic concerning the general economic \r\noutlook.\nManufacturing respondents report further increases in shipments, new \r\norders and backlogs, with gains especially notable in such important \r\ndistrict industries as paper, chemicals and primary and fabricated \r\nmetals. On balance, manufacturers report a decline in inventories \r\nand the diffusion of responses indicates inventories in some \r\nimportant lines have fallen below desired levels. Coupled with \r\nincreased demand for business loans reported by bankers in the \r\nsurvey, this suggests some step-up in the rate of inventory buying \r\nby district manufacturers may be under way. Current capacity levels \r\nare rated as about right by most manufacturing respondents.\nBoth banking and retail respondents report further increases in \r\nsales. Automobile sales were reported to be especially strong, with \r\nmore than 50 percent of the banking respondents indicating increases \r\nin their areas. Trade and service respondents also indicate \r\ninventories are down.\nEmployment and hours worked are reported to be up in manufacturing \r\nbut little changed in trade and service. Both manufacturers and \r\ntrade respondents report increases in wages, with some retail firms \r\nexpressing concern over the impending minimum wage increase. On \r\nbalance, trade and service respondents reported no change in prices \r\nreceived while manufacturers reported a slight decline.\nAccording to reports received from district bankers, residential and \r\nnonresidential construction activity continues strong in the \r\ndistrict. More than half of the banking respondents report an \r\nincrease in residential construction. Bankers report strong demand \r\nfor all types of loans. Demand for consumer loans appears to be \r\nespecially strong, with 17 of 21 banker respondents indicating \r\nfurther increases in their consumer loans outstanding.\nThis district's January-April cash receipts from farm marketings \r\nwere 3 percent above a year earlier, but the increase was \r\nsignificantly less than the 16 percent gain nationally. Larger \r\nlivestock receipts accounted for all of the district increase.\nIn general, bankers and other businessmen in the district remain \r\noptimistic about the general economic outlook. Forty percent of the \r\nbanking respondents believe business activity in their respective \r\nareas will improve in the next three months and the remainder \r\nbelieve activity will stabilize at present levels.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Boston | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-bo | "Beige Book Report: Boston\nJune 14, 1972\nBusiness is described as strong, with consumer spending very high \r\nand capital spending plans being revised upward. Profits are \r\nreported as very good. Bankers report deposits are continuing to \r\nsurge and business loan demand is rising.\nManufacturers of consumer goods and a banker on Martha's Vineyard \r\nall attest to higher than expected spending by consumers on leisure-time activities. Recreational \r\nvehicles\u2014campers, trailers, motor \r\nhomes, boats\u2014are described as selling like a \"house afire.\" On \r\nMartha's Vineyard, business is reported as busier than usual for \r\nthis time of year, with single-family homes being put up at a record \r\npace.\nDespite the rapid pace of consumer goods sales, inventories are not \r\nbeing raised. Two reasons are given. First, sales are so rapid it is \r\ndifficult to build inventories. Second, the use of computers has cut \r\ndown on the need for inventory accumulation. One large manufacturer \r\nindicated he expected work-in-process inventories to rise when \r\nmachine tool orders picked up, because of the long work-time \r\ninvolved in their production.\nHalf of our directors whose firms manufacture capital goods \r\nindicated orders were very strong. The other two directors said \r\nwhile machine tool orders were up, they were not coming in as fast \r\nas surveys of capital spending plans would indicate. These latter \r\ntwo directors expected the real surge in 1973. Two of our directors \r\nindicated their own manufacturing firms were drastically revising \r\nupward their capital spending plans.\nDespite the brisk pace of business activity, only one manufacturer \r\nreported a significant increase in his work force.\nPrices paid to suppliers were reported as generally rising by more \r\nthan 2 percent, with one director indicating the pace was faster in \r\nthe second quarter than in the first. Natural gas, an important raw \r\nmaterial for one manufacturer, has doubled in price since January.\nBusiness loan demand is reported by area bankers as good despite the \r\nlack of inventory accumulation. Savings deposits inflows are \r\nsurging, but there is little or no downward movement in mortgage \r\nrates.\nProfessor Samuelson, the only academic correspondent available this \r\nmonth, said monetary policy should be of an \"accommodating\" nature \r\nin this early stage of expansion. He felt a rate of growth of real \r\noutput of 6 to 7 percent throughout the rest of the year is a likely \r\nand desirable policy target. To meet this goal, he prescribed an 8 \r\npercent average annual growth rate in the money stock between now \r\nand year-end, even if interest rates were to \"ease upward.\"\nSamuelson is not a price optimist. Even if the rate of inflation \r\nwere to exceed the consensus 3 1/2 percent figure, he would not \r\nrestrict aggregate demand, since the pressures would be mostly cost-push in origin. He would shift to a 6 percent money growth policy \r\nonly if the rate of growth of real output exceeds 8 percent. \r\nSamuelson also noted Professor Modigliani would regard a 10 percent \r\nmonetary growth rate as necessary to accommodate the 6 to 7 percent \r\nreal growth target.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-sf | "Beige Book Report: San Francisco\nJune 14, 1972\nAccording to reports received from our directors, economic \r\nconditions are following the same trends established in recent \r\nmonths. Output and employment are rising gradually, but not at rates \r\nrapid enough to bring about any major reduction in unemployment. \r\nBusiness investment plans are somewhat cautious, consumer spending \r\nis steady and construction is maintaining a high level of activity, \r\nyet there are some elements of weakness. In the housing sector there \r\nis some evidence of overbuilding of apartments in southern \r\nCalifornia. Since declines in dwelling-unit authorizations have \r\noccurred in recent months, homebuilding in California may also be \r\nslowing, and consequently later this year there may be a weakening \r\nin the demand for real estate loans and declines in mortgage rates. \r\nIn other states, such as Utah and Idaho, commercial and residential \r\nconstruction are at record levels. Overall, the construction \r\nsituation appears to be satisfactory and the areas of strength more \r\nthan balance the few signs of weakness.\nConstruction activity has stimulated demand for lumber and wood \r\nproducts. The resulting greater output and employment has reinforced \r\nrecovery, particularly in the Pacific Northwest. Expectations in the \r\nlumber industry are that demand will remain strong for the rest of \r\nthe year.\nOur directors were asked to comment on current wage and price \r\ntrends. The consensus is both wages and prices have been growing at \r\nslower rates since the freeze was imposed last year. The directors \r\ndo not foresee any major increases in either prices or wages, \r\nalthough there are a few complaints some wage increases allowed in \r\nthe past were too liberal. Most firms and banks expect to stay \r\nwithin the guidelines without great hardship. In a few industries \r\ncompetitive pressures would prevent price increases in any event. In \r\ngeneral the directors prefer to keep the guidelines system for the \r\ntime being.\nOther comments on the guidelines pointed to both problems and \r\nadvantages. A problem for some firms is caused when unionized \r\nemployees gain approval for wage increases above the general \r\nguidelines allowed for other employees not represented by unions. On \r\nthe other hand, several directors thought the guidelines do play a \r\nuseful part in negotiations of labor contracts by restraining wage \r\ndemands. Another favorable factor has been the acceptance by several \r\nlarge unions of rollbacks from increases obtained in their \r\npreviously negotiated settlements.\nDirectors representing banks report some improvement in the demand \r\nfor commercial loans and further increases are expected. In \r\nconsequence, somewhat higher interest rates are expected. One \r\ndirector thought the prime rate might climb 50 to 100 basis points \r\nlater in the year and short-term money rates would lead the \r\nincrease. At the same time, other directors thought mortgage rates \r\nwould rise somewhat less than other rates, if they rise at all.\nDemand deposits continue to rise. This reflects, according to some \r\ndirectors, a generally liquid corporate condition and a consumer \r\npreference for holding large demand deposit balances, as well as a \r\ngreater level of economic activity. Saving deposits are also \r\nsomewhat higher despite the 4 percent rate on passbook accounts paid \r\nby some banks.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
National Summary | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-su | "Beige Book: National Summary\nJune 14, 1972\nReports from the twelve districts indicate continued strengthening \r\nin business activity and greater optimism in general. Consumer \r\nspending, which has continued strong in most regions, seems to be \r\nthe main source of strength. Greater output in industries closely \r\nrelated to the provision of final goods, especially durables, was \r\ncited as principal source of expanding manufacturing employment and \r\nincreased business loan demand. Inventories have, for the most part, \r\nremained unchanged. Construction of single-family dwellings has \r\ncontinued to boost overall activity. Loan demand at commercial banks \r\nhas increased, with consumer and business loan categories up most \r\nsharply. In general, wage and price increases have been moderate.\nMost districts reported encouraging strength in sales of consumer \r\ngoods. Part of the gain in consumer purchases was attributed by \r\nAtlanta, Richmond and Chicago to stronger auto sales; Dallas, \r\nhowever, reported a decline in auto registrations. Major household \r\nitems and other consumer durables were strong in some districts. \r\nKansas City, Boston and Chicago specifically mentioned recreational \r\nitems. While retail sales rose in the St. Louis district, the \r\nadvance was not as great as anticipated by retailers. Slowness \r\ncharacterized retail sales in the New York district, where the \r\noutlook was less bright than a month ago.\nSteel production was reported favorable in the Chicago and Cleveland \r\ndistricts. The output levels are considerably different, however, \r\nfor the various steel industry products. Production of steel sheets \r\nfor use in autos and appliances has displayed the most strength in \r\nboth districts, while demand for steel used in commercial and \r\nindustrial construction has remained relatively weak.\nManufacturing activity was reported to be increasing in five \r\ndistricts. Sales of both durables and nondurables advanced in \r\nMinneapolis and capital goods orders were strong in Boston. Dallas \r\nreported gains in industrial production in April with broad-based \r\nstrength across industry lines. Manufacturers that supply national \r\nmarkets are reportedly optimistic in the St. Louis district. St. \r\nLouis, and Chicago as well, mentioned benefits to manufacturers \r\nresulting from reduced foreign competition. Richmond reported \r\nstrength in district industries. Most districts reported little \r\nchange in inventory accumulation.\nSeveral reserve banks reported significant employment gains in their \r\nrespective districts. Philadelphia indicated over 15 percent of the \r\nfirms responding to a survey added to their payrolls and nearly 5 \r\npercent lengthened their average workweek. In the Chicago district, \r\nthere was an increase in the number of firms adding workers or \r\nstretching workweeks, but two major-city governments are still very \r\nconcerned about unemployment. While Dallas and Boston reported no \r\nsignificant labor market changes, Minneapolis indicated the Ninth \r\nDistrict's unemployment rate rose from 5.7 percent in March to 5.9 \r\npercent in April.\nConstruction activity has remained strong in most districts. San \r\nFrancisco reported that national construction activity gains have \r\naided recovery of the Pacific Northwest because of the greater \r\ndemand for lumber and wood products. Generally, residential \r\nconstruction has been strong in the nation, but Atlanta reported it \r\nappeared to be slowing. Commercial construction has slackened and \r\nconcern has been expressed for possible overbuilding of multiunit \r\ndwellings in the San Francisco and Kansas City districts. Of all the \r\ndistricts, only Atlanta reported anticipation of a surge in \r\ncommercial construction.\nLoan demand in general, and business loan demand in particular, were \r\nnoted as being quite strong by most districts. Exceptions included \r\nNew York, where an increase in total loans was not accounted for by \r\ncommercial and industrial loans, and Kansas City, where business \r\nloan demand has also been weak. Richmond and Dallas reported \r\nstrength in consumer loans, while Philadelphia and Kansas City \r\nreported moderate gains in consumer lending. Housing and \r\nconstruction credit were noted as sources of strength in the Dallas \r\nand St. Louis districts while in the Philadelphia district future \r\nstrength in construction lending is anticipated.\nFour districts reported continuing strong inflows of savings \r\ndeposits. One of the four, Kansas City, noted inflows were above \r\nyear-ago levels but slower than earlier in 1972. St. Louis, Boston \r\nand Chicago also mentioned strong savings inflows.\nMost districts cited the importance of the Price Commission's role \r\nin slowing the rate of inflation. The Minneapolis and San Francisco \r\nreserve banks indicated prices and wages were growing at reduced \r\nrates, and retail establishments in the Kansas City district have \r\nreported no sharp run-ups in suppliers' prices. In the Boston \r\ndistrict, suppliers' prices have generally been rising gradually and \r\none director indicated the pace was faster in the second quarter \r\nthan in the first. In the Philadelphia district, despite \r\nexpectations of no change in prices paid, 20 percent of the \r\nmanufacturing firms which responded to a survey were anticipating \r\nestablishing price increases on their own products in June. Only 7 \r\npercent reported price increases in May.\nWeather and cattle prices were emphasized in reports on the \r\nagricultural outlook. Weather conditions throughout much of the \r\nMidwest reportedly had adverse effects on plantings. Excessive \r\nrainfall in parts of the Minneapolis and St. Louis districts have \r\nretarded crop developments and in the case of Minneapolis caused \r\nsome switching from corn plantings to grain sorghums and soybeans. \r\nDrought conditions have developed in the Atlanta district and the \r\nnorthern part of the St. Louis district.\nHigher beef prices were noted by the Chicago, Richmond and Kansas \r\nCity banks, and the St. Louis bank reported strong sales of farm \r\nequipment.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Kansas City | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-kc | "Beige Book Report: Kansas City\nJune 14, 1972\nWith the possible exception of inventory loans, business loan demand \r\nat commercial banks in the Tenth District has weakened recently. \r\nReal estate and personal loan demand remains strong, however. \r\nMortgage commitments and savings inflows to savings and loan \r\nassociations continue well above their year-ago pace. Department \r\nstore sales, especially of household durables, are still advancing \r\nvigorously. Prices generally are perceived by marketing men and \r\npurchasing managers alike to be rising moderately (as one said, at a \r\n\"manageable\" pace), but recent performance of meat-animal prices \r\nbodes ill for retail meat prices in the near future. Overall, \r\nrespondents were almost uniformly optimistic about the business \r\nsituation for the rest of 1972.\nTenth District bankers report little change in overall conditions of \r\nloan demand, with continued strength in real estate and personal \r\nloan categories partly offset by some signs of weakness in business \r\nloans. Strength in real estate loans appears broadly based, \r\nincluding both residential and commercial mortgage loans. Most \r\nbankers interviewed indicate installment lending is moderately \r\nstrong and some report exceptional gains. Several Tenth District \r\nbankers single out credit card purchases as accounting for increased \r\ninstallment loans.\nThe recent weakness in business loans reported by most bankers \r\ninterviewed is in contrast to the steady and strong growth in \r\nbusiness lending in the Tenth District noted in the last three \r\nRedbooks. No clear pattern emerged in the reasons given for the \r\ndecline; one Kansas City bank reports a large corporate customer has \r\nengaged in a public financing in order to reduce its bank \r\nindebtedness. Oklahoma banks, however, report strong business loan \r\ndemand\u2014for example, for expansion by oil drilling companies. \r\nAlthough overall district business loan demand appears to have \r\nweakened somewhat, several banks have recently experienced rising \r\nvolumes of business loans to finance inventory accumulation.\nSavings inflows to savings and loan associations in the Tenth \r\nDistrict continue above those of a year ago, but appear somewhat \r\nsmaller than earlier in 1972. Mortgage commitments remain generally \r\nstrong, although some apprehension about possible overbuilding of \r\nmultiunit structures was expressed by associations in Omaha, \r\nOklahoma City, Topeka and Denver. Rates paid on savings are stable \r\nand rates charged on mortgages are generally reported as steady, \r\nthough a tendency toward stiffening was noted by a Topeka \r\ncorrespondent and an Omaha firm suggested a slight softening there.\nStable or slowly rising prices since early this year were reported \r\nby a majority of purchasing managers surveyed. But more rapidly \r\nrising prices were noted by a manufacturer of construction-related \r\nproducts, a maker of electric cable and associated products and by a \r\nrubber-tire manufacturer (with reference to textiles and paper). \r\nMajor retail establishments across the district report no sharp run-ups in their suppliers' prices, although increases are occurring. \r\nSome department stores report they are absorbing such price \r\nincreases at the cost of a profit margin squeeze, but more indicate \r\nthey are passing their cost increases on to customers.\nMost purchasing managers interviewed indicate little if any \r\nsignificant change in the terms and conditions of the purchases they \r\nmake. The only firms mentioning longer lead times were lumber and \r\nconstruction products firms and an electric cable manufacturer. One \r\nof these firms has increased inventories to compensate for extended \r\nlead time, but otherwise there were no inventory changes reported \r\ndue to general economic conditions.\nDepartment store inventories appear to be behaving about as desired \r\nby retailers, with several respondents noting inventories were \r\nrunning as planned, or budgeted, for this year. In no instance were \r\ninventories reported to be lower than desired.\nSales thus far in 1972 continue to be above those in the same period \r\nof 1971 in Tenth District department stores, with durable goods \r\nsales generally stronger than sales of nondurables. Nearly all sales \r\ncategories showing special strength this spring were durables: \r\nbuilding materials, furniture, major appliances and other home \r\nfurnishings and bicycles and sporting goods. When areas of weakness \r\nin sales were mentioned, they generally were specific soft goods \r\nitems. The major exception was men's apparel, an area of special \r\nsales strength in department stores in several district cities.\nAfter declining slightly more than 2 percent in March and April, \r\nfarm prices rose 3 percent during the month ending May 15, mostly on \r\nthe strength of higher meat-animal prices. Slaughter steers have \r\nsince registered further price gains while hog prices have remained \r\nsteady to weak. Seasonal factors, brisk demand and some tightening \r\nin pork supplies point to a firm price structure through the summer, \r\nafter which meat-animal prices may ease off. Thus retail meat \r\nprices, after showing some stability during the last two months, \r\nlikely will face strong upward pressures over the next few months.\nWheat producers in Oklahoma and southern Kansas are making good \r\nprogress harvesting the new crop. Yields are running somewhat higher \r\nthan expected, particularly in those areas of Oklahoma that \r\nsustained drought and frost damage earlier in the season. In Kansas, \r\nopinions on wheat prospects are mixed, but a growing feeling is that \r\ntotal production may approach the record 312 million bushels \r\nproduced last year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Atlanta | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-at | "Beige Book Report: Atlanta\nJune 14, 1972\nBusinessmen and bankers generally agree the Sixth District's strong \r\neconomic expansion will continue through the rest of this year and \r\ninto next year. One of our Tennessee directors expressed the \r\nmajority opinion in the following: \"Most individuals feel optimistic \r\nnot only about current conditions but about business in general for \r\n1973. They point out problems caused by an increase in the minimum \r\nwage; they are aware of the dangers of inflation; and they know \r\nuncertainty caused by a possible change in administration must be \r\nconsidered. But, in spite of this, they are confidently planning for \r\nan increase in their business in 1973.\" However, a minority of \r\nbusinessmen feel inflation has not been checked and will accelerate \r\nin 1973, to be followed by restrictive economic policies.\nRecently, there have been several announcements of major new plants. \r\nThe most noteworthy is a plant that will build offshore nuclear \r\ngenerators. This facility, eventually expected to employ 10,000, \r\nwill be located in Jacksonville, Florida. An auto producer has plans \r\nto construct a plant in Jackson, Mississippi, that will make \r\nelectrical components for autos. A major shipbuilding and repairing \r\nfirm will build an elaborate facility in Tampa. Tampa Harbor is also \r\nreceiving a new phosphate terminal. A southeast Alabama director \r\nreports that during the last 60 days plant announcements have picked \r\nup noticeably. In that area, plants will be built to produce such \r\ndiverse products as charcoal briquettes, ceramics, garage doors and \r\ntruck beds. There have also been a number of new plants or plant \r\nexpansions in construction-related businesses, such as cement, \r\nlumber, composition board and lighting fixtures. In addition, \r\nseveral firms recently announced large capital appropriations for \r\nplant modernization and pollution control. Tennessee is reportedly \r\nreceiving inquiries from a number of foreign countries concerning \r\nlocating or purchasing plants in that state. A major electronics \r\nfirm is locating its first \"mini-plant\" in Atlanta. This facility \r\nwill hire about 20 people and will produce a variety of products, \r\nemphasizing speedy delivery and individual attention.\nRetail sales, especially of consumer durables and autos, have been \r\nstrong. One department store reports a sharp increase in purchases \r\non time, an indication of strong appliance sales. Auto sales are \r\nreported good in several areas. A large Atlanta retailer recently \r\nannounced it intends to open a store in Birmingham. A nationally \r\nknown furniture retailer plans to build a combination warehouse and \r\ndistribution center in Jackson, Mississippi. A slight downturn in \r\nloan demand at two New Orleans consumer finance companies has not \r\nturned out to be as significant or as long-lasting as earlier \r\nthought.\nCommercial vehicles and farm machinery are selling very well, and \r\nthere is a shortage of heavy-duty trucks.\nThe growth of residential construction may be slowing. Only one \r\nmajor project has been announced recently and Birmingham's apartment \r\nmarket is approaching the saturation point. However, a surge of \r\ncommercial building is expected in Atlanta.\nDrought has damaged corn, soybeans and other crops, and if adequate \r\nmoisture is not forthcoming soon, damage will become severe. The \r\npine bark beetle has infested timber in some areas of the district. \r\nInfested timber must be harvested quickly, at increased cost and \r\nthen used only for pulpwood.\nA telephone company executive has warned a steady increase in phone \r\nrates will be necessary if services are to be expanded rapidly.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
St Louis | 1972-06-14T00:00:00 | /beige-book-reports/1972/1972-06-sl | "Beige Book Report: St Louis\nJune 14, 1972\nA sample of Eighth District businessmen reports improved sales and \r\nexpects future moderate gains. Employment is holding steady in the \r\nmajor cities, while smaller metropolitan areas are reporting \r\nadditional hirings. Firms that compete with foreign suppliers are \r\nmore optimistic since they are beginning to feel some effects of the \r\ndollar devaluation. Farmers in some areas of the district are \r\nexperiencing adverse weather conditions. Retail sales have improved \r\nover last year and the housing industry continues to show strong \r\nadvances. Credit is plentiful as savings continue to flow into \r\nthrift institutions at a high rate. Loan demands by businesses have \r\nincreased in recent weeks.\nManufacturing firms in the St. Louis metropolitan area that supply \r\ncustomers in national markets are generally more optimistic than \r\nlocally-oriented firms, except those related to residential \r\nconstruction activity. A large food processing firm is experiencing \r\nthe expected modest increase in sales and feels prospects are good \r\nfor the remainder of the year. Shoe manufacturing plants are at full \r\ncapacity, but expect no additional employment at this time. The \r\ndollar devaluation and inflations in foreign countries have made the \r\nshoe industry optimistic about further advances in sales because \r\nthey now have a better competitive position with respect to imports. \r\nSuppliers in hotel, restaurant and airline industries are continuing \r\nto experience an uptrend in business, reflecting improvement in \r\nthese leisure-service industries.\nFarmers in many areas of the Eighth District are experiencing poor \r\nweather conditions. A drought situation is developing in the \r\nnorthern half of the district and is seriously hurting newly planted \r\ncrops. In some areas of the central Mississippi Valley, rains and \r\nfloods have slowed the planting of crops. Strong sales of farm \r\nequipment are reported. Sales of one large manufacturer of \r\nagricultural equipment are up 25 percent from last year and the firm \r\nfeels a solid basis for further growth is present. Retail sales \r\nexceed the slow pace of last summer, but are still not as high as \r\nhoped. Retailers generally feel sales will improve with economic \r\nconditions. Stores in the downtown area of major cities have been \r\nexperiencing poor sales performance.\nThe construction industry is still a bright spot. The pace of \r\nhousing construction is good, but commercial construction is \r\nsluggish. The continued strong pace of home construction is making \r\nbuilders optimistic as they move into the summer, typically their \r\nbusiest season. Building suppliers' sales are up over a year ago, \r\nand in some cases further hirings are planned if sales continue \r\nupward through the remainder of the year.\nHousing credit remains plentiful as savings continue to flow into \r\nS&Ls at the high rates of the past few months. Expected slowing of \r\nthe rate of savings inflows has not occurred, and as a result \r\nmortgage rates in the district are generally holding steady, with \r\nslight declines reported in some areas.\nLoan demands at eight district banks are strong, especially for \r\ncommercial and industrial loans. One major bank reports loan demands \r\nincreased by 6 percent in the last four weeks and expects strong \r\nloan demands to continue. Bankers see the prime rate rising by the \r\nend of the year to perhaps 6 percent.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Richmond | 1972-05-17T00:00:00 | /beige-book-reports/1972/1972-05-ri | "Beige Book Report: Richmond\nMay 17, 1972\nLatest information on the Fifth District economy continues to \r\nsuggest a stepped-up pace of recovery, although current reports from \r\nmanufacturers are somewhat less bullish than in the last month or \r\ntwo. The trade sector continues strong in most parts of the \r\nDistrict, with most respondents in our latest survey indicating \r\nfurther sizable gains in both general retail and automobile sales. A \r\nnotable, and somewhat puzzling, exception is the Baltimore Area, \r\nwhere retailers express keen disappointment with the level of retail \r\nsales in April and early May. Construction continues strong \r\nthroughout the District. Employment is also reported on the rise, \r\nespecially in the Carolinas, with further increases in wages. Our \r\nlatest survey of the manufacturing and trade sectors provides little \r\nevidence of any notable pickup in inventory buying. Banking \r\nrespondents, however, report increased business loan demands and \r\ncontinued strength in demand for consumer and mortgage loans.\nReports from District manufacturers are mixed, although the \r\ndiffusion of responses in our latest survey suggests further \r\nincreases in new orders and backlogs. The gains, however, are \r\nconcentrated in furniture, textile, and building materials. \r\nChemicals, paper, and steel producers report a fall-off in orders. \r\nThe Survey of Manufacturers suggests no recent changes in inventory \r\npolicies, with most indicating general satisfaction with current \r\nlevels of stocks relative to sales. Current capacity levels are \r\nstill rated on the high side by most respondents.\nIn the trade and service sector, both bankers and retail \r\nestablishments report further improvement, although the number \r\nreporting increases in sales was less than in last month's survey. \r\nAutomobile sales remain strong in most parts of the District, and \r\ntruck sales are reported as unusually strong. Trade and service \r\nrespondents report recent increases in inventories but indicate that \r\ncurrent stocks are somewhat larger than desired.\nMore than one-third of all respondents in our latest survey report \r\nincreases in employment, with both manufacturing and trade and \r\nservices taking part in the gain. Trade respondents also indicate an \r\nincrease in hours worked, while manufacturers report no change in \r\nthe length of the workweek. Some further wage increases are \r\nreported, notably in the furniture and textile industries. Both \r\nmanufacturing and trade respondents indicate no recent changes in \r\nprices received.\nDistrict bankers report that both residential and nonresidential \r\nconstruction in their respective areas remain strong. Fifty percent \r\nof the banking respondents indicated an increase in residential \r\nconstruction, and approximately one-third reported an increase in \r\nnonresidential construction. There were no reports of decreased \r\nconstruction activity. Bankers also report sizable recent increases \r\nin the demand for all types of loans, with demand for consumer and \r\nmortgage loans especially strong. In the Baltimore Area, keen \r\ncompetition for mortgages has led to more liberal terms and \r\nconventional rates as low as 6 1/2 percent.\nDistrict farmers' January-February cash receipts from farm \r\nmarketings were 5 percent above a year earlier, but the increase was \r\nsubstantially below the national gain of 14 percent.\nA high level of optimism concerning the outlook for business \r\nactivity in the District continues to characterize both the banking \r\nand the general business communities. Seventy percent of the banking \r\nrespondents believe that business activity will increase in the next \r\nthree months, while none expects a decline. In most areas of the \r\nDistrict, the outlook for retail sales is rated as very good, and \r\nretailers express optimism. A notable exception is the Baltimore \r\nArea, where central city retailers, especially, remain in a gloomy \r\nmood.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
San Francisco | 1972-05-17T00:00:00 | /beige-book-reports/1972/1972-05-sf | "Beige Book Report: San Francisco\nMay 17, 1972\nIn the opinion of our Directors, economic conditions in the Twelfth \r\nDistrict are maintaining the trends of recent months. Employment is \r\nrising gradually, but unemployment remains a problem in some areas. \r\nConstruction, despite some signs of weakness, remains a major source \r\nof strength. Consumer expenditures and business investment are at \r\nsatisfactory levels but do reflect some caution in spending plans. \r\nPayrolls are rising across the District, yet there appears to be no \r\nimmediate prospect of a significant reduction in unemployment. There \r\nare such favorable factors as increasing hiring by the previously \r\ndepressed aerospace industry. Boeing is expected to add another \r\n5,000 workers by the end of 1972 in response to increased sales of \r\njet airliners. In California, the aerospace industry is described \r\n\"on the upswing and no longer is a drag on the area's economy.\" \r\nEmployment increases also are reported for the steel industry in \r\nUtah. At the same time, Utah's agricultural employment will be below \r\nnormal because of crop losses due to late frosts. In fact, \r\nagricultural employment throughout the District may be lower through \r\na combination of crop damage in some areas and increased \r\nmechanization in others.\nDirectors report no plans to increase hiring by their own firms. \r\nThis policy is common both for directors in banking as well as in \r\nmanufacturing. Hiring is aimed at maintaining present staff levels. \r\nSome major banks are planning to reduce their staff slightly, and \r\nanother company, which planned to layoff 50 workers because of a \r\nslowdown in orders, is holding these workers for vacation \r\nreplacements. Several directors report that their firms continue to \r\nbe cost conscious and are following a restrictive hiring policy. \r\nThis view seems quite common. Consequently, the consensus is that no \r\nmajor increase in employment is to be expected, and temporary summer \r\nemployment will be relatively difficult to find.\nActivity in the construction industry is currently strong throughout \r\nthe District. There are some signs of weakness in a few areas, but \r\nthe basic situation is favorable for the industry. In Southern \r\nCalifornia, the high level of apartment and commercial building \r\nconstruction is producing concern over vacancy rates, and lenders \r\nare beginning to be more cautious. Banks in such areas as Orange \r\nCounty have tightened their financing standards to protect against \r\nthe possibility of more difficulties in renting new units. In other \r\nparts of the District, such as Idaho and Utah, construction starts \r\n\"continue at a healthy pace.\" The ready availability of mortgage \r\nfinancing for most kinds of projects is another favorable influence \r\non maintaining current levels of construction.\nThe agricultural outlook is favorable for most producers. For \r\nexample, potato growers expect a good price structure. In part, this \r\nis due to reduced plantings in response to the heavy crop of 1971. \r\nFruit crops are also expected to be favorable for producers in those \r\nareas that escaped late frosts; serious losses in orchard crops had \r\noccurred in Eastern Washington, Idaho and Utah. Drought in parts of \r\nCalifornia has caused serious problems for ranchers and some crops. \r\nOther crops such as rice are expected to reach a normal production \r\nlevel.\nBankers report good loan demand for most categories, including \r\ncommercial loans. No important changes are reported in banking \r\nconditions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Chicago | 1972-05-17T00:00:00 | /beige-book-reports/1972/1972-05-ch | "Beige Book Report: Chicago\nMay 17, 1972\nThe economic uptrend is continuing in the Seventh District, with \r\nmost sectors participating. The improvement is expected to continue \r\nthrough 1972 and into 1973. Order backlogs are increasing, \r\nemployment is rising, price inflation is at a slower pace than last \r\nyear, inventories are generally low. Shipments of consumer durables \r\nare very strong, demand for some types of capital equipment has \r\npicked up markedly, and bank loans, especially business loans, have \r\nincreased substantially. Initial concern over the announcement of \r\nthe Vietnam blockade (May 8) appears to have died down with no \r\nsignificant impact on spending decisions by consumers, businessmen, \r\nor lenders.\nWidespread irritation exists in business circles concerning the \r\nactions and pronouncements of the Price Commission. In particular, \r\nthe Commission's productivity and profit margin standards for \r\njudging proposed price increases are criticized as arbitrary and \r\ninequitable. Nevertheless, a large number of businessmen believe \r\nthat price and wage controls, overall, have been a desirable \r\nstabilizing influence. Compliance is generally very good, perhaps \r\nreflecting the fact that most markets remain highly competitive. The \r\nmomentum of the business uptrend probably will overcome short-run \r\nuncertainties related to controls, but longer-term doubts remain.\nSome firms have not implemented authorized price increases, and some \r\nprices have been cut to improve competitive positions, even though \r\nproduct sales have increased sharply. Examples are household \r\nappliances, motor trucks, color TV sets, and some petroleum \r\nproducts.\nFactory shipments of virtually all major consumer durables-autos, \r\nappliances, furniture, and TV sets-continue far above last year. \r\nDemand for recreational vehicles and equipment is taxing capacity \r\nfor such products as motor homes, bicycles, motorcycles, and camping \r\nequipment. There are no signs of a weakening in consumer demand for \r\ndurables. Inventories are judged to be either \"on the thin side,\" \r\nor, at least, not out of line with sales prospects.\nIn March and April, demand for various types of capital goods was \r\nabove the year-earlier level by a wide margin. Examples include \r\nmotor trucks and trailers, materials handling equipment, hydraulic \r\nexcavators, industrial tractors, cement mixers, electric motors, and \r\nmechanical and electrical components and controls. Sales of farm \r\nmachinery are extremely good. Increases in these sales generally \r\nhave exceeded expectations, substantially in some cases. Exceptions \r\nto the pronounced improvement in capital goods include railroad \r\nequipment, heavy overhead cranes, large machine tools, and rolling \r\nmill equipment. Increases in outlays for modernization, replacement, \r\nand pollution control (rather than basic expansion) dominate the \r\npicture. The European market for U. S. capital goods has \r\nstrengthened more than most experts had predicted. The weakest \r\nforeign markets are Australia and Japan.\nThe strike of an Indiana plant that supplies about half of the heavy \r\ntruck engines was ended in late April after 56 days. Full production \r\nwas achieved in only three days. Sales of heavy trucks, 20 percent \r\nabove last year so far in 1972, are now expected to remain vigorous \r\nthrough mid-1973.\nLabor disputes are relatively unimportant at the present time. \r\nHowever, a strike of elevator maintenance men in the Chicago area is \r\nnow delaying construction of large commercial buildings.\nLocal experts have raised their projections of U. S. housing starts \r\nfor 1972 to 2.1 million or more. Real estate transactions in the \r\nDistrict are at a good pace and higher than expected. Apartment \r\nbuilding may be off this year in the Chicago Area because of rising \r\nvacancies in luxury type apartments, but production of single-family \r\nhomes may equal or exceed last year.\nMore firms are hiring again, but on a selective basis. Demand for \r\nexecutive and administrative personnel has increased further and on \r\na broader front. Experienced engineers, metal-workers, and \r\nconstruction workers are sought, and shortages may become \r\nsignificant in the year. But business firms are not hiring the \"warm \r\nbodies\" that were employed in the late 1960s, at least to the extent \r\nthey are free to exercise judgment.\nSales to farmers of agricultural equipment, fertilizer, and other \r\nproduction needs have been excellent. However, wet weather across \r\nthe Midwest has delayed corn plantings to the extent that additional \r\nacreage probably will be shifted to soybeans. Wholesale meat prices \r\ncontinue to strengthen, and pressure is being exerted on retail meat \r\nprices. Speculators in the futures markets apparently believe the \r\nfall decline in hog prices will be relatively small. Farm land \r\nvalues have continued to rise in the Seventh District. In part, this \r\nreflects demand for residential farms and for recreational sites.\nDemand for all major types of bank loans has strengthened \r\nsubstantially in recent months. One large Chicago bank reports \r\ndemand for business loans to be at the highest rate in its history. \r\nLife insurance companies are accommodating a rise in net policy loan \r\ndisbursements because of a drop in repayments. Activity in business \r\nmergers has accelerated, but there appears to be more desire to \r\nrestrict acquisitions to enterprises in lines related to existing \r\noperations than was the case in the merger surge of the late 1960s.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n" |
Subsets and Splits