diff --git "a/data.csv" "b/data.csv" --- "a/data.csv" +++ "b/data.csv" @@ -1,276 +1,3 @@ -Source,Date,Text,Token_count -beige_book_pure_text_pre2000,1970,"This initial report of economic conditions in the 12 Federal Reserve Districts is based on information gathered from directors of the Reserve Banks, conversations with local bankers, businessmen and economists, regular monthly surveys of manufacturing and trade industries conducted by some of the Reserve Banks, and selected statistical measures of regional economic activity. Reports from the Reserve Banks clearly indicate that the current overriding domestic concern is inflation. Businessmen contacted generally expect that prices will continue to increase at a rapid rate during the remainder of the year. There appears to be considerable skepticism regarding the ability of economic stabilization policies to achieve a significant reduction in the rate of inflation without generating an intolerable level of unemployment or a full-scale recession. Similarly, there is evidence of extensive concern about the persistence of strong upward wage pressures, despite some easing in labor markets. The wage-push problem is particularly acute in the construction industries. Some of the other major factors that are contributing to an underlying tone of pessimism regarding the business situation are prospects for a continued squeeze on corporate profits, concern about the tight liquidity position of some firms, the recent decline in the stock market, and domestic social unrest. There appears to be no consensus as to whether the economy is actually in a recession—or when the floor of the current slowdown will be realized. Views range from expectations of a further and deeper deterioration in real economic activity to beliefs that recovery is already in progress. The trucking strikes and lockouts have seriously disrupted business conditions in some areas, particularly in the Midwest. Several Districts noted that construction projects have been impeded because of steel shortages, and also because of widespread strikes in the building trades unions. There are also signs that some firms are postponing or stretching out capital spending projects where feasible. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",395 -beige_book_pure_text_pre2000,1970,"Comments on economic conditions in the twelve Federal Reserve Districts indicate that in most Districts bankers and businessmen find economic activity has been weakening, and they generally expected the decline will continue. In virtually all Districts, unemployment is rising, and in many, labor markets are easing noticeably. Retail trade is weaker almost everywhere, and consumers are ""downgrading"" and bargain-hunting. A few Districts report large cuts in capital spending. In a number of Districts, special note was made of the profit squeeze that is affecting many businesses, and in some, concern was expressed about a decline in corporate liquidity. Mention was again made in several Districts of the dangers from wage and price developments, and in four Districts a substantial number of respondents reportedly favor some sort of incomes policy. In only one Federal Reserve District, St. Louis, was recent economic activity regarded as ""good""; and in Kansas City it was deemed fair to good. In most Districts, activity has weakened significantly, and a decline in new orders was noted in three Districts. Expectations of a further decline are widespread. These range, however, from the belief that the bottom will come in the third or fourth quarter of this year, to the belief of the directors of the Cleveland Federal Reserve Bank that the contraction will be ""more prolonged and deeper than most economists and public policy makers are currently expecting"". A growth in unemployment is noticeable throughout the country, in some Districts only mildly, but in others strongly. Until recently, many firms were reducing their work forces simply by letting ""attrition"" take its toll, but now firms are ""furloughing"" workers, ""cutting back"" their staffs, and ""pushing"" early retirements. In a. few Districts, even ""quality"" labor has begun to be available. An easier market is noted for, among others, ""middle management"" and ""professional"" types and one District remarked upon an ""extremely sharp increase"" in unsolicited summaries from applicants with ""extensive experience"". Very few exceptions were noted to the general pattern of weakness in retail sales and of ""downgrading"" and bargain hunting. Department stores seemed to be particularly hard hit by the softening of demand, while discount stores and ""bargain basements"" were holding up well. Weakness was particularly strong in furniture, appliances, television sets, and clothing. Auto buying was an area where ""downgrading"" was especially intense—except in Dallas. The trend was heavily to cheaper models, stripped-down models, ""compacts"", low-priced imports, and late-model used cars. Outside the auto field, in the few Districts where no ""downgrading"" was apparent, consumers nevertheless had a sharp eye out for ""sales"" and ""specials"". In the San Francisco District, a ""strong"" demand for mobile homes was interpreted as possibly a form of ""downgrading"". In two Districts, Richmond and St. Louis, capital spending plans continue strong, out of ""fear"" of inflation or to offset increased labor costs. However, in the five other Districts that made reference to the subject, many firms are making substantial cutbacks. Among the comments: General Motors is making ""huge"" cutbacks, a ""large retail organization"" is cutting back by 50 percent, a ""large oil company"" is ""continuously"" reviewing its plans, in the Philadelphia District there has been a ""marked"" cutback since April, and in the New York District some firms are reviewing their plans for the ""second or third time this year"". Inventory holdings were specifically mentioned by half of the Districts. They were regarded as ""excessive"" in two of the Districts, and were being ""reduced"" in a third. In two others they were at a ""satisfactory"" level, partly because firms were working on a ""hand-to-mouth"" basis. In another District, reference was to merchandising firms, which were being ""extremely cautious"" regarding their fall and winter stocks. The profit squeeze is hitting many businesses very hard in many parts of the country. The situation is aggravated by a liquidity squeeze. Slow payment on accounts receivable was mentioned by both Chicago and New York as one of the reasons for this latter development. Because of their uncomfortable situation, many business firms have embarked on cost-cutting programs (including the reduction of staffs, of inventories, of advertising, and of capital spending). In the New York District, it was reported that many companies may not be able to ""meet their maturities"" and that some ""substantial"" companies would be unable to ""meet their payrolls without refinancing"". The liquidity squeeze is having repercussions in the commercial paper market. Some commercial paper dealers have told corporate customers they can no longer handle their issues. Among financial concerns that are troubled by their own liquidity situation are some life insurance companies. The latter were reported as wishing to increase their liquidity and therefore not seeking any new long-term investment outlets. Concern about continuing inflationary pressures, particularly arising from large wage hikes, was mentioned in several Districts, although some price declines were noted in Cleveland (machine tool and aluminum industries) and in Richmond (textiles and furniture). Respondents in some Districts expressed disillusionment with ""conventional"" stabilization measures or with the ""Administration's economic policies"", and a few Districts reported there was considerable sentiment in favor of some kind of incomes policy. In one District it was reported that some labor leaders noted confidentially that guidelines would provide them with""an excuse to argue for lower wage settlements"" than their members are currently ready to consider. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1238 -beige_book_pure_text_pre2000,1970,"Current comment by businessmen and bankers, as reported by the 12 Reserve Banks, continues to emphasize weakness in overall business activity and to focus on such problems as unemployment, rising costs, declining profits, inadequate liquidity, and excessive inventories. In most Districts, however, the general tone of the comment is less pessimistic than a month ago. While some Reserve Banks report a further softening of activity through June and early July, most indicate a growing consensus among businessmen that the worst of the latest decline has passed and that the economy is now bottoming out. Expressions of concern over the state of corporate liquidity continue numerous and apprehensions over the possibility of serious financial disorders persist. But on both counts, fears appear to be distinctly less pronounced than at the time of the last FOMC meeting. Of the 12 Reserve Banks, Boston characterizes the tenor of business comment in its District as ""markedly more optimistic than a month ago"" and is joined by Atlanta in emphasizing elements of strength in the local business picture. Cleveland also notes a marked improvement in June, attributed mainly to the termination of strike activity, but indicates a distinctly pessimistic outlook for July and for the near-term future. In the remaining Districts, comment on current conditions is predominantly bearish. St. Louis, which last month characterized current conditions as ""good,"" now reports ""some dampening of optimism in recent weeks."" Reports from Minneapolis and Dallas also suggest some further softening of activity as compared with a month ago. As for the outlook for the rest of the year, sentiment in most Districts appears to be veering increasingly towards a belief that recovery from the current decline will be gradual and that only a modest business expansion can be expected. Comments on business spending suggest some further cutbacks or stretch-outs in capital plans of manufacturers and retailers. Specific reference to such cutbacks or stretch-outs is made in the reports from New York, Atlanta, Cleveland, and St. Louis, with Chicago noting declines in the orders of capital goods producers. The St. Louis report, which indicates cutbacks only among retailers, is notable for its contrast with the bullish outlook for capital plans reported by that District in the last Redbook. Boston and Richmond continue to report no substantial evidence of any significant scaling down of capital plans. About half the Districts indicate some degree of inventory excess, with four reporting inventories as higher than desired while others say that businessmen are actively holding the line on inventories. Cleveland's latest survey shows a sizable reduction in stocks in June and San Francisco reports that business demand for inventory loans has fallen off. Consumer demand is indicated as less than buoyant in a number of Districts, although New York notes that retail buying seems fairly well sustained. San Francisco reports that personal bankruptcies are increasing and that retail sales in the Twelfth District are likely to decline. An apparent increase in the rate of saving by consumers is noted in the Philadelphia District, while Minneapolis and Richmond report some downgrading in the quality of consumer purchases. Other Districts describe the demand for automobiles as concentrated mainly in the less expensive models. Comment on the employment situation is most bearish in St. Louis, Chicago, and Minneapolis, where major firms are said to have stopped all hiring or to be considering additional layoffs. Philadelphia also expects further increases in unemployment and San Francisco reports the continuation of serious unemployment in the Pacific Northwest, with some increases in layoffs in Southern California and Arizona. But in the Boston, Cleveland, and Richmond Districts the employment situation appears to have stabilized and no significant further cutbacks are expected. Atlanta also reports ""no serious deterioration"" in prospects for employment. Some instances of price shading are reported in all Districts except Boston, although some Districts indicate that the practice remains fairly rare. Only Richmond and Dallas report widespread price shading. Most frequently mentioned items on which some shading is noted include industrial goods, such as some chemicals, lumber, steel, and nonferrous metals. Other items cited are synthetic fibers, glass, lubricants, and large capital items. Among consumer goods, automobiles and large appliances are mentioned. Some easing of prices is evident, especially in the New York District, but Chicago reports that some prices are higher and Cleveland says that most prices are ""firm or firming upward."" San Francisco and St. Louis report that inflationary expectations continue strong among businessmen. Most District reports mention corporate liquidity as a serious problem, but none describe it as critical. Several reports state that demand for bank loans by business continues strong. In two Districts, some finance companies and industrial firms that have been squeezed out of the commercial paper market are finding accommodation at commercial banks. The squeeze on corporate profits is also listed as a continuing problem in a majority of Districts. Firms reportedly have had little success in containing rising costs, and the expectation of continued wage pressure apparently is widespread among businessmen. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1067 -beige_book_pure_text_pre2000,1970,"The consensus of the reports by the twelve Federal Reserve Banks is that the economy is in a sidewise movement with few signs of strength in any sector. Businessmen have generally become more cautious with respect to plans for the remaining months of the year. Instead of an early vigorous recovery as envisaged by some in earlier reports, business leaders now view the outlook less optimistically. Profits have declined and many firms have responded with cost cutting measures, including employment cutbacks, reduced inventories, and in some instances a reduction in planned capital investment. Most Districts report ""sluggishness"" in sales with few optimistic comments. Although total retail sales appear to be holding their own, the volume is generally below expectations, and inventories are being evaluated carefully. Consumer durables are generally the sector hardest hit, with television sets and large appliances moving very slowly. Both New York and Minneapolis mention retarded sales of newer clothing fashions, while St. Louis and Boston indicate that the shoe industry is facing declining sales. Several Districts report that consumers are switching to lower quality merchandise in response to rising prices. The lower sales in some lines were apparently offset by a continued uptrend in sales of food and a few other products, such as steel, domestic oil, and automobiles. Most Reserve Banks report that although labor markets are relatively weak, unions have won major wage increases. Unemployment appears to be rising slowly. Most reductions in labor usage are taking place through normal attrition, unpaid vacations, and shorter workweeks. Some of the unemployment, however, has resulted from plant closings and layoffs. In Richmond, skilled labor is reported in short supply. Unemployment of skilled workers is reported by both Boston and Chicago. Rising prices, expectations of higher prices, and wage costs continue to plague most business respondents despite the weaker labor market. There is virtually total agreement that prices are rising and will continue to do so as labor unions continue to secure higher wages. This factor was mentioned by more than half the Reserve Banks. Cleveland specifically indicated the high construction wage settlements, which point to further increases in home prices. Price ""shading"" is reported by some Reserve Banks, but such practices are apparently of only limited extent. Nevertheless, cautious optimism is expressed by some that the fight against inflation is making progress, and one bank reports prospective weakness in livestock product prices in the coming months. Reports of the Reserve Banks are varied concerning credit demands. There is increasing caution on the part of lenders with respect to both large and small borrowers. Over half the reports mention the rising concern by commercial banks for borrower liquidity. Philadelphia reports a more comfortable feeling by businessmen with respect to liquidity while San Francisco reports neither improvement nor worsening of liquidity conditions. Although most firms are carrying out announced expansion programs, there has been a decline in new announcements. Nearly every District indicates that capital spending is expected to decline in the coming year. Caught between wage and salary hikes and a more-or-less constant level of demand, there is increasing pessimism regarding recovery of business profits. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",660 -beige_book_pure_text_pre2000,1970,"The reports in this Redbook are more optimistic than in earlier months. The consensus of directors, businessmen, bankers, and economists is that the economy will experience below potential growth in real output in the second half of 1970 and early 1971. There is general agreement that wage demands are not diminishing, despite an easing in labor markets and prospects for further increases in unemployment. Concern about inflation remains widespread, and the directors at one Reserve bank explicitly express the hope that the FOMC would permit only moderate growth in the money and credit aggregates over the near term. Housing and consumer durables, especially household goods, are evidently recovering, but the capital goods sector is sluggish. Indications are that the metalworking machinery industry has not yet seen the bottom of its recent decline. Districts in which machine tool producers are concentrated (Boston, Cleveland, and Chicago) specifically mention depressed conditions in that industry. Six Reserve banks referred to the impact of cutbacks in defense and aerospace industries. There are reports of selective price cutting at both the retail and the wholesale level and indications that price increases are becoming less prevalent. Cleveland reports price reductions in metal cutting machine tools and appliances; Minneapolis cites large price discounts to dealers by farm machinery producers; and Atlanta notes price weakening in some types of textile machinery. Philadelphia expresses concern about the likely effect of the corn blight on agricultural prices, but Chicago reports that the damage caused by the blight may have been exaggerated. Four Reserve banks specifically mention the improved liquidity positions of commercial banks in recent weeks. There are also reports of improved loan to deposit ratios and deposit flows, some limited softening in the demand for business loans, and scattered reports that borrowers are expecting lower interest, rates in the months ahead. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",396 -beige_book_pure_text_pre2000,1970,"The predominant view of businessmen and bankers in the twelve Federal Reserve Districts is that the economy has not yet returned to a faster rate of expansion. There are both elements of support for further expansion and of weakness. For example, consumer spending is being maintained in most areas, yet the rate of increase is below that achieved last year and expected sales targets are not being achieved. Construction activity also remains at its current levels with a mixed picture of good demand in some areas and poor in others. The situation in capital goods seems to have stabilized with few cases of further reductions being mentioned, although there is little evidence of a general recovery in capital expenditures. It appears that business men are waiting for stronger evidence that the economy has begun its recovery. A major source of uncertainty concerns the future course of the General Motors strike. The immediate impact is currently greatest in the Chicago and Cleveland Districts, where unemployment is rising as a direct consequence of the strike. Industries supplying the automobile industry are also beginning to be affected; glass, tire, and steel production is being cut back. In the other Districts, there have been some increases in unemployment in areas with GM assembly plants and some reports of reduced auto sales, but the repercussions for the moment have been small. Other labor disputes are creating problems: in Kansas City with a drawn-out construction strike and in Minneapolis with the Northwest Airlines strike. Businessmen and bankers in other Districts remain concerned about continued wage increases, especially in the construction industry, and, according to a report from the Chicago District, the ""huge number and variety of demands by the unions."" On the other hand, there are signs of a moderation in union demands noted in the Boston District. Unemployment continues to rise both as a consequence of the GM strike and layoffs in other industries. Among the other industries reported as having further reduced their work forces are machine tools (Cleveland, Boston), furniture (Richmond, Atlanta), textiles (Richmond, Atlanta), and metals (Richmond, Chicago). Aerospace employment continues to be low and to be the major depressing influence in such cities as Seattle. There are offsetting forces in other industries which are expanding. In particular, companies in coal mining, railroad-car and large truck parts report growing sales. Capital expenditures show little sign of recovery in prospect. Most Districts report that few large projects are being planned until there is a stronger recovery. Current capital expenditures are being stretched out or delayed. Similarly, other costs are subject to close scrutiny. Inventory reductions have not quite ended. There are reports from the Richmond, Chicago, and Philadelphia Districts that indicate there is little sign of a shift toward a building-up of inventories. The construction industry is still maintaining its overall volume but with considerable variation in the pace and type of local activity. In general, nonresidential construction remains strong. The major weakness in most areas is in residential, particularly single-family homes. There has been a slight increase in the availability of mortgage funds in some areas, but not in others. There has been little or no reduction in mortgage rates. Consumer spending has been maintained but it seems to be below retailers' expectations in most areas. There are some exceptions—for example, one major New York City department store reports a steady improvement and tourist expenditures are heavy in the Boston District. The net impression is that in most Districts retail activity is only at a moderate rate. Agricultural trends suggest the possibility of higher food prices. The effect of heavy rains and the spread of corn blight point toward a reduction in some crops, which will tend to push up prices. The corn blight has seriously reduced the corn crop in the Kansas City District but apparently has caused only a minor reduction in the crop in the St. Louis District. Nonetheless, the expectation is that the reduced supply of cattle feed will tend to push up meat prices in the future. The Dallas District reports that a survey of thirty-one city and county finance offices indicates a continued increase in local government expenditures and borrowing in the coming year. The financial situation has moved toward greater ease. Most banks have experienced an inflow of deposits. The banks in some Districts are making somewhat more business loans but without any substantial change in their lending requirements. In other cases, the banks used the funds to rebuild their liquidity. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",943 -beige_book_pure_text_pre2000,1970,"Current comment by businessmen and bankers, as reported by the twelve Reserve Banks, is decidedly more pessimistic than that of a month ago. The pervasive dampening effect of the General Motors strike is evident in most parts of the country. Employment continues to weaken, or at best, to show sluggish growth, in most Districts, while unemployment is reportedly rising further in several areas. On balance, reports emphasize continued weakness in consumer spending, and some further cutbacks or stretchouts of capital spending plans. Reports are mixed on the behavior of prices, but strong upward wage pressures continue to restrain any widespread belief that inflation will soon be under control. Residential construction activity is improving somewhat in parts of the country, but reports vary widely as to the degree of the recovery. Inflows of savings to financial institutions continue to grow, and somewhat easier mortgage terms seem to be available. Loan demand by consumers, potential home builders, and businesses is reported to be weak on balance, and is aggravated by problems in specific areas and industries. In the past month, there has been some widening of the impact of the General Motors strike upon the economy. The two Districts in which the effect is most direct are Chicago and Cleveland, although the Chicago report indicates that after adjusting for the strike, economic activity in that District is level to slightly up. Seven out of the ten major metropolitan areas in the Cleveland District, however, are adversely affected, and other Districts—New York, Atlanta, St. Louis, and Dallas—trace either direct or indirect dampening effects to the strike. The Philadelphia report contains the suggestion that the underlying economic trend is weaker than generally acknowledged, and perhaps too much blame is placed upon the strike. Numerous other strikes have had widespread effects as well— construction workers in Kansas City; carpenters, household appliances, construction machinery, and other autos in the Chicago District; and airlines in the Minneapolis District. Weakness in the employment picture is traceable to strikes as well as to cutbacks in government spending affecting the aerospace and aircraft industries in the Atlanta and San Francisco Districts. Also blamed for layoffs are cutbacks in business capital spending affecting the machine tool industry in the Boston and Cleveland Districts, and the computer industry in the Cleveland and Minneapolis Districts. Slackening steel production is a source of weakness in the Cleveland District, and the textile industry has accounted for some sluggishness in the Richmond and Atlanta Districts. A less-than-seasonal buildup of employment by retailers is also mentioned. District reports describe consumer spending variously from satisfactory to very bad. The consensus is clearly less than satisfactory, particularly for ""big ticket"" items. Only the Chicago District describes the outlook for consumer durable purchases as optimistic. Retailers' inventories are generally being held down, and holiday season buildups are apparently lower than usual. Residential construction is reported to be improved in the St. Louis, Minneapolis, and Kansas City Districts. In the latter case, the improvement follows a prolonged strike in several of the building trades. Residential building continues weak, however, in the Boston, Richmond, Atlanta, and San Francisco Districts. While the liquidity positions of financial institutions are reported to have improved, the consensus of the reports is that loan demand remains weak. In some Districts this is reported to have led to greater investment in municipal securities by banks, and there is some speculation about the possibility of an imminent cut in the prime rate. Some moderation in the growth of prices is mentioned in the Richmond, Chicago, Dallas, and San Francisco reports. In some areas, consumers are continuing to shift to lower-to-medium priced goods, and price shading of consumer items is reported. Concern continues to be voiced, however, about the problem of controlling inflation in view of recent labor settlements which have resulted in large wage increases, for example, in the St. Louis and Kansas City Districts. Increases in gas and electric utility rates and in prices of public services are of concern in the Atlanta District. The potential need for incomes policies in order to control inflation in the face of rising unemployment and continued upward pressure on wages is mentioned by respondents to surveys in the Boston and Philadelphia Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",918 -beige_book_pure_text_pre2000,1970,"Opinions expressed by bankers and businessmen in the twelve Federal Reserve Districts indicate that the more pessimistic economic outlook which had emerged last month was currently still in evidence, with some brighter spots—notably in residential housing—appearing here and there. Economic recovery was generally expected to be sluggish and more prolonged than had been anticipated earlier. Holiday retail sales so far were characterized as only fair to disappointing. Most manufacturers contacted reported unchanged or somewhat lower output and orders than last month, and in general looked for only a moderate pickup in the coming months. Concomitantly, there were further increases in unemployment in most Districts and additional reports of trimming of plant and equipment outlays. At the same time, it was generally felt that little or no progress was being achieved in curbing inflation, and sentiments for the adoption of an incomes policy or for other additional action by the Administration appeared to be growing. A cautious consumer attitude remains in evidence. With the holiday season getting under way, sales have begun to pick up. Most retailers, however, look for business to be about the same as last year—in some instances worse and in others significantly better. Thus, reflecting the difficulties in the aerospace and timber industries, sales in the Seattle area were particularly depressed. Virtually all retailers contacted in the Boston District reported very disappointing Christmas sales, while in Philadelphia the physical volume of sales in large department stores were down 10 percent from a year ago. On the other hand, retailers in some states—Colorado, Michigan, Wisconsin, Montana—look for a significant improvement over last year's holiday sales. As in previous months, ""down grading"", and ""bargain hunting""remained in evidence, and higher priced items continued to perform poorly. Industrial production remains weak. Most manufacturers contacted reported no change or some decline as compared with last month in output, sales, and new orders and, in general, look for only a moderate pickup in the coming months. Further slowdowns were evident in the machine tools, electronic, and business equipment industries (notably in the Boston and Chicago Districts) and in the aerospace and timber industries (San Francisco), but the weakness also extended to other industries. Some rebound in December was expected in the Cleveland and Chicago Districts, which had been particularly hard hit by the General Motors strike. However, reports from the steel industry in the Cleveland District reveal that the release of steel stockpiled for General Motors has so far been smaller than expected. Moreover, those steel economists that were contacted felt that inventory stockpiling by steel users against the possibility of a strike in the steel industry next year would begin later than during previous strike-hedging periods, with the ""big push"" coming only late in the pre-strike period. The Minneapolis Bank's industrial expectation survey, for the first time in 13 surveys, showed a year-to-year decline in District manufacturing sales. On the other hand, considerable optimism was expressed in the Chicago District with respect to prospects for all major classes of consumer durable goods; capital goods producers in that District, however, were generally more apprehensive than a few months ago. The slowdown in industrial production was reflected in a further weakening in the employment picture. Further layoffs and short time were evident in most Districts, with areas where particularly depressed industries—such as the aerospace, timber, machine tool, and certain nonferrous metal industries—loom large in the local economy being particularly hard hit. Unemployment among white collar workers and professionals continues to rise. For example, a professional engineering society in the Minneapolis District reported that 10 percent of the engineers in the Twin Cities were out of work. On the other hand, the rate of decline in employment was reported to be slowing down in the Richmond District, while reports from the Chicago Bank suggest little further change, with a rise in employment in consumer durable goods and construction industries offsetting potential layoffs in other sectors. With respect to plant and equipment outlays, there was some evidence of further trimming or stretching-out of original plans. However, since manufacturers have now been cutting back on their original planned capital outlays for several months, the rate of reduction appears to be tapering off. On balance, the outlook is for little change in such outlays from current levels over the next six months. One bright spot in the overall economic picture was provided by actual and prospective developments in residential construction, with most bankers and businessmen expecting a good to strong recovery in this sector. On the price front, scattered price concessions by manufacturers were reported in some Districts. Further strong upward pressure on prices, however, was widely anticipated in the face of increased labor costs. In this context, several Districts reported that bankers and other businessmen feel the GM settlement will affect forthcoming labor negotiations. Durable goods producers in the Chicago District with negotiations still pending are expecting to be under great pressure to follow the GM pattern, while in the Atlanta District, the aluminum industry is reported to be fearful it may have to settle on similar terms. The majority of respondents thus look for inadequate growth and inadequate moderation of inflation. Against this background, several Districts report growing sentiment for stronger action by the Administration. The Philadelphia Bank reports a feeling among directors and others than an incomes policy is worth trying, sentiment for wage and price controls was expressed by directors of the Atlanta bank, while a number of directors and others in the New York District felt the need for additional action by the Administration to solve the employment-inflation problem. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1201 -beige_book_pure_text_pre2000,1971,"Business conditions in the nation as viewed by businessmen and other observers of economic conditions in the twelve Federal Reserve Districts were slightly improved in late December and early January compared with a month earlier. Retailers report a sizable late spurt in Christmas sales, pushing the dollar volume above expected levels and well above levels of a year ago. However, the recent sales record has not been followed by reported intentions to expand inventories or to increase demand for factory output. The employment situation remains weak and the number of job seekers continues to grow. Some moderate gains are envisioned for industrial output in the months ahead, but capital investment plans continue to be pared. Credit availability is increasing with the rising liquidity of financial firms. Rising prices and price expectations continue to prevail, leading to intensive discussion of additional means of curtailing further advances. Output of most farm products, notably meats, was higher at the close of the year than a year ago, resulting in relatively low food prices and declining farm incomes. Most Federal Reserve banks reported sharp increases in retail sales just prior to the Christmas holidays, which resulted in total dollar sales well above planned levels, and, in some cases, 5 to 6 per cent higher than a year ago. Pre-Christmas sales apparently started off slow but began to rise sharply just before the holidays, and the higher sales volume is extending into the new year. The sales gains were predominantly in the lower priced items. Higher priced items such as color TV sets and high quality clothing continue to move slowly. Retailers report that inventories of most goods remain at very conservative levels, indicating considerable doubt that the recent upturn in sales will continue. Manufacturers are cautiously optimistic compared with the fact that no change was foreseen a month ago. The Cleveland Bank reports that new steel orders have increased sharply since mid-December. Furthermore, steel industry economists expect a big pickup in steel shipments to begin about March and the second quarter to be much stronger than the first. Much of this anticipated gain is based on rising demand in preparation for a steel strike. The Richmond Bank reported an increase in manufacturers' inventories. With the exception of the steel companies, however, manufacturers generally do not indicate great gains in sales expectations. In conformity with this view, some layoffs and plant closings have recently occurred in the electronics and TV industries. Most Reserve banks indicate that the current high rate of unemployment is likely to continue for several months. Further declines in employment, however, are not expected as most reports indicate that the retrenchment process of firms is about complete. Any future increases in the unemployment rate will primarily reflect additions to the labor force rather than layoffs. Most reports point to some moderate gains in construction in the months ahead. Reasons given include the more favorable interest rates and easier payment terms. Capital investment plans apparently continue to be pared. The Richmond Bank reports that manufacturing respondents often cite excess productive capacity as a problem. The Chicago Reserve Bank reports that a number of important firms have decided to keep capital outlays at or below depreciation in 1971. Cleveland reports that the 1971 authorized plant and equipment appropriation of a large rubber firm is only 60 per cent of the 1970 level of actual expenditure. Excluding public utilities, there are no reports of major industrial expansion plans, and when new investment is mentioned, it is in connection with cautious and conservative planning. All respondents concur that credit became increasingly available in the closing weeks of 1970. Savings inflows at banks and savings and loan companies have been very high in recent months. Business loan demand has been declining, and reports of more aggressive lending policies are more frequent than heretofore. Inflation and expectations of inflation continue to be a major worry of most businessmen. Practical means offered for stabilizing prices, however, vary widely from one Reserve District to another. Dallas, for example, reports that some form of incomes policy is generally favored as the solution, while Atlanta and Minneapolis report respondents varying from adamant opposition to an incomes policy to support for the adoption of some type of controls. A leveling out or decline in farm income may be in prospect for the months ahead. Low meat and poultry prices and higher priced feed have reduced profit margins to livestock producers. The large numbers of livestock on farms, however, have resulted in a high level of marketings despite the higher production costs. Readjustments in livestock numbers will likely occur during 1971, resulting in higher returns to farmers and higher food prices. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",979 -beige_book_pure_text_pre2000,1971,"Reports from the twelve Federal Reserve Districts indicate that there has been no material change in economic conditions. Output and employment appear to have leveled off after recent declines and, despite some optimism that a recovery will begin later in the year, the overall impression is that economic activity is at much the same level as the previous month. Price rises are still expected to continue, though at a lower rate, and employment to increase relatively slowly. One reason for the lack of an immediate recovery is that consumer spending has not picked up uniformly. In most districts, consumers are still cost-conscious, responding to sales, but not willing to make new major expenditures. At best, retail sales are described as ""more buoyant"" (New York) and, at worst, ""sluggish"" (Dallas). But more common are reports that ""sales are slightly ahead of last year"" (St. Louis) or ""reasonably good"" (Kansas City). Automobile sales in particular are not strong. In many Districts, they are disappointing and below what was expected after the settlement of the General Motors strike. Demand is concentrated in the lower-priced compact and subcompact models, and there is no expectation of a boom year for new car sales in 1971. Only in the Richmond and St. Louis Districts are sharp increases reported and, in the former case, the increase is a recovery from the strike- induced slump. The lack of strong demand is reflected in automobile production. General Motors has reduced overtime schedules and the other automobile producers are operating at reduced levels. Manufacturing shows no sign of a general recovery. There are industries which report a rise in output (containers, furniture, steel, some machine tools, and textiles), but other industries are still retrenching. Although major layoffs of workers are occurring less often, companies are continuing to reduce their workforces through attrition or unpaid holidays. Increased hiring is still not widespread. Investment plans similarly are restrained and expenditures on capital equipment in 1971 are expected to be at about the same level as last year. Even rising new orders for steel are not a reflection of an upturn in the economy but rather represent hedging against either a steel strike or further price rises. According to steel industry economists, overall production for this year will not be above last year. There is one sector which has favorable prospects for recovery. The demand for residential housing is picking up and sales of existing houses are increasing. Nonresidential construction is not as strong at the moment, and in many areas it is quite weak. But the net effect is to increase demand for the output of the building- materials industries and timber. In the San Francisco District, companies in these industries are already beginning to expand production and make heavier capital expenditures. An important factor in this expected recovery is the fall in mortgage rates. The lower mortgage rates are part of the general decline of interest rates. Nevertheless, the slow-pace of overall economic activity has meant that demand, particularly the demand for business loans, has not responded to the lower rates. Banks are continuing to lower the rates they pay for funds. CD rates have already fallen in line with other market rates, and many banks are not looking for time deposits. Rates have been cut on savings-type certificates in such Districts as Philadelphia, Atlanta, and San Francisco; in the Chicago District sales of these certificates have been restricted or eliminated. There is pressure on passbook savings rates and some bankers advocate the lowering of rate ceilings for savings accounts. Wage increases are still common and retail prices are continuing to creep up. But there are reports of price cuts (nonferrous metals, for example), and price shading (plastics, some oil products, and transformers), while other prices are higher (building materials and farm products). Forecasts for the coming year of business and academic economists reported by Cleveland and Boston are for a GNP below that forecast by the Council of Economic Advisers. The CEA has forecast a GNP of $1,065 billion for 1971; the other forecasts reported were $1,045 billion by Cleveland and $1,047 billion by Boston. The economists' view on unemployment were also more pessimistic than those of CEA. The general view of bankers and businessmen is that rising prices will continue to be a problem for the rest of the year without much easing of wage pressures or any major increase in employment. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",961 -beige_book_pure_text_pre2000,1971,"There is substantial agreement among bankers, businessmen, and economists that the recovery now underway is of moderate proportions and is clearly not strong enough to have a significant impact on the employment-unemployment situation over the near term. Despite the persistence of underlying slack in the economy, the Reserve Banks note little retardation of the rise in both industrial and consumer prices. In view of the sluggish demand conditions in the capital goods sector and disappointing retail sales, it appears that cost-push influences continue to fuel the inflationary momentum. Some recent financial developments mirror the sluggishness in the real sector. Bankers report that loan demand is relatively weak. They are concerned over the decline in short term interest rates, and there is widespread agreement that the System should not move toward further monetary ease at this time. With few exceptions, the Reserve Banks report that retail trade in January and February was not particularly strong. The post-strike rebound in auto sales thus far appears to be less robust than expected. Both San Francisco and Kansas City commented on the cost- conscious auto buyer. Sales of small cars (foreign and domestic compacts) are providing the major impetus to an otherwise lackluster auto picture. A number of Reserve Banks mentioned, in one form or another, that restoration of consumer confidence is the key element in the business picture. According to the Boston Bank, retail credit men in Rhode Island attribute cautious consumer spending to unemployment and the fear of layoffs. Dallas comments that bankers in their district feel continued inflation has tended to dampen consumer confidence and spending. The Banks uniformly report that current and prospective capital spending remains weak, except for the push stemming from the utilities. Businessmen want to see concrete evidence of a solid upturn in economic activity before they begin to increase capital outlays. Cleveland mentioned that recovery in computers and machine tools is not expected until yearend or early 1972, while Boston notes that prospects are now better for a pickup in machine tools by yearend. The only areas consistently mentioned by the Reserve Banks as exhibiting strength were capital expenditures by utilities, steel production, and residential construction. Boston, however, commented that improvement in housing related industries has been disappointing. As mentioned by Cleveland in the last Red Book, Chicago and Kansas City this time attribute part of the strength in the steel industry to buying in anticipation of expected price increases. Concerning the outlook for employment and unemployment, there are widespread indications that businesses plan to continue with cautious hiring policies (and in some instances plan further layoffs). As is the case for capital spending, there is a reluctance to hire additional employees until the recovery gathers momentum. On the financial front, the Reserve Banks generally report weak loan demand from consumers and businesses. The exceptions are a pickup in mortgage demand and in loans to finance steel stockpiling. Bankers are generally concerned about the decline in short-term interest rates and a developing profit squeeze. Atlanta mentioned that reductions in interest rates and increases in the availability of credit are encouraging signs for auto sales and construction. Cleveland directors specifically noted that they would oppose any further cuts in the discount rate because of an expected adverse reaction from foreign central bankers. The academic economists from Boston urge no further ease in monetary policy. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",706 -beige_book_pure_text_pre2000,1971,"While this month's district Redbook reports are conflicting on several points, their general tenor must be judged pessimistic. Nearly half the districts reported increasing signs of recovery, but an equal number characterized business and employment conditions as unchanged or deteriorating from January-February levels. When weighted for firmness of conviction, the April responses emerge as clearly bearish. On the employment front, the Cleveland, New York and Chicago districts reported that unemployment seems to be rising, while most other districts reported no change or nearly imperceptible improvement. Several districts cited continued layoffs in a wide variety of occupations, and others described continuing efforts at payroll trimming via reduced recruiting activity and inaction in replacing normal losses from attrition. Labor militancy in current and forthcoming contract negotiations was reported to vary widely among districts. Consumer caution remains readily apparent in all but the Richmond district. Even allowing for the later Easter this year, March retail sales have been disappointing. Consumer cost consciousness remains conspicuous, and no convincing evidence of a recovery in auto demand can be found. Individual district respondents continue to stress awareness of unemployment and layoffs as the major explanatory factor in consumer behavior, suggesting that there is no compelling reason why a consumer resurgence should be imminent. In the manufacturing sector, several districts reported that 1971 shipments levels in major regional industries are showing some pickup over midwinter lows. In many cases, however, increased shipments are proceeding at the expense of diminished backlogs. Chicago and Boston districts both reported severely depressed conditions in the machine tool industry, with no current prospects for improvement over 1971. No common trend in industrial pricing is identifiable as district Directors report news of increased price shading as well as expected price rises. Five districts report continuing austerity in industrial capital spending plans, although the Atlanta district discerns the early signs of a recovery in this area. Most districts report a substantial pickup in residential mortgage demand, but only Richmond, San Francisco and St. Louis were able to attribute this to definite strength in residential construction. Increased mortgage demand elsewhere seems heavily based on a flurry of sales of existing structures. New York district respondents are less optimistic about single family residential construction activity now than a month ago. Loan demand at commercial banks was reported higher in three districts, and unchanged to lower in five others. Deposit inflows are uniformly characterized as heavy relative to loan demand. Six districts now report cuts in passbook savings rates at major commercial banks, and bankers in other districts are considering cuts while watching market developments. Banking Directors in three districts took note of a developing profit squeeze in the commercial banking sector as a result of interest rate developments. Countering this nationwide trend are banks in the Kansas City and St. Louis districts, which have not dropped rates to date. Banking respondents in the Philadelphia district expect no substantial declines in long rates over the coming months, citing continuing corporate funding needs and the addition of an ""inflationary factor"" to projections of borrowing requirements. A Director of the New York bank, on the other hand, noted that SEC registrations for corporate bond issues—while still high—are tapering off and that a lighter calendar can be expected to develop. Academic respondents in the Boston district concurred with the latter view, projecting a fall in long-term corporate rates to below 7 percent by summer. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",727 -beige_book_pure_text_pre2000,1971,"The overall impression that emerges from the Districts Red Book reports is that the economic outlook has taken distinct, albeit moderate, turn for the better over the past month. Among the most encouraging developments is the evidence emanating from most parts of the country that the long awaited rise in consumer spending may finally be getting underway, even though an underlying note of caution characterizes most discussion of consumer attitudes. Several Districts reports also point to strong residential construction activity. On the other hand, while businessmen may be more optimistic than a month ago, business confidence has not as yet grown to the point where firms are rushing to build up inventories, nor is there much, if any, evidence of an upward revision in planned outlays for plant and equipment. Moreover, apart from a few scattered signs of improvement, the unemployment picture remains rather bleak. Finally, continued concern over inflation was expressed by a number of respondents in several of the Districts. Turning to consumer spending, all Districts report some improvement over the past month. In most instances, however, the increases in retail sales are characterized as ""slight"" or ""moderate"", and the consumer is usually described as still cautious, and cost conscious. The Boston Bank, for example, reports that retail sales in New England seem to have picked up somewhat, but that the consumer has by no means ""broken out"". Reports on retail trade in the Chicago District were more favorable than earlier in the year, but the improvement is characterized as modest. Similarly, the San Francisco Bank reports that retail sales are rising at a moderate pace but that in general retailers expect no major jump in consumer spending at this time. Some of the reports, however, are more optimistic. The Philadelphia Bank states that retailers report a noticeable pickup in sales, even though consumers remain bargain conscious. The St. Louis Bank reports that retail sales picked up considerably in the week before Easter and have remained at the higher level since then, with clothing and appliances moving well and with a strong demand for automobiles. All respondents in the Minneapolis and New York Districts expressing an opinion on this topic felt that the retail sales picture had improved as compared to earlier in the year, and a special survey of leading department stores in the Atlanta District reveal that sales have been exceeding expectations. Residential construction also continues to be a bright spot in the economic outlook-indeed perhaps a brighter one than earlier in the year. The Richmond Bank thus reports that the majority of banking respondents throughout the District feel a sustained surge in residential construction, as well as a revival in nonresidential construction, is underway, while Chicago reports that prospects for residential construction appear even stronger than in earlier months. Similarly optimistic assessments appear in several other District reports. Along with the pick up in retail sales and the sustained strength in the construction industry, there are reports of an increase in manufacturers sales and orders in a number of areas throughout the country. The Philadelphia Bank, for example, reports that a recent poll of area industrialists shows that for April almost four times as many firms registered increases in sales and new orders than showing decreases, while the Cleveland Bank's latest survey of Fourth District manufacturers points to further improvement in March, particularly in new orders, shipments, and backlogs. That Bank's report, however, cautions that some tapering off in the rate of gain may have occurred in April. A more rapid expansion of industrial production, however, has been inhibited by the fact that business confidence, although stronger than earlier in the year, has not as yet risen to the point where manufacturers and retailers are willing to aggressively build up inventories, but prefer to maintain stocks at current levels. Thus, the San Francisco Bank reports that, apart from stock piling of steel, and some rise in building materials inventories, there is little evidence that businesses are rebuilding inventories. The Richmond Bank reports an actual decline on balance, in both manufacturers and retailers inventories, while the St. Louis Bank reports that retail inventories have not been increased. Opinions are mixed among the Banks that discuss the unemployment picture in their District. The Kansas City Bank feels that the employment situation is still soft and that only a modest improvement is expected in the coming months. Similarly most respondents in the Dallas Bank District thought that unemployment in that area would not decline much, if at all, over the balance of the year. Unemployment is apparently continuing to rise in the Chicago area, while the Cleveland Bank characterizes the demand for labor as sluggish. On the other hand, signs of some, if only tentative, improvement can be found in the reports of the Philadelphia, Richmond and St. Louis Banks. Most Districts reported a firming of demand for bank loans, especially consumer and mortgage loans, but in several instances business loans as well. In general, loans continue to be readily available. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1052 -beige_book_pure_text_pre2000,1971,"Four major impressions emerge from this month's Red Book reports. First, inflationary expectations remain strong and, in some areas, may be strengthening. Second, demand for business and mortgage loans has firmed, and additional interest rate increases are anticipated. Third, several reports characterize the recovery of spending and production as being gradual. Finally, the reports indicate slightly more optimism in the economic outlook. The most commonly cited subject in this month's reports was strong inflationary expectations. Opinions are that there are no prospects for a significant reduction in inflation this year. Philadelphia reports that inflationary expectations seem to be somewhat stronger than they were a few weeks ago and that most businessmen believe that inflation is the number one problem facing the nation. Fifty business economists participating in a Round Table discussion at the Cleveland Bank have upped their estimated 1971 rise in the GNP deflator from 4.2 percent (estimated on January 29) to 4.7 percent (estimated on May 27). These economists also expect the rate of increase in the Consumer Price Index to accelerate to 4 percent in the second half of 1971. The nonbank directors of the Dallas Bank indicate that their firms have raised prices by an average of 5 percent since the beginning of the year and will raise prices again before year-end. St. Louis reports that there are some expectations of accelerated price increases later this year. Several Districts report increased demand for business and mortgage loans. Mortgage rates have risen in some areas, and additional increases in mortgage rates and in the prime rate are anticipated. At Boston thrift institutions, for example, conventional mortgage rates have moved back up toward 8 percent from their April low of 7.5 percent. Kansas City also reports that, in some cases, conventional mortgage rates have ticked up a notch. More than 80 percent of the bankers polled by Richmond report an increase in demand for mortgage loans and more than 50 percent of those polled report an increase in demand for consumer and business loans. Chicago reveals that loan demand is weak but notes that loan commitment volume has increased sharply—probably an indication of expected credit stringencies. Consumer spending continues to expand, but no major surge is expected. Most of those Districts commenting on consumer spending report slight-to-moderate increases in retail sales. St. Louis indicates retail sales are up strongly, taking into account that colder-than-average weather has retarded the movement of air conditioning equipment. Minneapolis, however, reports that optimism regarding retail sales seems to have dampened slightly during the last month. A modest expansion of employment appears under way and further gradual gains are anticipated. Atlanta and Dallas report some instances of additional hiring. Philadelphia indicates that there is some step-up in hiring plans at the manufacturing level. The number of polled manufacturers who are planning to add employees is nearly four times larger than the number of manufacturers who are planning to cut back. Richmond notes that employment has been declining less than in previous periods. Dallas and St. Louis anticipate increases in employment, provided, in the St. Louis case, that the current rise in business activity continues into the fall. The consensus of the 50 economists who attended the Cleveland meeting is that there will be only a moderate expansion of real output, which will be accompanied by substantial unemployment. On steel strike possibilities, it is generally recognized that the terms incorporated in the auto, can (and now, aluminum) settlements should set the pattern for agreement. Nevertheless, local problems and militant leaders may force a strike. Plant and equipment investment is generally predicted to be weak, evidently because of excess capacity rather than high interest rates. There is also no evidence of an inventory buildup. Boston, New York, and St. Louis mention excess capacity as a deterrent to investment. Dallas, however, notes some increase in investment recently. The Atlanta Bank reports a sharp increase in inquiries received by a state Industrial Development Department. Several Districts commenting on construction report strength. San Francisco, for example, reports that housing activity continues to grow and that commercial construction, especially large shopping areas and multistory buildings, continues to be important in that District. In some other areas, however, a leveling off in construction activity is noted, rather than further increases. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",931 -beige_book_pure_text_pre2000,1971,"The language used in the Reserve Bank reports, to summarize the characterizations of the current economic situation by their various sources of information, falls within a rather narrow range. The present recovery is described as weak (Boston), sluggish (Cleveland), sustainable but sluggish (Philadelphia), and modest (Dallas); there is also an expression of renewed doubts about its strength (New York). Economic activity is seen as continuing a gradual improvement (Richmond), expanding at a gradual rate (San Francisco), showing moderate improvement (Kansas City), continuing moderately upward (St. Louis), improving, with the outlook modestly optimistic (Atlanta), giving rise to expectations of a moderate pickup (Dallas), and leading to the anticipation of marked gains by the year's end (Chicago). The major sources of such strength as is observed in the economy continue to be construction, especially residential construction, and, to a somewhat lesser extent, consumer spending. This statement appears to be true for nearly all Districts, although there are some differences of degree. Nearly all Banks emphasized the importance of retail sales or consumer spending in supporting the observed levels of economic activity in their Districts. However, the relative weakness of automobile sales was mentioned by three Banks-Boston, Richmond, and San Francisco-while Philadelphia, Cleveland, and St. Louis appeared relatively less bullish about retail sales and consumer spending. The tourist trade was reported to be booming in New England, strong in Florida, and off somewhat in New Jersey. Most of the Reserve Banks continue to mention the importance of strong residential construction activity, with Atlanta describing construction as the ""leading sector"" in that District's improving economic situation. Richmond notes that firms producing output related to housing and construction are doing well, and San Francisco reports production and prices up in the timber and lumber industries as a result of rising construction volume. Possible clouds on the horizon of continued construction growth are the mention of higher mortgage interest rates by several Banks, some concern over possible overbuilding of multiple-dwelling units in southern California, and a report of some softening in occupancy rates in office space and apartments in the Chicago area. Among those Banks referring to financial matters, there was fairly general agreement on the strength of consumer installment loans and real estate loans, but more limited reference to, and less agreement on, business loan demand. Richmond referred to strong demand for loans of all kinds, including business loans, while Boston described business loan demand as sluggish. San Francisco sees it as steady overall; Philadelphia, weak; and St. Louis, rising. Although lending volume has not yet strengthened in Chicago, the large banks there report having perceived the early signs of a pickup in business loan demand. Several Banks-St. Louis, Chicago, and Cleveland-reported a slowing in the rate of inflow (and some runoff) of deposits into financial institutions. Deposit inflows continue strong in the Tenth District and in the Ninth District, outside Minneapolis-St. Paul. Not all Banks commented on the employment situation in their Districts, although several did. Unemployment remains high in the Far West, with some further aerospace layoffs to come, but is described as stabilized in the Cleveland District. Steel industry production cutbacks and layoffs are posing special problems in the Chicago and Cleveland Districts, as are layoffs in automobile and ordnance plants in the Kansas City and Atlanta Districts. There was some expression of feeling that the potential steel strike would be relatively short, if it occurred at all. Two longshoremen's strikes-one now underway on the West Coast, the other a possibility to begin on October 1 along the Gulf Coast—are both feared to be lengthy and serious in their adverse effects. The demand for short-term farm loans has declined in the Ninth District as farm income flows have improved. Improved farm income is also expected in the Tenth District—drought areas aside—despite anticipated declines in farm prices. But the situation of agriculture in the Eleventh District, where the drought is centered, remains uncertain to critical over wide areas. Increased corn acreage in the Seventh District, along with the planting of some blight-resistant seed, is expected to produce a sizable corn crop and substantially lower prices for it. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",915 -beige_book_pure_text_pre2000,1971,"According to the Reserve banks' reports, the economic recovery still appears to be proceeding quite slowly in most districts, with the industrial sector particularly sluggish. Strikes and strike-related effects have further dampened economic activity in some districts. The slow pace of the expansion has not yet generated renewed inventory accumulation. Retail sales are rising in some districts, but are slowing in others. The brightest spot continues to be residential construction. No improvement was noted in the employment situation. Prior to the President's imposition of the wage-price freeze, the bank reports indicated no slackening in the pace of inflation. In the financial sector, all the banks reported that business loan demand was slack and that flows into consumer savings accounts had slowed noticeably. Only three banks included reports on the reactions in their districts to the President's new economic policies. Initial reactions were highly favorable. Durable goods manufacturing appears to be the most sluggish sector. The Boston, Richmond and Cleveland banks reported that new orders are weak in capital goods industries and backlogs are shrinking. The St. Louis bank noted that while orders are quite low for steel and durable goods manufacturers, nondurable goods producers are optimistic. A number of banks mentioned that suppliers to the construction industry were experiencing very good sales. The construction sector is reported except New York. Nonresidential building, as booming in all districts well as housing starts, was robust in a number of districts. The San Francisco bank reported that residential construction is providing the principal stimulus to the district's economy. Heavy construction activity was cited as a major reason for low unemployment in several areas within the Atlanta district. Half the banks reported that retail sales were rising in their districts. The San Francisco bank, however, noted that retail sales were only holding steady and the Atlanta bank reported that sales have moderated recently. In the New York district, retail sales varied from trendless to slowing. There does not appear to be any strengthening of inventory spending. The Richmond bank reported a substantial increase in the number of manufacturing firms decreasing inventories and that both trade and manufacturing inventories were still at higher than desired levels. Inventory cuts by industrial firms were also expected in the Cleveland district. Sluggish retail sales were cited by the San Francisco bank as restraining inventory investment. The St. Louis bank reported that steel producers expect steel inventories to be run down over the next six months, depressing their production levels. The Cleveland bank reported the beginning of coal stockpiling in anticipation of an October strike in the coal industry. Strikes and strike-related effects were depressing economic activity in several districts. Coal mining areas in the Richmond district have been hurt by the rail strike and the slowdown in the steel industry. The copper strike is reported to have affected economic activity in Maryland, Utah and Arizona. The San Francisco bank noted that the rail strikes especially hurt shipments of agricultural products, while the dock strike is affecting a widening number of industrial and agricultural producers in the twelfth district. No improvement in the employment situation was noted by any of the Reserve banks. The employment situation was described as unchanged by the Richmond, Dallas, and Chicago banks and as weak by the Minneapolis bank. The Chicago, Cleveland and New York banks reported high unemployment in steel producing areas, with layoffs continuing during early August. Continued inflation at recent rates was mentioned by a number of banks. The Atlanta and Dallas banks reported that retail prices were expected to continue increasing at recent rates. A survey of purchasing managers by the Kansas City bank (made before the President's August 15 speech) found concern about the near-term prospects for any slowing in the rate of inflation. In the Minneapolis and Cleveland districts, concern was reported over the inflationary effects of the steel settlement and announced steel price increases. The Minneapolis bank reported that a number of price and cost increases have already been instituted as a result of the steel price hikes. In the financial sector, the demand for business loans was generally reported as sluggish. The Richmond, San Francisco and Chicago banks, however, reported either good or improving demand for business loans in sections of their districts. Most banks also reported a considerable slowing in the growth of time and savings deposits. Fears of disintermediation were mentioned by the Kansas City, Chicago and Atlanta banks. Only a few banks contacted their respondents after the President's speech. Philadelphia reported that directors, bankers and businessmen in the third district, while surprised at the magnitude of the policy changes, were overwhelmingly in favor of them. Businessmen noted problems in implementing the wage-price freeze, but their general mood was one of cooperation and optimism. Initial reaction in the Chicago district among bankers and businessmen was also generally favorable. Only one bank director in the Boston district was available for comment. He was very enthusiastic about the new policies, although he noted some problems in implementation for banks. As a result of the President's speech, the Boston bank's academic respondents were generally encouraged by the prospects for breaking inflationary expectations and achieving a more stable international monetary system. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1086 -beige_book_pure_text_pre2000,1971,"The latest Red Book reports from the District Banks are on the whole more bullish regarding the economic outlook than the reports of recent months. The President's new economic program has been, in general, very well received throughout the country. To be sure, with the possible exception of the temporary ""freeze,"" which appears to have been almost fully accepted by all segments of the economy, the actual impact of the program on economic activity is as yet barely discernible. Consumer spending was already on the rise during the first half of August, before the announcement of the program, and it was generally felt that, apart from some marginal situations, the proposed business investment tax credit is not likely to significantly stimulate capital outlays so long as the rate of utilization of existing capacity remains low. Nevertheless, the program seems, at the very least, to have had a beneficial psychological impact, halting the erosion in confidence that had been developing in previous months. Reports of the effect of the program on domestic business firms' demand for bank credit were mixed. A rise in consumer spending during August was reported by most District Banks. The St. Louis Bank noted a continued moderate upward movement in retail sales in most major centers of that District, with sales in Memphis rising sharply in recent days. In the Chicago District, sales of domestically produced major appliances were running above last year's level, with the margin of gain widening. A pickup in retail sales was also reported by the Richmond and New York Banks, and retailers in the latter District are looking forward to the Christmas season with optimism. Residential construction has been continuing at a high level in a number of Districts. This development is having a favorable effect on several industries. The San Francisco Bank mentioned the lumber industry in particular, while the Chicago and St. Louis Banks pointed to home furnishing and appliance manufacturers as well as building supply industries. Near-term prospects for increased business outlays for plant and equipment, however, are not regarded as particularly bright, although respondents in several Districts look for some improvement in the long run. The main deterrent to a pickup in such outlays at this time is, of course, the relatively low rate of utilization of existing facilities. The Richmond Bank, for example, reports that the overwhelming majority of manufacturers contacted believe that their current plant and equipment is adequate, or more than adequate. Most respondent firms in the St. Louis District indicate they are operating at less than capacity and have no immediate plans for plant expansion. In the New York District there are also doubts about any near-term stimulus from the proposed investment tax credit. Businessmen may, in general, be more optimistic than previously, but they seem to be adopting a ""wait-and-see"" attitude. While they are perhaps reexamining marginal investment projects more closely, they also seem to be waiting for projected sale increases to materialize. Three Districts reported some pickup in loan demand by domestic business firms that may not have been directly attributable to recent international developments. Some of the bankers contacted in a special System survey by the New York and Minneapolis Banks attributed the increase partly to inventory building. The other seven Federal Reserve Banks that reported on their survey results indicated domestic demand for business loans had remained ""weak"" or ""unchanged"". Indeed, Kansas City commented that ""the deterioration noted in July appears to have continued into late August"", and Richmond observed that not only has there been ""no evidence of unusual strength in business loan demand"" but ""pressure for business loan commitments appears to have abated"" since the wage-price freeze. Four Districts commented on bankers' expectations regarding business loan demands over the next few months, noting that these expectations were generally on the ""hopeful"" side. Interestingly, two of these Districts, Philadelphia and Minneapolis, were among those reporting some recent strengthening. The other two were St. Louis and Dallas. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",847 -beige_book_pure_text_pre2000,1971,"Judging from the District reports, the effect of the new economic program thus far has been to improve the economic outlook. Spending and production, as yet apparently largely unaffected by the new program, continue a moderate expansion. Strength in consumer spending is expected to continue. There is no sign of a marked change in capital spending plans. The loan demand outlook is mixed. There are some expectations of interest rate declines. Several banks report that optimism generated by the announcement of the new economic program continues. However, the St. Louis Bank indicates that the original enthusiasm for the program has moderated, and the Philadelphia Bank reports that earlier optimism seems to have dissipated. Kansas City reports that some merchants think the program may be adversely affecting consumer spending. Chicago reports that the program may have resulted in an ""air of uncertainty"" that conceivably could delay the economic recovery. The Philadelphia and Chicago Banks report skepticism about the efficacy of Phase II, and one of Boston's academic respondents thinks the control structure is awkward. Chicago indicates that some small firms appear to believe they can evade the controls with impunity and that large firms have almost cut off publicity on price developments. There is some doubt about the effect of the program on prices and price expectations. The Chicago Bank reports the freeze may have aided the disposal of 1971 model automobiles at better-than-expected prices and that popular 1972 models are being loaded with high-profit extras. Philadelphia reports a rise this month in the percentage of manufacturers predicting an overall increase in prices. Dallas reports that economists interviewed indicate little hope for a reduction in the rate of inflation. A Boston director does not feel that the size of a recent wage settlement was affected by the freeze, except that the freeze delayed the negotiated wage increase. The New York Bank reports excellent compliance with the freeze, yet one of the Bank's directors warns of a ""head of steam"" building under wage demands. Retail sales were most often described as strong or improving. Robust auto sales were commonly cited. Two banks report a bunching of purchases to beat post-freeze price increases. Two banks also mention that furniture sales are improving; in one case, the improvement was associated with the surge in residential construction. Several banks mention that no early uptrend in capital spending is anticipated and that inventory plans remain cautious. However, an increase in plant location inquiries is detected by St. Louis. Also, Chicago reports an increase in design-stage activity for some types of long-lead time machinery. Capital goods producers in the Boston District report improved prospects. An academic respondent in the Boston District sees a danger that political pressure to lower short-term interest rates could result in a flood of liquidity that, in conjunction with liberalized depreciation and the investment tax credit, could trigger an excessive capital spending boom in the first quarter of 1973. Manufacturers in the Richmond District report further increases in shipments, orders, and backlogs. Cleveland also mentioned an increase in new orders and reported that steel companies experienced an improvement in new orders in September, although orders were well below normal. Steel inventory liquidation is expected to continue into December. Philadelphia reports that manufacturers are less optimistic with respect to new orders, shipments, and unfilled orders. Loan behavior and loan demand outlook are mixed. Several banks note moderate to strong demand for consumer and mortgage loans. On the other hand, three banks report expectations of weak loan demand accompanied by declines in interest rates. Strength in construction was reported by several Districts, but San Francisco indicated concern over rising vacancy rates in multi- family units and Chicago indicates an excess supply of space in new office buildings. An oversupply of office space and apartments may also slow the growth of construction in the Atlanta area. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",812 -beige_book_pure_text_pre2000,1971,"The economic picture presented by the Red Book reports is that the price freeze is working, but that uncertainties concerning Phase II are hampering business planning. Consumers are spending more freely, especially on durables, but demand for most producer goods remains very sluggish, and inventory investment policies are cautious. Employment in most districts does not appear to be improving significantly. Credit is generally available in all leading categories, and interest rates are lower. Two banks (Chicago and San Francisco) report recent evidence that the housing boom has lost momentum. Most reports indicate that a gradual improvement in general activity is under way that will probably accelerate in 1972. But there are notable exceptions. Richmond reports a ""substantial reduction in the pace of shipments and orders, reflecting, in part, the coal and dock strikes. Cleveland finds the coal strike a depressing influence. New York finds that ""optimism (is) significantly more subdued."" St. Louis states that ""activity has tended to level off."" A Boston academician warns of a ""downward spiral."" Cleveland, on the other hand, reports general improvement, and, uniquely, finds evidence of a substantial rise in capital outlays. Lack of conviction as to prospects for future prosperity was characterized in a variety of clichs of limited descriptive power—e.g., ""cautious optimism,"" ""wait and see attitudes,"" and ""waiting for the other shoe to drop."" Business firms are cautious on inventories (Kansas City) hirings (Dallas and Philadelphia), and expansion of short-term debt (several banks). Atlanta tells of cotton textiles producers not accepting orders because of higher cotton prices, and other specific problems are cited in connection with the freeze. Uncertainty over Phase II is not simply a matter of a desire for action by Congress and the new regulatory bodies. Businessmen worry that prices may be controlled more effectively than wages. Lenders are concerned that if interest rates decline further, increases in rates will not be allowed when loan demand strengthens. Several banks found that purchasers of capital equipment do not view the investment tax credit as a significant stimulus to capital spending under current conditions. Requirements of utilities for new facilities remain large and will not be deterred by the factors affecting other sectors. Boston reports that some firms are reducing capital outlay budgets. The surge in auto sales, apparently, is universal. Some banks, including Chicago, Minneapolis, and San Francisco, also emphasized strong demand for household durables, especially furniture. Increased consumer purchases, however, have not significantly reduced the rate of rise in liquid assets. The trade balance may be improving because of pertinent aspects of the NEP. Boston sees evidence of a ""Buy American"" spirit. Atlanta reports foreign firms have ""increased inquiries about plant sites and joint ventures. Chicago, St. Louis, and San Francisco report large agricultural crops of good quality. Crop price declines, while resulting in reduced income for crop farmers, are helping to boost meat production. In the financial area, all banks report credit readily available, and generally at lower interest rates. At commercial banks, demands for consumer installment loans and mortgage credit are strong, but demand for business loans is still slow. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",693 -beige_book_pure_text_pre2000,1971,"The general tenor of the twelve Red Book reports may he summed up as follows: a present business situation that is generating little enthusiasm; an emphasis on uncertainty, perhaps even greater than usual; and a future viewed with some optimism. This generalization alone of course conceals a range of views, especially for the present situation: ""sluggish"" conditions are reported from Philadelphia and Cleveland, while Boston and Dallas report ""good"" or improving"" conditions, and some Atlanta District businessmen suggest that pessimism has been exaggerated."" The consensus is greater, however, on the existence and retarding influence of uncertainty—more than a little of which emerges from the presently unknown influence of Phase II policies and their implementation. Yet, expressions of optimism for the months ahead are found throughout the various Bank reports. As might be expected in a period of uncertainty and adjustment to new policies, considerable variations of opinion were gathered by the Reserve Banks from respondents to their inquiries. In construction, for example, the Richmond Bank reports some slackening in both residential and nonresidential building; in Chicago, residential vacancy rates are up and new permit issuance has slowed down; and construction activity has tended to level off recently in St. Louis. On the other hand, continued strength in construction is reported from Atlanta, Kansas City, and San Francisco. Several Banks found mortgage money abundant, and rates and terms easing. Saving and loan savings inflows remain strong, and life insurance companies also reportedly have ample funds and are in search of investment opportunities. Consumer spending, past and expected, also varies considerably from District to District. On balance, there does not seem to be great strength in this sector. Retailers contacted by the New York Bank expect a ""good, if not spectacular, holiday season,"" an attitude shared to a greater or lesser extent by merchants in the Kansas City, Dallas, Minneapolis, and San Francisco districts. Prospects might be thought a little brighter in the Richmond and St. Louis areas; a little dimmer in the Philadelphia area. Those Banks remarking on inventory investment nearly all cast some doubt on a sudden rise in the rate of inventory accumulation. The New York Bank's respondents see no significant pickup in business inventory spending, a view seconded in the Boston report. In the Dallas District, where sales have been slow recently, retail inventories are described as ""excessive,"" and St. Louis reports that retail inventories there are not growing with sales. In the San Francisco District, inventories are being ""deliberately kept low and geared to sales,"" while Chicago states that ""Inventories continue under tight control."" In a somewhat different view, the Richmond Bank notes some recent slight increases in manufacturers' inventories, but finds retail inventories declining to more desired levels. The steel industry's position was commented on specifically in the Chicago and Cleveland reports. Steel orders—""disappointing"" overall, but variable from firm to firm and plant to plant—appear to be in for gradual improvement, bringing operations back to ""normal"" next year for the entire industry. In the meantime, the steel industry is ""depressed"" as the inventory liquidation is prolonged by increased imports and lower-than-expected current consumption of steel. While the steel situation has combined with several strikes to bring recent employment declines in the Cleveland District, employment growth is lagging in other Districts, too. Philadelphia reports little new manufacturing employment, a condition expected to extend into the immediate future. Some slight improvement in employment in scattered areas of the New York District is apparently bringing little improvement in overall unemployment. Employers in the Boston District note that, with capacity use rates so low, a sizable rise in demand will be needed before employment is expanded. Yet, improving employment situations are reported in the Atlanta, Dallas, and Richmond districts. The relatively few comments on business capital spending indicate no current spurt in such activity. However, there has been some increase in purchases of heavy trucks, construction and materials handling equipment, and especially of farm machinery. Both the Minneapolis and Kansas City Banks commented that the investment tax credit might be partly responsible for the latter, along with the harvesting of bumper crops and rising farm income. Agribusiness firms generally are quite optimistic about their future sales prospects. There was agreement on the Atlantic and Pacific Coasts on the frailty of business loan demand and its relationship to the moderate pace of economic activity. The New York Bank noted that ""the demand for business loans does not suggest any quickening in the pace of business activity,"" and the San Francisco Bank commented as follows: "".... with few exceptions, bankers describe business loan demand as weak, reflecting the moderate pace of business spending."" Business loan demand was only ""seasonal"" in the Philadelphia area; ""slow, and weaker than usual"" in the Chicago District; and weak at major banks in the Eighth District. In the Kansas City District, however, business loans were stronger in November than in other recent months. The range of feelings expressed about Phase II include uncertainty, skepticism, and optimism. Several businessmen in the St. Louis District feel that the new programs have hindered business spending so far, and some ""see little hope for improvement in prices and profits."" Some respondents in the Chicago District feel that sufficient price rises will not be allowed to keep up with cost increases. A major fear, expressed in the New York report and implied in the reports from San Francisco and Chicago, is that controls on prices will be more effective than those on wages, and that a profit squeeze will result, especially for large companies. While not overly optimistic about the program's complete success, there was an attitude that its influence would be favorable—""better than nothing,"" with ""a 50-50 per cent chance of 'crudely and clumsily' moderating the pace of inflation,"" according to one director of the New York Bank. As the San Francisco Bank aptly concluded: ""Overall, Phase II was greeted with less enthusiasm than Phase I, because its duration and character are more difficult to assess."" We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1313 -beige_book_pure_text_pre2000,1972,"Moderate recovery, based mainly on strength in residential construction and some consumer outlays, continues to epitomize the course of the economy. Optimism prevails despite widespread slack in employment and business loan demand. The range of response from Reserve Banks is small. At best, the economy is expanding ""on a broad front"" and ""at a steady pace."" Superlatives were confined mainly to demand for consumer household durables, heavy trucks and building materials. At worse, there are ""some signs of recovery,"" though the upturn ""can barely be perceived"" in the eyes of some. Phase II has been generally accepted"" and has been regarded as helpful so far in aiding competitive forces to limit price increases. Some criticisms have developed, however, which may menace its future. Numerous declines in interest rates, particularly on mortgages and consumer deposit accounts, are reported. Savings flows have held up well. While some concern was expressed over the size of the Federal deficit, most were centered on the fear that large deficits will become a fiscal ""way of life,"" which could not be abandoned as the economy approaches full employment. Anticipated business investment remains very strong, though the concrete signs that have already emerged are mixed. In a survey of the corporate treasurers of Fortune's 650 nonfinancial firms, the Philadelphia bank found planned spending on plant and equipment will increase by 10 percent in 1972. That bank, along with Atlanta and Chicago, found numerous incidents of plant expansions and new plants. Neither New York, Cleveland, St. Louis, San Francisco, or Boston, however, found signs of a surge in capital spending. While the high level of unused capacity is typically cited as the cause, St. Louis found sluggish capital expenditures among some firms experiencing higher operating to capacity ratios. Although a majority of firms reporting to the New York bank anticipated higher inventory outlays, Kansas City encountered ""further inventory reductions, and no inventory buildup-sometimes in spite of increased sales expectations."" Neither Richmond nor Boston reported systematic inventory replenishment. There was a pickup in the pace of manufacturing orders, shipments, and backlogs in the Philadelphia, Atlanta, Richmond, and Chicago Districts. Steel companies in the Cleveland District expect first quarter shipments to outstrip last quarter's by 25 percent. Steel orders have picked up in recent weeks in Cleveland, and in Chicago they show the broadly based gain which had been expected. Most of the increases in employment were recorded in the East. Philadelphia found that 10 percent of manufacturing firms surveyed had increased employment and 17 percent had increased average hours. Richmond noted shortages of skilled and unskilled labor. Scattered gains also occurred in upstate New York and in the Cleveland and Atlanta Districts. Elsewhere the employment picture remained bleak, either stagnating or deteriorating. Little improvement was the story in Boston, St. Louis, and most of New York, while some layoffs appeared in Dallas, Cleveland, and Minneapolis. Continued strength in construction, primarily residential construction, and heavy output of lumber and wood products were both mentioned often. Financing proved not to be a problem, as savings flows were reported to have held high or even accelerated, while mortgage rates have either fallen, as in Richmond and Minneapolis, or downward pressure has developed, as in St. Louis. Some demand problems, resulting from overbuilding, have popped up for apartments, in Atlanta and in the Twin Cities, and in retail selling and office space, in Atlanta and in the Chicago loop district. A fear of competition from savings and loan associations has kept commercial banks in the Atlanta, Chicago, Minneapolis, and Cleveland Districts from cutting rates paid on consumer time deposits. Several banks have indicated to the Cleveland bank ""that a further reduction in the prime rate would probably force them to cut their deposit rates, regardless of whether other institutions followed. Most banks maintained that they could not successfully cut deposit rates unless they were convinced that savings and loans would follow, but they see no reason to expect savings and loans to reduce deposit rates as long as mortgage rates remain at current levels."" Variations abound in the sales performance of consumers' goods. Good gains in general retail sales materialized in San Francisco and in Richmond. Demand was vigorous for consumer household durables in Chicago, and new orders were encouraging in Boston. Strong durable goods sales in Minneapolis accompanied only modest increases in the sale of nondurables. Mixed patterns were also experienced in St. Louis, where services were strong and department store sales were weak, and in Dallas, where department store sales were up and new automobile registrations were down. Kansas City and Richmond reported buoyancy in consumer loan demand, but they, along with Philadelphia, Chicago, Boston, and San Francisco, continued to report weak business loan demand. The three academic respondents contacted by Boston agreed that an expansive policy should be continued until additional signs of strength appear. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1066 -beige_book_pure_text_pre2000,1972,"The overall impression that emerges from the individual District Red Book reports is one of continuing improvement in the economic outlook. Consumer spending is apparently on the rise, with indications of heightened interest in nonessential or postponable goods and in both big ticket and higher priced items. New orders, shipments and backlogs of industrial goods are reportedly strengthening, while business confidence is improving noticeably. These favorable developments, however, have not as yet been translated into a significant turnaround in the cautious inventory policies of businesses, and are still reflected only to a moderate extent in actual or planned increases in outlays for plant and equipment. Similarly, the increase in sales and production has not as yet found its counterpart in a sharp rise in the demand for labor, although it has reportedly led to a limited improvement in the unemployment picture. With respect to consumer spending for goods and services, evidence of strengthening of consumer confidence can be discerned in reports to the New York Bank of increased purchases of nonessential goods and of big ticket items, and the fact that sales of durables are much more vigorous than those of nondurable goods in the Chicago area, with recreational vehicles such as motorcycles, golf carts, snowmobiles and similar items leading the field. In addition, several banks report a sharp uptrend in passenger airline traffic and Atlanta reports booming tourist business in Florida. And while sentiments were mixed in the Philadelphia District, retailers are expecting sales of home furnishings to be strong as a result of the high level of housing completions in the area. A note of caution, however, was sounded by some San Francisco bank respondents who questioned whether consumer spending would become much stronger. Concerning construction outlays, most District reports referring to activities in that industry and/or related industries, indicated that residential, and in some cases (Atlanta) nonresidential construction, continues to be a strong element in the current economic recovery. Some banks, however, including San Francisco, Chicago and Boston, report some feeling among their respondents that a leveling-off in the industry is probably in the offing. As for industrial activity manufacturers participating in the Philadelphia monthly Business Outlook Survey report a further pickup in new orders and shipments in February, which is expected to accelerate in March, while Chicago manufacturers of TV sets, furniture and home appliances are said to be very pleased with the trend of sales. Increases in varying degrees in orders, shipments and backlogs-often linked either to a rise in consumer demand or to strong construction activity-are also mentioned by several other Banks, including Richmond and St. Louis. The Dallas Bank notes that the Texas industrial production interest rose to a record level in January. Despite the apparent strengthening of the economic recovery, District reports, however, generally note that businessmen are still maintaining cautious inventory policies at this juncture, and that no significant turnaround in such policies is indicated for the near future. The current inventory picture is well summed up by the results of the latest Minneapolis Industrial Expectations Survey, which indicate that nearly three quarters of the responding manufacturers considered their inventory positions to be satisfactory, with the balance equally divided between those who considered their inventories too high or too low. Similar sentiments were expressed by several other banks, although Chicago reported that an increasing number of firms showed concern over the adequacy of their inventories to meet rising demands. Concerning business outlays for plant and equipment, Philadelphia reports that an increasing number of area manufacturers are planning to boost capital outlays, with firms contacted that planned increases outnumbering those planning cut-backs 10 to 1. Atlanta reports that previously postponed capital improvements at airports and other nonresidential projects will now be implemented. Cleveland notes that truck production and sales were at record levels, while both the Chicago and New York Banks saw evidence of a sharp rise in agricultural capital spending. On the other hand, St. Louis notes that capital expenditures are being delayed as long as possible, as its business respondents express reluctance to make major investments in view of the uncertainties surrounding profit prospects, and San Francisco reports a conservative attitude by local businessmen toward new capital investment. Regarding the unemployment picture, reports vary among the District banks, but on balance suggest some limited improvement. Richmond thus reports sharp increases in manufacturing employment, as well as a substantial rise in the trade and services industries. The Philadelphia and New York Banks both had evidence that some firms were adding to their payrolls, while the Dallas Bank indicated that a rise in employment, notably in the construction industry, had lowered the jobless rate in the District to its lowest level in more than a year. According to reports to the Atlanta Bank, unemployment was "" low"" in East Tennessee, and scattered improvement was seen elsewhere in that District. There has also been some increase in employment in the lumber industry in the San Francisco District. The Cleveland Bank notes a continued small recovery into January in non-farm employment, but expects no major improvement at this time. Similarly, Chicago notes that employers have been very cautious in increasing their work force, and St. Louis reports that apart from some gains in the construction and service trades, additions to payrolls are being delayed. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1117 -beige_book_pure_text_pre2000,1972,"On the whole, District banks report that the general business climate continues to improve. Industrial activity is increasing in most Districts, but gains on the employment front are less widespread. The retail sector shows signs of improvement in several Districts both for general items and automobiles. Capital spending plans have been stepped up in some Districts, but caution remains among businessmen in other areas. Construction, however, continues to be a strong sector in most of the regional economies. Loan demand at commercial banks, in general, shows increasing strength. Concern about inflation appears in several reports, but there is some evidence that food prices are stabilizing. Industrial activity is on the upswing in most Districts. Richmond, Cleveland, Boston, and Philadelphia report continued increases in new orders and shipments at manufacturing firms. Other Districts also report gains, with business sentiment stabilized on a moderately optimistic level. Chicago notes particular strength in the steel industry while St. Louis reports improvement in steel and the consumer goods sector. Dallas attributes increases in industrial production in its District to an especially large boost in mining activity. However, improving trends in business activity have yet to register a nationwide impact on employment. District reports remain mixed. Richmond, Philadelphia, and Boston find firms adding workers to their payrolls. Richmond also reports increases in hours worked per week. Other Districts (Cleveland, St. Louis, and Dallas) report little change in their overall employment picture. Chicago notes that layoffs have become fewer in recent months and many firms are hiring again after a long drought. Minneapolis expects employment growth to improve but not significantly in the second quarter. The retail sector shows signs of improvement in several Districts. Richmond reports continuing strong sales, both in general retail items and in automobiles. Dallas cites sizeable gains in department store sales and new car registrations. San Francisco finds durables doing better than average and autos continuing steady. Other Districts (New York, Philadelphia, Cleveland, and Minneapolis) report only moderate improvement but more optimistic forecasts for future months. Although capital spending plans have increased in some Districts, an aura of caution remains among businessmen elsewhere. Boston reports that expenditure plans range from unchanged to a 10 to 15 per cent increase over last year. Chicago also cites an improved investment outlook with orders for capital goods rising in recent months. St. Louis, however, finds investment remaining sluggish. Profits at area firms, although up, are not sufficient to merit additional capital outlays. San Francisco reports that business investment plans remain cautious with no major revision of expectations apparent. Construction remains a bright spot in many of the regional economies. Kansas City reports housing starts are considerably ahead of last year and are expected to continue strong. Nonresidential construction is also expected to improve. Richmond, likewise, reports increases in both residential and nonresidential construction. New York reports continued strength but forecasts a possible flattening out in activity. Atlanta finds a near boom in construction in Florida. Other Districts (Cleveland, St. Louis, and Dallas), although reporting a leveling off or even a moderate decline, still show construction at high levels of activity. Loan demand at commercial banks shows increasing strength. Philadelphia, Cleveland, Richmond, St. Louis, Kansas City, and Dallas report signs of improvement in demand conditions for business loans. New York and Chicago report more sluggish activity and regard alternative sources of funds for business as a prime reason for a slack in loan demand, both now and in the near future. Boston, Richmond, Kansas City, and San Francisco report strong mortgage demand. Richmond, Kansas City, and San Francisco also see increases in consumer installment loans. Those District Banks reporting on the price situation generally express some reason for concern. Richmond, although noting few changes in prices received by trade and service or manufacturing concerns, reports increases in wages paid by these firms. Chicago reports upward pressure on a wide variety of raw materials. Boston cites many areas in which price increases have become common and, in some cases, quite large. Businessmen in the Boston area convey a growing disillusionment on the effectiveness of Phase II. This sentiment is also reported in the Minneapolis District. New York businessmen, although recognizing that Phase II is not fully adequate, nevertheless feel it is having a favorable impact on current developments. In the agriculture sector, conditions appear to be improving. Farm income is up and crop production is normal or better. Spot checks by Kansas City at retail food chains reveal greater price stability than a month ago. Wholesale meat prices are expected to decline in the near term but retail prices less so. Dallas finds livestock conditions better than a year ago, with the number of cattle on feed up substantially. San Francisco reports cattle prices holding steady. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1029 -beige_book_pure_text_pre2000,1972,"Overall, District reports reveal continued economic expansion in most sectors of the economy, although there are indications of slowing in certain activities. In the forefront, there is continued concern about inflation, the wage-price controls, and the performance of profits. Consumer sentiment and spending appear to be gathering strength in many areas, as is capital spending. Residential construction, however, is showing some signs of weakening. On balance, businessmen are still cautious with regard to inventory investment. Employment is generally rising, unemployment remains a problem. Current and prospective agricultural conditions are excellent in most parts of the nation. The major categories of bank loans are improving. Boston reports concern among businessmen about inflation and about the ability of the price and pay boards to achieve their goals. Economists attending a regular outlook session at the Cleveland Bank expressed the view that further progress in reducing the rate of inflation will be difficult to achieve, and they think it unlikely that inflation can be held below 3.5 percent for any sustained period over the next year or so. Chicago reports there is widespread irritation among businessmen over recent actions of the price commission. Atlanta, on the other hand, mentions that there have been few reports of inflationary psychology, despite tight labor markets in their area. Districts ""taking the pulse"" of the manufacturing sector report further gains in new orders and shipments, coupled with improvement in employment and the workweek. Richmond and Cleveland, however, detect a recent slowdown in steel orders. Chicago reports the demand for certain types of capital goods is up sharply, primarily for modernization rather than for expansion. Sales of heavy trucks in particular are expected to remain vigorous through mid-1973. Businessmen in St. Louis also say their capital spending is largely for modernization and equipment, noting that profit margins are still too low to provide incentive for major plant expansion. Chicago and Minneapolis both mention extremely good sales of farm machinery and equipment. Respondents in New York and Cleveland raise questions about accepting too readily the strength implied by recent plant and equipment surveys, at least until more evidence is available. San Francisco mentions some caution in business spending plans. Recent consumer spending patterns are difficult to interpret, in part because the early Easter season may have distorted March and April retail sales data. New York, Minneapolis, and Kansas City report gathering strength in consumer sales. Chicago and Atlanta emphasize strong sales of consumer recreational goods. On the other hand, Cleveland mentions a recent weakening of GAF retail sales; St. Louis reports a leveling in department store sales; Dallas sees some signs of weakening in nonautomotive retail trade; and Richmond says retailers in the Baltimore area were disappointed with sales in April and early May. Construction generally remains strong in most Districts, especially in Atlanta. Cleveland, however, reports a sharp drop in residential construction. Minneapolis mentions that rising vacancy rates in the Twin Cities are causing banks to be more cautious in their lending policies. San Francisco notes that the high level of apartment and commercial building in Southern California is raising concern over vacancy rates and causing banks to be more cautious in extending credit. Districts commenting on agricultural conditions (St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco) report highly favorable prospects for crops and livestock. Chicago mentioned that recent wet weather delayed corn planting. Districts commenting on bank loans report moderate to strong increases in loan demand, except Boston, where business loans are weak. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",746 -beige_book_pure_text_pre2000,1972,"Reports from the twelve districts indicate continued strengthening in business activity and greater optimism in general. Consumer spending, which has continued strong in most regions, seems to be the main source of strength. Greater output in industries closely related to the provision of final goods, especially durables, was cited as principal source of expanding manufacturing employment and increased business loan demand. Inventories have, for the most part, remained unchanged. Construction of single-family dwellings has continued to boost overall activity. Loan demand at commercial banks has increased, with consumer and business loan categories up most sharply. In general, wage and price increases have been moderate. Most districts reported encouraging strength in sales of consumer goods. Part of the gain in consumer purchases was attributed by Atlanta, Richmond and Chicago to stronger auto sales; Dallas, however, reported a decline in auto registrations. Major household items and other consumer durables were strong in some districts. Kansas City, Boston and Chicago specifically mentioned recreational items. While retail sales rose in the St. Louis district, the advance was not as great as anticipated by retailers. Slowness characterized retail sales in the New York district, where the outlook was less bright than a month ago. Steel production was reported favorable in the Chicago and Cleveland districts. The output levels are considerably different, however, for the various steel industry products. Production of steel sheets for use in autos and appliances has displayed the most strength in both districts, while demand for steel used in commercial and industrial construction has remained relatively weak. Manufacturing activity was reported to be increasing in five districts. Sales of both durables and nondurables advanced in Minneapolis and capital goods orders were strong in Boston. Dallas reported gains in industrial production in April with broad-based strength across industry lines. Manufacturers that supply national markets are reportedly optimistic in the St. Louis district. St. Louis, and Chicago as well, mentioned benefits to manufacturers resulting from reduced foreign competition. Richmond reported strength in district industries. Most districts reported little change in inventory accumulation. Several reserve banks reported significant employment gains in their respective districts. Philadelphia indicated over 15 percent of the firms responding to a survey added to their payrolls and nearly 5 percent lengthened their average workweek. In the Chicago district, there was an increase in the number of firms adding workers or stretching workweeks, but two major-city governments are still very concerned about unemployment. While Dallas and Boston reported no significant labor market changes, Minneapolis indicated the Ninth District's unemployment rate rose from 5.7 percent in March to 5.9 percent in April. Construction activity has remained strong in most districts. San Francisco reported that national construction activity gains have aided recovery of the Pacific Northwest because of the greater demand for lumber and wood products. Generally, residential construction has been strong in the nation, but Atlanta reported it appeared to be slowing. Commercial construction has slackened and concern has been expressed for possible overbuilding of multiunit dwellings in the San Francisco and Kansas City districts. Of all the districts, only Atlanta reported anticipation of a surge in commercial construction. Loan demand in general, and business loan demand in particular, were noted as being quite strong by most districts. Exceptions included New York, where an increase in total loans was not accounted for by commercial and industrial loans, and Kansas City, where business loan demand has also been weak. Richmond and Dallas reported strength in consumer loans, while Philadelphia and Kansas City reported moderate gains in consumer lending. Housing and construction credit were noted as sources of strength in the Dallas and St. Louis districts while in the Philadelphia district future strength in construction lending is anticipated. Four districts reported continuing strong inflows of savings deposits. One of the four, Kansas City, noted inflows were above year-ago levels but slower than earlier in 1972. St. Louis, Boston and Chicago also mentioned strong savings inflows. Most districts cited the importance of the Price Commission's role in slowing the rate of inflation. The Minneapolis and San Francisco reserve banks indicated prices and wages were growing at reduced rates, and retail establishments in the Kansas City district have reported no sharp run-ups in suppliers' prices. In the Boston district, suppliers' prices have generally been rising gradually and one director indicated the pace was faster in the second quarter than in the first. In the Philadelphia district, despite expectations of no change in prices paid, 20 percent of the manufacturing firms which responded to a survey were anticipating establishing price increases on their own products in June. Only 7 percent reported price increases in May. Weather and cattle prices were emphasized in reports on the agricultural outlook. Weather conditions throughout much of the Midwest reportedly had adverse effects on plantings. Excessive rainfall in parts of the Minneapolis and St. Louis districts have retarded crop developments and in the case of Minneapolis caused some switching from corn plantings to grain sorghums and soybeans. Drought conditions have developed in the Atlanta district and the northern part of the St. Louis district. Higher beef prices were noted by the Chicago, Richmond and Kansas City banks, and the St. Louis bank reported strong sales of farm equipment. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1116 -beige_book_pure_text_pre2000,1972,"Reports from the twelve Districts indicate that economic activity continues to strengthen and the outlook of most businessmen and bankers is optimistic. Consumer spending, especially for tourism, recreational vehicles, and autos, appears to be a major source of strength. Capital spending and plans for future outlays still appear to be gathering momentum, and orders and shipments of heavy capital goods producers are reported to be on the upswing. While construction activity is at a high level, signs of some slowdown in construction are becoming apparent in several Districts. Inventories are still being held closely in check with most manufacturing and trade firms reporting no change or only a modest increase in inventories. In general, agricultural conditions are good to excellent. However, heavy rains in some areas have set back crop conditions. Loan demand is on the increase, but banks apparently have adequate funds to meet the expected near-term loan demand. Interest rates on most loans are reported to be little changed or slightly higher in the last month. Optimism on the part of businessmen and bankers is evident in most of the District reports this month. Atlanta notes that descriptions of the economy generally run from good to booming. Richmond reports that their directors are optimistic, and Kansas City notes that businessmen seem ""unguardedly optimistic"" about the economic outlook. And the consensus at Chicago's annual Business Outlook Conference was that the current economic expansion would last at least through the first half of 1973. New York directors were characterized as mixed on the economic outlook but were more optimistic than in the previous month. Strength in the demand for consumer goods was noted in most regions. Minneapolis reports yearly sales gains of 5 to 10 percent in the Twin Cities area in the second quarter and a strong demand for meat at the retail level. Retail firms in New York were more optimistic this month about consumer confidence and outlays; consumer spending on nondurables appeared to be good in the Boston District. Brisk auto sales were cited by Richmond, Dallas, and San Francisco while Chicago reported an optimistic forecast for autos in both 1972 and 1973 at their Business Outlook Conference. Cleveland, however, reported that car sales in that District had risen less than in the nation. And St. Louis noted a decline in retail sales at major department stores in June, following a strong uptrend earlier in the year. Although the recent heavy rains depressed retail sales in the Philadelphia District, retail executives there are optimistic about sales this fall. Improved consumer demand is also indicated by increased spending for recreational activities. The Boston, Chicago, and San Francisco Districts all report booming sales of recreational type vehicles. Atlanta reports heavy attendance at Florida's Disney World, with the benefits of this visitor attraction apparently spilling over to other parts of the Southeast. Businesses catering to vacationers in the Kansas City District were doing very well although tourists were reported to be avoiding luxury items. Plans for increased capital spending were noted by St. Louis and Chicago as a source of further economic strength. And announcements of new plants and plant expansions continue to be numerous in the Atlanta District. However, the percentage of firms reporting increased capital spending plans in Philadelphia's regular survey has stabilized at about 45 percent in the past two months. The upturn in capital spending this year is beginning to have a noticeable impact on the sales of some heavy goods manufacturers. Chicago cited increased sales of heavy construction equipment and over-the-road trailers while Boston reported an increase in orders for oil field equipment and aircraft parts. Steel companies in the Cleveland District are experiencing a strong and steady order pace with the prospect of some pickup in orders from the auto industry for August deliveries. Inventory levels are generally unchanged or only increasing moderately. Manufacturing respondents to the monthly Richmond survey reported little change in their inventories and judged their inventory levels to be about right. San Francisco reported no sign of major inventory building at the retail level in that District, and Richmond noticed no change in trade inventories. New York and Boston, however, saw some evidence of moderate inventory building at the retail level. The Minneapolis Bank directors cited high finance costs, better management, and better-than-expected sales as possible reasons why inventory-to-sales ratios were remaining relatively low. Crop conditions are generally good to excellent in the St. Louis, Chicago, Kansas City, and San Francisco Districts. However, cool weather and excessive rainfall have hurt crops in the Richmond District, and New York and Philadelphia report some crop damage due to flood conditions. Rain also slowed the Kansas wheat harvest, but the 1972 crop may still rank among the largest on record. Prices for both crops and livestock are reported to be favorable for increasing farm income this year, especially in view of generally high levels of production. While employment gains were reported in some Districts, the uptrend is apparently still rather slow. Some manufacturers in the Richmond and Philadelphia Districts expect to increase their employment and lengthen workweeks. Nonfarm payroll employment is expanding moderately in the Cleveland District, and the insured unemployment rate has turned down. The unemployment rate for the five southwestern states in the Dallas District is at a low 4.4 percent, but employment analysts there are not optimistic about gains in employment during the rest of 1972. The demand for all types of loans is apparently strong in nearly every District and advancing at a steady pace. Cleveland did note, however, that business loan demand over the June tax date was less than a year ago in their District. The supply of loanable funds at banks is adequate, but in the Chicago District the volume of outstanding CD's has been rising. While interest rates are apparently little changed, St. Louis and San Francisco noted a slight rise in rates. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1234 -beige_book_pure_text_pre2000,1972,"Overall, district banks report a quickening economic pace and an increasing degree of optimism about the business expansion. Industrial activity is continuing up on a wide front. However, little or no change in unemployment is reported by most districts. Retail sales are up substantially, with automobile sales particularly brisk. Construction continues at a high level with housing starts strong in many districts. Most districts are experiencing slow or negligible increases in inventories. Commercial banks are experiencing strong loan demand. In the coming months interest rates are generally expected to rise, with short-term rates leading longer rates upward. Prices are continuing up in most areas. On the production front, order backlogs, new orders, and shipments are generally up. Atlanta, St. Louis, and Dallas report strong increases while New York, Philadelphia, Chicago, and Kansas City are experiencing significant but less noteworthy rises. Richmond reports a slight decline in the backlog of orders for some firms in that district but shipments are at a constant rate. In general, the employment picture appears to be improving only slightly at best. In Dallas the unemployment rate recently fell as low as 4.3 per cent. And, Chicago and St. Louis report modest improvements too. Most districts, however, report no change in their job markets. Serious pockets of joblessness are reported in parts of the San Francisco and Richmond Districts. Most districts report fair to strong increases in retail sales. Auto sales are mentioned as a leading gainer in the reports from Richmond, Chicago, Dallas, and San Francisco. Chicago commented that some retail trade analysts are becoming disillusioned with the surveys of consumer intentions to which they subscribe; at least two of these surveys have issued forecasts of lackluster consumer spending in recent months. In most districts the demand for loans is strong. Boston reports its loan demand is ""very strong"" in the real estate and consumer areas. Business loans ""grew substantially"" at Cleveland. ""Loan commitments are heavy"" in Chicago. At Kansas City local businesses are the leading borrowers. All loan categories are up sharply in Dallas with business loans up the most. Deposits are increasing in St. Louis, Kansas City, and San Francisco. About the only questions raised concerning interest rates are how much interest rates will rise, and exactly when the rise will start. The various districts are having a mixed experience with respect to the business investment sector. No areas are reporting general increases. Cleveland and New York referred to faster inventory accumulation. But, most districts discuss cautious inventory policies as reasons for lack of investment in this area. Capital spending for machine tools was up ""dramatically"" in Chicago. But no broadbased upward trend in plant and equipment outlay is reported. Most of the reports indicate that construction activity appears to have leveled off at the high plateau attained in late 1971. Total construction is being sustained by strong residential housing demand, while non-residential building is performing less impressively in several Districts. New York's Directors expressed concern over possible increasing rates of inflation, and one of Boston's academic consultants voiced similar views. But, most districts had little or no comment about expected changes in the general price level. In the agricultural sector, Philadelphia finds that some crop prices are rising. Richmond reports tobacco prices are at an all time high. Increasing prices for corn, soybeans, wheat, cattle, potatoes, and some fruits were mentioned in the reports issued by Chicago, St. Louis, Kansas City, Dallas, and San Francisco. Farmers are enjoying increased incomes in the Richmond, Chicago, St. Louis, Minneapolis, Kansas City, and Dallas Districts. Although the costs of farming are higher than last year, farm receipts are expected to be up even more because of higher commodity prices and good harvests. In spite of higher farm incomes, Minneapolis furnished some data suggesting that farm spending was decreasing. Bad weather hurt fruit growers and canners in Utah and many farmers around the Harrisburg, Pennsylvania area. Some bankruptcies are likely to result from these unfortunate local weather conditions. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",879 -beige_book_pure_text_pre2000,1972,"In general, the District banks report continuing business expansion and a good measure of optimism about future prospects. With few exceptions, retail sales are reportedly doing well. Home building nationwide has fallen back from peaks earlier in the year, but remains very strong in selected areas. Commercial banks are experiencing good loan demand from consumers and small business, while demand from national corporations is more restrained. The employment picture appears to have strengthened a bit further, and expectations of further employment gains were variously noted. The agricultural situation was almost uniformly described as bright, with farm output, income and investment up. Retail sales were said to be ""particularly good"" in Philadelphia; strong or improving in the Richmond, Chicago, Minneapolis and San Francisco and Dallas Districts, but only moderate or mixed in St. Louis, Kansas City, New York, and Cleveland. Atlanta and Boston report that the summer tourist season had been strong, but Boston said that vacationers had been ""quite careful"" with their money. Chicago noted a significant rise in domestic airline traffic. There was some evidence of increased capital spending. Philadelphia District businessmen expect to increase plant and equipment expenditures within the next six months. Chicago reports that most District producers of capital equipment have been experiencing higher sales and orders, with good prospects for the future. New York also cited some evidence of a strong capital spending outlook for 1973, and Atlanta reported the announcement of several large commercial construction projects, including hotel and office buildings. A survey by Minneapolis found a significant increase in local firms reporting plant capacity as ""less than needed"". Construction activity remains at a high level, but District trends are mixed. Atlanta characterized building activity in its District as being of boom proportion. A generally favorable construction picture is also reported by the Richmond and San Francisco Banks. St. Louis reports that while construction activity has apparently leveled off, it has done so at a relatively high rate. Similarly, though the Dallas Bank reports a decline since June, it notes that such activity remains well above last year's level. Cleveland states that residential contracts appear to have peaked in the May-June period and to have declined sharply in July. The nationwide employment situation appears to have improved further on balance. Richmond reports increases in employment and hours worked per week, and both Richmond and Atlanta found shortages of labor in some areas of their Districts. New York noted shortages of skilled construction workers, and Chicago reported both an increase in help wanted advertising and inadequate supply of quality workers. The unemployment rate is down further in San Francisco. Some other reports pointed to little current change in the job market but, among these, Philadelphia and Dallas found some evidence pointing to future improvement. Reports from some Banks indicated that concern over inflation remains strong. A number of New York's directors cited the inflationary implications of the large and widening Federal budget and of the heavy calendar of wage negotiations in 1973. Businessmen contacted by Philadelphia expected inflation to be more of a problem in the future. Encouragingly, however, Kansas City found evidence in the agricultural situation that the pressure would be off food prices for the remainder of the year. In this connection, most Banks discussing agriculture-Chicago, St. Louis, Kansas City, Dallas and San Francisco-all reported good agricultural prospects as a result of both higher prices and high production, though Richmond said the outlook in that District is for reduced crops and farm income. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",744 -beige_book_pure_text_pre2000,1972,"Comments from the District banks uniformly emphasize the strong pace of the current economic expansion. Near-term prospects for both consumer spending and business investment continue to be excellent. Strong income gains in the agricultural sector are bolstering retail trade and outlays for farm machinery and equipment. Construction remains at a high level in most Districts. Signs of overbuilding in certain areas, however, suggest an adjustment in 1973. Labor market conditions generally continue to show improvement, and some Districts are experiencing labor shortages. Businessmen and economists expressed concern over the possibility of renewed inflationary pressures in 1973, and over what public policy measures might be taken to counteract those pressures. Reports were mixed on the effectiveness of wage-price controls and their future prospects. Commercial banks are experiencing strong loan demand, especially from the consumer sector. Concern about the reemergence of inflation during 1973 was the most frequently mentioned problem on the economic horizon. Banks specifically commenting on the problem of renewed inflation include Boston, New York, Philadelphia, Cleveland, and St. Louis. On the subject of controls, Atlanta mentioned that businessmen are concerned about the inadequacies of wage-price controls, while St. Louis reported reservations among businessmen regarding the future effectiveness of controls. A comment picked up by New York was that continued wage controls (but presumably not price controls) seem to be a ""necessary evil"" if the problem of cost-push inflation is to be solved. Chicago underscores the effectiveness of Price Commission rulings in many industries, and business economists in Cleveland maintain that sentiment among large firms is for a continuation of controls next year. Banks generally reported that retail sales continued to register strong growth in recent weeks. Higher livestock and grain prices have contributed importantly to retail trade in Minneapolis and have stimulated sales of farm equipment. Chicago, Kansas City, Dallas, and San Francisco also commented on bright agricultural income conditions. In Richmond, however, the gain in agricultural income is below the national average. There are signs that the upswing in business fixed investment is gaining momentum. Philadelphia reported businessmen's plans for capital spending are being stepped up, while Richmond noted an increased number of manufacturers whose current plant capacity is too low relative to desired levels. Atlanta mentioned heavy capital spending on projects for pollution control and that investment is being undertaken primarily to reduce costs rather than to increase capacity. In Chicago, excellent consumer demand for recreational vehicles has spurred producers to expand capacity. Farm machinery producers in the Chicago District are pleased with domestic and foreign demand and plan to operate at a higher level than normal during the winter. San Francisco sees plant and equipment spending rising strongly in 1973, with heavy outlays required for pollution control. On the financial sides, commercial banks are experiencing strong loan demand, particularly for mortgages and consumer credit. Business economists in the Cleveland District do not expect a credit crunch to materialize in 1973, although they anticipate some edging up of interest rates. In Kansas City, bankers are concerned about the possibility of disintermediation. San Francisco reports that banks are reasonably liquid and in a position to meet increased loan demand without major increases in interest rates. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",695 -beige_book_pure_text_pre2000,1972,"According 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. The 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. Reports 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. Richmond, 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. Agriculture 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 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. The 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. The outlook for wage and price increases differs, to some extent, in each district that reported on inflation. With the exception o£ Atlanta, where inflationary pressures remain strong, the expected rate of inflation for next year is generally termed ""moderate."" This assumes that some wage-price regulations continue through 1973. Farm prices should, in coming months, exert less upward pressure on consumer prices then they have recently. There 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—although the strength of business loans varied throughout the district. St. Louis reports We serve the public by pursuing a growing economy and stable financial system that work for all of us.",796 -beige_book_pure_text_pre2000,1972,"Economic activity around the Nation is maintaining its forward momentum according to reports from the twelve Districts. And, the outlook for 1973 ranges from optimistic in several Districts to ""almost universally ebullient"" in the Seventh District. Orders, inventories, and shipments of manufacturers were reported on the rise, and manufacturing employment is expanding. Retail sales are strong, and the 1972 Christmas season is expected to result in sales well above the 1971 level. Construction activity has generally remained at high levels or expanded further, but signs of weakness in construction were noted by several Districts. With the economy continuing to expand, shortages of labor and materials were noted as emerging problems. Wet weather has curtailed the harvest of several crops and inflicted some losses, but the overall farm income situation remains favorable. Loan demand continues strong at banks, but trends in deposits have varied significantly between Districts. Manufacturing activity was reported on a noticeable upswing according to survey results reported by the Cleveland, Richmond, and Minneapolis banks. Steel shipments were cited as especially strong in the Cleveland report, and steel economists predicted a record year for steel shipments in 1973. Chicago noted that auto and truck production was at high levels and further gains were expected in 1973. However, in the Philadelphia District, manufacturers reported a lull in their December orders while maintaining an optimistic view about the next six-month period. The increase in business activity continues to generate expectations of higher levels of capital spending. Several directors of the Boston bank anticipated large increases in capital spending in 1973 because of the approach of production to capacity levels. Atlanta reported that the construction of numerous small plants had been announced recently in the Southeast, and Chicago indicated that auto makers were accelerating their capital spending plans. However, St. Louis reported complaints from businessmen in their District that profit margins were not sufficient in some industries to stimulate plant and equipment spending even though utilization rates were near capacity. Although construction activity is still characterized as strong in most Districts, there is growing concern about possible overbuilding of multi-family residential units. Cleveland, Boston, New York, San Francisco, and Minneapolis all indicated that apartment and/or condominium construction may be excessive in parts of their Districts. Although several Districts suggested the possibility of a decline in housing activity in 1973, the extent of the possible decline was not large. Builders in the St. Louis District were reported to be optimistic about further gains in construction in 1973, including an increase in single-family housing for the St. Louis metropolitan area. Atlanta reported numerous large-scale construction projects—both residential and nonresidential—in the Southeast, especially in Atlanta and in central Florida. Retail sales are rising and the outlook for the months ahead is favorable. All of the Districts commenting on retail trade indicate that 1972 Christmas sales should be well ahead of last year. San Francisco and Chicago noted that luxury and ""big ticket"" items were selling well. And Kansas City reported that the strong auto sales included many of the more expensive models or models with large amounts of optional equipment. Although reporting retail sales as generally good, Minneapolis indicated that sales of winter recreational vehicles had not been up to the earlier expectations of one manufacturer. Employment is expanding in most areas and declines in unemployment were mentioned by several Districts. Dallas reported a record level of employment in the Eleventh District states in October as a result of widespread gains. In the Third District, Philadelphia noted that the unemployment rate had fallen from 5.7 to 4.5 percent in the last three months. Atlanta indicated that unemployment rates in several southeastern states were at their lowest levels in years. With the gains in employment, some signs of labor shortages were reported by the Atlanta, St. Louis, Richmond, and Chicago Districts. And Chicago noted that turnover rates and absenteeism were rising at firms in the Seventh District. The generally favorable agricultural situation has been set back somewhat by wet weather in the Midwest, Southeast, and Southwest that delayed the soybean, sorghum, and cotton harvests. Kansas City indicates that the production of soybeans and sorghum will fall below the November crop report estimate, and Atlanta cited a loss of 30 million bushels of soybeans in Tennessee. The extent of the losses in the Chicago District was uncertain, but it was noted that the overall farm outlook was still the most favorable in many years. Dallas reports that the cotton yield continues to look good, but the delay in harvesting may hurt the quality of the crop. While the wet weather hurt production in most areas, Florida citrus and vegetable growers were aided by the moisture. Loan demand was reported to be generally strong by Dallas, Kansas City, and Richmond. Consumer installment loans and mortgage loans were mentioned as areas of strength by bankers in the Cleveland and Philadelphia Districts. The trend of bank deposits varied considerably among the Districts. Cleveland reported a strong rise in deposits while Kansas City and Philadelphia indicated that deposits were largely unchanged. Bankers in the Kansas City District are trying to attract additional deposits by offering higher rates on CD's than currently prevail in the New York market. Banks are apparently not experiencing a shortage of funds, and Cleveland reports that most banks in the Fourth District are highly liquid. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1149 -beige_book_pure_text_pre2000,1973,"The overall impression conveyed by the District Banks' reports is that the economic expansion of 1972 continued undiminished at the turn of the year and was perhaps gathering additional momentum. Retailers generally enjoyed a very good Christmas season, and many were reported to be quite optimistic about sales prospects over the months ahead. Business confidence improved further, as evidenced by increased actual or planned outlays on plant and equipment. Manufacturing activity has quickened, with increases reported in new orders, shipments and backlogs. And while housing construction on balance appears to have peaked out, it remains at very high levels. The unemployment situation improved somewhat further, and there were frequent reports of a growing shortage of skilled and semi-skilled labor. On the dark side, however, concern continued to be voiced over the outlook for further inflation. One of the brightest spots in the latest District reports was the strength in consumer spending over the Christmas season. Moreover, retail sales were reported as continuing strong during the post-holiday period. To be sure, the phrases used to describe the strength of Christmas sales varied somewhat, from the ""continued to expand"", ""were generally reported good"" or ""continued strong"" (Richmond, Kansas and Dallas, respectively) to ""extremely vigorous:; ""very strong"" and reaching ""record levels"" (Chicago, Cleveland and San Francisco). It thus appears that nationwide consumer spending was well above that of the 1971 holiday season, frequently surpassing retailers' expectations. An optimistic outlook regarding sales over the months ahead, moreover, was mentioned by a number of districts, including Minneapolis, St. Louis and San Francisco. Boston also reported an unusually high rate of reordering from retail stores for this time of the year. Against this background, reports from a number of Banks, including Cleveland, St. Louis, Richmond and Chicago, pointed to a further improvement in the industrial production picture, with manufacturers' new orders, shipments, and backlogs on the rise. Cleveland reports strong demand for steel, and that output in certain other durable good industries that had been sluggish since 1970 is beginning to rise. St. Louis notes that all manufacturing industries in that District reported higher levels of output in recent months. The Texas production index reached record levels. A number of Districts, including Cleveland, reported constraints on production stemming either from capacity limitations, difficulties in obtaining supply, fuel shortages (in part due to cold weather), or from a shortage of skilled labor. Most reports on construction suggest that total activity in that industry, on balance, has stabilized at or near recent high levels. In certain areas, including the Richmond and St. Louis Districts, a rise in nonresidential construction offset declines in residential building activity. There were indications that the employment picture has continued to improve somewhat. Boston reports tightness in some labor markets in the midst of pockets of high unemployment. Cleveland notes that employment in that District continues to expand at a more rapid rate than in the nation. Richmond reports a severe shortage of textile workers, and Chicago, St. Louis and Dallas all note increases in employment in their areas. Concern over inflation remains in evidence. Philadelphia reports that over one-half of the respondents in its monthly business outlook survey expect to pay higher prices over the next six months. Atlanta states that the main concern of businessmen is that inflationary pressures will mount. Dallas, St. Louis and Boston respondents voiced expectations of further price increases. Respondents in a number of Districts remarked that the rise in certain farm products would eventually be reflected at the retail level. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",783 -beige_book_pure_text_pre2000,1973,"On the whole the economy continues strong. Manufacturing activity is rising in most areas and is expected to continue upward. Labor markets are tightening and some labor shortages are reported. Inventory investment is reported to be rising only slightly, but plant and equipment spending is increasing as some manufacturers find themselves operating at near-capacity levels. Residential construction is continuing at a high level in most districts. Commercial construction is rising according to some reports. Retail sales generally remain strong. Farmers are making larger than average incomes despite various operating problems. However, on the darker side, inflationary expectations are rising significantly. Bankers report some credit tightening and frequently mention rising interest rates. Production activity is rising. Most districts report increases in new orders, shipments, order backlogs or similar barometers of manufacturing activity. Some districts (St. Louis, Richmond, Boston) talk of strong increases in output. Durables manufacturers are mentioned with more frequency than non-durables producers in the various districts' discussions of rising manufacturing. The Richmond district's furniture manufacturers are operating at a high level of output despite labor shortages. San Francisco reports that activity at Seattle's Boeing facilities are picking up. Cleveland refers to ""dramatic increases in orders for machine tools."" Labor markets are tightening in some places. The Dallas report speaks of ""particularly buoyant"" employment opportunities. Labor shortages are reported in central Florida. In St. Louis labor markets are ""very tight"" and employment for Research and Development personnel is picking up. No general labor shortage appears to exist, however. Minneapolis, for example, reports no shortage of skilled labor. Boston reports both labor shortages and pockets of high unemployment. Manufacturing jobs in Philadelphia aren't presently increasing. Cutbacks in the Federal budget are mentioned as a possible cause of unemployment pockets in some locales. Most districts discussing inventories (New York, Cleveland, Philadelphia, Richmond) report that spending from this sector is not bullish. New York mentions ""no discernible change in inventory."" Cleveland talks about inventory investment leveling off at a lower level. Plant and equipment spending is on the rise. The steel industry and consumer durables manufacturers in Cleveland's district are expected to expand their facilities. Chicago reports that an informal survey there revealed that manufacturers in the following fields are operating near full capacity: paper, petroleum, refining, machine tools, appliances, furniture, color television, trucks, recreational vehicles, electric motors, construction machinery, flat rolled steel, foundries, tool and die shops, lumber, gypsum board, insulating material, fertilizer and certain chemicals. Many firms in Philadelphia's monthly survey are currently reporting plans for increased plant and equipment outlays. Residential construction is expected to rise or at least continue unabated in most districts. Minneapolis conducted a telephone survey of HUD officials and found that ""the freeze on subsidized housing should not effect district homebuilding in 1973, but could dampen residential construction in 1974 and 1975."" However, Atlanta and Dallas do refer to diminishing rates of housing starts. San Francisco expects that its high level of construction may turn down. The reports on non-residential construction are mostly bullish. The outlook for retail sales is generally good, although some districts do report that sales are still recovering from a lull that followed holiday buying. San Francisco's sales expectations are optimistic and they point out that tax refunds should boost consumers' spending this spring. Inflationary expectations are rising on a broad front. Chicago reports that the oil companies there are not entering into their usual one or two-year contracts with oil truckers and other large users because of expected price rises. Philadelphia reports that the respondents to its survey report significant increases in their expectations about prices for the second month in a row. Minneapolis reports that some labor unions there plan to disregard the 5.5% wage guideline. New York reports that a number of its respondents are so concerned about inflation they think that price controls are probably necessary. Most bankers across the nation are experiencing rising loan demand from businessmen and consumers. Applications for mortgages also show few signs of diminishing. Some Boston bankers are being more restrictive in granting lines of credit. Time and savings deposits are providing a small amount of new funds in most of the cases reported. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",851 -beige_book_pure_text_pre2000,1973,"This month's District Red Book reports, on balance, describes the current and prospective pace of business activity as very strong, in some cases reaching boom proportions. Consumer and business investment spending showed impressive strength, and construction remained at a high level. Employment was rising. On the negative side, evidence of increasing strains on productive capacity was emerging, with widespread lengthening delivery schedules and growing shortages of labor as well as materials. Prices were rising and serious doubts were frequently expressed regarding the probable effectiveness of Phase Three in controlling inflation. Countrywide, little concern was expressed over recent international financial developments. All Banks reported continued advances in economic activity. The assessments ranged from ""boom"", ""near boom"", and ""most vigorous in many years"" (Kansas, Cleveland and Chicago), to a somewhat more restrained expectation of continued expansion at least until mid-1973 (San Francisco and Dallas). Reports of strength in both consumer spending and in business outlays for plant and equipment were widespread. Atlanta reported that many retailers are expecting a banner year. San Francisco characterized consumer spending as generally ""vigorous"", especially for automobiles and durables, and a number of major retailers in the Richmond District reported sales to be considerably higher than year ago levels. Similar reports emanated from most other Banks. Plant and equipment outlays were reported as especially strong (San Francisco), brisk (Atlanta), and continuing at a high level (Philadelphia). A number of Richmond District manufacturers indicated current plant and equipment capacity to be at lower than desired levels. Further evidence of strong capital spending was provided by a number of reports of large order inflows in the capital goods industry, including among others, the Boston, Cleveland, Chicago and St. Louis Districts. A number of Banks also reported a high level of commercial construction, in some instances (Atlanta) reaching boom proportions. On the darker side, the brisk pace of economic activity has led to mounting strains on productive capacity. Most Banks reported rising backlogs of orders—in some cases to record or near record levels— and lengthening of delivery times. Similarly, there were frequent reports of actual and anticipated shortages of a wide range of basic raw materials, including steel, chemicals and construction materials (notably lumber)—and of semi-finished and finished products as well. The employment picture has tightened further, and shortages of skilled and semi-skilled labor were reported by a number of Districts. Against this background, concern over the prospects of a heightening of inflationary pressures was widely reported to be on the rise. For example, the Philadelphia report states that inflationary expectations are high and rising, and some respondents in the St. Louis and New York Districts deemed inflation to now be the chief current economic problem. Similar expressions of concern appear in most other reports. Indeed, rising prices are pointed to by well over half of the Banks. In this context, considerable doubt was expressed about the effectiveness of Phase Three in controlling inflation, particularly on the wage side. Dallas reports that the introduction of Phase Three had caused a number of its respondents to alter their expectations regarding prices, which they now foresee rising much faster than previously thought likely. Turning to the credit scene, most Districts reported a strong demand for bank loans, especially consumer loans. Several Districts reported a slowing down in the rate of deposits, and growing banker concern over disintermediation was mentioned by several Districts, including Philadelphia, Dallas, Kansas and Boston. In general, little concern was expressed over the domestic impact of the recent international financial disturbances. Respondents in the San Francisco and New York Districts felt that the recent devaluation of the dollar should help stimulate exports. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",800 -beige_book_pure_text_pre2000,1973,"This month's district Red Book reports indicate that the current vigorous expansion is increasingly straining capacity. Raw material shortages, lengthening delivery times and difficulties in finding skilled labor are emerging. Inflation is again the major economic concern with recent price increases rekindling inflationary fears. All districts reported continuing gains in economic activity, with most Banks describing business conditions in terms like ""robust"" (Atlanta), ""expanding at a rapid pace"" (Cleveland and Dallas), and ""strong"" (Minneapolis). The labor picture, however, varies sharply among districts. Dallas reports the unemployment rate dropping to 3.6 percent, while the First District is still experiencing unemployment rates above 6 percent. Philadelphia reports modest gains in employment, while Chicago, Cleveland, Dallas, Atlanta, and St. Louis have tight labor markets with significant skilled labor shortages. Growing raw material shortages and lengthening delivery times were also mentioned by most Banks. Shortages of petroleum products, wood products and nonferrous metals were cited by New York, while gasoline rationing was noted in parts of the Atlanta and Dallas districts. The Dallas Bank reports that oil companies believe that rationing is a ""definite possibility"" and Chicago reports that fuel shortages in the Midwest are the ""worst in the world"" with oil firms refusing new customers and placing ceilings on sales. The concern expressed by a New York director that ""widespread raw material shortages—rather than plant capacity—seemed likely to lead to production bottlenecks over the coming months"" appeared evident in many Bank reports (Boston, Kansas City, Cleveland, St. Louis, Chicago, and Atlanta). High levels of construction activity were described by several Banks. Residential construction is described as strong (Atlanta, Chicago, St. Louis, Kansas City, and San Francisco) despite rapid price increases (Kansas City and Atlanta) and recent increases in mortgage rates (Kansas City, Cleveland, and Chicago). Commercial construction is reported as heavy by Atlanta, but ""spotty"" by St. Louis, and Dallas notes a recent decline in contract awards. Capital spending by business is a major source of strength. New plant construction and expansions are reported (Atlanta, St. Louis). Boston reports that the machine tool industry is experiencing rapidly rising orders and backlogs double those of a year ago. Chicago and Cleveland report that steel mills are operating at full capacity and that ""near-boom conditions"" exist in manufacturing in their districts. Chicago reports that one large steel producer has started rationing, because orders exceed capacity. Most Banks reported mounting concern about inflationary pressures and many district reports noted dissatisfactions with Phase 3 (Boston, New York, San Francisco). The feeling that Phase 3 has triggered ""a new wave of inflationary expectations"" (New York) and that inflation was again the major economic problem was widespread. Philadelphia reports that two-thirds of surveyed firms are currently encountering rising costs for raw materials and over half are charging higher prices for their goods. Boston notes that skyrocketing price increases for materials appear to be coming from medium-sized firms which are not being carefully scrutinized under Phase 3 rules. District reports on agriculture do not indicate any immediate alleviation in the supply-demand imbalance. Heavy rains are reported as delaying plantings (Kansas City and St. Louis) and hampering the movement of livestock to market (Kansas City), while transport delays have held up grain shipments (Chicago). Dallas, however, reports favorable conditions in the Southwest and the shifting of acreage into crops in short supply. Cleveland, Chicago, and Kansas City report that farmers responded to the meat boycott by withholding supplies, thus keeping up prices, but that this may lead to heavy marketings in the coming weeks. Bank loan demand was described as very high (San Francisco, Chicago, Richmond, St. Louis, Kansas City, Boston). Reactions to the proposed dual prime rate were mixed, but those commenting saw administrative complications. San Francisco notes concern that the two-tier system will be ""the first step toward a complex system of selective credit controls,"" while Kansas City and Minneapolis report concern that the community's size or whether it is a national or regional borrower be taken into account in defining large and small businesses. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",922 -beige_book_pure_text_pre2000,1973,"In May, as in April, the 12 Redbook reports paint a picture of an overheated economy that retains strong upward momentum. Concern over inflation and the impact that increases in the cost of living will have on union negotiations is reported by several banks. Shortages of materials and manpower are widespread and are growing worse. Agricultural areas in the Midwest and South have been hard hit by heavy rains and floods. Capital expenditure programs are gathering strength in all districts. Some banks reported views of respondents who believe that real GNP will rise at a slower race in the second half because of declines in residential construction and in purchases of consumer durables. The business loan increase has slackened in major centers, but credit growth, overall, continues at a rapid pace. Most banks found capital expenditures gathering strength. A group of Cleveland economists expects gains in capital outlays to continue in 1974, with the year as a whole up 10 percent from 1973. San Francisco found commercial aircraft orders up sharply. Atlanta listed major new projects in a variety of fields. Philadelphia could find no firm that was reducing capital outlays. Most banks commented on growing stringency in local labor markets. Only Boston was worried about continued high rates of unemployment. In the Chicago district, employment standards have been lowered and training programs have been reactivated. Shortages of materials and components were emphasized by Boston, Chicago, Richmond, New York, and Minneapolis. Tight supplies of oil products, steel, nonferrous metals, electricity, lumber, and components and shortages of freight cars were holding down increases in output. Cleveland, Richmond, and St. Louis reported that manufacturers' inventories of finished goods were being reduced to meet customer demands. Consumer purchases remain at very high levels everywhere, but a number of businessmen in the New York and Cleveland districts believed that consumers were buying in advance to beat price increases. Sales of autos and appliances, at least, were thought to be at unsustainable levels. Gasoline shortages were emphasized by Atlanta, Chicago, and Minneapolis. Dallas reports output of crude oil to be declining despite the elimination of controls. Persian oil has been brought to the Texas area for the first time. Most banks appear to accept the view that residential construction will decline significantly in the second half. But a number of banks, including Minneapolis, New York, and Atlanta, found that the residential sector remains very strong currently. The agricultural situation probably has never before received as much space in the Redbook reports. Heavy rains have slowed plantings in the Kansas City, St. Louis, Chicago, Dallas, and Atlanta districts. (San Francisco reports a drought in the Northwest!) Plantings of corn, soybeans, cotton, rice, and sugarcane all are behind schedule. In addition, beef supplies have been held down by losses of cattle, poor gains in weight, and the recent order to stop use of the DES hormone drug that stimulates growth. But farmers are generally optimistic about income prospects. Purchases of farm equipment are at very high levels, and farmland values in the Corn Belt have increased by a record amount in the past year. Some banks reported slower growth in business loans, but loan growth, overall, continues at a rapid pace. Upward pressures on short- term interest rates continue. Funds for farm, consumer, and residential mortgage loans remain in good supply. One Boston professor expects continued strength in activity because of rising capital expenditures, while another expects slower growth because of reduced consumer demands. Both professors think the situation calls for an easier monetary policy. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",777 -beige_book_pure_text_pre2000,1973,"Reports by the Reserve Banks indicate that the economy has continued to expand vigorously in recent weeks. However, the rate of expansion has apparently slowed in the residential construction industry, and a number of Banks reported expectations of a more moderate rate of expansion in the overall economy in the second half of the year. Retail sales have generally continued strongly upward. The most common report was that sales continue to rise at about the same rate as in recent months. However, some softening in retail trade was detected in the Fourth District, especially in appliance sales, and a Minneapolis Director associated with the retail industry reported that a slowdown in consumer spending may be occurring. There is no letup in manufacturing expansion. Most Banks which reported on this topic found the uptrend noticeable. Cleveland and St. Louis indicate that factories are operating at or near capacity; the former, however, found a modest decline in the proportion of firms reporting new orders in May. Dallas, Minneapolis, Philadelphia, and Richmond reported further gains in manufacturing activity. Atlanta reported that employees were working overtime in lumber, machinery, and metal products. Chicago reported that the uptrend of manufacturers' orders may be slowing because of reluctance to take new orders many months ahead at stated prices. Shortages and rationing continue to be major complaints in many product lines. Seven of the Reserve Banks reported either raw materials or manufactured products of some type in short supply. Items reported in short supply include: labor, gasoline, natural gas, paper, paperboard, transportation facilities, cement, fertilizer and other agricultural supplies, and electric power. The shortages are apparently leading to a capital spending ""boom."" The impending plant expansions in the Sixth District include a wide range of the major industries of the nation. Cleveland respondents representing steel and other industries reported that capital spending to expand capacity is underway and that no plans exist for cutting back in 1974 as long as new orders and profits warrant the expenditures. A high level of capital investment in plant and equipment was indicated by Dallas and San Francisco, and plant capacity is reported to be inadequate to meet expected future sales in a number of other Districts. The reports indicate that inflation is still a major concern of businessmen, and there is little optimism that it will come to an early end. Chicago reported an acceleration in the number of announced price increases in June. Dallas Directors expect wage rates in their companies to rise at a 7 percent rate in the second half of the year. Philadelphia respondents report higher prices for raw materials, and over half of the area's executives expect a worsening of the situation. New York Directors expect further price increases over the coming months, but at a more moderate rate. New York expressed the view that the increased food prices may have a strong impact on union wage demands. Residential construction has apparently turned down in most of the Districts. Chicago reported that a decline in residential construction is clearly underway. Other Districts reporting either a slowdown or weakness in such activity include: Atlanta, Cleveland, Dallas and San Francisco. Only Richmond reported further increases in home building. The trend in commercial construction is mixed. Employment has leveled off in most of the Districts and unemployment has inched up, but most of the Banks still report a ""tight"" labor market and labor shortages, especially of skilled labor. The nation's agricultural situation has vastly improved in recent weeks. After an extremely difficult planting season because of wet weather and floods, prospects are now good for a large production of critical food and feed crops. Some shortages in seed and fertilizer still exist in limited areas and some land along the Mississippi River may not dry in time to plant cotton, the intended crop, which will be critical to individual cotton farmers. Farm production costs are high and rising, but overall prospects are for high farm incomes. If average growing conditions are realized, record levels of production are likely for a number of major crops and record prices may be received for them. In the meantime, however, as reported by Chicago and Kansas City, prices of meat animals may be pressing against the ceilings, and rising feed costs are reducing profit levels from feeding. The ceilings could thus result in lower levels of production. Most Districts reported a strong loan demand, slower deposit growth, and generally higher interest rates than heretofore. Regular business customers are apparently having no trouble obtaining credit at the higher rates, but Chicago reports that country elevators are having increased financing difficulties as a result of transportation problems and sizable margin calls on hedged grain. In response to the Board's request for information on the impact of the Treasury's tax proposals for eliminating real estate tax shelters, the replies varied from little or no impact on construction activity to a definite dampening effect. Boston, after a study in some depth, concluded that subsidized housing would be severely hurt, and that while profits in the private market would be reduced, most ""worthwhile"" projects would be built. A decline in construction would be anticipated in the Kansas City and Minneapolis Districts. Kansas City reported that the healthy business situation in the Tenth District would be dealt a severe blow if investment funds flowing into cattle and construction were suddenly cut back by tax reform. The respondents indicate that the tax would not have a significant impact on construction in the Chicago, New York, Richmond, and St. Louis Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1077 -beige_book_pure_text_pre2000,1973,"Economic activity remains strong across the nation. Consumer spending is consistently described as continuing to grow in each District. A high level of activity is also reported in most manufacturing areas, as order backlogs keep production at full capacity in most industries. In spite of some signs of weakness, construction is maintaining current volume and in some Districts, it is expanding. The principal economic problem concerns stabilization policy, and in particular, the price freeze. The price freeze is causing major dislocations in agricultural processing. At the moment, the effects in other sectors such as manufacturing and retailing are limited, yet some inequities are appearing which would become serious if the freeze should continue beyond 60 days. Credit conditions remain tight as banks face very strong loan demand. Consumer spending is showing no sign of slowing. In part this is attributed to expectations of higher prices. Heavy purchases of durables are reported by retailers in the Minneapolis and San Francisco Districts. Automobile dealers are also experiencing excellent sales, particularly in the Dallas and Atlanta Districts. In Minneapolis, Richmond and Cleveland, a shift is noted toward smaller cars, and this is thought to be a reaction to prospective gasoline shortages. Manufacturing activity is pressing against capacity in most Districts, and order backlogs show no sign of shortening. Shortages of many materials are developing, and according to the Cleveland and St. Louis Banks, they are beginning to affect production adversely. Chicago reports shortages in steel, castings, chemicals, and many other products; furthermore, delivery dependability and product quality have deteriorated. Farm equipment and parts are also in short supply in several Districts. Construction, despite some expectations of slowing later this year, is at high levels in most Districts. Residential construction contracts increased in the Dallas and Richmond Districts, but Atlanta and San Francisco report forecasts of a construction slowdown later this year. Gasoline shortages are affecting tourism in such Districts as Kansas City and Minneapolis. In other Districts, shortages are not as severe, but the problem is causing some uncertainty and it is reducing demand for such products as recreational vehicles. Dallas reports its District refineries are turning out record amounts of gasoline; both Dallas and Chicago indicate, although there may be localized distribution problems, the shortage is not as severe as expected. Despite a high level of activity, more concern is reported about prospective economic conditions in Philadelphia, Cleveland, and Atlanta. In contrast, the Chicago Bank describes local businessmen and bankers as seeing no sign of any downward trend. In other areas, the evidence is mixed; industrial equipment lines are at capacity in the Boston District, but orders for consumer goods are slackening. Inventories are variously reported unchanged in New York, lower in Richmond, and up in Philadelphia. In the St. Louis District, many industries are expanding production facilities, but in the Philadelphia area more firms are now expecting to decrease their capital expenditures. Directors in several Districts are expressing concern over the direction of economic policy. Most feel that more emphasis should be given to fiscal policy. Reports for all Districts indicate various degrees of hostility to the present price freeze, ranging from belief that it is ill conceived to the opinion that it is disastrous. The common conclusion is that the freeze cannot be continued beyond the planned 60 days without serious problems developing. The most serious consequences are now felt in agriculture and associated food-processing industries. The price freeze is cutting into livestock and poultry production. Feedlot operators and poultry producers are being squeezed by higher feed grain prices and fixed wholesale prices which do not cover costs. Food and grain processors in the Chicago, Richmond, Kansas City and San Francisco Districts have cut back or closed operations. Egg and milk production is expected to fall. Both St. Louis and Dallas forecast reduced beef supplies this fall as a result of the freeze. In nonagricultural industry, the price freeze is beginning to cause dislocations. New York, Dallas and Chicago describe shortages caused by imports being hampered by low domestic prices. Some suppliers, according to the New York Bank, are exporting to obtain higher external prices and thus not filling domestic orders. Chicago lists a large number of devices that are beginning to be used by suppliers to evade price ceilings. Banks in all Districts report strong loan demand. Real estate loans, in particular, are being restricted or tied to higher down payments. Kansas City banks report that the recent increases in prime rate are not discouraging business borrowing. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",971 -beige_book_pure_text_pre2000,1973,"The overall impression conveyed by the District Banks' August Red Book reports is that business activity continues at a high level, but with some scattered indications of a tapering off in the rate of growth. Most Banks report a sustained high level of consumer spending, in part related to expectations of further price increases, but respondents in several Districts looked for a cooling off of consumer demand over the coming months. Business plant and equipment outlays remain at a high level, largely undeterred by the high cost of credit, and the demand for agricultural machinery is recording a sharp rise. However, shortages of raw materials, energy, and trained labor were frequently cited as possibly inhibiting further expansion in capital goods output and production generally. Moreover, private residential construction is generally reported on the decline, in good part because of the high cost and unavailability of mortgage funds, in turn traceable to the net outflow of deposits at thrift institutions. Commercial and nonbuilding construction has been faring better, although some reports indicate a tapering off in this sector. Against this background, there appears to have been little net change in the nationwide industrial production and employment situation. Crops are expected to be at, or near, record levels in most agricultural areas. Most Districts in varying degree reported dissatisfaction on the part of business over Phase IV, and controls generally. Continued strong loan demand was noted in most reports. San Francisco reports that consumer spending is clearly the leading sector in all areas of the District, in part reflecting anticipations of further price increases—a factor also mentioned by Minneapolis. St. Louis reports that consumer outlays are continuing to trend upward, and Chicago notes that sales of major appliances have surged since mid-June. Major retailers in the Richmond District, however, have found that while sales have continued to improve, the rate of growth has tapered off during the past month. A large nationwide retail firm headquartered in the Cleveland District, moreover, looks for an appreciable decline in the rate of expansion in consumer spending over the year ahead. Retailers in Minnesota, on the other hand, are reported to expect no slowdown in their sales growth during the remainder of 1973. The reports generally also point to a sustained high level of business plant and equipment outlays. Philadelphia thus reports that almost 45 percent of the manufacturers surveyed planned to increase capital investment in the six months ahead, while Cleveland and Boston report receipt by firms in their Districts of large capital goods orders. Chicago reports that business borrowers have shown little reluctance to borrow at the currently high level of interest rates and that a number of industries are moving vigorously to expand basic capacity. Atlanta lists a sizable number of large new plant announcements. A similar picture emerges from most other reports. However, a number of Banks—including Chicago, Cleveland, and New York—cite the growing list of shortages of raw materials and trained personnel as adversely affecting both capital goods and consumer products output. Regarding construction activity, most of the Banks report an actual or prospective decline in private residential construction, reflecting the net outflow of funds from thrift institutions and the accompanying dearth and high cost of mortgage funds. Commercial and nonbuilding construction, however, with scattered exceptions, was generally reported to be holding up well. A bright picture emerged from reports from agricultural areas. Kansas City thus expects a record wheat crop while Atlanta reports a record citrus fruit crop. Dallas, San Francisco, St. Louis and Richmond all anticipate above average or good to excellent agricultural production. Much criticism, however, was expressed over the continued ""freeze"" on beef prices. More generally, a great deal of skepticism regarding the effectiveness of Phase IV in coping with inflation, and hostility on the part of businessmen toward the controls, was expressed by respondents in many Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",830 -beige_book_pure_text_pre2000,1973,"Reports of sustained current strength continue to coexist with expectations of a future slowdown. Consumer spending and the demand for consumer loans have maintained their recent pace of growth. Business investment and foreign demand are buoyant and are expected to remain strong into the future. Only residential construction has weakened, though business and public construction has partly offset housing declines. Shortages of material, skilled labor, and mortgage funds are widespread. The unavailability of some materials is traced to the economic controls program. Small changes in employment have occurred. With a few exceptions, business loan demand has strengthened. With thrift institutions experiencing deposit losses, some loans have been made to nonbank intermediaries. Despite damages due to Delia and drought, agricultural output, prices, and income are reported to be high. Greater stability in food prices is expected in the future. With the exception of large automobiles, consumer demand has been brisk in most Districts. Minneapolis and Atlanta report that controls have not produced the feared curtailment of planned business investment, but St. Louis and Chicago suggest controls may be hampering capacity expansion in sectors such as the paper industry. San Francisco and Kansas City report inventories generally below desired levels but reports from the Richmond, Philadelphia, and Cleveland Banks do not expect major inventory buildups in the future. The Cleveland and Chicago Districts have experienced intense foreign demand for steel and many ""bargain"" U. S. materials. Lack of mortgage funds has reduced residential construction activity in most Districts. Shortages are reported by the New York, Atlanta, Chicago, St. Louis and Kansas City Banks. In the Kansas City District, lead times are considerably above normal, and lengthening. In St. Louis, manufacturing is at or near its capacity levels. Chicago, which has been experiencing strong demand for a wide variety of goods, indicates that price controls have restricted the supply of petroleum and paper products. Atlanta reports that material shortages have led to plant closings. New York has experienced shortages of skilled labor. In Chicago and Atlanta, the labor shortage includes unskilled labor as well. Nevertheless, most Districts reported only minor gains in employment. A near-term slowdown is expected by the directors and businessmen in the Boston, New York, Philadelphia, Cleveland, Richmond, and Minneapolis Districts. A Boston director notes a convergence of opinions on the economic outlook very close to the consensus view of the business economists in the Fourth District--a ""growth"" but not ""classical"" recession. New orders have started to level off in the Philadelphia and Richmond Districts, though they continue to rise in other areas. According to the reports from New York, Cleveland, and Minneapolis, the tapering will center in the consumer spending area. The outlook for agricultural incomes and crops, particularly soybeans, remains good. Drought in the West and tropical storm Delia in the Gulf have destroyed some of the wheat, rice, cotton, and soybean crops. High poultry prices have stimulated supply in the Southeast. The Dallas Bank notes that the number of cattle and calves on feed in the Southwest was down from July but well above last year. Cattle placements and slaughter were, however, down from last month and last year. The Kansas City Bank indicates that ""on balance, food prices should tend to stabilize in coming months, but hoped-for declines of a significant magnitude are still sometime off."" Business loan demand was strong in most districts. Both Dallas and Kansas City, however, report some decreases. The pace of disintermediation is widely reported to have accelerated in August. Except in St. Louis, where most prospective home purchasers can obtain mortgage credit, mortgage availability and terms have become increasingly stringent. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",810 -beige_book_pure_text_pre2000,1973,"The Redbook reports describe a very strong economy with widespread shortages of manpower and materials and substantial upward pressures on prices. Disintermediation at S&Ls, usury rates, and generally tight money have drastically reduced the availability of mortgage funds, with the result that residential building activity is shrinking rapidly throughout the nation. Virtually all other major sectors, including nonresidential construction, remain vigorous with rising backlogs and stretching lead times on deliveries. Inventories of goods, especially raw materials, are lower than desired in most sectors. A wide range of materials and components are in critically short supply. As a result, expansion of output has been dampened and, in some cases, output has been curtailed. Investments in plant and equipment in virtually all industries are rising, and this trend is expected to continue well into 1974. Prospects for crops are generally very favorable. Reports on retail trade were mixed and inconclusive. Reports on credit demands also were mixed, but it is apparent that lenders have no difficulty finding profitable outlets for available funds. Selected highlights of reports from each of the districts follows. Comments on the universally bleak residential construction picture are omitted. Boston: Sales and orders of capital goods continue to rise at a rapid pace, but orders for consumer goods are ""a little slower."" Unemployment remains relatively high. Domestic capital goods orders are particularly vigorous for chemical processing equipment, machine tools, and aerospace. Foreign orders for capital goods are large. Views of four academic correspondents are presented. New York: Demand for materials and goods remains strong, but slower growth in overall activity is expected. Phase IV is termed a ""disaster."" Higher prices abroad are drawing away U. S. resources. Labor's wage demands are viewed as under ""restraint."" Scarcities have hampered attempts to build inventories of raw materials. Philadelphia: Plant and equipment investment plans have been raised. Employment is rising slowly and workweeks are lengthening. Delivery lead times have stretched out. Cleveland: Shortages are ""constraining"" growth in output, and are judged to be the main cause of the recent slowing in the rise in general activity. Moreover, shortages have become more severe in recent weeks. Glass production lines have been shut down for lack of soda ash and increased supplies are a year or more away. Shortages of plastic materials are cutting production of various products. Foreign prices for plastic materials and for steel are well above U.S. prices. Most steel order books have been closed for the year. Inventories are low generally. Some retailers report slower sales. Labor turnover is high. Some firms are hoarding fuel. Richmond: Business activity continues to expand despite shortages of labor and materials. Paper, synthetic fibers, and chemicals are especially strong. Electrical components are in short supply. Phase IV is criticized. Retail sales remain strong. Nonresidential construction has been maintained. Volvo will locate a plant in Virginia. Atlanta: Only residential construction is down. Shortages have delayed construction projects. Commercial construction plans announced for the Atlanta area ""dazzle the imagination."" Industrial projects are being pushed in various parts of the South, and Japanese and European manufacturers are evaluating sites for new plants in the region. Shipyards are being expanded to handle the boom in tankers and bulk cargo carriers. Labor shortages are limiting phosphate mining. Shortages of shrimp and oysters are reported. Chicago: Supplies of a broad range of basic materials are very tight with no improvement expected in the foreseeable future. Motor vehicle output has been limited by strikes and availability of components. Labor supplies are inadequate, both for skilled and trainable workers. Nonresidential construction has been delayed by shortages of materials. Shortages of steel, nonferrous metals, paper, fuels, chemicals, and plastics are holding down production of finished goods. New labor contracts may be more generous than suggested by announced increases in basic wages. Record crops of corn and soybeans are anticipated. St. Louis: Widespread shortages of raw materials are hampering output. Plants producing garments, appliances, and hardware are at capacity. Many firms report labor shortages, and unemployment is low. Crop conditions are ""good to excellent."" Minneapolis: Retail sales have ""not yet let up"" and further gains are expected. The outlook is for record crops. Shortages of materials, e.g., steel and plastics, are holding down output. The fertilizer shortage is ""critical."" Shortages of general laborers as well as skilled workers are reported, and labor turnover has increased. Kansas City: Recent floods have damaged property and delayed planting of winter wheat, but the overall impact probably will be ""rather insignificant."" Propane supplies needed to dry crops may not be adequate. Auto sales are very good, especially sales of compacts. Department store sales are strong. Lead times on consumer goods orders are long, but retail inventories are ""as budgeted."" Dallas: Employment reached a new high in August. Department store sales increased ""rapidly"" in September. The CLC's ""two-tier"" system has allowed prices of ""new"" crude to rise substantially above prices of ""old"" crude. Imported crude is high-priced. Fertilizer supplies are limited. Crops are generally ""good to excellent"" except for a large decline in rice yields. San Francisco: Housing is the only sector showing a decline. Both business and consumer spending remain strong. Investments by electronics, fertilizer, and chemicals firms are at high levels. Boeing has received additional orders. Farmers are spending freely. Power shortages have caused cutbacks in usage in Oregon. The housing decline has reduced demand for lumber and cement. Drought cut wheat output in the Northwest. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1235 -beige_book_pure_text_pre2000,1973,"While the reports of the Federal Reserve Banks indicate that the pace of economic activity may have slowed somewhat in recent weeks, the current situation is highlighted by growing demand pressures, material shortages, problems of inadequate capacity, and increased rationing of raw and semi-finished products by the private sector. In the agricultural sector, large crops and increased food supplies are in prospect. The energy crisis is a topic of prime concern to businessmen throughout the country. Several Reserve Banks report business slowdowns in their Districts resulting from fuel shortages, and respondents in many Districts fear that layoffs of workers will worsen. Dallas reports that oil production in Texas is falling and that present stocks of oil in that state are only sufficient to last through the first severe cold spell. Diesel fuel shortages are being felt in some areas. Atlanta reports that a recent cutback in diesel fuel allotments will reduce coal deliveries to TVA, thus contributing to a power shortage. Cleveland reports that the petrochemical and rubber industries are being adversely affected by lack of oil and that steel production may be curtailed in the months ahead. Chicago reports that industrial users of natural gas and propane may be cut off, but major electric utilities in the Seventh District appear to be in a relatively good position because of the use of coal and nuclear energy. In addition to the concern about energy, shortages of other materials are widely reported. New York reports shortages in zinc and copper which approach ""Korean War proportions"". Labor, paper, steel products, and various other raw materials are reported to be in short supply in many areas. An increasing number of firms in the St. Louis District report rationing of a wide variety of raw materials by their suppliers, and Cleveland indicates that a three to six-month delivery period is common for many products. Manufacturing activity continues generally strong, but some Districts report a slowing in the rate of increase. Chicago indicates that lack of supplies and manpower, rather than lack of demand, is responsible for the slowing. Capital goods industries are especially strong, as investment spending continues at a high level. Reports from New York and St. Louis suggest that much of the investment may be for mandatory pollution control equipment rather than for projects which will increase productive capacity, Many investment projects in the Atlanta District are being delayed, largely as a result of shortages. Continued high capital spending in agriculture is projected in the New York District, and Chicago reports that farm equipment firms are ""swamped"" by orders. Retail sales generally continue at high levels, although some of the Federal Reserve Banks indicate a slowing in consumer demand. This was noted particularly for automobiles and consumer durables. Employment generally continues at high levels, with many Districts reporting labor shortages. For example, Dallas reports a sharp rise in employment in recent months, led by increases in construction and government employment; unemployment in the Dallas District remains around 4 percent. By contrast, Boston describes the New England employment picture as ""bleak"", with September unemployment about 6-1/2 percent in the region and 7-1/2 percent in Massachusetts. The agricultural situation is good with high crop yields and large farm incomes in prospect. Many Districts report that crop harvesting is progressing rapidly. Livestock production in the Dallas District is slightly higher than last year, and the Florida citrus crop is the second largest on record. Chicago reports that, in the last year, value of farmland has experienced the largest increase in 20 years. Construction activity is down in many areas, but commercial construction has held up better than residential. A number of the Federal Reserve Banks reported that construction is being retarded by material shortages, late deliveries and uncertainties stemming from rapid price changes. Interest rates have in some cases declined in recent weeks, reflecting a decrease in bank loan demand, especially for commercial loans. Both San Francisco and St. Louis, for example, reported that the lower business loan demand may reflect the substitution of commercial paper for bank loans. Some Reserve Banks report increased availability of mortgage funds, but the movement in mortgage rates is apparently mixed. Usury laws in some states have tended to limit the supply of mortgage funds. Chicago reports that the 8 percent usury law in Illinois continues to limit new loans. New York reports an increase in the supply of mortgage funds resulting from the raising of the state usury ceiling from 8 to 8-1/2 percent. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",954 -beige_book_pure_text_pre2000,1973,"Energy shortages are beginning to cause considerable concern, but as yet the pace of economic activity continues to be strong. Retailers in most Districts anticipate good Christmas sales, and agricultural earnings continue to climb. Capital expenditures are another source of strength, and although considerable variation is reported for business investment plans for 1974, the prospects are that capital spending will remain high. Weaknesses are most apparent in residential housing and automobile sales. The impact of petroleum shortages varies considerably from region to region, and from industry to industry. The prospective gasoline shortages are one cause of reduced demand for regular-size domestic automobiles which has resulted in layoffs in several Districts (Atlanta, Chicago, Kansas City and San Francisco). Sales of compact cars are excellent, and so, interestingly enough, are sales of luxury cars. Diesel fuel, in particular, appears to be in short supply and black markets for this fuel are reported to be developing in some areas. Other industries affected include petrochemical-based plastics, manufacturers of recreational vehicles, and plywood mills. Airlines are laying off employees in several Districts, and tourism-related manufacturers are being hurt according to reports from Minneapolis, Kansas City and San Francisco. Atlanta, in contrast, notes optimism about Florida's tourist business. Shortages of natural gas are causing problems for the manufacturers who are forced to cut production or shift to high-priced fuels such as propane. Electrical shortages are not prevalent. New England, whose utilities rely relatively heavily on residual oil, appears to face the most serious problems and may have power blackouts this winter. In other areas, conditions have improved. The Pacific Northwest's power shortage has been relieved by heavy rainfall in November. The view expressed in most Districts is that the uncertainty caused by the energy shortages is disrupting transportation and causing shortages. This is likely to slow economic activity in 1974. However, there is considerable variation in opinions as to the net impact. Some respondents do not think that the shortages will be so severe as to cut into expected capital expenditures or to cause serious layoffs, but others think a serious recession is likely. Directors in the Boston District seem to be most pessimistic in this regard. As to the proper government response, opinion is divided between those favoring rationing and those wishing to rely upon voluntary reductions. In the St. Louis District, there is less concern about energy shortages and more concern about inflation and the effects of government price controls as a factor causing materials shortages. Similar views are noted by Cleveland. Chicago, Philadelphia and New York Districts report little change in current investment plans. For example, Chicago describes capital goods manufacturers as being overwhelmed by orders, but St. Louis reports reductions in investment plans. Although there is some reluctance to project trends, there is considerable support for expecting continued heavy investment expenditures. Retail sales in most Districts are equal to or exceed last year's levels but retailers are more uncertain about 1974 and are more cautious about their spring orders. A survey by Richmond indicates 70 percent of its respondents expect a lower rate of economic activity. High agricultural income is stimulating the heavy expenditures by farmers. Dallas reports harvests and plantings equal to or exceeding last year's schedule for all crops. On the other hand, cattlemen are more uncertain about beef markets. Prices have declined and supplies of beef for slaughter are abundant. Residential construction is continuing to fall off and it is only being partially offset by commercial construction. Increases in flow of mortgage funds, reported in several Districts, may help but the prospect is for a continued decline. Dallas reports that oil drilling has responded strongly to the incentives of higher prices and is at the maximum level for the existing availability of crews and rigs. But production from Texas fields is expected to decline because these fields are past their peak in production capacity. In summary, despite local problems the economy is continuing to expand but uncertainty caused by worry about energy shortages may contribute to a revision of spending plans by businesses and consumers. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",867 -beige_book_pure_text_pre2000,1974,"Notwithstanding the pervasive concern over the energy situation, District reports on balance point to a sustained high level of industrial activity as strong demand-with the exception of some consumer goods-generally continues in evidence. Weak spots so far by and large have been concentrated in regular or large-sized auto sales, airlines and aircraft manufacturers, residential construction, and, to some extent, recreational business. Largely reflecting developments in these sectors, some softening in the employment picture appears in the offing, though current industrial production and manufacturers orders and backlogs remain at high levels. However, much concern was expressed over the obstacles to further growth presented by the wide variety of growing shortages of materials in addition to petroleum products. Moreover, many respondents felt that the abatement of inflationary pressures was not in the cards for the immediate future. Increasing doldrums in the residential construction industry were also noted in some Districts, primarily as a result of high mortgage rates and the high cost of new housing. Strong demand and high prices were expected to stimulate increased agricultural production in 1974, though such an increase might be inhibited by fuel and fertilizer shortages. District respondents generally continued to express serious concern over the potentially adverse effects of the anticipated energy shortage and the rise in oil prices. However, the main thrust of the ""energy crisis"" in terms of output and employment so far appears to have been concentrated on a relatively few, albeit significant, economic sectors, in particular, according to the District reports, the automobile and related industries, airlines and the aircraft industry, and in some areas tourism. The plastics and petrochemical industries have also suffered from shortages of raw materials. However, as noted by Boston, growing shortages of supplies other than petroleum products appear more critical at this time to current production, leading to accumulation at manufacturers of virtually completed products, ranging from aircraft to ovens, for want of a few parts. Indeed, concern over such shortages is mentioned in virtually all District reports. Thus, Chicago succinctly sums up the situation as one where so many different materials and components are in short supply that a list could be constructed almost at random, with shortages of castings, forgings, bearings, steel, nonferrous metals, plastics, all fuels, and paper probably being the most prominent. Cleveland also reports that purchasing agents in the Cleveland area find virtually everything they buy in short supply, with increasingly long delivery time, and that the steel industry continues to operate at full capacity despite some cutback in orders from the auto industry. Dallas reports a dearth of drilling rigs, pipes and other products involved in petroleum output, with little or no relief in sight over the next few years. Against this background, there were frequent reports of business efforts to stockpile, of ""double ordering"", and in some instances of budding black markets and of sharp price increases. Despite the uncertainties surrounding fuel and material supplies and the price situation generally, most District reports pointed to a continued strong business plant and equipment picture. Among others, business respondents in the Dallas, St. Louis, and New York Districts indicated they had no intention at this time of changing their current plans for increased capital outlays. Philadelphia reports that many manufacturers in that District expect to increase their capital expenditures in the coming months, and San Francisco notes that capital expenditures remain at a high level, as business continues to modernize or expand capacity to meet expanding demand. Cleveland points to strong new orders for machine tools, and to a high level of backlogs in that industry, while Chicago reports that producers of a wide variety of capital equipment indicate that the very strong demand for such equipment that had prevailed since early 1973 or late 1972 continues unabated. The consumer spending picture is somewhat more mixed, although with the exception of sales of autos-and, in some instances, of other durables-on balance still appears strong. In part, this strength may reflect anticipatory buying, which was mentioned by Cleveland and New York. A number of Districts, including Minneapolis, Chicago, San Francisco, and Richmond, report that retailers have generally enjoyed a high level of sales over the holiday season, in some cases exceeding expectations. Atlanta, however, notes that increased consumer cautiousness may have kept a ""good"" Christmas season from being a ""great"" one, while a mixed consumer spending picture emerges from Cleveland. A slowing down in department store sales of postponable items is mentioned by Philadelphia, while St. Louis also reports a slowdown in consumer purchases, reflecting in part a sharp drop in auto sales, and perhaps the unusually bad weather conditions in that area. Regarding the employment situation, a number of Districts, including San Francisco, Minneapolis, St. Louis, Chicago, Atlanta, and Richmond report some laying off in industries directly affected by the energy crisis—notably in the auto, airline, and aircraft industry-but otherwise in general see little evidence that this trend is becoming more widespread at this time. Manufacturers in the Kansas City District expect employment to hold up well in 1974, but some manufacturers in the Philadelphia District expect laying off workers by next summer. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1116 -beige_book_pure_text_pre2000,1974,"District reports describe a generally weakening economy, punctuated by booming conditions in agriculture and the capital goods industries. Shortages of materials are hampering production and leading to some hoarding of supplies. The impact of the truckers' strike in most Districts appears to have been mainly limited to a temporary disruption of livestock marketing and food processing operations. Economic conditions varied both among and within Districts. Only Richmond concluded that business activity remains ""strong."" Dallas noted a decline in industrial production led by falling refinery runs, while New York, Philadelphia and Atlanta reported their economies as weakening. Chicago described communities dependent on manufacturing of full-sized cars and recreational vehicles as ""economic disaster areas,"" and Atlanta called the motels around Disney World ""ghost towns."" Yet, Atlanta reported brisk announcements of new plants, and Chicago noted that equipment manufacturers are experiencing an ""unparalleled boom"" and that the steel industry was operating at capacity. The general feeling, as noted by the San, Francisco District, was that some sectors and regions continue to exhibit considerable strength, but the overall outlook was cautious. Retail sales in January were described as good and better than anticipated (Philadelphia, Dallas, Richmond and St. Louis), but retailers were reported as still maintaining their conservative sales forecasts for 1974. Only Atlanta reported some weakening in January sales. The truckers' strike may have led to some panic buying (St. Louis, Cleveland), but its major impact in most Districts appears to have been limited to a temporary disruption of livestock marketing and food processing operations (Richmond, Minneapolis, St. Louis and Kansas City). A survey of retail food chains by the Philadelphia Bank found most stores' inventories holding up well as retailers utilized alternate sources and rail transport. Only Cleveland reported that economic activity had been seriously affected, with major disruptions in shipments of steel and other products, leading to sharp increases in unemployment and declines in output. St. Louis also experienced some output losses and layoffs as a result of the strike in the steel and motor vehicle industries. Residential construction activity was described as weak by most Districts with the major factors being high building costs, confusion over the energy situation and high interest costs. A number of Districts, however, reported increased savings inflows. As a result, several Districts expected a pickup in activity in the second half of 1974 (Kansas City, New York, Dallas). The industrial sectors showing the greatest strength were machinery and equipment and basic materials. Capital goods, chemicals, paper and steel industries were described as operating at capacity levels with sizable order backlogs (St. Louis, Cleveland, Chicago, Boston). Chicago reported that equipment producers were experiencing an ""unparalleled boom."" Only Philadelphia and Minneapolis were aware of a ""softening"" of investment plans. Shortages of materials and semi-manufactured goods were of paramount concern, according to all the District reports. New York referred to the ""steady breakdown effect"" on the economy of the energy crisis and growing shortages of materials. Several Districts reported that attempts to stockpile materials were boosting loan demand (Kansas City, Chicago, Boston, St. Louis and Minneapolis). Directors in Boston expressed the belief that shortages have been created by price controls and that producers are shipping goods abroad or are diverting supplies into the most profitable channels. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",729 -beige_book_pure_text_pre2000,1974,"District reports continue to suggest that the cross-currents which have characterized the economic outlook in the recent past remained in evidence in early March. While assessments were mixed, the overall impression which emerged was that of a still generally robust economy, with some areas of weakness in business activity. Business demand for plant and equipment continues to show great strength, although output is being hampered by shortages, not only of energy, but of many raw materials and semi-finished products. Consumer demand seems to be holding up well, aside from the well-publicized weakness in large automobile sales, but production of consumer goods also is being hampered by materials shortages. On the other hand, residential construction remains depressed, and a number of Districts report some rise in unemployment. The demand for bank credit remains mixed. Regarding consumer spending, a decline in automobile sales, and in some instances a weakening of consumer demand for other durable goods, was mentioned by a number of Districts. On the whole, however, retail sales were reported strong by St. Louis and better than expected by New York. Sales were also reported strong in most parts of the Richmond District, although there were indications that business at suburban outlets was adversely affected by the gasoline shortage. Philadelphia reports that sales declined in February but that retailers are cautiously forecasting an improvement in March. Respondents in the Boston District reported production of consumer goods to be slack, partly reflecting reduced demand, but also because of materials shortages. Dallas reported generally strong department store sales, but some weakening at stores specializing in more expensive products, as well as sharply slower unit sales of the more expensive food items, notably meat, at retail food stores. Similarly, Kansas City attributes the recent sharp decline in livestock prices partly to sluggish consumer demand for meat. Several Districts, including Boston, Richmond, and Atlanta, report weaknesses in tourism and recreation related businesses, while Kansas City refers to generally poor power boat sales. In the building sector, residential construction is termed weak by Atlanta, severely depressed by Cleveland, and falling by San Francisco, while Chicago reports that commercial and public construction has been weaker than expected. House-builders in the Dallas District, however, anticipate a strong turnaround in residential construction by midyear, while several Districts, including Cleveland, Chicago, and San Francisco, characterize industrial construction as strong, reflecting businesses! efforts to expand capacity. Indeed, most Districts paint a strong capital investment picture. Among others, Boston notes that capital goods orders are very strong and backlogs high; 40 percent of the respondents to the Philadelphia survey of manufacturers expect to boost their capital outlays over the next six months. Chicago terms the demand for machinery as intense, while capital goods producers in the Cleveland area are more optimistic over the outlook for 1974 than they were a month ago. Good prospects for agriculture were also generally reported by most Districts in agricultural areas, dimmed somewhat, however, by potential shortages of fertilizers, farm equipment, and fuel. Minneapolis, however, notes that fertilizers may have been stockpiled, that many farmers have tended to overfertilize and if available fertilizer is used more efficiently, crop yields may not be affected. As in previous months, growing shortages of industrial items were also reported by most Districts. Among others, St. Louis mentions that many firms report ""frantic"" searches for raw material. Steel economists in the Cleveland District state that the demand for steel continues to exceed capacity. Chicago and Richmond report the shortage situation to be a major problem. In this context, respondents in the Minneapolis District felt that price and wage controls have contributed to bringing about existing shortages, and should be eliminated. Similar sentiments were expressed by New York respondents. Regarding bank credit developments, Kansas City and Richmond report a strong loan demand, but Philadelphia and St. Louis report a softening of demand while a mixed picture appears to characterize the situation in the Atlanta and San Francisco Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",865 -beige_book_pure_text_pre2000,1974,"The general impression conveyed by this month's Red Book is that the worst of the economic slowdown appears to be over, and that the economic outlook has improved. Directors throughout the System, along with other businessmen and bankers, are generally more optimistic (or less pessimistic) than a month or two ago. The improvement in attitudes is widely attributed to the lifting of the oil embargo. Moreover, indications are that business in the energy-affected sectors was not as bad as expected, or at least the declines have bottomed out in areas such as auto sales, tourism, and housing. Retail sales are showing signs of a pickup, while capital spending remains very strong. Severe shortages of materials and long delivery times continue to hamper operations in many industries. Residential construction is characterized as having stopped declining, but no solid upswing is yet in progress. Agricultural prospects are viewed as good in most areas, although shortages of certain production inputs are a problem. In addition, producers of meat animals and poultry are incurring severe losses as a result of recent price declines. Business loan demand has surged in recent weeks. In the consumer sector, there are signs that the most depressed areas, such as new cars, large used cars, and spending for tourism and recreation, are beginning to improve. Districts commenting on the auto market indicate that the decline has ended. Auto dealers are becoming more optimistic as sales of luxury-type and large-sized new and used cars show some pickup. Tourism and recreational spending, which had been dampened by the gasoline situation (and poor weather in some ski areas), is beginning to recover. Nonautomotive retail trade is generally described as having been soft during most of the first quarter. Pre-Easter sales, however, appear to be better than expected by retailers in some Districts. Minneapolis attributes good first quarter sales partly to the high level of farm income. On the other hand, Richmond says that consumers are becoming more cautious about discretionary spending, while Cleveland suggests that it is too early to conclude whether a significant pickup in general merchandise trade is underway. Business fixed investment continues to be an important source of strength. Atlanta notes that the volume of plant announcements is once again on the upswing and emphasizes substantial spending for pollution control. Chicago sees no letup in demand for all types of capital goods, and adds that the farm equipment industry will be hard pressed to increase shipments over last year because output is at capacity and finished goods inventories are down sharply. Cleveland also reports across-the-board strength in capital goods, particularly machine tools. St. Louis, San Francisco, and Philadelphia all see signs of further strength in capital spending. Shortages and long delivery time continue to be serious economic problems, although of less importance than inflation. Almost every District's report includes some comment on the difficulties in obtaining materials and parts and, in some cases, skilled labor and transportation. Shortages are affecting not only manufacturing, but also mining, construction, and agriculture. There are scattered indications that selective decontrols have helped alleviate tight supply conditions in certain instances. But in some cases the situation has grown worse. Chicago, Cleveland, and Dallas, for example, all emphasize increasingly tight conditions in the steel industry, partly because of rapidly dwindling coal supplies. Residential construction seems to have bottomed out, but no District reports a solid recovery underway. In fact, there is concern (variously expressed by Boston, Chicago, Cleveland, St. Louis, and San Francisco) that rising interest rates and potential disintermediation may adversely affect the recovery of home-building. St. Louis reports that S&Ls already have begun to lose deposits in significant amounts. In the agricultural sector, prospects for crops are generally good. Dallas, however, notes that the winter wheat crop in Texas has been affected by drought and is expected to be half of last year's harvest. Shortages of agricultural inputs are disrupting production in the Southwest. Chicago and San Francisco also mention problems regarding shortages of inputs such as fertilizer and machinery. Prospects do not appear to be particularly good for cattle, hogs, and poultry. Dallas, Kansas City, Minneapolis, and St. Louis each express concern over the cost-price squeeze currently affecting many producers. Sharp losses due to recent price declines in cattle, hogs, and poultry are reducing the incentive of producers to expand their output. In the banking sector, business loan demand has risen sharply in recent weeks. Kansas City and New York attribute some of the strength to borrowing in anticipation of higher prices. New York adds that the recent rise in money market rates has caused a shift from the commercial paper market to bank credit. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1005 -beige_book_pure_text_pre2000,1974,"Latest Redbook comment suggests that the recent business slowdown has bottomed out and that the economy may now be in a mild, though fragile, recovery. Heavy demands f or capital goods appear to be the main element undergirding the current level of activity. Fuel shortages are reported to have eased substantially, although shortages of industrial materials, most notably steel, remain a serious constraint on production growth. Reports on consumer spending are spotty, with some Districts reporting retail sales as ""good"" or ""holding up well"" while others note a softening of demand for big-ticket items and a leveling off in sales of nondurables. The housing sector is uniformly described as weak and, in the light of recent interest rate behavior, as likely to weaken further. All Districts report persisting inflationary expectations, which along with recent sharp price increases and fears of acute materials shortages, are causing large demands for inventory financing. Current comment contains many more references than usual to financial stringencies and liquidity problems, in both the business and banking communities. The most bullish area of the economy clearly is the capital goods sector. Chicago reports that the capital goods boom in the Seventh District ""continues at full throttle"" and this theme is echoed in the reports from Cleveland and St. Louis. The New England machine tool industry is also reported as operating at capacity. Materials and other shortages, however, are mentioned as seriously impeding output growth in this sector. Chicago, for example, notes shortages of metals (especially steel), chemicals, packaging materials, components, trained manpower, and transportation as factors limiting output. Output in the Chicago District was also reported to have been hampered by strikes. As regards the consumer sector, several Districts report an improvement in sales of medium-sized and large automobiles, and Chicago notes that automobile firms ""are pressing for delivery of additional steel for large car production which has increased."" Atlanta and Chicago also report increased demand for recreational vehicles. While retail sales are in general characterized as good, some Districts note that price increases account for much, if not most, of the reported gains. Boston, Dallas, Richmond, and St. Louis report a leveling of sales, with the last two indicating a softening of demand for big-ticket items. Reports on inventories suggest efforts in some industries to build stocks of materials as a hedge against both rising prices and future shortages. A Cleveland survey found stocks depleted in some steel, coal, oil, machinery, chemical, and packaging firms, with respondents indicating that they would like to rebuild their inventories. Capital goods producers are said to be unable to build inventories because of heavy demand pressures and shortages of materials and components. Minneapolis reports some involuntary accumulation of goods in process due to materials and component shortages. In some lines, however, reports suggest inventory accumulation may be leveling off. Dallas reports that retail inventories are being held down while Boston and Minneapolis indicate that high interest costs may be discouraging stock building. Also Richmond reports a significant increase in the number of manufacturing respondents indicating general satisfaction with the current level of inventories. Districts reporting on housing indicate continued weakness in this sector, with prospects that the recent sharp run-up in interest rates will pinch off any recovery that may have been underway. Most Districts report extremely tight mortgage market conditions, with six Reserve Banks reporting a significant amount of disintermediation at either thrift institutions or commercial banks or both. New York characterizes the disintermediation at Second District thrift institutions as severe. All District reports describe business loan demand as ""strong"" or ""very strong,"" although Boston and Kansas City indicate some leveling of demand at a high plateau. Inventory financing is generally reported as a major factor behind this demand. Most reports suggest that increases in demands for this purpose are attributable mainly to higher prices of inventoried goods although some Districts indicate that expanded stocks of materials are also a factor. New York and Chicago also report that delays in construction projects and sizable inventories of unsold houses may be contributing to loan demand. Some shifting of capital market borrowing to banks was also reported as a factor behind business loan demand by New York and San Francisco. Several Districts noted increased demand for accounts receivable financing and a substitution of bank credit for commercial paper sales, especially by REIT's, as contributing factors. Chicago, Richmond, and Minneapolis reported strong demand for farm credit because of increasing difficulty being encountered by farmers in arranging trade credit. Several Districts cite increasing liquidity problems for businesses as well as for thrift institutions and commercial banks. Boston and Kansas City report vigorous complaints against tight money policies in some quarters, with Boston indicating financial stringencies for public utilities and insurance firms. A number of Districts report that banks are becoming increasingly selective in screening loan applicants and some Districts indicate a growing reluctance on the part of the banks to finance loan expansion through high cost CD financing. The agricultural outlook is reported generally good for crops, but low market prices and high production costs are a problem in the livestock sector. St. Louis reports that resulting production cutbacks could mean higher red meat prices later this year. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1118 -beige_book_pure_text_pre2000,1974,"""Moderate economic recovery"" capsules the views of most Red Book reports this month. Inflation and materials shortages once again seem to be major items of concern. While some reports expect a subsiding of inflationary pressures toward year's end, others expect these pressures to remain severe throughout the year. Current views on materials shortages also vary. Some Districts indicate a loosening of basic materials supplies, while other reports indicate continued shortages. Residential construction remains depressed, with strikes of construction trades making matters even worse in several Districts. Capital spending plans remain strong, though some downward revisions of capital expenditures have apparently taken place because of high interest rates, materials shortages, and the cyclical downturn in the economy. Inventory building as an inflationary hedge or because of the fear of shortages has been limited and scattered. Business loan demand remains at high levels despite high interest rates. However, there were some reports of slight reductions in demand; and lending is reported to be more selective now. Delinquencies on most types of loans are up. Consumer spending is beginning to show some life, with a renewed interest in larger autos as one area of strength. Heavy rains may cut into expected bumper crops in some Districts. The first quarter slide in economic activity has apparently bottomed out, and a moderate economic expansion is now under way in most Districts. Philadelphia reports that the first quarter slide has ended. Cleveland, St. Louis, and Minneapolis note that economic activity is beginning to pick up and should continue to do so throughout the rest of this year. San Francisco, however, does not expect much improvement until the third quarter. A number of Districts emphasize the growing concern over inflation. Philadelphia sees inflation as the sore spot in its economy, with price increases on manufactured items and raw materials continuing throughout the year. This view was echoed by Atlanta, St. Louis, and San Francisco, while Cleveland expects some abatement in price increases by the fourth quarter. Though supply problems continue to exist, some easing is beginning to be noticed. Boston, Richmond, and Chicago note some loosening in supplies. However, other Districts indicate continued difficulties and longer lead times in obtaining plastics, basic petrochemicals, steel, and electrical goods. Residential construction remains universally weak in all Districts. In Minneapolis, San Francisco, and St. Louis, strikes in the construction trades have depressed this sector even further. The Administration's new housing program is expected to have only a slight impact on residential construction. New York describes the program's probable impact as a ""cushion"" to a further decline in residential construction rather than a stimulus. Capital spending continues to be the major area of strength, but some retrenchment in these spending plans may now be taking place. Boston reports some postponing of capital spending because of anticipated declines in interest rates. Reports from New York indicate ""some cooling of enthusiasm"" regarding expansion programs. Materials shortages are curtailing capital spending in the San Francisco District. Inventory building because of materials scarcities is not as widespread as earlier reports indicated. Atlanta and New York note that high financing costs may be inhibiting inventory investment in many areas. Cleveland also finds some signs of inventory investment abating, and responses to Richmond's survey of manufacturers suggests that inventories may be higher than desired. Views are mixed on the effects of record-high interest rates on loan demand. Philadelphia, Cleveland, Minneapolis, Dallas, and San Francisco indicate little letup in loan demand. However, Boston, Richmond, St. Louis, and Kansas City note a slight reduction, particularly in demand for business loans. A pickup of deposit growth at commercial banks was also observed in several Districts. Richmond's survey of large District banks, as well as information from other Districts, reveals that firmer credit standards are being applied to loan requests. Several Districts also indicate that an increase in loan delinquencies and a rise in bankruptcies are a matter of growing concern. Consumer spending in most Districts is beginning to perk up. St. Louis and Kansas City indicate that appliances are selling well. Tourist activity is on the upswing and is expected to remain so through the summer months in the Atlanta and Minneapolis Districts. Several Districts note a pickup in the sale of larger-sized cars. Minneapolis suggests, however, that consumer resistance to higher car prices may be responsible for a more recent drop in sales. Agricultural prospects appear mixed. Reports from a number of Districts confirm the decline in livestock prices. San Francisco' s agricultural prospects are expected to be excellent throughout the District. Rain and bad weather have affected crop plantings and prospects for crop yields in the Chicago, St. Louis, Kansas City, and Atlanta Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1029 -beige_book_pure_text_pre2000,1974,"Although it may now be less appropriate than earlier this year to characterize the U.S. economy as one of general materials scarcity, reports from the Reserve Banks continue to emphasize this problem. A fair generalization may be that shortages of materials and components are still generally severe, although the availability of some items seems to be easing. Cleveland and Chicago both emphasize the tightness of supplies, and the spotty nature of the improvements. In the Richmond and Kansas City Districts, some materials are now more easily obtainable but only at much higher prices. The New York Bank reports no lessening of pressure on productive capacity. Its respondents expect some further moderation in basic commodity prices, but continued upward pressure on finished goods prices. The situation in the steel industry, as reported by the Chicago and Cleveland Banks, is of special interest. A shortage of steel is expected to be a major barrier to output increases in other industries, as demand for steel continues to exceed supply. (1974 shipments are now expected to be below the 1973 total.) According to the Chicago Bank, ""shipments have been maintained at recent high rates by further reducing mill inventories below levels thought to be rock bottom."" The situation could tighten further because of equipment bottlenecks, and shortages of ore and coal. Demand for coal, from utilities as well as steel companies, is strong their stocks are low; and the overall supply situation is tight. Steel company officials are concerned about the possibility of a coal strike in November, which would severely disrupt operations. (An economist with a coal-producing firm considers it likely that there will be a coal strike in November of from 2 to 4 weeks duration.) Several Banks—including Chicago, Atlanta, and San Francisco—report increasing numbers of labor disputes and more strike activity. Construction in the Chicago District has been severely hampered by a strike of ready-mix-concrete truck drivers. Interwoven with the increasing amount of strike activity is the increasing number of large wage demands (and settlements), making the intensifying wage-push pressure on prices a matter of great concern. Capital spending remains generally, though not uniformly, strong. Chicago reports that demand for capital goods is well above output capabilities, and backlogs are rising in spite of all-out production; Cleveland also reports rising backlogs. Plant and equipment spending is behind schedule in the Atlanta District, but only because of capital goods delivery problems; capital spending plans remain strong across the District. In the Philadelphia District, however, manufacturers are taking a closer look at their plant and equipment spending plans and the outlook now is for a smaller increase in capital spending. Dallas, on the other hand, reports no significant revision of spending plans by large firms in its District. However, small businesses there are holding back on long-term expenditures because of the difficulty of getting bank financing and because of the high cost of funds. Both Chicago and Richmond report that some major electrical utilities are scaling down their expansion plans. Chicago states that financing problems are to a large extent responsible for the cancellation of some projects, and Richmond notes the announcement of cutbacks, postponements, and review of plans by several electrical utilities in its District. Eight of the twelve Banks refer in this Red Book to the continuing serious plight of the residential construction industry. The Chicago report is most blunt: ""Housing is in a severe recession, with hopes dashed for a revival in 1974."" The story is much the same for the Districts commenting: building permits off drastically; savings inflows to, and mortgage lending by, thrift institutions, very weak; construction sluggish and no recovery in sight. Indirect effects are also mentioned. San Francisco notes that the lumber and plywood industry is ""marking time"", waiting for a pickup in housing. Richmond reports that the sustained decline in residential construction has meant a 20 percent reduction this year in orders to the furniture industry. Only Minneapolis, St. Louis, and Atlanta report some improvement in retail sales, or consumer spending in general. Cleveland and Philadelphia refer to weak or sluggish consumer spending, as does Richmond for big-ticket items. Several Banks report that retail inventories are considered excessive by their respondents. Views of a number of retailers range from uncertain to pessimistic for sales during the rest of the year. Tourist business has been ""lackluster"" in New England and slow in the Mountain states of the Kansas City District, but tourism is on the upswing all across the Atlanta District and the industry's outlook for the rest of the summer is good in the Minneapolis District. Loan expansion by commercial banks continues to be limited by tight credit conditions, with deposit growth slowing down. Philadelphia reports loan demand as firm, held down primarily by restrictive loan policies rather than by adverse publicity. Business loan demand is characterized as strong by Atlanta, and by Minneapolis, where no let-up is foreseen. Richmond and Cleveland also report strong demand for business credit, with their banks becoming increasingly selective in allocating scarce funds. Kansas City and St. Louis detect some weakening in the rate of growth of demand for commercial loans. ""Lackluster growth"" summarizes the comments on recent deposits behavior, by Philadelphia, Atlanta, Kansas City, St. Louis, Minneapolis, and Richmond. Boston's Eckstein and Samuelson warn of the dangers of overly tight money. New York respondents worry that the country is nearing serious trouble as the strains on liquidity increase. In Atlanta, apprehensive businessmen are reacting to the rumors of little liquidity in banks, while nonbank respondents for San Francisco call commercial banks ""dangerously illiquid."" Meanwhile, most Philadelphia banks have been able to roll over their CD's without major difficulties. Concern with the agricultural price situation is recorded by several Districts. Richmond and Atlanta report that poultry and cattle producers are caught in a severe cost-price squeeze. Kansas City, Dallas, and San Francisco comment further on the troubled cattle industry. Minneapolis and Kansas City explain the recent turnaround of grain prices as being partly due to the uncertain effects of unfavorable spring weather on the corn and soybean crops. Offsetting the bad farm news, San Francisco points to the high price for sugar beets, and Kansas City reports a good wheat harvest in progress. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1342 -beige_book_pure_text_pre2000,1974,"District reports present a mixed picture, with elements of weakness generally overshadowing those of strength. There are scattered indications that shortages and bottlenecks are breaking up in some sectors, although shortages of certain industrial goods remain critical. Many firms have been critically reexamining their capital spending plans, and some have scaled back such plans, not only among public utilities but in some other sectors as well. Similarly, more cautious inventory policies seem to have been adopted by some firms. Consumer spending on appliances continues sluggish, but demand for the remaining 1974 model automobiles appears to have strengthened. Residential construction continues to languish. Inflation remains a serious concern, especially in light of recent estimates of a significant drop in the expected harvest of certain key agricultural commodities. Regional differences in the state of overall economic activity were reflected in the District reports. Economic conditions were characterized as mixed by Cleveland and Atlanta and as showing ""marked contrasts"" by Chicago. Activity was described as sluggish and slowing by Philadelphia and Richmond, respectively, while Minneapolis reported that prospects were not as promising as earlier in the year. On the other hand, manufacturing activity was reported strong by St. Louis and San Francisco, and Dallas reported that factory orders are generally running ahead of year-ago levels. Capital spending plans are being subjected to increasingly critical scrutiny, and some cut-backs were reported even outside of the public utility sector, where deferrals and cancellations of capital investment projects are widespread. Among others, Philadelphia and Richmond report reluctance on the part of manufacturers to increase such outlays, with some manufacturers planning some cut-backs. Cleveland reports some softening in new orders for machine tools. On the other hand, Chicago and St. Louis report continued strong demand in the capital goods industry, and San Francisco reports that business investments are heavy. As in the case of capital spending plans, inventory policies have been under reexamination. The emergence of more cautious inventory policies on the part of businesses was reported by a number of banks, including New York, Philadelphia, Cleveland and Richmond. Some easing of shortages was reported by Chicago and Cleveland, although Cleveland also noted continued intense demand for steel and desperate attempts on the part of industrial firms and utilities to stockpile coal. Shortages were reported to be continuing to hamper output in the San Francisco District. Several banks reported that residential construction remains in the doldrums. Other types of consumer outlays appear sluggish for the most part, although Richmond noted a rebound in retail sales and San Francisco characterized such sales as ""good"". A number of banks reported weakness in sales of big-ticket items such as furniture and appliances. On the other hand, several banks, including St. Louis and San Francisco, observed a strengthening of automobile sales. Despite the apparent slowing down of business activity and the reported easing of supply conditions in a number of industries, concern over inflation continued to be expressed by many respondents. These fears have been heightened by recent reports of prospects of significantly lower harvest of certain key agricultural products, notably corn and soybeans, than expected earlier in the year-a situation described in detail by Minneapolis and Kansas City and referred to by several other banks. Agricultural conditions were reported to be more favorable in several Districts, including Richmond, Atlanta, and San Francisco. The demand for bank credit generally continued strong. The adoption of tighter bank lending policies, which in some instances may have helped contain the expansion, was mentioned by several banks, including Dallas, Philadelphia, Minneapolis, and New York. Thrift institutions were widely reported to still be losing deposits, and to have been especially adversely affected by the recent Treasury sale of 9 percent notes in denominations as low as $1,000. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",808 -beige_book_pure_text_pre2000,1974,"The general thrust of this month's commentaries is that expectations concerning the near-term outlook for business have deteriorated considerably. Prospects for dampening inflation are viewed with various degrees of skepticism and pessimism; some businessmen fear wage-price controls. District reports emphasize supply-demand imbalances in labor, product, and financial markets. The supply situation is improving in some product lines, while conditions remain abnormally tight or have grown worse in others. Qualitative statements suggest that aggregate economic activity is registering little if any real improvement in the current quarter. Consumer spending remains sluggish, except for a recent spurt in auto sales. Inventories held by retailers generally are considered excessive. Housing is depressed throughout the nation, with indications of a further weakening in store. The capital spending picture may require reevaluation, as industrial firms and utilities announce cutbacks or postponements in their plans for expenditures. Agricultural prospects for crops and feedgrains have improved somewhat since early August, but the situation in the livestock industry is dismal. Savings outflows from thrift institutions continued in August, and banks in some Districts are also experiencing losses in deposits. Business loan demand remains strong, but is being curbed as bankers are becoming more selective in allocating credit. There is widespread concern among businessmen, bankers, and economists over the current and prospective effects of tight money. Consumer spending is described as sluggish or weakening in almost every District. Sales of appliances and home furnishings, in particular, are depressed. Philadelphia reports widespread consumer resistance to higher prices on the new fall line of soft goods. Chicago says spending on discretionary goods is slow, and that recovery in recreational vehicles has ended. A number of Districts mention problems of excessive inventories at the retail level. New car sales seems to be an exception in the generally lackluster consumer sector. Dallas, Cleveland, Kansas City, St. Louis, and San Francisco all report recent strength in sales of 1974 models stemming from the publicity given to price increases on the 1975 models. Expectations are that new model year cars will suffer from buyer resistance to higher prices. In the capital goods sector, some weakening tendencies are developing in an otherwise strong market. San Francisco says high interest rates are thought to be depressing capital spending. Philadelphia sees signs of weakness ahead. Minneapolis reports some cutbacks in planned expenditures on machinery and equipment in farming areas where crop prospects are uncertain and cattle prices are depressed. Atlanta says the volume of commercial and industrial building is declining. A number of Districts (Boston, Richmond, Cleveland, Chicago, and Minneapolis) commented on reductions in capital spending by utilities or emphasized their current financial problems. Residential construction appears to be depressed in every District, and prospects for recovery before 1975 are bleak. Thrift institutions continued to lose deposits in August, according to St. Louis, Dallas, San Francisco, New York, Richmond, and Cleveland. High interest rates have caused postponements and cutbacks in major condominium projects in Atlanta. In the agricultural sector, early summer drought has severely damaged crops in many parts of the nation. Recent rainfall has improved the situation, however. Chicago mentions that now the major concern for the corn crop is cool weather and an early frost. The livestock feeding industry is experiencing its own recession, according to Kansas City, Dallas, San Francisco, Minneapolis, Chicago, and Atlanta. Banks continue to face strong business loan demands in San Francisco, Philadelphia, Richmond, and Kansas City. Those Districts all report that bankers are becoming increasingly selective in granting loan requests, particularly from new borrowers. Kansas City, however, notes that loans to new customers in energy-related fields are being accommodated. Dallas mentions a problem of loan delinquencies in real estate and heavy construction. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",820 -beige_book_pure_text_pre2000,1974,"On balance this month's comments indicate a further slowing in overall economic activity and more widespread pessimism regarding the near-term outlook. Residential construction remains in a depressed state throughout most of the nation. The situation in the housing sector is causing a marked decline in consumer outlays for durables related to housing, and aggregate real consumer spending appears to be weakening further. Business capital spending continues relatively strong although there are further reports of delays and cutbacks of previously scheduled outlays. The manufacturing sector presents a mixed picture with reduced demand pressure and fewer shortages in some industries, particularly those industries serving primarily the housing and consumer durables sectors, but continued tightness and shortages elsewhere. Several Districts report that the improved supply-demand balance in some industries has reduced the upward pressure on prices for certain raw materials and intermediate industrial goods, but no precipitous softening of industrial prices is yet evident. Adverse weather conditions are apparently restricting crop yields and hampering the growth of farm income in the central portion of the country, and conditions in the livestock industry have deteriorated further. Most Districts report more restrictive bank lending policies and a consequent slowing in the growth of business loans. Thrift institutions experienced further net deposit outflows in several Districts during September. Retail sales appear to be generally flat in current dollar terms implying the possibility of some decline in real consumption during recent weeks. Boston, New York, and Philadelphia report that consumers are more cautious and bargain conscious. Several Districts indicate a further decline in sales of big ticket items, notably furniture and home appliances. Cleveland and Chicago report new model automobile sales are off to a slow start. Dealers in the Minneapolis and San Francisco Districts fear that higher prices, difficulties in obtaining financing, and the recent spurt in 1974 model sales will constrain new model sales in coming months. Conditions in the construction sector remain dismal, although Philadelphia reports a higher rate of nonresidential building than last year due to increased public works construction. Dallas, on the other hand, foresees a sharp curtailment of nonresidential outlays in coming months due to a lack of interim financing. Nonresidential building permits have dropped by 50 percent in the Dallas District during the last three months. No District expects any near-term improvement in the residential sector given the pervasive lack of mortgage credit. Business fixed investment remains the strongest sector of the economy, although there are additional signs of a reduced rate of planned capital expansion. Atlanta and San Francisco report sizable reductions in planned outlays by utilities. Chicago notes a reduction in the demand for certain types of capital goods due to postponements and cancellations by utilities and automobile manufacturers. In the Cleveland District machine tool orders, while still strong, are running somewhat below their peak earlier this year. Conditions in the manufacturing sector are spotty, reflecting the sluggishness in the housing and consumer sectors on the one hand and the relative strength of capital spending on the other. Industries closely related to housing and consumer durables (lumber, glass, textiles, furniture, and appliances) are noticeably weaker. In addition, several Districts (New York, Chicago, Kansas City, and San Francisco) report that some industrial materials, particularly fuels, certain chemicals, and paper, are more readily available. The easing of supply constraints in these industries is contributing to less aggressive purchasing and some declines in order backlogs. Cleveland, Chicago, Kansas City, and Dallas indicate somewhat softer prices for chemicals, fuels, and other materials, but no major break in industrial prices has occurred to date. Steel markets remain tight in most Districts, due in part to the prospective coal strike. Both Cleveland and San Francisco suggest an easing in the steel situation in coming months, however, due to the increased availability of foreign steel. The agricultural outlook appears generally weaker. Atlanta reports favorable harvest yields with the exception of the hurricane-damaged Louisiana sugar cane crop. But Chicago, St. Louis, Minneapolis, and Kansas City indicate that early frosts will substantially reduce corn and soybean yields, reducing farm incomes and increasing feed costs. The demand for business loans remains strong in most Districts, although St. Louis notes a leveling off following the sharp upward trend earlier this year. Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas all report slower growth in outstanding loans and commitments due to more restrictive bank lending policies. Several Districts indicate that both banks and thrift institutions are restricting new loans to established customers. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",975 -beige_book_pure_text_pre2000,1974,"Though some areas remain strong, economic weakness appeared to be spreading, even before the coal strike began. The consensus is a deterioration in economic conditions since last month's reports, with the earliest chances for a recovery in mid-1975 and then only a mild upturn. The drop in residential construction has spread to many other industries, such as timber and lumber, furniture, and textiles. Auto and auto-related manufacturing industries are also depressed because of the resistance to buying the new model cars. Plant closings, job layoffs, and, in some cases, bankruptcies have resulted. The regions hardest hit are those where these industries predominate: the East, Midwest, and Southeast. Other manufacturing industries, particularly capital goods, report continued strong demand. However, some softening may be starting in these industries, with an easing of new machine tool orders and cutbacks or postponements of capital-spending plans reported from some Districts. Consumer spending, particularly for big-ticket items, is off. Reports indicate that consumers are increasingly becoming more price-conscious and purchasing more heavily sale merchandise. Production and general sales declines have resulted in easier availability of many materials in short supply only a few months ago and, in some cases, lower materials prices. Only a few items are still in short supply. There was near-universal accord that because of sales declines and the greater availability of basic materials, manufacturing and wholesale and retail trade inventories are now too high. Realignment of these inventories will slow economic activity through the early part of next year. Bank lending has leveled off in most Districts because of a decline in loan demand and more restrictive loan requirements. Savings and loans inflows were reported in several Districts but are not expected to give any immediate relief to housing. A number of favorable crop reports were received, but livestock producers are still caught in a cost-price squeeze. Plant closings and layoffs are now appearing more frequently in District reports. Richmond, Atlanta, Chicago, and St. Louis all report production cutbacks, plant closings, and layoffs by a wide range of manufacturers-such as autos, mobile homes, appliances, televisions, furniture, textiles, bicycles, and electrical components. Many of these cutbacks are related to the decline in housing, although a general fall-off in demand is also responsible. Lumber producers in the Atlanta and San Francisco Districts have been severely hit by the decline in residential construction. Lumber demand is practically nonexistent. Some areas have escaped substantial layoffs, however. Both Minneapolis and Kansas City Districts report only a slight rise in unemployment. They do not expect the situation to worsen significantly in the near future. Capital goods industries remain the most buoyant. But even here more signs of cutbacks and postponements were reported. Cleveland reports machine tool orders still are strong, but a number of spending programs for 1975 have been cut back. Atlanta, Chicago, and Kansas City report similar cut backs. Capital equipment orders in the Chicago District have fallen off recently, and stretch-outs of orders have also become more common. A Richmond survey shows that one-third of its respondents now consider capital-spending plans excessive. Orders remain strong for steel and other types of capital goods, however. There is growing evidence of a general weakening in demand for most consumer items. Auto sales are uniformly poor in all Districts. Most big-ticket items are not selling well. Only Minneapolis reports any strength in higher-priced consumer goods. Reports from San Francisco, Dallas, Boston, New York, Atlanta, and Philadelphia suggest that price cutting and sales campaigns by retailers and discount shopping by consumers are now more commonly practiced. Expectations about Christmas sales range from optimistic in Minneapolis and Dallas to Boston's report of no expected change in sales from last Christmas. Shortages have apparently eased considerably according to reports. Boston, Cleveland, Atlanta, Chicago, and San Francisco all indicate that many shortages are abating. Cleveland notes that the greater supply availability has led to a moderation of materials prices. Several Districts report continued shortages of steel and petroleum-base products; but in the Chicago and San Francisco Districts, even these shortages have moderated. The coal strike will create new shortages, but it is too early to tell how severe these will be. Excessive inventories and the need for inventory realignment appear to be on many businessmen's minds. Excessive inventories are the result of both declining sales and the easing of shortages. Dallas reports higher-than-desired retail store inventories are attributed in part to declining sales but also to overshipments by suppliers who are themselves trying to reduce inventories. Concern over shortages has dramatically given way to attempts to reduce inventories, according to Chicago's report. In the Kansas City District, the attempt to reduce inventories was one reason cited for the flatness in bank loan demand. Most Districts report that loan demand has begun to ease. Philadelphia notes that loan commitments have fallen both because of a decline in demand as well as more restrictive lending policies by many banks. Business loan demand appears to be off the most. San Francisco indicates that many large borrowers are returning to the capital markets. Minneapolis is the only District reporting continued strong loan demand because of agricultural borrowing. Inflows to time and savings accounts at commercial banks are beginning in many Districts. Funds are also beginning to flow back into savings and loan institutions. The Kansas City report indicates that savings and loan associations are beginning to see a return to ""black ink."" New York also notes an inflow but doesn't believe it will significantly improve the housing situation in the near future. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1206 -beige_book_pure_text_pre2000,1974,"The news of spreading weakness in the economy has not changed much from last month, although a somewhat firmer consensus on the side of pessimism emerges, if only because of the confirming character of this round of reports. Most Districts tell of further declines in consumer demand, softening employment, and increasing uneasiness about the economic outlook. And again as was the case last month, several report of business efforts and intentions to reduce inventories, to cut costs, and to reduce investment in plant and equipment. Some subsectors of the economy, such as the oil industry and parts of agriculture, are thriving amidst an otherwise general slump in business. Still others, such as home building and cattle farming, remain deeply depressed. Bank deposits and loans continue roughly flat. Additional modest inflows to thrift institutions are not expected to help home building in the near future. The deepening recession is quite evident in this month's Redbook, as the more insulated Districts and lagging sectors begin to come in weaker. The swing in the Minneapolis report is of special interest. Ninth District directors and businessmen were still relatively optimistic last month, but this time around they joined the ranks of the worried pessimists. The reports of Kansas City and Dallas also show more concern than last month. In November, Kansas City observed that Tenth District economic conditions were somewhat better than in the nation as a whole. This month, they are said to be looking about as bad. In November, Dallas department store executives were optimistic about the Christmas season. This month, there is a strong indication of sluggish retail sales in the report from the Eleventh District. Meanwhile, the Districts which have been reporting increasingly gloomy economic conditions for many months are reporting even lower depths of pessimism. The spread of the recession to business fixed investment was indicated by the cutbacks in capital spending plans reported last month by five Districts. Three more, Boston, Philadelphia, and Minneapolis, confirm the findings this month. Current activity in capital goods industries continues high, as reported by St. Louis, but the leading indicators for this sector suggest a weakening ahead. Cleveland reports a significant reduction in buying lead time for capital equipment. Chicago and Boston note declining new orders for capital goods, although backlogs will keep suppliers busy for most of 1975. Retailers are losing hope for either a merry Christmas season or a happy New Year's spring. Even the most optimistic store executives, those reporting to Minneapolis, do not expect much of an increase in real sales. Richmond reports a decline in the dollar volume of retail sales, and real retail sales are apparently down in the remaining Districts. With inventories considered excessive in view of expected sales, stores are heavily promoting sales of merchandise at reduced prices. The New York report suggests that some firms may have already been successful in liquidating inventories and are now operating with ""lean"" stocks. But inventories arc reported high by Cleveland, Richmond, Minneapolis, Kansas City, Dallas, and San Francisco. Agricultural conditions are reported to have deteriorated in the Eleventh District by Dallas, due to depressed livestock markets, and big shortfalls in crop yields of wheat, grain sorghum, hay, and cotton. San Francisco reports that the strongest sector in the Twelfth District is agriculture, although cattle producers are under a severe profits squeeze there too. Crop reports from Atlanta are mixed, with cotton poor, corn, rice, and soybeans normal, and burly tobacco good. Richmond reports a record-breaking value for a crop of flue-cured tobacco, and notes that crop receipts through the third quarter of 1974 registered a 15 per cent increase over a year ago. However, the index for prices received by farmers now is at last year's level, while the index of prices paid is up 17 per cent over a year ago. This month's Redbook, as noted early in this summary, contains reports that confirm those of a month ago, and are therefore not repeated in a District-by-District fashion here. Suffice it to say that this month's evidence is overwhelming in establishing the weakness of the economy and in indicating its likelihood of continued decline. Virtually every indicator of general economic conditions that is reported on by the 12 Districts points to deepening recession at worst, or continued sluggishness at best. But, thanks to this, gains appear to be materializing on the price front. The pre-Christmas sales are good news for consumers. Cleveland purchasing agents report a continued slowing in the rate of price increases. Atlanta calls attention to the 30-40 per cent decline in lumber prices, and reports that some suppliers of other items once short but now long are reducing prices. Unfortunately, the good reports indicating slowing inflation are offset by the more disappointing reports such as Philadelphia's, in which businessmen relay their all-too-recent experiences with inflation, and tell of their expectations that such rapid price increases will continue at least through May. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1078 -beige_book_pure_text_pre2000,1975,"District ""Red Book"" reports for mid-January generally reflect the accentuation in most parts of the country of the pronounced deterioration of the economy in the recent past suggested by nationwide economic indicators. Retail sales in most areas over the holiday season were only equal or barely above last year's level in dollar terms and, given the sharp rise in retail prices over the past year, lower in volume. Moreover, this year's level was achieved only by dint of heavy pre-Christmas aggressive promotion, special sales, and price cutting in addition to the usual early January clearance sales. Against this background, a number of respondents in various Districts regarded retail inventories to be relatively high to excessive in relation to current sale prospects, with increased reports of efforts to reduce positions, both at the retail and manufacturing level. Planned business plant and equipment outlays, apart from energy related industries, on balance appeared to be weaker than had been expected, and a number of Districts report cutbacks, or outright cancellations of planned projects. The private residential construction, and to a lesser extent commercial construction, picture remained bleak, although a reported moderate reversal in the outflow of deposits at thrift institutions gives hope that the eventual bottoming of the decline in that industry may be approaching. The outlook for near term manufacturing activity other than related energy industries was further dimmed by widespread reports of declining new orders, shipments and backlogs. Against this background, virtually all Districts report a rise in the jobless rate, concentrated in the automobile and construction related industries, but also widening to other economic sectors. In addition, there were increased reports of rises in payment delinquencies and in bankruptcies. On the brighter side were reports of lessened, even vanishing, materials scarcities, of price reductions of primary commodities and of downward price pressure at the manufacturing and wholesale level; apart from the possibly only temporary promotional price concessions mentioned above, however, these reductions as yet seemed to have had limited influence on retail prices generally. Concerning retail sales, San Francisco, among other Districts, reports consumer spending in December as restrained, and while retail sales rose in dollar terms, this resulted primarily from vigorous efforts by retailers to draw down excessive inventories. Minneapolis reports that most retailers surveyed had December sales increases of only about 5 percent, in good part achieved by price cutting. Philadelphia District dollar sales in December were only slightly above last year's level with retailers relatively pessimistic regarding the outlook for January. Cleveland describes retail trade as ""poor"", despite a late spurt during the week prior to Christmas, while Richmond finds continued weakness in the sale of big ticket items. Atlanta characterizes pre-Christmas sales as very good in many areas of the District, largely in response to heavy promotions and price cuts. St. Louis reports that department stores' dollar sales were up somewhat from a year ago, a better performance than had been expected. Holiday sales in the New York District were on the weak side, but no more than had been expected, and reported to have been strengthening somewhat recently. This relatively sluggish retail sales performance for this time of year finds its counterpart in excessive inventories, and in actual and expected efforts to reduce stocks, at the retail and, in some instances, at the manufacturing level, as reported by a number of banks, including Minneapolis, Kansas City, Richmond, Cleveland, Chicago and New York. Moreover, declines in new orders and backlogs and increases in cancellations, as well as the virtual elimination of many shortages and the appearance of surpluses of some materials and finished goods, are noted by a number of banks, including Philadelphia, Cleveland, Chicago, Richmond, San Francisco and Dallas. Dallas, however, reports that firms supplying steel and fabricated metal products to energy related industries continue to be hard pressed to meet demand. Cleveland and Richmond note that sharp reductions in natural gas supplies are adversely affecting production. The well known plight of the construction industry is mentioned in a number of reports. Atlanta notes, however, that owing to an improving inflow of dollars to thrift institutions, funds are rapidly becoming more readily available for the housing industry, while Kansas City reports that several commercial banks plan to commit funds for future construction. An improvement in inflows to savings and loan associations is also reported by Minneapolis and Chicago, but these institutions are not expected to increase loan commitments until they have reduced their large borrowing and increased their liquid assets. Over half of the reports point to evidence of a weaker capital spending picture. Among others, Boston reports that orders for machine tools have ""all but vanished"", while Cleveland and St. Louis report a weakening in the sale of such items. San Francisco reports more cancellations of capital projects; almost half of the manufacturers surveyed by Richmond consider current plant equipment excessive; and Chicago states that although producers of heavy capital equipment continue to operate at capacity, backlogs are declining, and in the case of heavy trucks have ""dissolved"". The unemployment picture has darkened throughout most parts of the nation, although there are regional variations in the intensity of the problem, ranging from ""probably unprecedented since World War II"" in the Chicago and Detroit areas to the report by Minneapolis that, while layoffs have occurred in the District, they have not reached the proportions reported nationally. At the same time, there were some reports of continued shortages of skilled workers and, in the Dallas District, of unskilled labor as well. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1179 -beige_book_pure_text_pre2000,1975,"The general thrust of this month's comments is that the economic situation has deteriorated and further weakening is in store. Unemployment seems likely to rise again in February, on the basis of widespread reports of more layoffs since early January. Slackening conditions in the labor market, however, have done little thus far to curb wage demands, according to New York and Chicago. On the other hand, the recession appears to be having a depressing effect on prices, perhaps even more than the indexes suggest. The overall impression of the District reports is that the recession has become more pervasive but there are regional and industry sources of strength in the nation's economy. Reduced natural gas supplies, mentioned by Cleveland and Richmond, have contributed to cutbacks in industrial production and employment. Housing remains in the doldrums throughout the nation, retail trade generally continues to be sluggish except for a pickup in new car sales, the capital goods sector is showing signs of further weakness, and excessive inventories remain a problem for many firms. A number of Districts report instances of inventory liquidation underway. At the moment there seems to be little optimism regarding prospects for an early recovery. In one of the more bearish reports, for example, Boston points to growing fear of a ""second tier"" in the recession; its academic correspondents are particularly concerned over the state of the economy. Alternatively, there are some encouraging items. Philadelphia reports that more than half the manufacturers in its survey are optimistic for the outlook six months ahead. Richmond says there seems to have been a break in the mood of pessimism which has prevailed over the past few months, with an increase in the proportion of their survey respondents expecting an improvement in business activity in the next six months. Atlanta mentions a rebound in tourism in Central and South Florida, and that businessmen seem to have a renewed air of optimism since the first of the year. In the consumer sector, heavy sales promotions and price-cutting have had limited success stimulating retail trade. Sales are described as weak or sluggish in virtually every District. The auto manufacturers' rebate program has made new car sales an exception, but as Chicago notes, has not brought about a boom. Atlanta adds that some dealers worry about what will happen when the rebate program ends. Philadelphia says retailers are pessimistic about the near-term outlook, and Boston reports that retailers are growing more cautious in their ordering. New York and Richmond say some progress has been made reducing excessive retail inventories. In the capital goods sector, several industries are still operating at a high level. Chicago says large order backlogs are maintaining output of equipment for coal mining, oil well drilling, rail transport, ore boats, heavy agricultural operations, and chemical processing. Orders for many other types of capital goods have dropped sharply, however. Philadelphia reports that capital spending plans have been cut back in the retail sector, but are holding firm in manufacturing. New York and Cleveland see signs of weakening in capital spending. Richmond and Atlanta mention little scaling down or retrenchment in spending plans. In New England, firms say most investments are planned for such purposes as cost reduction, replacement, and compliance; plans for expansion are nil. San Francisco commented that an increase in the investment tax credit would not help capital spending until late 1975. The agricultural outlook for soybeans and feed grains appears to be encouraging, according to Dallas, St. Louis, and Richmond. Despite recent declines in crop prices, there is still enough incentive to increase production plans, The sharp drop in cotton prices is causing a switch from cotton to soybean production. Kansas City, Dallas, Minneapolis, and San Francisco all comment on the difficulties of livestock producers, many of whom have gone bankrupt. Among Districts commenting on banking developments, Philadelphia says prospects of large defaults in loans are concerning bankers. Dallas says that most banks have increased reserves for loan defaults. It also reports that delinquencies on farm loans have risen. No District reported any strength in business or consumer loan demand. Demand deposits have declined generally. Thrift institutions continue to have net savings inflows, according to Dallas, St. Louis, Atlanta, and Cleveland. Chicago notes a dropoff in savings inflows in late January. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",914 -beige_book_pure_text_pre2000,1975,"The general impression given by this month's Redbook reports is some moderation in the rate of decline in economic activity. While no District reports suggest that a general economic upswing is ""just around the corner"", with some exceptions the March reports indicate that the deepening pessimism that had characterized businessmen's outlook in previous recent months may have abated significantly. Respondents in most Districts either expect a turnaround at some point in the second half of the year, or expressed relatively bullish sentiments regarding prospects for their individual firms and industry. Retail sales were generally described as running at a lower level than a year ago in unit terms, but the decline in consumers' outlays in general appears to be leveling off, and some Districts actually reported some improvement. Retail inventories have been substantially reduced, but manufacturers' inventories still remain high. The outlook for the housing industry on balance appears to be improving, if only slightly. There were further reports of price cutting, both at the retail and production levels. On the darker side, the employment situation continued to deteriorate in many parts of the country. Among the comments regarding the economic outlook, Boston reports that its directors were more hopeful, and while they did not as yet believe the economy to be on the threshold of a turnaround, they felt that following the rapid deterioration in previous recent months, business activity was now stabilizing. Philadelphia reports little change in economic activity, which it considers an improvement compared with the declines in previous months. Moreover, it notes that businessmen in general expect the District's economy to pick up in the fall. Similarly, while Richmond reports a continuation of a broad decline in economic activity, it also reports an easing of the pervasive mood of pessimism displayed during the past few months as more businessmen now see ""a light at the end of the tunnel."" St. Louis reports that the rate of decline in unemployment and output has moderated, and indeed notes that activity in selected industries continues at relatively high levels. Respondents in the San Francisco District expressed the belief that conditions in the District's hardest hit industries—construction, lumber, and transportation equipment—have now stabilized. On the other hand, Chicago reports that pessimism has not been so deep and widespread since the 1930's. Retail sales continue to be generally sluggish in most Districts, but there appear to be scattered encouraging developments. St. Louis, for example, observes that no further decline in department store sales has been reported. Cleveland reports that bonuses as well as rebates spurred a sharp jump in auto sales in February, while more modest increases were reported in several other Districts. Dallas reports a rise in sales, with big-ticket items in particular moving well ahead of their sluggish pace of recent months. Atlanta, on the other hand, reports that home appliance sales have been particularly weak but that apparel sales have been doing well. A very recent pickup in retail sales was observed by Kansas City and New York, while Philadelphia reports optimism on the part of retailers despite sluggish sales. Minneapolis reports that retail sales have held up well in Montana and that the area's businessmen have grown more optimistic. Most Districts commenting on the subject report a decline, in varying degree, in retailers' inventories from their excessive levels at the turn of the year. Continued high inventories at the manufacturing level, however, are mentioned by a number of Banks, including Atlanta, Boston, Cleveland, and Richmond. Activity in the housing industry in general continues at a low level. There were indications, however, that the industry may be coming out of its slump as mortgage funds become more readily available with the sustained inflow of funds to thrift institutions and as the inventory of unsold residential units is being worked off. Atlanta and Kansas City report some improvement in home sales. Cleveland reports a moderate rise in residential construction contracts from their severely depressed levels, while builders in the St. Louis District anticipate an early increase in residential construction activity. The darkest spot in the current economic picture, of course, is the high level of unemployment reported by most Districts. Richmond reports that unemployment rates have risen to record levels in many areas. Minneapolis reports a sharp rise in unemployment in January, although the jobless rate for the District remains below the nationwide average. Cleveland mentions that numerous lay-offs have been reported thus far in March, while Chicago also refers to ""waves"" of lay-offs in durable goods industries. San Francisco and Philadelphia respondents do not look for an increase in the level of employment over the near term, which combined with the growth in the available labor force is expected to be reflected in further increases in the jobless rate. On the other hand, Kansas City notes an improvement in the employment situation at automobile manufacturing plants in the Kansas City area, while St. Louis mentions that scattered reports for February suggest a leveling off of the unemployment rate. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1056 -beige_book_pure_text_pre2000,1975,"This month, reports from the twelve District Banks show faint signs of optimism—not that the recession has already bottomed out, but that it is approaching bottom. The unemployment picture is grim, and there is no quick solution in sight. But inflation is abating. Retail sales are weak, and the manufacturing picture is mixed, but the inventory correction which must precede recovery is occurring. While construction activity is very soft, mortgage rates are dropping and the new tax bill provides some additional incentive to get housing going again. Agriculture is likely to be a very strong sector in the months ahead. Bank loan activity is weak throughout the country, but savings inflows should provide the industry with large amounts of lendable funds once the recovery starts. The picture in manufacturing is a mixture of good and bad. Post- rebate auto sales have been soft for all except luxury and imported car lines. However, some progress is reported in trimming auto inventories and auto manufacturers are starting to produce some models again. In contrast, both Chicago and Cleveland report that steel production has been strong. Demand has recently begun to slacken, but in the Cleveland District, the industry is still producing to rebuild its own inventories. Kansas City reports that its area's extractive industries are quite busy. Dallas, however, notes that oil refining is now operating well below capacity as a result of declining demand for oil and a shortage of available storage capacity. There is a consensus that the inventory adjustment process is moving along well. In manufacturing, San Francisco reports that the firms in its area are over the worst of their cutbacks, while Richmond notes that the process may continue for another 3-6 months in its District. But whether it be 3 months or 6 months, the message from all areas of the country is that progress has been significant and that production consistent with current demand is likely to begin soon. In the retail sector the signals are less uniform. In general, there have been substantial inventory reductions, but in some lines of goods more trimming will be required. Consumer durables is one example offered by Cleveland as an area which still has substantial inventories. Whether retail sales will rebound enough to move these durables in the near future is uncertain. Retail sales in March were weak in most areas of the country. An early Easter, cold weather, and in Philadelphia a major transit strike all combined to keep sales down. Yet many Districts report that their retailers see signs of rising consumer sentiment which make them cautiously optimistic about the future. There are also hopeful signs in other sectors of the economy. Chicago, Kansas City and San Francisco all report strength in their agricultural areas—despite the declining prices of farm products. Residential and nonresidential construction are both still weak, but the signs are hopeful. Unsold inventories of structures are said to be manageable everywhere except in the Southeast and Far West. Atlanta and San Francisco both report that builders in their region are pessimistic about the chances for a quick recovery even with the new Federal tax incentives. Elsewhere, it is expected that construction can be a positive force in turning the economy around in the months ahead. Oddly enough, tourism and leisure seem to be one of the economy's strongest sectors. Cleveland, Atlanta, Kansas City, and Minnesota all mention that industries catering to the nation's taste for recreation have been remarkably resistant to the recession. Capital expenditure plans of industry have been much less buoyant. While the process of cutting capital spending may be stabilizing, the outlook everywhere is, as Boston phrased it, ""lean."" Financial institutions throughout the country are facing the same basic problem. Money is flowing into these intermediaries at a record rate, but reinvestment alternatives are limited. By default, the funds are being used to build liquidity because loan demand is very weak. Virtually every District reports declining commercial and retail loan demand. Inflation and unemployment also conform to the ""good news/bad news"" theme of these reports. There is widespread optimism that inflation is being brought under control. Many examples of growing industrial competition and price cutting are cited in the District reports. There are also scattered reports of restraint in the prices of new lines of seasonal consumer goods. Relatively few shortages still remain. Kansas City forecasts that declining raw agricultural prices may enable food prices to stabilize in the second half of 1975. The news on unemployment is less cheerful. The best that any District Bank could say is that the situation is no worse. Unemployment in most areas is still rising. It is especially severe in New England, but even some urban areas of the Midwest are feeling the pinch. Scattered reports of rehirings and fewer layoffs create an impression that, at best, the indices may soon stabilize at their current high levels. Overall, however, the central theme of the reports is one of hope—hope that inflation is slowing, that the inventory correction is nearing completion, and that lower interest rates may stimulate housing and business investment. There is also a suggestion that the ""hope"" itself is very important. While the reports relay skepticism that recent tax legislation will have any significant economic impact on the economy, there is some agreement that the psychological effect of fiscal stimulation on consumer and business confidence may be very important in turning the economy around. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1145 -beige_book_pure_text_pre2000,1975,"This month's Redbook reports provide several indications of improvements in activity, but many sectors are still declining. A widespread belief exists that the recession is ""bottoming out,"" and that a turn for the better is near at hand. The words ""optimism"" and ""optimistic"" appear frequently. But an early return to full prosperity is considered unlikely, and unemployment is expected to remain high. Retail sales remain sluggish in virtually all regions. Inventory liquidations are continuing, especially at the manufacturing level. The rate of inflation continues to moderate. Makers of many types of capital goods are cutting output, and others are working off backlogs. Although residential activity is improving moderately in some regions, new construction remains at a very depressed level. A number of reports indicated that loan demand at commercial banks has been soft, but this may reflect, in part, highly selective lending policies. Agricultural prospects are generally favorable, except for flooding rains in the South and excess moisture in Iowa. Most districts report that the rate of decline in activity has at least slowed down. Improvements are reported for appliances and auto tires (Cleveland), textiles and apparel (Richmond, Atlanta, and Dallas), chemicals (St. Louis), and aircraft (San Francisco). New York says many manufacturers are cutting output rather than prices. Demand for autos and most consumer durables remains very weak, inventory liquidations continue, and the capital expenditures boom is ebbing. Virtually all districts commented on the continued poor performance of retail sales. Auto deliveries fell back after the rebate programs expired. New York and Philadelphia indicated that cold, rainy weather had hurt sales of general merchandise recently, adding to the effects of unemployment and adverse consumer psychology. A number of districts attempted to assess the impact of the personal tax rebates, but with inconclusive results. Chicago commented on lagging sales of mobile homes, RVs, boats, and lawn and garden equipment. Atlanta was impressed with ""unbelievably"" strong tourism. A number of districts found that retailers had reduced inventories to desired levels, but some additional cutting was in prospect if sales did not improve. Manufacturers' inventories remain generally excessive, except for textiles and apparel, and substantial further overall liquidation apparently is planned. San Francisco commented on very heavy inventories of petroleum and copper. Several districts indicated that steel mills are building inventories, while their customers are liquidating, but the overall effect is a substantial slide in mill shipments, output, and employment. No significant revival in steel shipments is likely until late in the year, when auto and appliance producers are expected to lead the recovery. Various districts reported that price inflation had slowed significantly, with some wholesale and retail prices relatively stable and others declining—see New York, Philadelphia, and Chicago. Cleveland and Chicago say that demand for equipment for coal mining, energy exploration, pollution control, steel production, and water and sewerage is very strong, but most other capital goods producers have reduced output, more or less substantially. Electric utilities and railroads are moderating capital outlays because of financial stringencies. The picture for farm and construction equipment is mixed. Heavy truck sales are dismal. Districts commenting on the increase in the investment tax credit found it relatively ineffective. Foreign demand for U. S. equipment is strong, partly because of favorable exchange rates. The construction outlook remains gloomy, although Atlanta and St. Louis report some improvement in the residential sector. Large inflows of savings to S&Ls continue, but both homes buyers and lenders remain cautious. San Francisco says new construction is at a ""standstill."" Districts commenting on the home purchase tax credit see little impact, partly because of the complexities of the IRS guidelines. Dallas suggests the tax credit is simply a ""windfall"" to those who would have purchased homes anyway. Usury rates are mentioned as a problem in Illinois and Minnesota. Atlanta reports several bankruptcies of apartment complexes and mortgage companies in Florida. A number of districts (Boston, Philadelphia, Cleveland, and San Francisco) note that mortgage lenders expect interest rates to rise later in the year. Two districts discussed the ""crowding out"" effect of heavy Treasury financial needs. Philadelphia says few bankers believe demand for credit is being influenced by the prospective federal deficit. Dallas, however, emphasizes ""crowding out"" as a potent factor hindering efforts of business firms to raise funds in the capital markets, which have become ""inaccessible."" Commercial banks and other lenders have become highly selective in granting new credits to all classes of borrowers, according to several districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",991 -beige_book_pure_text_pre2000,1975,"Business conditions showed signs of improvement in most parts of the country, according to this month's Redbook reports. The rise in unemployment appeared to have slowed, but joblessness was not expected to decline soon. Retail sales revived noticeably in most districts, led by seasonal merchandise and some consumer durables. Retailers generally appeared to have achieved comfortable inventory positions. Manufacturing activity continued to be weak, but there were scattered signs of improvement. The inventory situation improved for producers, but stocks were still above desired levels. Automobile sales and residential construction remained sluggish. Financial institutions continued to gain funds, and loan demand remained almost uniformly weak. Agricultural conditions were generally good across the nation. New hirings and worker recalls were cited as evidence of labor market strength. However, new layoffs and labor force increases were expected to keep unemployment rates high. Workers were being recalled by several industries in the St. Louis and Atlanta districts, and Richmond reported a significant increase in manufacturing employment and hours worked. Despite the high level of construction unemployment in Chicago—about 30 percent—building trade unions won wage increases of 5 to 8 percent; in Dallas, increases of 10 to 11 percent were won. Most districts reported a marked improvement in recent retail sales, and retailers apparently felt they had largely re-established sound inventory positions. A revival in consumer confidence, warmer weather, vigorous sales promotions, and price cutting were all cited as important stimulants. Almost none of the retail sales gain was attributed to the tax rebates. Warmer weather was credited with improving soft goods sales in Chicago, Boston, and Philadelphia. Large appliances and furniture sold well in New York, Chicago, and San Francisco. Automobile sales remained sluggish across the country, except in the Atlanta region, where truck sales were particularly strong. District reports on manufacturing activity were mixed. St. Louis, Dallas, and Atlanta, for example, reported some improvement in the sales of textiles and apparel. A Philadelphia survey indicated that new orders were up for the first time since last September, and Richmond reported a firming up in manufacturing shipments and new orders. In the Cleveland district, the decline in manufacturing activity decelerated in May. Respondents to a Minneapolis survey, however, revised their 1975 sales expectations downward. Most durable goods sales were adversely affected by cutbacks in capital spending. Capital goods producers in the Chicago area reported cancellations and rescheduling of orders, while a few encouraging signs in the capital spending sector were noted by Cleveland. Boston, Chicago, Cleveland, and Dallas commented that sales of oil field equipment were down because recent tax increases had dampened oil companies' enthusiasm for drilling. Most respondents said manufacturers had made progress in cutting inventories, but stocks in many cases still exceeded desired levels. The Philadelphia and Richmond surveys, for example, found an improved inventory situation, but further liquidation was expected. Recent gains in residential construction activity in most districts were modest at best. For instance, new housing starts were up slightly in Philadelphia, and new home sales improved somewhat in Chicago. But the stock of unsold houses remained large in the Atlanta district. Residential construction was also slow around St. Louis, although commercial construction was proceeding more rapidly. New York attributed lagging construction activity to current economic uncertainties and to continuing high construction costs. Dallas and St. Louis said that mortgage lenders had been reluctant to lower rates, thereby inhibiting a turnabout in residential construction. Savings inflows at S&Ls continued to be strong, and time and savings deposits were generally up at commercial banks. However, lending policies remained cautious. Overall loan demand at both banks and S&Ls was still sluggish; in the Richmond district, for instance, commercial and industrial loan volume fell steadily in May. Consumer loan demand also remained weak, in large part because of lagging auto sales. Spring planting proceeded rapidly in the nation's corn belt in May. Kansas City expressed concern that a bumper winter wheat harvest might depress farm prices and incomes. Crop conditions were good except in the Deep South where cotton planting was far behind normal and in the areas of the West where cool weather had retarded growth. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",900 -beige_book_pure_text_pre2000,1975,"The decline in economic activity is over, but recovery will likely be protracted, according to this month's Redbook reports. Consumer spending continues to firm in most districts, on the strength of sales of nondurable goods. While retailers have managed to work off inventories to comfortable levels, some inventory liquidation continues in the manufacturing sector—particularly for producers' equipment. Labor markets have stabilized, and some workers that were laid off earlier in the year are expected to be recalled by the end of summer. Residential construction faces a long recovery even though mortgage lending is up in a few areas. Deposit flows continue strong at commercial banks, but loan demand remains weak. Bumper crops are expected in most areas of the nation, and farmers face a decline in grain and soybean prices this fall. Most districts indicate that consumer spending continues to improve, primarily on the strength of nondurable goods sales. Although somewhat stronger, purchases of durable goods remain generally weak. San Francisco states consumers are still cautious and are unwilling to assume debt for big-ticket items. New car sales are up modestly but remain well below the year-earlier level. Foreign cars, on the other hand, are selling briskly, according to Atlanta. Spending for tourism and recreation is up substantially across the country. Retailers have managed to pare inventories to low levels and appear reluctant to rebuild stocks. In fact, New York and Dallas report some retailers may now be understocked, and Chicago reports increased sales would require retailers to restock. Manufacturers' inventories of consumer goods have for the most part been worked down to acceptable levels. But other manufacturers are continuing to run off stocks. Metals inventories remain excessive in New York and Atlanta, and manufacturers of producers' equipment are still liquidating inventories in Cleveland and Chicago. Prospects for industrial output are mixed. Capital goods production continues to fall with no near-term recovery in sight. The outlook for production on consumer goods, on the other hand, is more favorable. Because inventories are generally low at both retail and manufacturing levels, increased consumer spending should quickly result in stepped-up production. Although unemployment remains high, job markets appear more stable than in recent months. Kansas City's survey of purchasing agents, for example, reveals little change in manufacturing employment recently. Several districts report demand in some job categories appears to be firming. In Boston, companies are showing renewed interest in hiring personnel with business and technical skills. And Richmond reports over a third of the manufacturers surveyed have recently begun to rehire. In addition, the start up of production lines this summer will require worker recalls in both Chicago and Kansas City. While there are scattered reports of increased construction activity, home building remains weak throughout the country and will be slow to recover. High costs are the major deterrent to home buyers, according to Boston, New York, Chicago, and San Francisco. Chicago and Dallas mention residential construction is being constrained in some cities by a lack of building sites, as land developers have been unable to obtain financing for these ventures. But New York and Atlanta report improved sales of new homes. In the Southeast, residential construction is on the upswing, largely because of government funding of military housing. And St. Louis and Minneapolis mortgage loan demand has turned up sharply. Deposit flows continue strong at commercial banks, but demand remains weak in most loan categories. According to Dallas and Philadelphia, loan demand is expected to remain sluggish throughout the summer. However, there are scattered reports that bank lending may be picking up. For example, St. Louis notes a rise in loan demand, and Kansas City states that lending for inventory accumulation has risen. San Francisco reports a growing demand for loans by utilities, transportation and energy companies, and the food industry. Bumper crops are expected in most areas of the country, although adverse weather has affected production in some states in the Richmond, Atlanta, St. Louis, and Minneapolis Districts. According to Dallas, farmers fear increased production will lead to lower prices this fall. In the Kansas City District, farmers seem to be holding their wheat in anticipation of higher prices but will have to sell part of the crop before year-end to pay production expenses. A recovery in livestock prices has led to an increase in the number of cattle placed on feed. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",929 -beige_book_pure_text_pre2000,1975,"This month's Red Book District reports again suggest that the recession has come to an end and that recovery is under way. Assessments of the strength of the upswing vary, however. The majority of the respondents expect a gradual pickup in business activity. A somewhat more optimistic tone, however, emerges from some reports, particularly from those Districts where agriculture and the production of nondurable goods loom large. Retail sales, including auto sales, increased over the past month. The reduction in retail inventories apparently has largely run its course, a development that has been reflected in increased orders to and production by the consumer goods industries. The residential construction picture has improved moderately in some areas. The capital goods industry, however, remains depressed, with continued reduction in metal and machinery inventories. Crop prospects appear generally good, except in certain areas of the Midwest affected by drought or flooding. The demand for bank credit is generally described as weak, except for agricultural loans. Regarding consumer spending, Boston reports a modest growth in such outlays, while retailers in the Philadelphia District look for a gradual upturn through the fall. Richmond and St. Louis report that retail sales continue to improve, but that sales of big ticket items remain weak. Kansas City, however, reports particularly strong sales of durable goods. Minneapolis reports that consumer spending has improved since last spring and that the outlook is for further expansion. About half of the Districts report increased auto sales, with particularly good performance reported by Atlanta, Kansas City, and Dallas. Heavy tourist traffic is reported by several Banks, including Philadelphia, Minneapolis, and San Francisco. The reduction of inventories at the retail level apparently has run its course. Indeed, several Banks including New York and Philadelphia report some actual or prospective rebuilding of inventories. Increased new orders, production, and shipments of consumer goods are reported by several Banks, including Cleveland, Richmond, Kansas City, and Dallas. And hand in hand with the increase in activity in the consumer goods sector, notably textiles and other soft goods, the employment situation in those industries has improved, as noted by Cleveland, Philadelphia, Richmond, and St. Louis, among others. On the darker side, the capital goods industry remains in the doldrums. Chicago thus notes that the less vigorous tone in that District compared with the nation reflects the relatively greater emphasis in that area on producers' goods. That Bank reports that order backlogs of capital goods producers continue to erode, that inventory liquidation at the manufacturing level continues in full swing, and that the demand for workers remains very weak. Similar observations are expressed by Cleveland, San Francisco, and Richmond, while Philadelphia characterizes capital spending plans as less than robust. There apparently has been some pickup in the construction of one-family homes, as reported by Atlanta and Chicago. On the other hand, commercial construction-apartments, condominiums, and nonresidential structures-remains weak in most areas. San Francisco notes that construction of all types is being hampered by high costs. Atlanta, however, reports the reactivation of several industrial building projects that had previously been shelved. There are scattered indications that concern is mounting over the possible development of shortages and over the resurgence of inflation as recovery gets under way. Concern over the shortage of natural gas was expressed by respondents in the San Francisco, Atlanta, and Cleveland Districts. Cleveland, moreover, reports that while most of its respondents in general do not expect shortages of materials and capacity to hamper the early state of recovery, a small minority do fear such an eventuality might rapidly develop. A similar view was expressed by purchasing managers in the Atlanta District and by some retailers in the Kansas City District. Regarding the fear of inflation, Philadelphia bankers were in general agreement that inflation remains a potential problem, and St. Louis notes that inflation has re-emerged as a major concern of businessmen as demand begins to pick up. Cleveland reports that several District directors expect the rate of inflation to accelerate. Reports from agricultural areas for the most part continue to point to good crops. However, several Districts-Chicago, St. Louis, and Kansas City-report crop damage from drought in some corn-producing areas, and Minneapolis reports flood damage to potato, sugar beet, and small grain crops. Chicago and San Francisco note that sales of grains to the USSR have put upward pressures on cereal prices. Cash receipts by farmers from sale of livestock and crops, however, were reported by Dallas to have fallen sharply. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",974 -beige_book_pure_text_pre2000,1975,"The tone of the Redbook this month can be described as ""cautiously optimistic."" Virtually every District reports that its economic slide has bottomed out and its economy is moving in a positive direction. The recovery process described by Boston and Chicago is still quite weak, while the rebound in Minneapolis and Dallas is somewhat more solid—though not robust. Unemployment rates are still very high, but this month's reports suggest distinct progress in most Districts. However, inflation shows some well-publicized signs of heating up again. An analysis of the national economy by sector produces an equally mixed picture. The manufacturing sector is weak but seems to show distinct signs of improvement. New orders are up and inventory stocks are down. Retailers report sales slightly above last year's levels, and tourism is rather strong. Current crop prospects in the agricultural sector are inconclusive, and farm earnings for the first six months of 1975 are below those of 1974. Construction is still very weak in most regions of the country. Bank lending to consumers is picking up, but commercial loan demand remains soft. Disintermediation is also showing signs of becoming troublesome in a few Districts. One of the most encouraging developments to surface in the reports this month is a brightening in the job markets across the nation. Many Districts report declining unemployment rates, albeit from very high levels. St. Louis reports that total employment is finally rising again in its region, and one Minneapolis director describes the labor market in a part of that District as ""tight."" Philadelphia, Richmond, and Dallas note a lengthening of the average workweek in their Districts. The outlook for inflation is not as encouraging. In varying degrees, most Districts report renewed concern over rising prices. Directors of the Minneapolis Bank see ""no widespread resurgence of rapid inflation"" for the present, but this confidence is not mirrored in the other reports. Richmond, New York, Chicago and San Francisco all note the anxiety of their respective business communities over the prospect of rekindled inflation. Despite substantial amounts of unused capacity, several basic manufacturing industries are reported to be raising prices. The fear of a reimposition of price controls is mentioned by San Francisco as a reason contributing to the recent price hikes. In most parts of the country manufacturing is starting an upswing. Richmond, Atlanta and Philadelphia all report higher levels of new manufacturing orders. Petroleum, chemicals and metals are strong in the Dallas District, while mining and pollution control equipment are bright spots for Chicago. The process of cutting inventories appears to be nearly over. The only consistently weak area in manufacturing is the capital goods sector, especially for New York and Chicago. Retail sales are a bit more encouraging. New York and Dallas both note that department store sales are quite strong in their regions. Auto sales are also showing gradual improvement. Richmond and New York also mention that the tourist business in those regions does not seem to have suffered much from the recession. The agricultural reports vary from region to region. Chicago is optimistic since recent rains have improved the chances for record crops in several states within that District. However, Kansas City reports that rainfall has come too late to help the fall crops in its area. Both Richmond and Kansas City report that cash receipts from farm marketings for the first half of 1975 were below levels posted a year ago in their regions. The construction industry remains in the doldrums throughout much of the country. Atlanta, St. Louis and Minneapolis report marginal improvements in the health of that sector, but these areas are clearly the exception. The general picture is still one of weak or sluggish markets for single-family housing and very depressed markets for multifamily units. Nonresidential construction is also badly depressed. The dual culprits are reported to be high construction costs and uncertainty about future mortgage rates and financing. The situation of the country's banking community has changed little in the last few weeks. Loan demand is generally weak, with the exception of consumer loans which are showing some life in Richmond, St. Louis and Kansas City. Boston notes that loan officers in its area are still ""occupied with a lot of workouts."" The picture on deposit flows is rather mixed with some Districts reporting net inflows while others report mild outflows. Disintermediation is not yet a serious problem, but several Banks mention concern in their regions that it could become serious. Kansas City and St. Louis both indicate that the possibility of future disintermediation may be a drag on recovery of the housing industry. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",988 -beige_book_pure_text_pre2000,1975,"The general tone of this month's REDBOOK reports is somewhat less confident. Virtually all districts note improvement in conditions, but there are frequent mentions of unsatisfactory gains. Retail sales have increased, but mainly in soft goods with consumers showing continued caution on big-ticket purchases. Inventory adjustments are largely completed at the retail level (unless sales recede again), but many manufacturers plan further liquidations. General price inflation continues, despite weakness in some commodities, and there are fears that increases in the price level will accelerate. References to weak job markets do not seem commensurate with the substantial gains in employment reported for the nation. Unemployment remains at depressingly high levels in all districts. Reports on capital expenditures suggest further weakness, overall. Construction activity has shown no sign of revival except for single-family homes. Fears of substantial disintermediation are slowing new loan commitments by thrift institutions. Business loan demand at commercial banks remains sluggish for the most part. Harvests of major agricultural crops have been generally very good, but Hurricane Eloise caused extensive damage in some parts of the South. Boston's report indicates widespread discouragement with economic trends and emphasizes ""hazards"" to business. Richmond finds the improvement ""less widespread,"" and San Francisco says the recovery is ""slower than expected."" Most districts sound some notes of caution. Perhaps the strongest pictures are presented by Philadelphia, St. Louis, and Dallas. Retail sales have improved modestly in most districts, mainly in apparel and other nondurables. Only Dallas reports a ""marked pickup"" in big-ticket items. However, Minneapolis, St. Louis, and Dallas find that auto dealers are pleased with the reception accorded 1976 models. Chicago and Philadelphia say that consumer credit delinquencies have been reduced. The inventory correction continues. Most districts draw a contrast between manufacturers' continued efforts to reduce inventories and the success of retailers in bringing stocks into line with anticipated sales. Cleveland emphasizes the continued overhang of steel inventories, and Kansas City points up the recent stocking of steel to beat the October 1 price increase. Needs to replenish depleted inventories account for much of the increase in output of chemicals and textiles since last spring. Continuing price inflation remains a major consideration almost everywhere. Cost-push inflation reflects rising labor costs, higher prices for energy, outlays to control pollution, and high interest charges. New York observers see inflation in the 6 to 8 percent range and some fear a ""reacceleration."" None of the districts reported views that the inflation rate would slow substantially next year. Dallas and Philadelphia report a significant rise in manufacturing employment and in the average workweek. But Chicago finds that demand for workers continues weak, and Minneapolis says manufacturing employment declined further in the summer. The weakest job market appears to be in New England where unemployment increased to 12 percent in August. Most districts reported that capital expenditure prospects appear soft for the next several months at least. Cleveland says capital goods orders have strengthened, but from ""very low levels"" last spring. Chicago says most manufacturers of capital goods and components are still cutting output, but demand for large mining and earth moving equipment remains strong. Richmond says 40 percent of manufacturers consider capacity ""excessive."" Dallas reports a very high level of oil and gas exploration in proven fields, but riskier ventures have been deemphasized and exploratory offshore drilling is at a ""virtual standstill."" San Francisco reports weak orders for commercial aircraft and reductions in investment plans for aluminum and lumber. Sales and construction of single-family homes have improved this year throughout the nation, and added gains are expected in 1976 if credit conditions permit. But slowing inflows of funds to thrift institutions constitute a threat to further recovery. New apartment building is at very low levels. Office space is in excess supply with Atlanta reporting a vacancy rate of 20 percent. Chicago says architects have ""nothing on the shelf or the boards."" Atlanta comments at length on the damage done to crops and buildings by Hurricane Eloise and the associated adverse impact on tourism. New York observers are apprehensive over the spreading impact of the financial problems of New York City. Unsettled conditions in the municipal bond markets have ""virtually halted"" major new commitments on government construction projects throughout the state. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",937 -beige_book_pure_text_pre2000,1975,"The economy has continued to recover, according to this month's Redbook reports, but the recovery has been uneven due to a persistent sluggishness in several regions and industries. Retail sales improved this fall, and retailers expect a good holiday season. With some exceptions, manufacturing activity has improved in recent weeks, but building activity has remained off nationwide, and business loan demand has been slow in most districts. Opinions vary concerning effects of a possible default by New York City. Favorable weather conditions have resulted in better than expected crop yields in many areas. The nation's retailers were generally optimistic about their holiday sales prospects because of improved retail sales this fall. However, their optimism was guarded, resulting in tight inventory policies. Consumers were still usually characterized as ""trading down"" or hunting"" and as being ""quality conscious"" and ""exceptionally cautious."" Retailers in the Boston and Cleveland districts experienced disappointing sales this fall and were therefore less optimistic about holiday sales than their counterparts in other districts. For example, a November survey by the Richmond bank indicated substantial sales gains and the first increase in sales of big-ticket items in over a year. Sales of big-ticket items, except furniture, remained weak in most other districts, while clothing was apparently selling well nationwide. Automobile sales presented a mixed picture, with sales increases reported by St. Louis, San Francisco, and Minneapolis. The two latter districts also noted an improvement in truck sales. New York indicated that the new small cars met with a good reception, while the reverse was true in Kansas City. Despite a slight increase in new car sales, Cleveland noted a lack of enthusiasm for the new 1976 models. Present inventory positions were regarded as satisfactory by most retailers, and caution had prompted only modest restocking. Retailers in several districts stated that they preferred the risk of running out of some goods rather than facing an overstocked position after Christmas. Prices were reportedly steady to increasing slightly in most districts, although retailers in Philadelphia noted some easing in prices. Although reports varied, manufacturing activity appeared to be slowly recovering. Surveys by Richmond and Philadelphia indicated improvement, and St. Louis, San Francisco, and Cleveland stated that manufacturing shipments had advanced. Other indicators also denoted better conditions. Richmond, for example, found that inventories had been brought into line with sales. Chicago, however, pointed out that many manufacturers were still cutting inventories but indicated some stocks appeared to be ""approaching leanness."" Philadelphia, St. Louis, and Richmond reported increases in manufacturing employment, but Chicago indicated few companies were actively hiring. Furthermore, while Philadelphia indicated capital expenditures by manufacturers were beginning to pick up, several districts said capital goods producers and steel producers were experiencing continued difficulties. Construction continued to be depressed nationwide, although St. Louis noted a substantial increase in building of single-family units. There was little evidence of a recovery in nonresidential construction. Most districts reported that business loan demand was slow, though seasonal lending needs were up in some districts. Kansas City and Dallas attributed flat loan demand to the moderate pace of inventory rebuilding, while Philadelphia cited present excess industrial capacity and substantial corporate liquidity. Boston and Philadelphia both anticipated little significant increase in loan demand for the next three to six months. Banks were divided in their assessments of a possible default by New York City. Chicago and Kansas City expected the impacts would be relatively minor, and many San Francisco directors felt the market had largely discounted the default. Boston, however, believed that a constructive workout prior to default would save ""some anguish"" and that the Administration had ""underestimated the wrangling, chaos, and cash drain that default would entail."" New York said its district was being adversely affected by the city's difficulties, though directors within the New York district were split in their assessments of the impacts of default. The nation's harvest had been nearing completion ahead of schedule under near-perfect weather conditions. Yields had been better than expected in many areas, and Dallas, Richmond, San Francisco, and Minneapolis were among the districts noting improved farm income prospects. Kansas City and Dallas stated that there had been a sharp upturn in cattle feeding, and Atlanta said that the movement of range livestock to market had been progressing at a record pace. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",925 -beige_book_pure_text_pre2000,1975,"The economy continues to recover but at a lackluster pace. Stepped up consumer spending is providing the primary stimulus for continued growth. Retail sales have improved, and Christmas buying is expected to be strong. In addition, new car sales are well above year-earlier levels. Industrial production has leveled off as new orders have slowed and some inventory liquidation continues, particularly in durable goods industries. Recovery, however, is evident in some nondurable goods industries. The demand for labor is generally weak, and construction is depressed except for some modest pickup in single-family housing starts. Loan demand at commercial banks remains flat, and no substantial rebound is expected in the near term. Lower grain prices have provided greater incentive to increase livestock production. Retail sales have quickened, and merchants are generally expecting a strong Christmas season. The improvement, according to San Francisco, is attributed to a diminution in the rate of price increases for general merchandise and improved consumer confidence. Philadelphia, Atlanta, St. Louis, and Minneapolis report durable goods are selling well; but Richmond, Cleveland, and Chicago note sales of household goods remain sluggish. November sales were held down by unseasonably warm weather, according to New York and Chicago, and Atlanta reports department store sales are weak in Florida. Auto sales are up substantially over year-earlier levels but remain well below the rates of two or three years ago. The pace of overall manufacturing has slackened, and a return to a robust rate of production is not generally expected in the near term. The inflow of new orders has slowed, and some inventory liquidations continue, particularly in durable goods industries. New orders and shipments have fallen for the first time since midyear, according to Philadelphia. Chicago reports steel shipments are off, and some major projects to expand steel capacity in the Midwest are being re-evaluated. The rise in manufacturing employment and the average factory workweek has leveled off, especially in the eastern half of the country. The recovery in capital goods production is uneven according to Cleveland, Chicago, and Minneapolis. Producers in some depressed industries voiced optimism about a turnaround early next year. While production is off in durable goods industries, some nondurable goods industries have staged strong recoveries. Cleveland, St. Louis, and Dallas cite impressive gains in the output of petrochemicals and related products. And apparel manufacturers have experienced a sharp increase in new orders according to New York and Dallas. The strength of labor markets differs markedly from district to district. In the Southwest, the unemployment rate has dropped below 7 percent. The jobless rates in two New England states, by contrast, are double that rate. Cleveland also reports virtually no improvement in employment since the recessionary low last spring. And job markets in Georgia and Florida continue to deteriorate. Bankers report a pickup in deposit inflows and a flat loan demand, especially for business loans. Kansas City reports a sharp falloff in loan requests from national accounts. Interest rates on business loans have edged downward according to St. Louis and Richmond. A slow recovery in loan demand is expected over the next three months by Philadelphia and Richmond. And Boston sees a pickup in business loan demand coming in late spring. Residential construction remains weak in most areas, particularly for multi-family housing. Chicago, St. Louis, Minneapolis, and San Francisco note a revival in single-family starts. Home buying has picked up as mortgage rates have stabilized with a steady inflow of deposits at savings institutions. Both Philadelphia and Cleveland report active markets for existing housing. Kansas City finds no buyer resistance to present interest rates and, like Philadelphia, sees no pressures that would increase rates before March. Nonresidential construction continues at a low level, as many manufacturers regard their current production capacities as adequate. Dallas reports the sluggish pace of nonresidential construction has curtailed the output of construction steel. San Francisco, however, notes some new projects have been undertaken recently. In addition, construction in the Atlanta area will receive a boost when work begins on a new rapid transit system. A bumper harvest has led to a decline in grain prices. San Francisco reports farmers are complaining about the embargo on grain sales to Russia since these commodities are expected to be in heavy surplus. The reduction in grain prices, however, has provided greater incentive to increase livestock production according to St. Louis. Kansas City states the current trend in farm prices should lead to greater stability in food prices in the months ahead. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",971 -beige_book_pure_text_pre2000,1976,"This month's Red Book reports suggest that economic activity is continuing to expand, but that the upward impetus is narrowly based. The most optimistic sector is retail trade, where Christmas sales as well as automobile sales in several Districts were stronger than expected. However, only a modest recovery in inventory spending is anticipated as retailers maintain tight inventory control and as some durable manufacturers continue to trim excessive stocks. Caution characterizes the capital spending outlook, with weakness expected in some sizable industries. Led by activity in the single- family area, construction is generally expected to continue its modest rate of recovery. Although most respondents did not foresee any near-term acceleration in inflation, some concern was expressed over construction costs and the outcome of the heavier bargaining calendar in 1976. One favorable aspect of the price outlook comes from the agricultural sector where there are generally expected to be increased supplies of pork and beef. Loan demand at commercial banks is generally expected to remain sluggish. Strong gains in consumer spending were reported throughout the twelve Districts. Sales far exceeded expectations in several districts including New York, Atlanta, Chicago, Minneapolis, and Dallas. Very strong sales were reported even in some areas in the Boston and Cleveland districts where high unemployment was expected to have adverse effects on consumer buying. Some reluctance toward the purchase of ""big-ticket"" items was reported in New York and Richmond, but Philadelphia, Cleveland, and Minneapolis all reported increases in this category. Auto sales were surprisingly strong in Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco, while tourism was thriving in both the Atlanta and the Minneapolis Districts. While the brisk pace of retail activity has significantly pared stocks, some progress remains to be made in trimming manufacturing inventories. For example, respondents from the Atlanta, Boston, and Chicago Districts reported that Christmas sales were so strong that stocks are now fairly low. However, retailers and purchasing managers in the Minneapolis and Kansas City Districts foresaw fears of overstocking as motivating tight inventory control policies. At the manufacturing level, respondents in the Philadelphia and Richmond Districts noted that durable manufacturing inventory liquidation had yet to be completed. Purchasing agents from the Kansas City District suggested that the rather modest outlook for inflation for most products precluded much in the way of speculative buildups. In view of these considerations, the typical outlook was for only a moderate first-half upturn in inventory spending. A large measure of caution seems to surround the prospects for a recovery in capital spending in 1976. For example, respondents in the New York and Chicago Districts among others did not foresee more than a modest recovery until at least the second half of the year. One of the problems emphasized in the Dallas and Cleveland Districts was the considerable proportion of capital expenditures represented by pollution abatement requirements in the petroleum refining and steel industries. In the energy sector, Dallas respondents report that fixed investment in the drilling area remains strong. However, investment in petroleum refining is expected to be below last year's level reflecting, in part, refiners' expectations that higher petroleum costs will result in a long-term flattening out in demand for many refinery products. In the San Francisco District another sizable area of concern was the aircraft industry where a decline in new orders for commercial jets has prompted a significant cutback in plant and equipment expenditures for 1976. Construction and real estate activity remain generally depressed, although there were a few signs of strengthening. Atlanta and Minneapolis both report continued sluggishness in new residential construction but increased interest in the existing housing stock. San Francisco reports that the anticipated improvement in residential construction has not yet materialized. St. Louis presents a somewhat brighter picture, reporting a strengthening in single-family dwellings as well as in non-residential construction. Chicago and Dallas also report a continued improvement in residential construction activity. But commercial construction, with few exceptions, is still weak. Also, a large number of condominiums remain vacant in the Atlanta District, and the construction of Reports from agricultural areas are generally favorable. Richmond, Atlanta, Minneapolis, and Kansas City all expect increases in hog production and pork supplies. Improved conditions for cattle producers are anticipated in the Atlanta District as they are in Minneapolis, Kansas City, and San Francisco. Only the Dallas District is somewhat pessimistic, expecting placements of fed cattle to fall as their prices continue declining. Minneapolis reports cash farm receipts were up from the first half of the year, led by record prices for dairy products. Cash receipts for grain, however, were below 1974 levels. The widespread remaining slack in manufacturing coupled with the generally expected near-term sluggishness of capital spending and rather modest inventory rebuilding were often mentioned as factors holding down inflation at least over the first half of the year. Nevertheless, the possibility of uncomfortably large price increases in some sectors was recognized by some respondents. For example, a Cleveland director reported sharply rising costs for concrete and lumber, while one of the nation's largest homebuilders expected a 10 percent rise in new home prices in 1976. Respondents in the Cleveland District also reported that the October 1 rise in steel prices appeared to be sticking fairly well, although divergent views were expressed elsewhere on the firmness of the aluminum price increase. Some concern was voiced over the possible price impact of the potential terms of settlements of major wage negotiations in 1976. A rather broad consensus emerged that loan demand was weak and that no strong near-term recovery was in the offing. A number of respondents cited tighter inventory control policies as a major reason for the prospective sluggishness in loan demand. Reflecting this outlook, bankers in the Philadelphia District expected the prime rate to edge down somewhat further before starting to move up gradually beginning in the second quarter. Bankers from the Boston and San Francisco Districts, among others, emphasized the much increased concern over quality of credit. With respect to bank earnings, these bankers foresaw a weak profit picture for 1976. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1292 -beige_book_pure_text_pre2000,1976,"Strong retail sales are the key to a generally optimistic outlook for the Redbook this month. Nearly every District focuses attention on the strength of consumer demand as an indication that the economy may be regaining some of the momentum it lost in the latter months of 1975. The picture is still far from rosy, but the outlook is distinctly more optimistic. Even though capital goods industries are still weak, the rest of the manufacturing sector is gaining strength. Inventories have been brought into line with sales and new orders are up. Two persistent weak spots—the construction industry's slump and high urban unemployment—remain gloomy, but inflationary pressures seem to be moderating in several Districts. While there is little disagreement that ""catch-up"" efforts in wage negotiations scheduled for 1976 pose a problem for stabilizing production costs, there are differences of opinion on the likelihood that food prices will rise significantly during the next few months. The financial sector continues to build liquidity rather than expand. Savings are flowing into commercial banks and thrift institutions at very rapid rates. This is putting downward pressure on mortgage rates. However, despite low interest rates for business loans, demand for credit remains sluggish. Reports from 10 of the 12 Districts indicate that the surge of retail sales experienced in December was no fluke. In each case, the bulk of the gains recorded at the end of 1975 were preserved through January. ""Big-ticket"" items are leading the sales surge in most areas. Cars, trucks, appliances and furniture are all selling well. Chicago, Philadelphia and Minneapolis note that apparel sales are also strong. In general, retailers appear to have their inventories at levels which they feel are sustainable and are increasing their stocks only to the extent needed to meet revised sales forecasts. The manufacturing sector continues its upswing. Cleveland notes that steel producers are experiencing a gradual recovery while Kansas City and Chicago both point to rising sales forecasts as a spur to automobile production in their Districts. In most industries manufacturing inventories are now either in line with sales or nearly so. Dallas reflects the findings of most District Banks in reporting that business continues to be reluctant to rebuild inventories now that stocks have been cut back. The manufacturing sector's advances seem to be most hesitant in the Richmond District. That region had experienced substantial improvement in late 1975, but this month's report indicates a retrenchment may be occurring. New orders and backlogs both softened during January in that District. Capital goods manufacturers have yet to participate fully in the recovery, and in the Boston District capital goods orders are still ""feeble."" St. Louis and Minneapolis report similar weakness. Cleveland describes farm machinery and mining equipment as ""holding up well,"" while Richmond's machinery and equipment group is one of the few sectors showing progress in that region. The construction industry remains in the doldrums throughout much of the country. Residential and nonresidential construction activity were both lower last quarter in the Cleveland District, and Boston's real estate and housing markets remain ""depressed."" Atlanta finds itself with very large amounts of vacant office space that resulted from overbuilding. However, the city is trying to turn substantial recent additions to its hotel room capacity into a plus by searching for more convention business. The San Francisco District reports that its stock of unsold housing and high building costs are continuing to discourage new residential construction even though mortgage rates are dropping. There has been relatively little progress so far in reducing the nation's unemployment problem. Chicago finds that ""job markets are improving gradually but unemployment remains very burdensome in the inner cities."" St. Louis finds its region in a similar situation. The Dallas region is one of the few in the country where the problem is not severe. Increasing job opportunities in the oil industry have helped to bring the area's unemployment rate below 6 percent. By contrast, San Francisco reports the opposite problem since its area's aircraft industry is once again badly depressed and its employment is dropping. The best that can be said of inflation is that it may be moderating. Prices continue to rise virtually everywhere, but no District reports any unusual increases. New York and Kansas City both note predictions from sources in their Districts that food prices will be declining in the months ahead—courtesy of good harvests, heavy plantings and intensified preparation of livestock for meat production. The Chicago District report, however, disputes this forecast. New York, Richmond, Chicago and Minneapolis all mention the concern that ""catch-up"" raises will be the objective of 1976 wage bargaining. The current outlook for agriculture is mixed. With the exception of soybeans, forecasts call for planting additional acreage in most major crops. The outlook for 1976 crop harvests at this point is generally positive. However, farm income is currently under pressure because of declining grain prices. According to the Minneapolis report, the price decline is also resulting in slow debt repayment and requests for additional inventory financing at rural banks. The situation of the country's banking community has not changed substantially in recent weeks. Savings inflows are generally strong, while business loan demand continues to be weak. For instance, Richmond reports that some of the banks in its District are experiencing unusually low levels of credit line utilization. Even aggressive loan pricing efforts (Philadelphia) are producing little new business. The Dallas District banks seem to be relatively busy with agricultural and consumer loans. But despite the comparative strength of that region's economy, commercial loan growth is described as ""lackluster."" The only development of significance is the downward pressure that savings inflows are putting on mortgage rates, especially in thrift institutions. Boston, Cleveland and Chicago all report declining financing costs for mortgage loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1231 -beige_book_pure_text_pre2000,1976,"The picture that emerges from virtually all of this month's District reports is one of a resumption of a vigorous upswing in the economy following its pause late last year. Strong retail sales, including autos and other durable goods as well as nondurables, are reported by most Districts. Business inventories with a few exceptions are now in line with sales, and some restocking is getting under way, notably at the retail level, but also, if to a modest extent, at the manufacturing level. The residential construction outlook continues to brighten in several areas, although commercial and industrial construction generally remain sluggish. Against this background, the employment picture has been improving. Business attitudes towards capital expenditures, however, continue cautious. The outlook for the 1976 crop year is mixed. The demand for bank credit generally remains flat. Virtually all Districts report further advances in the pace of consumer spending, with retail sales variously characterized as healthy, brisk, and stronger than expected. This trend, moreover, is generally expected to continue over the coming months, with a good Easter season in the offing and, as reported by one Bank (Philadelphia), with expectations that fall will be better than spring. Particularly encouraging were reports by most Banks that the improvement has been shared by both soft and hard goods. Across the board increases, broad-based strength, and dramatic improvement in major household appliance sales are mentioned in several reports (including Cleveland, Chicago, Richmond, and St. Louis). Strength in auto sales is mentioned in about half of the reports, and most The strength in retail sales has improved the inventory picture at both the retail and the manufacturing level. Retail inventories are generally found in good shape and at or below desired levels, and a number of Banks report moderate efforts by retailers to rebuild depleted stocks (Philadelphia, Richmond, Atlanta, Chicago, and St. Louis). Cleveland, however, reports that retailers are not expected to build inventories until late this year. At the manufacturing level, Philadelphia reports that inventory liquidation has given way to a modest accumulation, while Dallas reports a rebuilding of chemical inventories by users, and a build-up of finished goods by producers. A strengthening in the demand for steel, aluminum, lumber products, and similar basic products is noted by some Banks (Cleveland, San Francisco, and St. Louis). The gradual improvement in residential construction that had already begun to emerge in some areas continued in evidence over the past month, with a number of Banks reporting increased building activity (including Atlanta, St. Louis, and San Francisco). The improvement, however, as yet remains largely concentrated in single-family building (although Atlanta also reports an improved outlook for apartment building). Industrial and commercial construction have yet to show convincing signs of a revival. The picture in the capital goods industry has brightened somewhat over the period but in general business outlays for plant and equipment continue to lag the recovery. Among others, Cleveland notes that while there has been some pick-up in orders of equipment from depressed 1975 levels, respondents in that District do not expect a sharp recovery until 1977; manufacturers in the Richmond District view plant capacity as still excessive; and Chicago reports the outlook for capital goods to be mixed. The increased tempo of business activity finds its counterpart in a generally improved employment picture, with increased hirings and/or declining unemployment mentioned by a number of Banks (including Philadelphia, Richmond, St. Louis, and Chicago). More restrained reports, however, emanate from Boston and New York. Reports from agricultural Districts regarding the outlook for 1976 crops are mixed. Kansas City and Dallas note substantial drought and wind damage to the winter wheat crop, but the former indicates that timely precipitation could improve production prospects considerably. Minneapolis reports that most of the District's agriculture has not been affected by drought, and prospects for a good winter wheat crop in the St. Louis District are reported excellent. Most Banks report the demand for commercial bank loans in general continues flat, in part reflecting the higher level of corporate liquidity. Respondents in a number of Districts, however, note scattered evidence of some strengthening in loan demand (including Richmond, St. Louis, and Kansas City), and some mention expectations of a pick-up as the year progresses. Deposit inflows at thrift institutions generally remain good, and some increase in mortgage loan demand is noted. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",950 -beige_book_pure_text_pre2000,1976,"The recent surge in consumer spending is broadly based. Auto sales and ""big ticket"" items are reported to be selling well and exceeding expectations, according to nearly all District reports. New York describes the consumer as being less price conscious. Atlanta reports tourism is ""booming"" on the east coast of Florida and advance bookings for central Florida are heavy. Several Districts commented that retailers are bullish with respect to prospects through 1976. Tight control seems to keynote comments concerning retail and manufacturing inventories. Higher consumer spending has yet to be translated into higher inventories. Retailers are apparently cautious with respect to building stocks and they are more likely to err on the low side, although a large department store chain will apparently boost its inventory. Low inventories for controls, motors, and timber have strengthened orders for those products, while tire production has been boosted because of an anticipated work stoppage in the rubber industry as well as low stocks relative to sales. Manufacturers' stocks are still excessive, according to the Richmond survey, but the latest survey conducted by Philadelphia indicates that about one-half of the respondents plan to build their inventories over the next 6 months. Chicago notes beginnings of inventory buildup of purchased materials and components, while New York expects cautious rebuilding of inventories that will accelerate with recovery in capital goods. Manufacturing activity continues to strengthen, despite the lack of thrust from capital goods. Forecasts of steel output for 1976 are being adjusted upward as a result of completion of inventory liquidation and better than expected auto, truck and appliance production, according to Chicago and Cleveland. Atlanta reports allocation of certain types of steel in the third quarter is likely. Considerable uncertainty and caution mark comments with respect to capital goods. New York and Boston see little evidence of recovery while Chicago, Cleveland and Richmond see some pickup in orders for non-electrical equipment and machinery, Cleveland reports machine tool orders continue to rise gradually, while higher than expected orders for printing equipment, bearings, and certain types of construction machinery have led to upward revision in forecasts for those industries. A broad pickup in capital goods is not expected until late 1976 or early 1977, according to Chicago and San Francisco. Construction continues to be marked by strong demand for single-family housing. Multifamily housing and nonresidential construction remain weak throughout much of the country. Demand for new single-family housing appears strongest in the Southwest, the Midwest, and Southeast. In other areas, however, the market appears strongest for existing houses, and only limited or moderate recovery in new housing is reported. Multifamily construction remains depressed, although scattered positive signs are appearing in some areas. There is very little evidence of a pickup in industrial construction, and St. Louis reports only scattered increases in activity in nonresidential construction. Reports from agricultural areas suggest conditions are favorable despite drought and an early freeze that could affect crop output. St. Louis, Minneapolis and Richmond report spring planting is ahead of normal in several areas. St. Louis describes prospects for the winter wheat crop as ""excellent."" although Kansas City expects output this year will be off by about 20 percent from last year. Expected increases in spring wheat production coupled with a large carryover of stocks from the last crop year are expected to offset some of the decline. Kansas City expects that expansion of red meat supplies during the second half of 1976 will constrain livestock prices, despite recent strengthening. Pork and beef output is expected to be about 2 to 3 percent above 1975 levels. Weak business loan demand is continuing throughout the country, but consumer and mortgage loans have been strengthening in several Districts. Philadelphia reports that some banks are more aggressively encouraging customers to use existing lines of credit, while some larger banks in the St. Louis District are offering loans at below the prime rate to larger business customers. Bankers in Philadelphia do not expect loan volume to increase until the third or fourth quarter. Sluggish loan demand is associated with ample corporate liquidity and rate spreads between the prime rate and commercial paper, according to San Francisco, St. Louis and Kansas City. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",892 -beige_book_pure_text_pre2000,1976,"This month's District reports suggest that the overall recovery is continuing at about the same rate as during recent months. Sales of consumer goods remain generally strong throughout the country, although there are scattered indications of some moderation of consumer demand. Manufacturing activity appears to be accelerating. Several industrial Districts report further increases in orders and shipments and lengthened delivery schedules. Conditions are particularly tight in the steel industry. Despite the continued improvement of sales and output, most Districts indicate that both retailers and manufacturers are following cautious inventory policies. Reports regarding the outlook for business fixed investment continue to be mixed, but there are signs of increasing strength in this sector in the industrial Midwest and Southeast. Most Districts report further moderate increases in single-family home building but continued weakness in multi-family unit construction. Agricultural conditions are generally favorable, with crop plantings either on or ahead of schedule. Although consumer and farm loans are increasing in several Districts, business loan demand remains stagnant throughout the country. Consumer spending remains the strongest force sustaining the recovery. The reports of several Districts, including Boston, Richmond, and St. Louis, suggest that consumer demand for big-ticket durable items is now expanding rapidly. Automobile sales are strong throughout the country. New car demand appears to be centered increasingly on large domestic models. Subcompact sales are sagging. Although retail sales remain buoyant overall, there are scattered reports of weakness. Philadelphia reports a recent slump in carpet sales. Both Cleveland and Chicago indicate that television sets are moving slowly, and Kansas City reports sluggish sales of durable goods in some areas. Manufacturing activity appears to be accelerating. Manufacturers surveyed by the Philadelphia and Richmond Banks indicated increases in orders and shipments, and several Districts report lengthened delivery schedules. Increased appliance and automobile production has greatly increased the demand for flat-rolled steel. Cleveland indicates that steel producers in the Fourth District are presently operating at about 90 percent of capacity compared to 70 percent earlier this year. Chicago suggests that steel shortages might arise later in the year if capital goods manufacturers increase their demand for steel. The generally increased demand for industrial goods has contributed to recent increases in the prices of key industrial commodities. Several Districts report that businessmen expect an acceleration of industrial price increases as the year progresses. Despite the continued recovery of sales, inventory restocking is proceeding cautiously in most areas at both the retail and manufacturing levels. Philadelphia, Richmond, Dallas, and San Francisco indicate that factory inventories have remained flat in recent weeks. Some retailers in the Richmond and Kansas City Districts reported stocks at higher than desired levels. Although the outlook for business capital spending remains uncertain, several Districts indicate favorable developments. Atlanta reports numerous recent announcements of new plants to be constructed in Alabama and Tennessee. Cleveland reports a sharp upsurge in the demand for heavy-duty trucks, bearings, and machine tools. Chicago suggests a growing belief that margins of unused industrial capacity may have been overestimated. In contrast, however, Boston reports little change in orders for producers' durables. Comments regarding residential construction follow the pattern of recent months. Construction of single-family housing continues to increase at a moderate pace in most Districts, and the outlook in this sector is generally favorable. Multi-family unit construction remains sluggish, although St. Louis reports improved prospects for multi-family building in the St. Louis metropolitan area. Most Districts report favorable agricultural prospects. Chicago, St. Louis, and Minneapolis indicate that crop plantings are on or ahead of schedule in their Districts. Kansas City reports that recent rainfall has broken the drought in that area and substantially improved winter wheat crop prospects. Kansas City expects the high prospective level of grain stocks to assist in holding retail food prices to their smallest increase since 1972. Agricultural conditions in the Southeast are less favorable than elsewhere. Atlanta reports that dry and cold weather has damaged cotton crops in some areas. While consumer and agricultural loan demand has increased in some Districts, no District reports any increase in business loan demand. Philadelphia and St. Louis report that prime business borrowers can obtain money at rates below the announced prime rate. Inflows of funds into thrift institutions have remained strong. Cleveland, Chicago, and St. Louis report that thrifts are seeking to reduce these inflows by reducing rates paid on longer-term savings certificates, and Cleveland indicates that thrifts would like to reduce passbook rates. Mortgage rates have declined to the 8 1/2 - 8 3/4 level in recent weeks in several Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",984 -beige_book_pure_text_pre2000,1976,"Continuing expansion at uneven rates characterizes this month's economic reports. Although capacity utilization is high in several major industries, shortages of raw materials, components, and finished goods remain the exception. The pace of consumer spending slackened somewhat in most areas in late April and May. However, opinion varies widely concerning the implications of this tendency. A positive outlook persists but is heavily tempered by caution in inventory building and capacity expansion. Price behavior appears fairly normal for a cyclical expansion; increases are primarily in sectors where spot shortages or a need to adjust to rising costs exist. Demand for business loans is flat or increasing slightly. Adverse weather conditions have affected yields of several major crops. Major industries report generally high capacity utilization rates. Yet, capacity is regarded as adequate for the next 6 to 12 months in almost all industries. Shortages are expected to be temporary in most cases or confined to a relatively limited sector affected by unique conditions. With some exceptions, and a caveat concerning comparability of reports, high utilization rates are found in paper (90 to 100 percent), wood products, steel (80 to 90 percent), textiles (85 to 100 percent), apparel, chemicals (80 to 100 percent), oil refining (85 to 90 percent), and automobiles (80 to 100 percent). Low utilization rates are confined to furniture, aluminum, machine tools, and agricultural chemicals. In each industry, however, a more meaningful impression is obtained by differentiating between particular products. In the steel industry, for example, flat-rolled steel used in consumer durable goods is in fairly tight supply, as are foundry products such as castings. Abundant capacity and supplies exist of other products used for capital goods and heavy construction. Current shortages are few, across the board, and generally reflect special conditions. Foundry products, for example, are frequently mentioned as an area of potential shortages. Both Chicago and Kansas City note that closing of foundries because of EPA regulations is reducing capacity in this industry. Other facilities which are similarly affected are coke ovens and forging operations. Several responses indicate that coke supplies are a potential raw material problem for steel producers. The primary current bottleneck in most Districts is the supply of natural gas to users on interruptible contracts. Uncertainty concerning natural gas supplies is widespread and has resulted in substantial capital investment in stand-by energy systems. Concern also exists about the reliability of natural gas liquids used as feedstocks in chemical processes. Slackening consumer spending, beginning in about mid-April, is noted in a number of reports. In most areas, durable goods sales, especially automobiles, remain strong; nondurables, particularly apparel and department store sales, have weakened. Explanations include cool weather, smaller tax refunds, a shift from nondurable to durable purchases, as well as a return to a sustainable growth rate. Boston reports some retailers are cutting back on future commitments, while Philadelphia expects such action to follow, should the present tendency be confirmed. Dallas reports that the fall apparel market, held in May, was weak for women's and some men's clothing lines. Richmond and Philadelphia note continued optimism among most retailers; Cleveland finds that some remain positive, but one director fears a spending decline serious enough to ""trigger a double-bottom recession."" Each of these three Districts notes an excessive level of retail inventories. The inventory condition of manufacturers varies greatly. Dallas finds factory inventories manageable, and Kansas City notes attempts by many firms to retain a lean inventory position. Philadelphia finds a decline in inventories of manufacturers for the first time since January, but Chicago reports cautious inventory building. One-third of the manufacturers in the Richmond District report an excessive inventory level, with most others indicating satisfaction with their condition. Capital spending remains static. Boston finds a disappointing demand for machine tools. Chicago notes an improvement in capital goods orders but expects no uptrend until late in 1976. Cleveland expects little gain in the strength of fixed investment during the second half. An exception exists in the case of capital investment in agriculture, where strength is noted by Minneapolis and Chicago. New York, Chicago, Kansas City, and Cleveland find environmental regulations to be a source of uncertainty and a major disincentive to capacity expansion. Price behavior is consistent with a normal cyclical pattern. Spot shortages have caused sporadic price increases, as in newsprint; but in cases such as heavy crude oil, chemical fertilizer, and carpet yarn, oversupplies are causing price shading. Prices are generally expected to behave normally within the context of a cyclical recovery. Loan demand continues to increase slowly. Business loans have inched up,"" according to St. Louis, Richmond, and Kansas City but have not increased in Philadelphia. Gains in consumer loans are widespread. St. Louis reports moderating savings inflows. Kansas City finds some banks beginning to rebuild certificates of deposit. Minneapolis reports that the recent drought will almost certainly curtail crop yields in Minnesota and has now spread westward into the Dakotas. The main impact is expected on prices of barley, oats, flax, and durum wheat. San Francisco reports weak demand, low prices, and surpluses of beans, potatoes, and wheat. However, a possible beef shortage is foreseen for late 1976. Richmond notes a sharp decline in the winter wheat crop and freeze damage to the peach crop. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1168 -beige_book_pure_text_pre2000,1976,"The prospect is for a sustained economic expansion in the last half of the year. Although the majority of the Districts report that activity moderated in the second quarter, the outlook for the rest of the year is optimistic. Retail sales, although somewhat weaker this quarter, are expected to pick up. Manufacturing output shows little sign of weakness and it is not being hampered at this time by capacity limitations. Generally inventories are being kept under control and no build-up is anticipated. Residential construction continues to recover in most Districts but multiple-housing and commercial construction remains weak. Despite some problems with weather conditions, agricultural prospects are good. Demand for business loans continues sluggish in most Districts. The growth of retail sales slowed somewhat in the second quarter in most regions. This slowing is expected to be temporary and retailers are optimistic about prospects for the rest of the year. Soft goods sales are generally good but major appliances exhibit more variation in demand. Some Districts (Chicago, Minneapolis) report weakness in appliance sales but others (Philadelphia) are experiencing good demand. Appliance manufacturers in the St. Louis District are experiencing a slowing of orders. Expenditures on tourism are high in most vacation areas (Atlanta, Philadelphia, Minneapolis). Consumer spending for automobiles is high, and larger and intermediate sized models are in great demand. Some weakness is evident in small car sales. Chicago reports that the smallest auto producer which concentrates on small models has stopped assembly of 1976 models earlier than usual, while the larger manufacturers are pushing production of their large cars. At present, the strike of tire manufacturers is not causing problems for car manufacturers. Manufacturing activity generally continues to expand. Demand for steel has increased (Chicago, Cleveland) and order books are full for flat rolled steel. Farm equipment sales show a mixed pattern. In Chicago, sales have exceeded expectations, but in Atlanta they are described as poor. Aircraft production prospects have improved primarily because of increased government contracts (St. Louis, San Francisco). The pattern is mixed for machine tools; Cleveland reports increased orders but Boston and Atlanta manufacturers' sales remain low. For most industries, operating rates are below capacity. Capacity is being increased by many producers. Philadelphia notes that one-third of its survey respondents plan to increase their plant and equipment expenditures. Producers of aluminum, glass containers, and certain plastics are approaching full capacity. Shortages are not widespread although manufacturers may face problems in obtaining sufficient natural gas supplies (Chicago, San Francisco). Gasoline is not expected to be in short supply this summer, but New York reports a forecast of tighter supplies later in the year. No major build-up in inventories is in prospect. Most retailers and manufacturers regard their inventories as adequate, however in the Richmond District, 70 percent of retailers surveyed thought their inventories were excessive. Retailers are following a cautious policy in rebuilding stocks despite an optimistic sales outlook (Boston, New York, Philadelphia, St. Louis, San Francisco). Residential construction is recovering at a moderate rate in most Districts and it is described as good in the Kansas City District. Some concern is expressed about the effect of higher prices dampening the growth of sales (St. Louis, Minneapolis). Multiple-housing and heavy construction remains weak; Dallas reports the greatest weakness is in highway construction. The agriculture outlook for most crops appears to be improving. Drought conditions have ended in several Districts (Minneapolis, St. Louis) and yields are expected to be good while prices will be firm. St. Louis and Atlanta note that cotton acreage is being reduced because of wet weather. Cattle prices may recover later this year, but they have been falling recently. Low prices have resulted in less cattle being placed on feed (Dallas). Kansas City reports excellent prospects for the wheat crop in its District, although nationally the crop should be lower than in 1975. Crops such as soybeans and corn are likely to be larger than last year according to Chicago, St. Louis and Atlanta. Commercial banks are experiencing sluggish business loan demand and little strengthening is expected. The major exception is Kansas City where strong increases are reported. Consumer lending in the Boston District is relatively strong. Boston and New York banks are experiencing strong competition from savings institutions whose deposit-accepting and lending powers have been increased. Cleveland and Kansas City savings and loan associations report strong mortgage loan demand. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",947 -beige_book_pure_text_pre2000,1976,"This month's District reports suggest that the economic advance has continued at about the moderate second-quarter rate. Automobile sales remain strong, but department store sales softened in July. Retailers are still generally optimistic about the sales outlook, however. Manufacturing activity appears to be expanding, albeit at a modest pace, and there are indications that firms are beginning to revise capital spending plans upward. Capacity appears ample for the time being. While construction of single-family residences continues to increase, building of multiple-family dwellings remains very sluggish. The agricultural situation is generally favorable, although inadequate moisture may reduce crop production in some areas. Commercial bank lending to business continues to show little if any strength; loans to consumers are still on an uptrend. Readings on consumer spending are mixed. Automobile sales remain strong, with demand favoring large- and intermediate-size American cars, some of which are in short supply. Department store sales, on the other hand, softened in July and generally have been below expected levels, although Atlanta reports healthy gains stemming from expanding convention and tourist trade. While retailers for the most part remain optimistic, there are indications that some have scaled back sales forecasts for the second half of this year (Boston, Minneapolis, Kansas City). There are also scattered reports of heavier than desired inventories at the retail level, but serious imbalances thus far have been avoided, in part because of cautious inventory policies. Manufacturing activity appears to be expanding at a moderate rate. Increases in new orders and shipments are reported by Philadelphia, and Chicago indicates that order backlogs for steel remain substantial. Richmond and St. Louis, however, report a leveling-off in manufacturing activity. Cleveland indicates an easing of tight supplies of certain steel and chemical products as a result of a slowing in orders. While the rubber and coal strikes have not had much impact as yet, the coal strike could affect steel output because coke is already in short supply. Further increases in industrial materials prices are in the offing, although these may be of relatively modest proportions (New York, San Francisco). Capacity remains adequate in most sectors, and outright shortages so far have not materialized. Steel lead times have shortened recently, and steel capacity is judged sufficient for the remainder of this year and most of 1977. Similarly, chemicals and most capital goods industries have ample capacity. There is concern about the future availability of a variety of metal products and of natural gas, although in this regard Chicago and Dallas indicate that a pickup in drilling of gas wells is expected once the new ceiling prices on interstate natural gas shipments become effective. Manufacturers continue to manage inventories cautiously, and changes in stocks are generally small. There are scattered reports of inventories above desired levels, but others indicate that producers' inventories are lean. The recovery in capital spending remains modest. There are signs, however, that firms are beginning to reuse capital spending programs upward. Chicago reports that plans previously shelved by automobile and steel companies are being revived; orders for transportation equipment have also improved. Atlanta indicates that capital spending plans have been raised by chemicals and by textiles and related industries. Moreover, export demand for capital equipment is reported strong, with significant orders from the USSR and from OPEC. Some Districts report continued growth in home building, with activity concentrated in construction of single-family units. Apartment construction remains sluggish. Demand for mobile homes is very strong (Dallas). Comments on nonresidential construction suggest that it is still weak (Minneapolis, New York), although the possibility of some pickup in activity is foreseen. Mortgage funds are generally available, although St. Louis notes some recent upward pressure on mortgage rates and the full effects of the sale of the 8 percent Treasury note on savings flows are not yet apparent. Business loans continue to show little if any growth, and bank lending rates have tended to decline. Kansas City reports, however, that most of the District commercial banks contacted were slow to move to the 7 percent prime rate, with some respondents still posting a rate of 7 1/2 percent. Consumer loans are generally rising moderately. Loans to agribusinesses and farmers are increasing. The agricultural outlook is favorable for the most part. St. Louis reports that recent rains have improved yield prospects for some crops, and Atlanta notes that a new irrigation system is enhancing yields in part of Georgia. Kansas City suggests that increases in cattle prices will be only modest over the remainder of this year. Inadequate moisture has caused concern in some areas (Richmond, Chicago), while cotton acreage has been adversely affected because of excessively wet weather. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1001 -beige_book_pure_text_pre2000,1976,"Continued moderation in the pace of economic activity highlights reports from most Districts. Several Districts report spurts in retail sales in August, but few report signs of strengthening in manufacturing and housing. The recovery in capital goods continues at a gradual and uneven pace, and the outlook does not suggest substantial acceleration in the short-term. Concern over possible shortages and bottlenecks appears to have diminished with the slower rate of recovery. Business loan demand remains weak, and there is little indication of much revival for the next several months. Drought, especially in the corn belt, has reduced harvest prospects for corn, soybeans and cotton, suggesting possible upward price pressures for those crops and for cattle. Most Districts report a spurt in consumer sales in August. The pickup reported in most areas was mixed, but New York was especially encouraged by ""substantial momentum in recent weeks"" across all product lines. New car sales were strong across the nation, but other big-ticket items and the tourist trade moved well only in some Districts. The outlook for consumer spending for the rest of the year ranged from continued steady improvement in Philadelphia, Cleveland, Chicago, and San Francisco to little change in Richmond. Manufacturing activity continues to improve gradually and unevenly. Further strengthening is noted in Philadelphia, Atlanta, St. Louis, and Minneapolis; but Cleveland reports declines in steel, Atlanta and St. Louis declines in paper, and Dallas reports slower growth in chemicals. Philadelphia's most recent survey of manufacturers showed that two-thirds of the respondents expect continued gains in manufacturing over the next 6 months, and Minneapolis reports its latest survey showed manufacturers expect substantial gains in sales for the next three quarters. Reports on residential construction suggest fairly strong demand for single-family housing. St. Louis notes that low vacancy rates for apartments in St. Louis and Little Rock spurred plans for new apartment projects. A special sales incentive program doubled condominium sales in Memphis. San Francisco reports a rise in home building in Southern California and Utah has stimulated lumber sales production. Despite the moderated pace of recovery, businessmen are still optimistic over prospects. Cleveland, Philadelphia, St. Louis, and Kansas City all indicate little fear exists that the recovery will prematurely peak. Nevertheless, inventory and capital spending plans of business appear to be cautious. Richmond reports that some manufacturers still view their inventories as higher than desired. Philadelphia's survey shows manufacturers plan little addition to inventories for the next 6 months. There is still some liquidation of stocks, including copper, linerboard and corrugated paper, electrical machinery, and sheet steel. There is still little indication of a surge in capital spending. Ample capacity and projections of only moderate growth in demand over the next year or so are among factors that are dampening spending. For capital goods producers, recovery is spotty. Perhaps most encouraging reports are those from Chicago and Cleveland, where sizable increases in machine tool business occurred in the last few months. Recent increases were also noted for heavy-duty trucks and drilling rigs. However, both Chicago and Cleveland comment that demand for machinery, such as cranes, construction machinery, and mine shovels, is still weak. Concern over shortages appears to have diminished. Tightness in steel products virtually disappeared with the sharp drop in demand for flat-rolled products, which some producers were informally allocating a few months ago. Spot shortages may appear for a limited number of products, such as special castings, snow tires, and some chemical products, but District reports suggest no widespread bottlenecks or shortages are now apparent or in prospect. Business loan demand remains weak and the outlook suggests little to moderate recovery over the next several months. Boston and San Francisco cite the lack of inventory building, the inability to recover return on investment, and the availability of funds from other sources among reasons for the continued sluggishness. Drought in several parts of the country has reduced yield estimates for corn, soybeans, and cotton, according to reports from St. Louis, Kansas City, and Minneapolis. However, Kansas City reports the corn harvest is still expected to slightly exceed the record 1975 harvest. Sharp declines in supplies of soybeans from 1975 will likely cause upward price pressures, but the outlook for corn prices remains uncertain. Minneapolis, San Francisco, and Richmond report wheat, fruit crops, and flue-cured tobacco harvests are expected to range from good to excellent. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",959 -beige_book_pure_text_pre2000,1976,"District reports generally suggest some recent moderation in the pace of overall economic expansion as well as in the rate of inflation. For the most part the manufacturing sector continues to expand but at what is characterized as a sluggish, modest, or less vigorous rate. Retail sales have been erratic in recent months but are apparently increasing at a moderate rate over time. New automobiles are selling well in the Atlanta, Chicago, and Minneapolis Districts. Current outlays for capital goods have yet to improve significantly. New York and Cleveland, however, report a pickup in capital goods orders. Construction of single-family housing is showing strength in the Chicago, Minneapolis, and Dallas Districts and remains firm in St. Louis' District despite some recent leveling off. Other construction remains basically weak except in the Atlanta District. The agricultural sector remains depressed, suffering from the recent drought, soft commodity prices and erratic weather conditions. Most districts appear to be experiencing some abatement of upward price pressures but price expectations have not been affected uniformly. Soft demand, slower growth, and excess capacity are causing downward revisions of some inflation forecasts. On the other hand, New York, Cleveland, and Kansas City cite continued concern over inflation among some businessmen, due to continuing cost pressures, notably wage settlements in excess of productivity gains, rising energy prices, and the higher costs of new plants. Chicago, Richmond, Cleveland, and Atlanta report some recent pickup in orders for machinery and electrical equipment. Primary metals producers continue to experience sluggish demand although New York Directors expect demand to strengthen in the near term. Manufacturing in the Philadelphia District is generally expanding while San Francisco notes unexpectedly strong orders for commercial aircraft, which has contributed to a leveling off in the aerospace industry. Retailers have been experiencing wide month-to-month variations in sales, and September seems to have been a generally weak month except in the Boston District and in the New York area where new-found strength in consumer spending extended into early October. Expectations regarding fourth quarter sales vary across districts but what is widely perceived as erratic consumer behavior is apparently creating a mood of caution and uncertainty among retailers. On a more positive note, Chicago reports that sales of television sets are up significantly although still below expectations. Sales of new automobiles seem to be proceeding well, with the strike having only minor and scattered effects. Minneapolis and St. Louis report some spot shortages, such as of full- and intermediate-sized cars. Tourism appears relatively strong although some areas have yet to experience the expected level of activity. Chicago reports consumers spending freely for travel and entertainment. Some strength appears to have developed in residential construction, particularly in the Minneapolis, Chicago, Atlanta, St. Louis, and Dallas Districts. But with the exception of Atlanta and Chicago the pickup seems to be concentrated in single-family dwellings. Minneapolis reports that housing unit authorizations have reached 1972 levels. Commercial and industrial construction remains basically soft although Atlanta and Chicago suggest some revival of interest in this area. The overall level of business loan demand remains weak nationwide. Kansas City, Philadelphia, St. Louis, and Dallas report little sign of renewed strength in business loan demand. Richmond, on the other hand, reports a healthy increase in loans during September. Only in agricultural lending does there seem to be consistent strength. Dallas, Minneapolis, and Kansas City point to particular strength in this sector, which they attribute partly to producers holding commodities off of the markets. News from the agricultural sector is generally gloomy, at least from the standpoint of farmers. Widespread drought and erratic rainfall have been disruptive, causing reduced yields on many crops, while what are perceived as low prices are discouraging farmers from marketing some crops and livestock. Kansas City in particular notes that the weakness in prices of Tenth District agricultural products is putting producers in a precarious financial position. Specifically, low prices for wheat, rice, and cattle are reported to be depressing factors. Minneapolis expects the reduced crop yields due to the drought and the depressed livestock industry to adversely affect income. Richmond District farmers, on the other hand, have experienced an increase, although slight, in cash farm income. There seems to be no general concern over supply or capacity constraints. Boston foresees no problems other than perhaps in the lumber industry. Chicago mentions some lengthening of lead times for electrical components, and in the St. Louis District a manufacturer of diesel engines is reportedly operating at capacity and extending order backlogs into next year. The most commonly held view of future price developments is that the inflation rate will decline further due to a moderation in demand. Atlanta, New York, St. Louis, Minneapolis, and Richmond all suggest expectations of some further decline in the rate of price increases. New York, Cleveland, and Kansas City, however, indicate continued concern over inflation. Continuing cost pressures deriving from imminent wage negotiations, rising energy costs, and higher costs of plant expansion are cited by these districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1072 -beige_book_pure_text_pre2000,1976,"Continuing attenuation of the economic recovery is evidenced in the past month's reports. Despite some recent increases in soft goods sales, merchants generally expect holiday gains no greater than a normal seasonal advance. There is some feeling that the recent boost may be the result of abnormally cold weather in combination with price reductions rather than an upsurge of demand. Sales of appliances and furniture differ in strength between regions, but auto sales are generally good. Production declines have occurred in several key industries, as efforts to realign inventories have reduced demand. Some strengthening is discernible in capital expenditures. Single-family housing continues to dominate construction activity. Price reductions are occurring in those industries seeking to reduce inventories, but other firms are hedging against wage and price controls by raising prices. Credit demand is generally flat, with certain exceptions reflecting special conditions. The agricultural sector presents a picture of marked contrasts in prosperity. The degree of optimism concerning consumer spending has diminished somewhat. Most areas expect a normal seasonal gain during the holiday season. Soft goods sales, which have been weak, were helped by the arrival of colder weather and recent price markdowns. Philadelphia notes that outerwear sales have risen in advance of their normal seasonal upswing due to the cold weather. Dallas notes some price resistance in men's clothing lines. Major appliance and furniture sales are weak in the Cleveland, Chicago, and St. Louis Districts but have strengthened in the Richmond, Atlanta, and Kansas City regions. Merchants remain hopeful but uncertain about further strengthening. Auto sales appear to be fairly strong, except for smaller models; San Francisco and Cleveland note some signs of weakness. Chicago views strongly increased consumer borrowing as a confirmation of growing consumer confidence; similar trends are noted by New York, Philadelphia, and Richmond. Dallas reports lackluster consumer loan demand and, like San Francisco, interprets high savings inflows as an indicator of consumer caution. Production declines have taken place in several industries. Steel output has been reduced to limit an inventory build-up; but increasing orders for some types of steel are found by Chicago and Richmond. Appliance production has been sharply reduced in the Chicago, St. Louis, and Cleveland Districts. Declines are also noted in output of paper and board, plastics, and aluminum. Orders are down for lumber, apparel, chemicals, and furniture. Copper, lead, and zinc output has risen in the western states. Lift truck inventories have stabilized, and orders recently have been increasing. Increasing strength is detectable in capital expenditures. Boston, Cleveland, Chicago, and St. Louis note increased orders for machine tools. New York cites an increase in new orders for capital goods at a number of firms, but Philadelphia finds a decrease in the proportion of firms planning further increases in capital outlays. New York mentions environmental and other government regulations, as well as the threat of wage and price controls as deterrents to capacity expansion. Atlanta and San Francisco report that capital expenditures by paper companies will be very limited in the foreseeable future. Construction activity continues to be strongest in the single-family home category. Housing starts are at a high level in Texas, and construction employment has expanded rapidly during the past year. Home building in the St. Louis area is strong, but a decline has occurred in Memphis, other parts of Tennessee, and Mississippi. In the Los Angeles area, home construction is very strong, but average monthly price increases of nearly 3 percent are now generating buyer resistance. Price reductions are occurring in sectors where inventory accumulations are excessive. In both steel and apparel, price concessions are being made to stimulate demand. Lumber prices have softened in the past two months. St. Louis states that chemical prices should remain stable as a result of new capacity coming on-stream. Atlanta finds evidence that businesses are raising list prices as a hedge against possible imposition of wage and price controls. Shortages and bottlenecks are of little concern, partly as a result of the economic slowdown. Some concern continues to be expressed about natural gas shortages. Demand for credit remains generally weak, with interesting regional exceptions. Consumer loans provide an element of strength in several areas. In the Southwest, lending for petroleum drilling is the sole area of growth in loans. Dallas, Kansas City, and Minneapolis report that the demand for agricultural loans is rapidly increasing. Higher costs and lower prices are forcing farmers and ranchers to seek extensions of present loans. In wheat growing areas, many farmers are withholding grain from the market to await higher prices. Dallas notes that marginal farmers will find it difficult to obtain operating capital unless Farmers' Home Administration or Small Business Administration loan guarantees are granted. In contrast to the general flatness reported in commercial and industrial loans, San Francisco finds a modest increase in loan demand from small- and medium-sized companies, and Richmond notes an increasing demand in wholesale and retail trade. The agricultural sector presents a mixed impression. Farm cash receipts in the Richmond region have benefited from sharp price increases for flue-cured tobacco. Minneapolis reports that price declines for corn, wheat, hogs, and cattle, as well as the effects of drought on crop production, present a bleak prospect of lower income, reduced spending, and increased borrowing. St. Louis and Kansas City note that cattle ranchers and feeders remain in a loss position, despite recent price increases. Land in the Southeast is likely to be shifted from cattle production into other crops, with the potential for an eventual beef shortage. San Francisco reports a bountiful harvest; supplies of fruit, wheat, beans, and potatoes are large, storage facilities are bulging, and prices have declined. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1217 -beige_book_pure_text_pre2000,1976,"Although many Districts report that activity over the past month has been sluggish or flat, almost as many report that the lull in activity is over and an uptrend has been resumed. Consumer spending is anticipated to be 8 to 10 percent higher this Christmas season than last although sales will not be this exuberant in agricultural areas where income gains are low this year. Residential housing has been picking up momentum over the past three months, generating capacity operations at lumber mills. There is some doubt as to whether the recent rash of posted price increases will stick. Business loan demand remains in the doldrums but inquiries at banks have picked up. Savings flows at thrift institutions continue to set new records. Consumer spending is not expected to be exuberant over the Christmas season, nor is it expected to flag greatly. Gains over the last year on the order of 8 to 10 percent are anticipated depending on the amount of promotional effort expended. A larger proportion of sales this year involve the use of credit. As reported by Minneapolis, Richmond and Kansas City, spending is less buoyant in agricultural areas where income is running about 5 percent over last year. Inventories of big-ticket appliances continue to be high in the Northeast. Sales of large cars and intermediates are very strong but many reports state that the rebate program was unsuccessful in moving subcompacts. The Dallas District is experiencing more robust Christmas sales than elsewhere. The coldest winter in 80 years is draining fuel supplies in the Midwest and, in some cases, raising home heating bills by 35 to 40 percent over last year. Observers in the oil industry in Dallas expect an OPEC price increase of 10 percent which would lead to a one cent per gallon increase in gasoline prices. Although the most recent indicators of industrial new orders, employment and the workweek are down, this trend is generally regarded as a lull and is not expected to continue. There is some feeling that capital spending plans are being held up in anticipation of an investment tax credit and other possible changes from the new administration. The strength of residential construction reported by Dallas and San Francisco is already causing tight supply situations for lumber and gypsum in those areas. According to Cleveland, steel economists have reduced their forecasts of domestic steel shipments for 1977 from 105 million tons to about 100 million tons, compared with an estimated 89 million tons in 1976. Moreover, both the textile and apparel industries are reported by Richmond to be experiencing declining activity and capacity is regarded as excessive. The factors responsible are excessive inventories and higher imports of apparel. It is unclear whether recent posted price increases for a wide range of basic materials such as flat-rolled steel, aluminum sheeting, chlorine and chlorine solvents and synthetic textiles will hold in today's markets. Some of these increases were unexpected and are being attributed to fear of the imposition of price controls. Although the consensus appears to be that these increases will stick, discounting seems to be a widespread practice. In agriculture, livestock feeding operations continue to be unprofitable and some crops such as cotton had a below-normal yield this year. The winter wheat crop has been planted, but farmers are very concerned about the low level of soil moisture. Drought seems to be a real fear this year across much of the nation's farmland. Spending on new farm equipment and vehicles is down considerably and loan activity, especially refinancing, is up. Business loan demand continues sluggish in all Districts. The Boston District reports that four noted economists interviewed by them believe that some stimulus is called for to avert an ""incipient recession"" and ""...provide the strong financial climate for the strong investment performance which had been hoped for but not yet materialized."" However, some bankers in Philadelphia, Dallas, and San Francisco have noted an increased number of encouraging conversations with corporate borrowers regarding additions to plant and equipment. The heavy inflow of funds into thrift associations has continued and, as a result, both mortgage rates and interest rates for savers are declining. Some savings and loan institutions in Cleveland are raising the size of minimum savings certificates and withdrawing the offer of certificates with less than 2-year maturities. In some areas, mortgage rates have declined from nine percent to 8 1/2 percent over the past month. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",937 -beige_book_pure_text_pre2000,1977,"This month's District reports strongly suggest that the ""pause"" in the current recovery has ended and that the pace of business activity is regaining momentum. Virtually all reports indicate some improvement in economic activity. Retailers generally enjoyed a good to excellent Christmas season, with sales strengthening markedly toward the close of the season and with continued strength evident in early January. Business inventories appear to be in line with desired levels, except for scattered exceptions. There is additional evidence of strengthening in residential construction. While the capital investment picture remains mixed, there appears to be mounting evidence of an impending improvement in that sector. Prices, however, continue under upward pressures. The demand for commercial loans remains generally sluggish, and inflows into savings deposits continue at a high rate. As it has throughout the current recovery, consumer spending continues to provide the main thrust to the upswing. Retailers on the whole enjoyed a good Christmas season, with general merchandise sales rising above year-ago levels, in line with or exceeding expectations. The retail sales performance varied widely, however, ranging from unexpectedly strong and generally excellent (Boston, Chicago, St. Louis, and San Francisco) to above last year (Philadelphia, New York) and to a more restrained slightly improved (Richmond) and not overly strong (Kansas City). Auto sales, particularly those of standard or large size vehicles, are also mentioned as being particularly brisk by several Banks (including Minneapolis, Atlanta, Kansas City, and San Francisco). Although several Banks note that the improvement was achieved at least in part by dint of markdowns and other aggressive promotional activities, Chicago and New York report that by and large such activities did not reach exceptional proportions. A number of Banks report that the uptrend in sales that emerged as Christmas approached has continued in evidence in the immediate post-holiday period and early January. Atlanta and St. Louis thus report excellent results in post-Christmas promotions, and retail respondents in several Districts are reported to be cautiously optimistic regarding developments over the coming months. Respondents in the Minneapolis District feel that consumer confidence has improved since the election, but retailers in the Philadelphia District look for only moderate growth during 1977, with a sluggish first half. Those comments that were received on residential housing suggest that consumer outlays for new homes continue to gather momentum. San Francisco reports that the residential housing market is very strong and continues to strengthen each month, and Minneapolis notes that District authorizations of new housing are close to 1972's record levels. St. Louis reports homebuilding made considerable progress in that District in 1976 and that prospects are for further gains this year, while Dallas respondents expect homebuilding will continue to be a major source of strength in the southwestern economy. Boston, however, characterizes residential construction as a major weak spot in the New England economy. Inventories at the retail and/or manufacturing level were generally regarded to be about in line with sales and at desired levels, although there are scattered reports of undesirably high stocks of certain items, including some nonferrous metals, furniture, T.V.s, and smaller cars. Few indications of shortages were reported with the exception of an actual or potential dearth of natural gas mentioned by Richmond, Cleveland, and Minneapolis, as well as fuel oil in the Minneapolis District. Turning to business expenditures for plant and equipment, the pace of such outlays by and large continues to lack vigor, but there is growing evidence that a pickup in this sector might be getting under way. Thus, among others, Cleveland reports rising activity in the machine tool, communications equipment, printing equipment and heavy duty truck industries. Chicago reports a pickup in orders for mining equipment, a further expansion of planned equipment purchases by auto companies, and alludes to the prospects that various major projects kept on the ""back burner"" by the food processing, paper, chemical, and glass industries might be activated this year. Although St. Louis characterizes prospects for capital spending as mixed, it reports several announcements of sizable investment plans for 1977, and Atlanta reports that new industrial expansion continues rapid in its District. About one third of the manufacturers surveyed monthly by Philadelphia plan increases in capital expenditures over the coming months. Respondents in the San Francisco District feel that tax incentives would have positive, albeit slight, effects in stimulating capital investments, if such incentives were made a permanent part of the tax structure. Respondents in Dallas and New York felt that major capital outlays would be deferred until the direction of government policy became clearer. On the dark side, indications of increased upward pressure on prices were reported. Respondents in the Philadelphia monthly survey report that higher prices and costs are somewhat more widespread than in December, while in the latest Cleveland survey, the proportion of respondents expecting price increases remained as high as in the previous two months. Recent price increases in the steel industry are reported to be sticking, according to observers in the Chicago and New York Districts, although respondents indicate discounting of steel prices in the San Francisco District. Reports from agricultural areas of the nation note the relatively low prices currently paid producers for grains and certain other agricultural commodities as a result of record crops. Kansas City reports that earlier concerns over the District's winter wheat crop have been allayed by an extensive snowfall that has provided needed moisture as well as a protective snow cover. While grain prices may thus be held down, farmers are reported to expect rising cattle prices. The demand for business loans at commercial banks generally continues sluggish, although loans to agriculture strengthened. Inflows into time and savings accounts continue at a high level, with consequent downward pressure on mortgage rates. Several District reports indicate reductions in rates paid on consumer time certificates, or consideration being given to such cuts, and Cleveland reports reductions in rates paid on passbook accounts at banks in several cities of the District. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1274 -beige_book_pure_text_pre2000,1977,"Weather dominated the news in most Districts' reports. Cold weather drained natural gas supplies and resulted in widespread layoffs in some Districts, especially Atlanta, Philadelphia, Cleveland, Chicago, and New York and extensive crop damage in Florida. Nevertheless, the overall opinion seems to be that the economy shows signs of strengthening and losses in output and employment will be made up later in the year. Retail sales were particularly strong in several areas not affected by the weather, such as San Francisco and Boston, and also held up in Chicago and St. Louis despite severe weather. Housing activity shows signs of accelerating. Prices for manufactured goods are likely to be under upward pressures because of the high cost of alternate fuels and alternate transportation, and prices for fruits and vegetables are also expected to accelerate. Savings flows remain generally strong and rates paid on deposits are easing in some Districts. Natural gas and fuel shortages apparently have their greatest effects on output and employment in Atlanta, Philadelphia, Cleveland, Chicago, and New York. An estimated 250,000 to 335,000 layoffs have resulted from fuel shortages in the Atlanta District. Approximately 175,000 workers were laid off in the Philadelphia District as a result of curtailments of natural gas and weather- related problems. Cleveland estimates that about 110,000 manufacturing workers were laid off as of early February, principally in steel, automotive, glass, and metal fabricating plants. Chicago notes that the most serious impact has been on steel plants in Indiana, where over 40,000 workers were laid off early in February. Automotive assembly plants in Michigan had layoffs because of parts shortages. Chicago and Cleveland said that many manufacturers have switched to alternate fuels, but deliveries have been slowed by frozen waterways and lack of carriers. As these deliveries have improved, many laid off workers have been recalled. New York also notes cutbacks in output and employment, especially in Buffalo and Rochester. Slight to moderate effects of fuel shortages were noted in Richmond and St. Louis, but other Districts, including Boston, Minneapolis, and Dallas, were relatively unaffected either because alternate fuel supplies have been available or weather conditions have not been abnormal. Despite widespread effects of fuel shortages and abnormal conditions, the tone of District reports still seems to indicate that losses in output and employment will eventually be recovered and economic activity will continue to strengthen. New York remarks that ""business economists viewed the decline in production and employment as a temporary disruption,"" and Cleveland points out economists who met at that Bank on February 3 expect the expansion to continue through 1977 despite constraints on fuel supplies. The latest surveys by the Philadelphia and Richmond Banks indicate that respondents expect continued improvement in economic activity at least through the first half of 1977. Consumer spending has been notably strong in some Districts, but fell sharply in some others especially in the last few weeks of the cold weather period. Boston, Chicago, St. Louis, and San Francisco note that retail sales in the last 2 months were strong; but New York and Philadelphia comment that sales in the last 2 weeks of January and early February fell sharply, apparently in response to severe weather. Retailers, although optimistic, are concerned over effects of high fuel bills on discretionary spending. Construction activity, especially housing, appears to show signs of accelerating. Substantial strength in housing starts is noted in Dallas and San Francisco. Forecasts of housing starts in the Chicago District have been increased because of the large volume of funds available from savings and loan associations and life insurance companies. Dallas remarks that one homebuilder plans to boost starts by a fourth this year in Dallas, Ft. Worth, and Houston. Starts in several areas of the San Francisco District have increased 30 to 50 percent from last year. Both Dallas and Atlanta report mobile home sales have strengthened. Similarly, signs of revival in multi-family construction are noted in the southwest and west coast areas. Shortages of building materials, including lumber, brick, cement, plastic pipe, wallboard, and insulation, may develop this year according to Chicago and Dallas. Adverse weather conditions in Atlanta, Minneapolis, and San Francisco have caused extensive damage to crops and concern over future prospects for agriculture in those Districts. Florida's fruit, sugar cane, and vegetable crops, except celery and lettuce, have been severely damaged by freezing weather. Citrus fruit losses are estimated between 25 and 35 percent of the unharvested crop. Last year's drought and lack of moisture caused considerable concern to farmers and bankers in the Minneapolis District. Low farm commodities prices and low production in drought-stricken areas are cutting farm spending. The need for refinancing appears to have increased, but bankers are concerned about the ability of farmers to continue payments even on existing loans. Lack of rainfall in the west is curtailing hydro-electric power output. According to San Francisco, the Bonneville Power Administration has stopped the flow of interruptible power to aluminum and chemical plants in the northwest and plans for allocating water to farm and residential areas are underway in most States. Agriculture prices will apparently be under upward price pressures because of adverse weather conditions. Sharp increases in prices for agricultural commodities this year are expected by San Francisco, and Atlanta points out that vegetable, citrus crops, and livestock prices are likely to increase as a result of a severe freeze in Florida. However, ample supplies of red meat and pork should hold down increases in overall food prices, at least for the first half of 1977 according to Kansas City. Large beef supplies in the first half are likely to be followed by smaller supplies and higher prices in the second half of 1977. Upward price pressures on industrial commodities are likely to intensify because of higher costs of alternate fuel oil and higher costs of alternate modes of transportation. Business loan demand remains generally sluggish in Districts that commented. However, a considerable pickup in credit demand from oil distributors to finance inventories is noted in Philadelphia, and Kansas City notes strong loan demand by coal mining and oil drilling firms. Easing in rates paid on time and savings deposits and on saving certificates has occurred in Dallas and St. Louis; but some thrift institutions in Cleveland, which only last month reduced rates on passbook savings accounts and on certificates, raised rates because of loss of deposits. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1365 -beige_book_pure_text_pre2000,1977,"The overall impression that emerges from this month's district reports is that the economy is recovering smartly from the disruptions caused by the bitter weather earlier in the year. Production has rebounded quickly, and laid off workers have returned to the job with the onset of more temperate weather. Retail trade generally shows strength, factory orders are reported to be rising, and a rebuilding of business inventories may be getting underway. There were also scattered reports of a strengthening of the business capital investment picture. On the darker side, however, there appeared to be increased apprehension over inflationary pressures, as the drought in the western states threatens to add higher food prices to higher fuel prices. The impact of the weather-induced disruptions appears to be short-lived. Cleveland, for example, reports that economic activity in the district is recovering rapidly from the severe winter, with respondents from industries hardest hit by fuel shortages—steel, automobile, appliance, and glass—generally expecting losses in output to be recouped over the next few months. Economic activity in the Chicago district has returned to near normal levels, with many manufacturers, particularly in the steel and auto industry, working full speed to overcome shortfalls in output. St. Louis reports that although weather conditions and natural gas shortages hampered activity of some firms in January, the return of normal weather has alleviated most of the problems. Similar sentiments were expressed by New York respondents. It appears, on balance, that weather related disruptions of industrial activity turned out to be less acute than had been feared. Boston states that New England industry escaped relatively unscathed, with only isolated production slowdowns, and Philadelphia reports only moderate disruptions at the relatively small group of firms affected—mostly in the primary metal and food product industries. Richmond and Kansas City report that weather-related difficulties were not widespread, and Atlanta reports only minor disruptions. Finally, Minneapolis reports the cold weather had no significant impact on its district's industrial activity, which indeed expanded further. The consumer spending picture is generally favorable. Chicago characterizes retail sales of both durables and nondurables as excellent, and St. Louis reports February sales to be running somewhat above the particularly high February 1976 pace. Dallas sees continued strength in department store sales, and notes that merchants are generally optimistic. Richmond reports similar sentiment. On the other hand, sales were apparently mixed in the Philadelphia district in February. Consumer outlays on new homes also appear to be on the upswing. Chicago reports that demand for housing, especially for single-family homes, is very strong, and residential building is up in urban areas of the Minneapolis district, where a healthy amount of residential construction is expected for 1977. San Francisco reports that construction activity continues strong in most western states. On the other hand, commercial and industrial construction generally continues sluggish, although Atlanta reports increases in nonresidential construction activity in some parts of the district. Regarding business sales, Boston reports a particularly high level of new orders for hardware, machine tools, and appliances, and St. Louis notes a rise in the sale of chemical goods and commercial aircraft. Manufacturers in the Richmond district report a high level of orders, particularly for chemicals and primary metals, and as a group seem more optimistic than at any time in the past several years. Similarly, Philadelphia reports that manufacturing respondents report increases in orders and that most of these respondents expected further expansion over the coming months; Minneapolis reports manufacturing sales up 18 percent from a year before, with respondents expecting sales to exceed year-earlier levels over the coming months. A period of inventory rebuilding may be getting underway. Chicago notes that many manufacturers and some retailers have already begun to rebuild depleted inventories. Philadelphia reports that retail inventories are in good shape and that higher levels of inventories are projected by manufacturers. Minneapolis respondents are generally content with current inventory levels, while manufacturing respondents in the Richmond survey of business conditions suggest the most comfortable inventory positions in almost a year. Business outlays for plant and equipment generally still appear sluggish, although there was some limited evidence of a strengthening in that sector. Several respondents in the New York district expected some increase in plant and equipment outlays later in the year, partly reflecting a shift by some producers to alternative energy sources for their plants. Respondents in the Richmond and Philadelphia districts also expected some increase over the coming months, while Chicago notes that capital expenditure programs probably have increased somewhat but that uncertainties continue to hamper such spending. On the darker side, respondents in over half of the districts looked for a heightening of inflationary pressures, particularly in view of the drought in the western states. Concern over possible damage to crops due to the lack of moisture is mentioned by Kansas City, San Francisco, and Minneapolis and, to a lesser extent, Chicago and St. Louis. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1046 -beige_book_pure_text_pre2000,1977,"The recovery has been solidly reestablished, according to this month's district reports. Manufacturing activity has increased, retail sales are generally good, inventories appear to be at satisfactory levels and there are signs that capital spending is picking up. Deposit inflows continue to be strong, particularly for savings accounts. Loan demand seems to be up overall, but there is considerable variation in the reports on commercial loans. Recent rainfall has eased problems in the agricultural sector, but several districts mention that this area remains a trouble spot. Farmers are caught in a profits squeeze as costs, often drought related, are rising faster than prices. The one rather negative element in this generally favorable picture comes from reports of widespread price increases. Consumer spending continues to be strong. Almost all districts observed that retail sales are in an upward trend. Large ticket items such as appliances and furniture were singled out as moving particularly well by several Banks. (Boston, Richmond, St. Louis and Minneapolis). Sales of automobiles were reported to be healthy by Cleveland and Minneapolis, although in New York's district they are lagging last year. All three Banks observed that standard and intermediate size cars are in much greater demand than compacts. When mentioned, inventories were said to be within desired limits. Boston expressed concern that the tax rebate might lead to an excessive inventory buildup as a result of temporarily higher sales. Manufacturing output and employment have picked up. Surveys by Philadelphia, Richmond and Chicago indicated that new orders and shipments are higher for many manufacturers. In both Philadelphia and Richmond this improvement has caused increases in both employment and the workweek. Cleveland, St. Louis and Minneapolis also expressed optimism about business prospects. Among the industries which were observed to have made significant gains in recent months were primary metals, especially steel, textiles and chemicals. Manufacturers of apparel and furniture were reported to be doing well in some districts but not in others. The outlook for capital spending remains confused but there are signs of an improvement. Producers of capital goods, particularly small items, are experiencing increased interest in their products, but there seems a general reluctance to undertake any large-scale expansions. Increases in the demand for component capital goods like bearings, castings and engines were reported by Boston, Cleveland, Chicago and St. Louis. New York and Chicago observed that steel sales were strengthening. Boston and San Francisco reported that sales of aircraft and aircraft equipment were expected to improve; and Cleveland and Chicago noted a strengthening in orders for equipment used by the lumber industry. St. Louis indicated that sales of construction equipment have increased but Cleveland commented that these were still weak in its district. Despite these indications that capital spending is picking up, several Banks expressed dissatisfaction with the level of investment in their districts. Boston and Richmond noted that there was little interest in their regions in expanding capacity, New York reported that capital spending was recovering slowly. Businessmen in its district are said to feel strongly that investment is being discouraged by government regulations. Environmental regulations were singled out. This view was echoed by Chicago and St. Louis: while capital spending is picking up, government regulations are hindering it. Similar sentiments were expressed by Kansas City. On the more positive side, approximately 40 percent of the firms responding to Philadelphia's survey plan increased capital spending. Kansas City reported that investment in the energy field has been strong and will increase if there is a shift from natural gas to coal. According to Dallas, oil drilling activity is continuing to rise and the demand for oil field equipment is climbing steadily. Recent rains have relieved drought conditions in the west, but several districts remain very concerned about low crop prices and drought-induced cost increases. Chicago and St. Louis reported that soil moisture conditions are considerably improved in their districts and planting is proceeding normally. Minneapolis, Kansas City, Dallas and San Francisco, on the other hand, reported that while drought conditions have been alleviated considerably more moisture is needed. All are concerned about depressed product prices, particularly for wheat and cattle. These prices in combination with rising costs have reduced farm income and except in San Francisco's district have resulted in heavy borrowing at rural banks. Financial developments seem generally consistent with other sectors of the economy. Loan demand appears to have increased with real estate and consumer loans accounting for most of the gain. Richmond, Kansas City and San Francisco noted increases in commercial loan demand; Boston, Philadelphia and St. Louis observed that it was flat or varied throughout the district and Dallas reported a decrease. As mentioned above, agricultural loans have increased in parts of the west. Philadelphia reported that banks are receiving inquiries about fixed rate loans and that one is offering high quality customers loans at 8 percent with an outside maturity of five years and no balance requirement. Kansas City noted that in Oklahoma a number of banks had raised their local prime lending rate from 6 3/4 to 7 percent because of a strong demand for energy-related loans. Deposit inflows to savings accounts and savings and loan associations are said to be strong, although they have slowed recently in St. Louis and Minneapolis. The ominous note in this month's reports is the widespread price increases observed in several districts. All the eastern banks—Boston, New York, Philadelphia, Cleveland, Richmond and Atlanta—noted that manufacturing prices are increasing. Over half of the respondents to Philadelphia's survey reported higher materials prices. Price increases in metals appear to be holding according to Boston and Cleveland, although Cleveland also noted that producers of stainless steel withdrew increases announced earlier this month. Concerns about inflation were apparently quite common among respondents for New York and Boston, although the academic economists consulted by Boston believe that recent spurts in prices are temporary and that the underlying inflation rate is still between 5 and 6 percent. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1246 -beige_book_pure_text_pre2000,1977,"The firmer tone asserted in last month's REDBOOK was generally confirmed by developments in the recent period. Eleven districts reported further increases in output, employment, and new orders. Cleveland and Philadelphia reported a slower rate of rise, however. Minneapolis found ""little change"" in nonagricultural activity. All districts attempted to assess the impact of the Administration's energy program, as requested by the Board telegram of April 27, with interesting but inconclusive results. In general, the strongest reports were from the Sunbelt districts, especially Dallas. Business inventories are in reasonable balance and are expected to rise. Capital spending is moving up, with emphasis on new equipment. Inflation fears are increasing, although in varying degree. The frenzied boom in single-family homes is virtually universal. Agricultural prospects have improved with recent rains in the Midwest and Northwest. Demand for consumer, real estate, and agricultural loans is strong, but demand for business loans is still relatively weak. A sampling of opinions finds the Administration's energy program praised for its note of urgency, and for its objective of curtailing demand through taxes and higher prices. It is criticized for complexity, inadequate incentives to expand supplies of fuel, and for lack of compromise on the methods and timetables for reaching environmental goals (Cleveland, Chicago, and San Francisco). A number of districts, including Boston, Atlanta, St. Louis, Kansas City, and San Francisco reported opinions of some contacts that, by increasing uncertainties, the proposed program would have some retarding effect on capital spending. In any case, the program is ""highly tentative"" and is unlikely to be accepted as a package in its original form. The predominant view appears to be that the program will have little or no clear effect on either consumer spending or capital spending, at least not in 1977. Most business investment plans are fairly well set for the current year. Moreover, investment programs have been moving toward reducing dependence on natural gas and toward general energy conservation for at least four years (emphasized by Cleveland, Chicago, and Minneapolis). These trends were accelerated by the January fuel crisis. Retail sales continue at a favorable level. However, a Boston area retailer reported a drop in sales following the announcement of the energy program. New York sees ""good prospects"" for the second quarter. Cleveland reported one view that the cancellation of the income tax rebate would reduce sales somewhat. No clear impact on auto sales from the proposed taxes and rebates is apparent. Philadelphia retail sales were depressed by a transit strike, now settled. Inventories, overall, are well in line with sales. New York expects a ""moderate buildup"" in the months ahead. Some Richmond manufacturers now view inventories as ""inadequate."" Longer lead times are mentioned by Atlanta and Chicago. A number of districts, including Boston and St. Louis, see a continuing improvement in sales of business equipment. Cleveland reports a ""broader recovery."" San Francisco reports a surge in demand for commercial airliners that is helping the Seattle area. Six districts report increased fears of accelerating inflation, but none expected a near-term return to double-digit inflation once the effect of the special conditions of the first quarter are overcome. Supply stringencies are not generally significant at present. However, current or prospective pressures on capacity were mentioned for tires (Boston), coal freight cars (Cleveland), building materials (Dallas), and aluminum (San Francisco). The tremendous market for single-family homes is nationwide, and prices continue to rise sharply. Vacancy rates are down for Florida condominiums. Higher mortgage rates are reported by Chicago, St. Louis, and Dallas. Nonresidential construction remains sluggish in most districts, but Atlanta finds some improvement, and prospects for new plants in Texas are very strong, partly because energy is ""believed to be readily available"" there. Minneapolis, Kansas City, and San Francisco emphasized substantial improvement in farmland moisture conditions, although some areas, such as Montana and North Dakota, remain parched. Retail trade in rural areas improved with crop prospects. Soybean plantings are up in various districts, including Richmond and Minneapolis. Dallas reports increases in receipts from sales of cotton and soybeans. Districts reporting on bank loan demand presented a generally similar picture. Consumer, real estate, and farm loans are strong, while business loans remain weak or only moderately higher. Philadelphia, for example, finds business loan volume ""flat or down"" in April, but inquiries and commitments are up, and ""moderate"" increases in business loan volume are expected for the remainder of the year. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",995 -beige_book_pure_text_pre2000,1977,"The economy continues on a firm upward path, according to this month's district comments. Retail sales in general remain good, with the sales of autos and other durables showing particular strength. Factory orders continue to rise, and a building up of business inventories could well be underway. At the same time, the capital spending picture, while not exuberant, has brightened somewhat. Residential construction remains very strong, but little evidence of speculation is reported. The outlook for the 1977 harvest is, on balance, favorable. In the financial area, the demand for consumer and mortgage credit continues relatively strong, that for business loans generally weak. Consumer spending generally continues to support the recovery, although several districts report a mixed performance. Chicago characterizes retail sales in its district as excellent, with sales of appliances, domestic large cars and imported small cars especially strong. Dallas reports department store sales as running about 14 percent above year-earlier levels, with durable goods selling especially well and retailers looking for a steady increase for the rest of the year. Similarly, solid gains in consumer spending were also reported in the New York, Minneapolis and San Francisco districts. And Boston indicates that, after rather disappointing performance in early May, retail sales gained considerable strength in the second half of the month. On the more restrained side, Cleveland reports a recent flattening in retail sales, although new car sales remain strong if off somewhat from the March and April pace. Richmond finds little change in total sales during May, but some decline in sales of big ticket items, while Atlanta reports that retail sales have turned spotty, although car sales remain robust. Philadelphia finds the pace of sales mixed, but generally below the expectation of retailers. Housing construction continues very strong, in virtually all districts, and sharp increases in real estate prices, including farmland, are widely noted. Against this background, district reports address themselves to the question of the possible role of speculation in the current real estate market. With few exceptions, little or no evidence has been uncovered that speculation has been a significant factor in that market. Comments from the San Francisco district in general explain the sharp rise in housing prices as the result of a surge of post-recession demand confronting a housing supply reduced by the preceding recession. The influence of speculation, however, is reported in Southern California, where speculators may account for an estimated 20 percent of some markets. Scattered instances of possible speculation are also noted by Philadelphia and Atlanta. Business sales and manufacturing activity continue strong. Manufacturing respondents to the Philadelphia monthly survey report that new orders and shipments are higher in June, and further increases are expected. Similar sentiments were echoed by respondents in the Richmond district survey. St. Louis reports that manufacturing activity continues to register gains in sales and orders over a wide range of industries, including the chemical, home building products, and commercial aircraft industries. Dallas mentions further gains in manufacturing output, and Minneapolis reports that district manufacturing activity remains quite strong, with manufacturers responding to its latest survey looking for year-over-year increase in sales of about 15 percent in the first half of 1977. Against this background, a period of modest inventory rebuilding may be underway. Manufacturers in the Philadelphia district thus project an increase in inventories over the balance of the year, and Richmond reports that manufacturers? inventories, after remaining flat for several months, are once again moving upward. San Francisco reports that some industries, including aerospace and electronics, are cautiously bringing inventories back to ""normal"" levels to support higher production levels and sales. Minneapolis' manufacturers in general feel inventories to be in line with expected sales, as are department store inventories in the Dallas district. Similarly, Chicago reports inventories of some items, mainly hard goods, to be below levels necessary to maximize sales. Growing shortages of drilling equipment are mentioned by Dallas and Atlanta. Reflecting the continued strength in manufacturing activity, improvements in the labor market are reported by several Banks, including Philadelphia, Richmond, Chicago and Minneapolis. Growing shortages of certain types of skilled workers are mentioned by St. Louis (carpenters) and Dallas and Atlanta (oil drillers). Assessments of business capital spending generally remain cautious, but on balance have become somewhat brighter. Among others, Boston reports increased orders at machine tool manufacturers, as well as an expansion in the investment plans of New England firms themselves. Capital good producers in the Cleveland district expect capital spending in 1977 to at least match that projected by the latest Department of Commerce survey, in some instance to exceed it. Chicago reports increased steel shipments to capital equipment producers as well as a ""well grounded"" upswing in spending on such equipment, although the strength of demand varies greatly among industries, with construction leading the way. St. Louis reports strong sales of machine tools, welding and cutting equipment, and commercial aircraft. However, the proportion of manufacturers in the Philadelphia survey anticipating increases in their capital spending over the next six months declined somewhat. Several Banks including Cleveland, Minneapolis and New York, mentioned the uncertainties surrounding the energy program and/or environmental controls as factors inhibiting capital outlays. Reports from the agricultural areas are generally good. Kansas City reports that the wheat harvest now underway in that district is expected to top the 1976 harvest by 15 percent, while Minneapolis indicates that recent rains have eased concerns about the draught. San Francisco, on the other hand, reports that the agricultural sector in that district seems ""resigned"" to a less than good year, while weather has adversely affected some crops in the Atlantic district. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1209 -beige_book_pure_text_pre2000,1977,"Most districts report continued improvement in economic activity and a generally optimistic outlook for business. Consumer durables are still selling well. Manufacturing and residential construction remain strong. Doubts persist regarding the likely paths of business investment in inventories and in plant and equipment. In the agricultural sector, low prices and drought are having depressing effects on farm income in some areas. The demand for bank loans is generally strong, but business loans are weak in some districts. Reports on consumer spending vary, although most districts note a continued high demand for durables. Kansas City says retail sales are much stronger. St. Louis reports a continued rise, and Chicago a continued vigor in consumer spending. Boston observes that retail sales have recovered from a recent slump. Minneapolis finds slowing growth in retail sales; Richmond reports little change in the level of retail sales; and Atlanta says retail trade presents a mixed picture. Philadelphia describes department store sales as uneven, while New York calls them ""slack"" in June. Strength in durables is mentioned by New York, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City. Cleveland finds expectations of a reduced pace of consumer spending during the second half of 1977, but retailers are reported as optimistic by Kansas City, Boston, New York, and Minneapolis. In contrast, Philadelphia describes merchants as generally bearish about the second half as a whole. Summer tourism is reported as excellent by Minneapolis and Philadelphia, but as off to a slow start by Atlanta. Manufacturing activity continues to increase, but at an apparent slower rate. San Francisco finds production still strong in aerospace and pulp and paper industries. Dallas notes growing manufacturing output generally, except in transportation equipment. St. Louis says manufacturing appears to have leveled off somewhat, and Philadelphia describes conditions in the industrial sector as only marginally better. But Richmond reports improvement in the manufacturing sector, especially in machinery and electrical equipment. Boston says its region's manufacturers are experiencing strong demand, while Atlanta mentions increased demand for certain hard goods such as castings. Cleveland reports a mixed recovery continuing in capital goods industries. An unusual degree .of caution characterizes investments in inventories and capital projects. New York feels capital spending plans are slowly gaining momentum, but Philadelphia finds no substantive change during the month. San Francisco describes investment plans as mixed, while Richmond finds manufacturers content with current capacity. Atlanta sees an acceleration in industrial building activity, but Cleveland projects a weakening in steel production. Just as inconclusive are the observations on inventories. St. Louis describes them as being maintained at very low levels. Boston and Cleveland, however, report possible overaccumulation. Kansas City, Minneapolis, and Philadelphia retailers call their inventories satisfactory; Philadelphia and Richmond manufacturers appear content with their current levels. Residential construction is continuing its boom, according to reports from Atlanta, New York, Chicago, St. Louis, and Minneapolis. Dallas and Chicago say high occupancy rates are spurring construction of office buildings, and New York notes an impressive recovery in demand for Manhattan real estate. Atlanta finds commercial construction is increasing. Particularly encouraging were scattered comments about lower inflation and inflationary expectations. Philadelphia notes a lessening in upward pressure on prices. Boston says fears of inflation seem to have abated. Retailers reporting to Kansas City do not expect inflation to accelerate. New York observes that builders? concerns about inflation appear to be waning, and New York respondents do not expect reimposition of wage-price controls. Dallas, however, projects no appreciable slowdown in the current rate of inflation. Agricultural developments are touched upon in several district reports. Minneapolis, Chicago, Kansas City, Dallas, and San Francisco point to low farm prices. Dallas reports reduced cash flows to Texas farmers due to low wheat prices. Kansas City expects a large wheat crop, and other crops are reported doing very well by Chicago, San Francisco, St. Louis, and Minneapolis. Atlanta indicates heavy losses resulting from drought, and a rise in price for Florida citrus fruit. Richmond reports being hard-hit by drought, too, but District farm income is up there nonetheless. Loan demand is reported as strong by Minneapolis, Richmond, Cleveland, Kansas City, and, at small banks, by St. Louis. St. Louis finds business loans demand relatively low at large banks, while Philadelphia says business loan demand is still weak although consumer loans are generally increasing. San Francisco reports a very modest growth in business loan demand. Chicago sees little change in the generally sluggish loan demand for large businesses. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",980 -beige_book_pure_text_pre2000,1977,"The rate of growth in business activity may have slowed recently according to this month's District reports, but the trend continues moderately upward. Consumer spending continues to increase; however, demand for soft goods was reported to be weak in some of the Districts. Inventories are generally being maintained at satisfactory levels. Business loan demand remains relatively weak at the larger centers, but some pickup in demand is reported by a few Districts. Mortgage funds are ample at current interest rates. Strong loan demand and high loan-to-deposit ratios were reported in some of the agricultural communities. Residential construction continues at a high rate and signs of rising industrial construction were noted. Upward price pressures remain strong, particularly for construction materials. Prospects are for a relatively large output of farm commodities, lower average farm product prices, and little growth in cash farm receipts from a year ago. Consumer spending generally continues up, but signs of weakness were noted in some of the Districts. Apparel and soft goods sales were reported to be weak by Chicago and St. Louis. Reduced sales were reported in the rural communities by Minneapolis. Prior to an upsurge in July, an overall trend toward slower retail sales growth in the second quarter was reported by San Francisco. On the other hand, sales of hardware, excluding automobiles, continued persistently upward and a recent upturn in total retail sales was reported by Philadelphia, Cleveland, and San Francisco. Automobile sales were mixed with Dallas and San Francisco reporting continuing strong sales while Cleveland and St. Louis reported some easing off of such sales in July. Business inventories, with a few exceptions, are in satisfactory condition. Continued shortages and delays in delivery are still found in the construction industry. Chicago and St. Louis, for example, reported some delivery lags for insulation, brick, drywall, plumbing fixtures, lumber, and millwork. San Francisco reported that automobile dealers are having difficulty in stocking all types of cars. Somewhat fewer ""shortages,"" however, were reported in inventory items than heretofore, especially for raw materials used in making tools and metal fixtures. Also a few inventory excesses were reported. New York reported that mounting inventories are becoming a problem for some businesses, and Cleveland reported that, while inventories are not excessive, they are sufficient to dampen further inventory growth this quarter. Manufacturing activity continued strongly upward according to most District reports. Boston reported rising capital goods output and a buildup in order backlogs. Further gains in the manufacturing sector were reported by Philadelphia, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco. Somewhat counter to the general movement was the mixed situation reported by New York and some leveling off by Richmond. Those Districts commenting on construction indicate a continuing up trend in residential building and the beginning of a recovery in commercial and industrial building. Construction of homes was reported at virtual capacity by Chicago, strongly upward by St. Louis, and strong by Minneapolis and Dallas. New York reports tentative signs of a recovery in real estate and construction, and San Francisco reported early indications of a pickup in nonresidential construction. The comments on price expectations varied greatly from District to District. However, the prices of construction materials appear to be rising rapidly and prices for most farm products are declining. Boston sees no escalation in the rate of price increases. Less widespread price increases were reported by Richmond and a leveling off of housing prices was reported by San Francisco. Lower farm commodity prices were reported by a number of Districts. Nevertheless, generally upward price pressures were reported by Chicago, and sharply higher construction materials prices were reported by St. Louis and Kansas City. The financial sector is characterized by relatively high demand for consumer and farm loans, but sluggish demand for business loans. High or rising demand for consumer loans was reported by Philadelphia, Richmond, and San Francisco. Chicago, Minneapolis, and Kansas City report farm loan demand to be exceptionally strong. Strong real estate loan demand was reported by Richmond. While most of the Districts report that business loan demand remains relatively weak, there are indications that such demand is beginning to pick up. Boston reported some rise in industrial loan demand. Richmond noted some increased demand for loans by wholesalers and retailers. Sluggish business loan demand in New York has prompted several banks to seek out medium-sized regional borrowing customers. Some flew York banks have already established out-of-state loan production offices and others are contemplating similar action. Some moderation in the rate of savings growth was indicated by reports from Philadelphia, Cleveland, St. Louis, Minneapolis, and parts of the Dallas District. Kansas City, however, reported strong deposit and loan growth. No upsurge in interest rates is expected. Philadelphia reported that the prime rate was expected to move up to about the 7-7-1/4 range by the end of the year. Overall prospects for crop yields and production this year are generally good. An abundance of grain and lower cost livestock feed is in prospect for the year ahead. These developments point to rising supplies of livestock products. Drought has had some adverse impact on crop prospects in parts of the Richmond, Atlanta, Chicago, and San Francisco Districts, but recent rains have improved the outlook for crops. Of great concern to the farm sector, however, is the decline in prices of major farm commodities and the impact on farm incomes. The generally unfavorable farm income outlook was expressed by Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The lower farm commodity prices, especially grains, are already having an unfavorable impact on bank credit conditions in rural communities in a number of the Districts. Chicago reported that deposit growth in agricultural area banks has slowed, that loan demand is exceptionally strong, and loan-to-deposit ratios are above desired levels. Kansas City reported some serious farm cash flow problems. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1272 -beige_book_pure_text_pre2000,1977,"Consumer spending was generally strong during August. Solid gains in department store sales were achieved in Boston, New York, Atlanta, Chicago, Cleveland, Minneapolis, and Dallas, although Philadelphia merchants describe sales as below expectations and St. Louis reports only modest gains. Philadelphia and San Francisco report strong sales of durables, such as furniture and appliances, matching the growth in residential construction. Sales of 1977 model automobiles, apparently stimulated by price increases announced for next year's models, continued to be excellent in the Atlanta, Chicago, Dallas, Kansas City, St. Louis, and San Francisco districts. Both residential and non-residential construction continued their vigorous advance in many areas, although scattered reports of labor and material shortages have appeared. Dallas reports that housing starts are down only slightly from the record June pace and that shopping center construction in Texas is triple the level of last year. The Atlanta, Chicago Kansas City, and St. Louis housing markets remain robust. The housing boom continues on the west mast, but San Francisco reports that the rate of increase has apparently reached a plateau in most areas. While no district is experiencing a shortage of mortgage funds, Chicago, St. Louis, Atlanta, and Dallas report spot shortages of various building materials and skilled construction workers. Manufacturing activity presents a mixed picture, with materials shortages appearing in some districts and concern over the health of the steel industry growing in others. Dallas reports a continued rise in industrial production, led by increases in the output of oil field equipment and building materials. Shortages of brick and cement are reported to be widespread, however. Record offshore oil and gas production has stimulated shipbuilding activity in Atlanta, but ""serious shortages"" of all types of oil handling equipment have developed. In New York, production cutbacks announced by a major steel producer will further retard the sluggish recovery of the western part of the state. Cleveland expresses concern over layoffs and salary cuts at steel plants in its district. Manufacturing output continues to increase at a moderate rate in St. Louis, particularly among consumer goods, although steel shipments are down 10 percent or more from year earlier levels and new orders for several lines of chemicals slowed in August. Reports from other districts are more optimistic. Growing manufacturing activity has provided new jobs in Minneapolis, and is expected to continue to do so. Shipments were generally up in Richmond, but new orders showed little change. In Boston, on the other hand, a slight drop in production reflecting normal seasonal influences is expected to be reversed in the near future due to an increase in new orders for defense goods. Philadelphia reports a rise in industrial production, especially in durable goods, while Kansas City is experiencing an energy-sector led increase in business activity. Investment in inventories and capital projects may best be described as cautious. In view of the slowdown in business activity expected in many districts over the next six months, current low inventory/sales ratios are generally regarded as satisfactory. Inventories appear to be at desired levels in Boston, Philadelphia, St. Louis and Dallas. Excessive inventories in specific industries are mentioned by New York, Chicago, and Minneapolis. Business surveys in the Richmond district suggest some unintended inventory accumulation, with an increase in the number of respondents who view their inventories as excessive. Less optimistic business expectations are also reflected in the behavior of plant and equipment expenditure. New York reports ""very conservative"" capital spending plans; only 37 percent of firms surveyed in Philadelphia plan increases in capital spending over the next six months; Kansas City, Cleveland, and Atlanta cite energy and tax legislation as important causes of business uncertainty; San Francisco sees capital spending as generally weak in the west, with a significant portion of new investment tied to pollution control equipment. Loan demand continues its familiar pattern, with consumer loans, particularly for automobiles, remaining strong and business loans remaining flat in most districts. Commercial loans are up in Boston, but the funds are being used primarily for plant modernization rather than for new capacity. Atlanta and St. Louis note that a recent court decision in Tennessee upholding the 10 percent limit on consumer loan interest rates has caused a virtual halt in consumer lending in that state. Bankers in the Cleveland, Kansas City, and Philadelphia districts expressed fears of possible disintermediation due to the recent rise in short rates, although current deposit inflows have remained strong in these and other districts. Agriculture is a particular concern in many districts. In some areas, record harvests, by driving prices down, and unprecedented drought, by driving costs up, have reduced farm income, increased agricultural indebtedness, and decreased the demand for heavy agricultural implements. This basic pattern is mentioned by Chicago, Minneapolis, Kansas City, Dallas, and San Francisco. In other areas, such as Boston, Richmond, and Atlanta, the crop-reducing effect of the drought has had the most pronounced effect on farm income. Atlanta notes that prices for Florida citrus fruits are double last year's level, however. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1078 -beige_book_pure_text_pre2000,1977,"This month's REDBOOK reports suggest an economy still expanding, but at a slower pace than in the first half of the year. Various districts note a contrast between business caution and consumer confidence. Progress is uneven, with softness noted in demand for steel, nonferrous metals, farm equipment, and textiles. Capital spending continues to rise overall, but not in a manner approaching the 1973-74 boom. Except for some building materials and certain skills, few shortages are apparent. Price inflation is less commented upon, but still pervasive. Inventories are not generally excessive, but managements are keeping accumulations under close control. Retail sales are described as ""strong"" in most districts. Demand for housing is somewhat less intense, while commercial and industrial construction is improving gradually. The energy supply picture is surprisingly favorable. Large crops are expected, but heavy rains have slowed harvests. Demand for consumer loans and mortgages remains vigorous, in contrast to demand for business loans which remains moderate. Most districts report some slowing in the growth of employment, output, or other measures. Exceptions are Minneapolis where ""activity is quite strong,"" Dallas where energy exploration is booming, and San Francisco where the economy is ""healthy and growing,"" despite some ""weak spots."" Strong retail sales—often contrasted with business investment—accompanied by substantial use of consumer credit are described by New York, Philadelphia, Richmond, Atlanta, Chicago, and St. Louis. The particular types of goods that were selling especially well varied by district. New York, Cleveland, and Chicago commented on recently announced cutbacks in the steel industry. Reductions in output and employment are mainly scheduled for older high-cost plants, but there is increasing concern about the viability of the whole industry and the effect on morale in other sectors. Chicago emphasizes also the competitive problems of the largest US color TV producer, and lower sales of farm equipment. San Francisco cites weakness in demand for nonferrous metals, especially copper. New York and Richmond tell of declining backlogs for textiles with output cuts expected. Boston finds some concern about retail inventories being too high. Richmond says that one-third of manufacturers report materials inventories but retail stocks are ""in line."" Philadelphia sees no change in inventories. Atlanta, St. Louis, Minneapolis, and San Francisco find inventories held in balance by careful management. In general, excessive inventories are confined to the manufacturing sector, and, except for textiles, the problems do not appear to be substantial. Stringencies of supplies of insulation and various other building materials are hindering home building in Atlanta, Chicago, and Kansas City, and probably in other regions as well. Most districts report the capital spending picture to be mixed, but that the general trend is upward. Cleveland says machine tool orders are up sharply after a ""summer sag."" Demand for excavators and cranes is good, but equipment for steel mills, nonferrous metals, chemical plants, and oil refineries is slow. An engineering design firm's backlog has been ""flat"" for several months. Atlanta and Dallas emphasize great strength in oil and gas exploration with drilling rigs and skilled workers in short supply. Minneapolis says food industry outlays are up. Chicago comments on huge outlays required to manufacture smaller cars. San Francisco tells of substantial orders for new commercial jet aircraft. Although markets for most industrial and consumer goods are described as highly competitive, the ""underlying"" 6 percent inflation rate is probably unaffected. Chicago reports 60 percent of firms paying higher prices, Richmond 50 percent, and Philadelphia 27 percent. These proportions have been higher in the past but they are still large, and very few firms are paying lower prices on average. The supply of gas and oil for the winter appears to be shaping up much better than had been expected last spring. Cleveland and Chicago say that large gas transmission companies are taking on new industrial and residential customers, for the first time in years in the case of Ohio. New gas supplies, conservation, and shifts to alternative fuels are responsible. Atlanta also sees gas supplies as more adequate. The iron ore strike and the dockworkers' strike are not baying a significant effect, at least as yet. Cleveland says that a 45-day coal strike would have little effect because of large stocks above ground and because only a portion of total coal output would be stopped. San Francisco says the ""hot housing"" market has ""cooled,"" but with a beneficial effect. Housing markets in other regions are somewhat slower, but a large backlog of demand still exists. Apartment contracts are stronger in Dallas. Mortgage money is generally available at stable rates. Cleveland and Chicago report a gradual pickup in commercial and industrial construction. Outlays on public works are still slow in most districts. New York, Atlanta, Chicago, St. Louis, and Minneapolis all report harvests slowed by wet weather. The effect on output probably will not be large, however. Harvests in the Midwest are ahead of schedule, because corn and soybean crops matured earlier than usual. Kansas City reports winter wheat off to a good start with soil moisture adequate, in contrast to last year. Farm income unfortunately is depressed by large crops. San Francisco says that costs of producing cotton, especially pumping of water, results in poor profits despite high prices. The Richmond region still suffers from drought. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1151 -beige_book_pure_text_pre2000,1977,"The district bank reports indicate that the economy is still expanding; however, the pattern is mixed. A few banks observed no change from the previous month. Consumer spending continues up. Inventory levels are in line with expected sales except in a few instances. Overall credit demands are rising. Some districts pointed to the high loan to deposit ratios outside the urban areas which reflects the high farm loan demand. Production generally continues up; however, a number of specific district problems were mentioned including: loss of production caused by strikes (New York, Atlanta, Minneapolis) and declining farm income or harvest problems (New York, Richmond, Atlanta, St. Louis, Minneapolis, Kansas City, and Dallas). With few exceptions consumer spending continues up across the nation according to the district reports. For example, in the Boston and New York Districts, where little change was observed in the overall economy, some gains in sales or consumer spending were reported. Other districts reported consumer buying or retail sales as: up (Philadelphia), further improvement (Richmond), continues to advance (Atlanta), vigorous (Chicago), some gains (St. Louis), and very good (Minneapolis). While inventories are generally at or near desired levels a few excesses were indicated. They are being watched closely and those few excesses reported are not believed to be widespread or burdensome. Also, some ""shortages"" continue in the building industry in a few districts. Typical of the inventory reports were: being watched closely (Boston), in good shape (Philadelphia), at a desirable level (St. Louis), levels are good to adequate (Dallas), and at desired levels (San Francisco). Some inventory imbalances were reported by New York, Richmond, and Minneapolis. On the other hand, Chicago reported shortages of insulation, and shortages or poor quality of a long list of other building components and of skilled trades workers. Credit demand continues generally upward in most of the districts. There has apparently been no letup in consumer and real estate credit demands, and a number of districts report a pickup in commercial and industrial loan demand. Richmond reported commercial and industrial loan demand to be quite strong. Indications of rising overall loan demand were also reported by Richmond, Atlanta, Chicago, St. Louis, and Kansas City. Savings inflows were reported to be slowing somewhat in a number of districts, but no serious disintermediation was indicated. The high demand for and slow repayment of agricultural loans were alluded to in a number of District reports. Richmond reported a strong farm loan demand and further deterioration in loan repayment rates. Chicago reported significant deterioration in farm credit conditions in recent months. On the other hand, Kansas City reported some easing in the farmer's cash flow problem. Further expansion occurred in production during recent weeks, but the overall pattern was variable. Manufacturing and industrial activity varied from no change in Boston and Richmond to a rebound in Dallas after a brief lull. Construction of homes is apparently slowing somewhat from the high levels of the summer months; however, a pickup was noted in commercial and industrial building by a few Districts. Some easing in the rate of home building was indicated by Minneapolis and Dallas, and San Francisco reported more caution by developers in putting up blocks of houses. San Francisco, however, reports a shift from single family to multiple units and non-residential construction. Gains in non-residential construction were also reported by Atlanta and Chicago. The reports indicate that farm production will be up, gross farm income will be somewhat higher, and net farm income will be down from last year. Nevertheless, some districts reported a slight improvement in farm income expectations in recent weeks. Minneapolis reported an improved outlook for farm income, and Kansas City, while recognizing a farm commodity price squeeze, noted recent improvement in the cash flow position of farmers. Atlanta reported wider profit margins in broiler and egg production. Indicative of the lower farm income outlook, the last quarterly survey of farmland values in the Chicago District shows a decline for the first time since 1960. This followed an increase of 160 percent during the past five years. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",890 -beige_book_pure_text_pre2000,1977,"Business continues to improve, if somewhat unevenly across the nation, according to District reports, and businessmen remain optimistic that economic activity will expand further in the year ahead. Respondents in every District expect at least satisfactory growth in retail sales this holiday season, although sales of new domestic cars may be below amounts projected earlier for some regions. Despite good to excellent prospects for Christmas sales, inventories at retail are still regarded as above desired levels in several Districts. In manufacturing and other nonretail industrial activity, the overall impression is of a slight upward trend nationally, with District reports on production and sales varying from spotty and unchanged to generally expanding. Strikes are again mentioned in several reports as factors influencing business activity. And the Administrations still uncertain economic policies are said to be one of the main barriers to capital spending. Improvements in the prices of some agricultural products have helped the incomes of farmers who are now using strike and protest techniques to draw attention to their plight. Credit demands are reported as strong in financial markets. Thrift institutions are apparently having no problems supplying mortgage funds for the booming housing industry. Demands for bank credit, business loans in particular, appear to be growing rapidly in most Districts outside the money centers of New York and San Francisco. Everyone may not be optimistic about business conditions in 1978 but, as Chicago puts it, no one seems to be forecasting a recession. Cleveland and Richmond report increases in business confidence this past month, and it might be inferred from some other district comments that their respondents are also more optimistic than a month ago. For example, Minneapolis finds manufacturing sales stronger than expected. Retailers' concerns about excessive inventories were relayed by Boston, New York, Atlanta, St. Louis, and Kansas City. Philadelphia also reports relatively high retail inventories, but these stocks are expected to be worked down without difficulty by early next year. Softening in auto sales is concerning suppliers to the auto industry, according to Cleveland. Although new car sales are up in St. Louis, Atlanta, and most of San Francisco's District, inventories of new cars are described as ranging from near normal in Kansas City and Atlanta to very high in New York. Chicago, however, summarizes the story of new car sales nationwide by noting that recent adjustments in auto production schedules clearly reflect sales falling short of expectations. Some Reserve Banks commented on special topics. San Francisco directors estimate that the average wage increase for western industries in 1978 will be between 7 and 8 per cent. Richmond expects serious consequences to its District economy from the United Mine Workers strike. Cleveland finds capital-goods producers to be more optimistic about capital spending for the first half of 1978 than indicated by the latest estimate of the Department of Commerce. Boston respondents have seen no sharp industrial price increases in recent months, and they are not concerned about shortages of materials or fuels in 1978. Dallas says petroleum refining capacity is not being expanded because of unresolved economic and political issues, but New York observes that well drilling by the oil industry is at a 16-year high.> Richmond and Atlanta report District farmers are joining in nationwide protests against low prices of farm products. Chicago notes that some rural banks are hard-pressed to accommodate farmers who have been forced to renew loans. St. Louis, Kansas City, Dallas, and Richmond call attention to the recent improvement in prices received by farmers for some products, while Minneapolis reminds us of subsidy payments now being made to wheat farmers. San Francisco says that it is not yet clear that the drought in the western states is over. St. Louis reports farmers storing more of their crops than usual. Only about 25 per cent of the 1977 cotton crop and about 10 per cent of the soybean crop has been sold. Kansas City suggests that it is likely that wheat and corn prices may peak earlier than usual in this marketing year—if they have not already done so. Increases in business loan demand are reported by Kansas City, Richmond St. Louis, Boston, and. Philadelphia, with adjectives ranging from robust to less-than-hoped-for. Broad-based loan growth continues in the Sixth District, says Atlanta. New York and San Francisco, however, describe their demands for business loans as persistently sluggish and limping, respectively. Some softening of terms and new lending programs are reported by New York. Philadelphia bankers expect at least one round of prime rate hikes between now and June. Saving and loan associations in the Dallas District suggest mortgage demands will slow in coming months, but in the meantime, mortgage rates are expected to remain near present levels. Problems with disintermediation are not anticipated by S&L executives interviewed for the Dallas report; in Minneapolis, the disintermediation possibility that concerned directors last month has not materialized. Inflows into S&Ls are reported to be increasing by St. Louis, but at a more moderate rate than earlier in the year. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1080 -beige_book_pure_text_pre2000,1978,"The overall impression that emerges from this month's Current Economic Comments is one of no significant change over the past month in the business and financial situation. According to these reports, retailers in most Districts enjoyed a good to excellent Christmas selling season, although the sale of domestically produced autos continued weak. Retail inventories are generally at or even below desired levels, and manufacturing inventories are in line with sale expectations. Residential construction remains strong. There were further, albeit limited, indications of a strengthening of business plant and equipment expenditures. No significant disintermediation has developed, although savings inflows apparently have slowed down. Demand for bank credit, notably consumer loans, was strong. Virtually all Districts report a good to excellent Christmas selling season at non-auto retailers, with business generally exceeding already high expectations. Sales thus are characterized as ""fantastic"" by some Boston respondents, and as breaking all records by Atlanta. A good to excellent selling season is reported by Cleveland, Chicago, San Francisco, New York, and Minneapolis and as substantially above expectations by Dallas. A number of Districts report continued brisk sales since Christmas, including Chicago, Philadelphia, Atlanta, Boston and San Francisco. Sluggish auto sales, however, are reported in about half of the reports. Among others, Chicago reports December auto sales to have been a distinct disappointment, while St. Louis and New York also note that such sales have been less than expected. Auto dealers in the Dallas District look for sales of the 1978 models to exceed those of the 1977 models, but Cleveland characterizes prospects for new car sales and production as ""highly uncertain"". Continued strong sales of imported cars, however, are noted in Atlanta, Dallas and New York. Regarding consumer outlay on tourism, a good ski season is reported by Boston and San Francisco. The high level of non-auto retail sales has apparently reduced retail inventories to desired levels, indeed in a number of cases to below such levels. Boston thus reports that strong Christmas sales has enabled retailers to work off any excess stocks that may have developed earlier, while Dallas reports inventory levels to have been drawn down to low levels at many stores. Similar sentiments are expressed by respondents in the Cleveland and San Francisco Districts. Chicago characterizes current retail inventory positions as on the ""slim side"", St. Louis as ""trim"", Minneapolis and New York as posing no problems, and Philadelphia and Richmond as consistent with sale expectations. Similarly, according to several reports, inventories at the manufacturing level are generally well balanced. Manufacturing respondents in the Kansas District thus reported their inventories as neither excessive nor inadequate, while Boston respondents felt inventories were unlikely to create problems. Philadelphia manufacturers plan to maintain their inventories at current levels, while St. Louis reports manufacturing inventories excluding autos to be generally in line with expected sales. However, the view that inventories are too high is widely held among manufacturers in the Richmond District. Residential construction remains strong, according to those reports that comment on this sector. Atlanta perceives an acceleration in the pace of such construction, led by single-family units but with quickening of the rate at which apartment projects are coming on stream as vacancies dwindle and rents climb. St. Louis reports home building to be strong, with recent home sales in some areas of the District the largest in several years for the winter season. Minneapolis notes that home building in its District has remained well above the previous record pace of 1972, and is expected to remain strong in the coming months, while housing experts in the Chicago District also believe home building will be strong again in 1978. Regarding business capital outlays, Chicago reports that the demand for most types of capital goods has continued in a modest uptrend, and that a majority of purchasing agents in areas heavily emphasizing capital goods production expect improved conditions this year. Similarly, capital goods producers in the Cleveland District expect business to be as good or better this year than in 1977, with a sharp step-up in capital spending in the aerospace and communication industries. Respondents in New York and Cleveland note that currently ample capacity obviates the need for additional investment in the chemical industry, but Boston reports increased capital goods orders by that industry. Dallas reports that many oil field machinery and equipment manufacturers are expanding production facilities. No significant change on balance appears to have occurred in manufacturing output and sales, which in general continued to advance. An improvement in the steel industry is noted by several banks, including Chicago, Cleveland and St. Louis. Philadelphia reports that the strike in the coal industry as yet has had little effect on the District's economy, although Richmond reports the strike to be a major factor in the District's economy. On the banking scene, no indications of significant disintermediation have emerged, although a low or slower rate of growth in time deposits and passbook saving accounts is noted by several Banks, including Richmond, Cleveland, St. Louis and Dallas. Concern was expressed by some respondents, however, that such disintermediation would occur should money rates rise much further. The demand for credit continues strong, particularly for consumer and real estate loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1122 -beige_book_pure_text_pre2000,1978,"Severe weather conditions and the potential effects of the coal strike dominate this month's Current Economic Comments. Because of unfavorable weather, retail sales throughout much of the country were below expectations. However, respondents in most districts believe that consumer demand is basically strong and expect to make up the lost sales in the spring. Manufacturing was up but again somewhat less than expected. In the financial sector, deposit inflows to thrift institutions have slowed while mortgage demand remains strong. Consequently, mortgage rates have risen in approximately half the districts. Fears about disintermediation vary considerably among districts, but most report that lending institutions are fairly confident they can meet the demand for mortgages. Thus far, the coal strike has had only minor secondary effects on the economy, but this is likely to change as widespread power curtailments now appear imminent. Almost every District reports that economic activity during the past several weeks was adversely affected by severe weather. Winter storms had their greatest impact in the northern districts, although Atlanta also experienced significant negative effects. Boston reports that much of southern New England was literally shut down for almost a week. Chicago describes the impact of the storms on sales and output as greater ""than in any previous winter in memory."" Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Dallas and San Francisco all report that retail sales were depressed by weather conditions. In most cases retailers expect to make up the losses in later months. Philadelphia retailers are looking forward to a strong spring season; Dallas store executives are optimistic about the impact on sales of rising income levels and the proposed tax cuts. Such expectations seem to be supported by the experience of retailers before the winter storms and in unaffected areas. Chicago reports that retailers were very pleased with their experience until mid-January and the onset of the bad weather. Richmond, which did not report severe storm impacts, observed increases in both total sales and the proportion of big ticket items, and Atlanta reports that those areas least affected by bad weather experienced strong sales growth. In northern New England, the ski industry is enjoying another great year. According to San Francisco and Atlanta, automobile sales which had been slow began picking up in mid-January. Retail inventories were not seen as a problem in any district except St. Louis where stocks of new cars were larger than desired. Chicago notes that weather-caused shutdowns at the auto plants substituted for layoffs otherwise needed to hold down excessive inventories. Manufacturing activity appears to be increasing, although in most districts dealing with this topic, the experience of the past month fell short of expectations. Again weather was thought to be the major cause of the slowdown. San Francisco observes that production levels are steady or growing in most industries and that some industries have largely achieved full capacity. The aluminum industry, in particular, is operating at capacity and there is actually a shortage of capacity at the rolling stage. Richmond's survey of manufacturers finds a general increase in new orders and rising backlogs. Dallas notes that sales in the apparel industry have strengthened; chemical sales remain weak but improvement is expected. St. Louis reports that aircraft manufacturing and industries serving the housing market are experiencing strong demand, although overall the rate of growth in manufacturing has slowed. New York and St. Louis both find that capital goods producers are making small gains but are not doing as well as expected. New York manufacturers do not expect the tax proposals to improve this situation. Chicago reports that the demand for capital goods has picked up, with construction equipment the leading sector. Steel orders have also increased, primarily because of the capital goods demand. According to Cleveland, capacity utilization in the steel industry will rise to the mid-eighties from about 75 percent in the previous quarter. The most pessimistic report comes from Philadelphia, which finds no change in new orders and a small increase in shipments. Richmond, Atlanta and Philadelphia report slight increases in manufacturers' inventories. Excessive automobile inventories have been reduced by planned shutdowns in the St. Louis district and storm-caused disruptions. Cleveland, Dallas and San Francisco note that refiners' inventories of petroleum products are above desired levels. In the financial sector, almost all districts report that the inflow of deposits to thrift institutions and other mortgage lenders has slowed. Kansas City finds that deposit growth has actually picked up since the fourth quarter but is below that of two years ago. The demand for mortgages has remained strong. As a result, in over half the districts mortgage rates have increased in recent months. The greatest increase seems to have occurred in the Sixth District; Atlanta reports that conventional rates have risen 1/2 percentage point in one month. This increase seems to have attracted borrowers hoping to avoid higher rates in the future. Chicago reports some savings and loan institutions have begun to reduce maturities and increase fees; some are lending only for single-family, owner-occupied dwellings. Some California thrift institutions have also limited loans to single-family dwellings and in Oregon a number of thrifts have adopted a temporary moratorium on lending. In most districts, however, the thrift institutions believe that they can meet the mortgage demand by supplementing regular deposit inflows with other funds. Chicago, St. Louis, Minneapolis and Kansas City report that thrift institutions in their districts plan or have already begun to borrow at the Federal Home Loan Banks. In the Cleveland, Dallas and Kansas City districts a number of thrifts are planning to sell mortgages in the secondary market. Atlanta reports that saving and loan associations there have launched campaigns to promote savings and are offering ceiling rates on certificates of deposits. The extent of concern about disintermediation varies considerably from district to district. Institutions in New York and Philadelphia are particularly worried that higher interest rates will lead to serious disintermediation. One Philadelphia mutual savings bank believes an increase in short-term rates of only 25 basis points will cause a significant shrinkage in mortgage funds. As mentioned above, San Francisco reports that several thrifts have already left the mortgage market. On the other hand, institutions in most districts seem to feel that they can meet projected demand with higher rates and by seeking non-deposit funds. Boston thrifts believe disintermediation will not be a serious problem unless short-term rates rise 100 basis points. Districts with substantial involvement in agriculture report that price increases are likely in 1978. In California rains ended drought conditions but damaged crops. Consequently, prices of vegetables like lettuce and carrots have risen sharply. Atlanta reports that orange prices are ""sky high"" and that cotton prices are rising. Kansas City and Chicago both believe that pork prices will be higher than previously estimated and Kansas City thinks that there may be ""rather explosive price increases in the cattle industry."" There is still some talk of a farm strike, but interest has dwindled. Finally, Philadelphia, Cleveland, Richmond, Atlanta, Chicago and St. Louis are very concerned about the potential economic impacts of the coal strike. To date the impact has been largely confined to the direct effects in the mining and railroad industries. However, supplies of coal have run low and these districts fear that there will soon be power curtailments which will in turn result in widespread layoffs. Richmond and St. Louis report that utilities in their districts may have to begin curtailments within two weeks. As Atlanta and Philadelphia point out, even those coal users with relatively large stocks are worried because after the strike is settled there will still be a considerable delay before deliveries start up. The most critical situation appears to be in Indiana where utilities have already requested a cutback in lighting and will soon reduce power to large industrial users. The steel industry, however, has adequate supplies of coking coal as long as the strike is settled by April 1. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1677 -beige_book_pure_text_pre2000,1978,"The overall impression that emerges from this month's district comments is that while the severe weather in many parts of the country and, to a more limited extent, the spreading effects of the coal strike, have somewhat weakened the economy's momentum, the interruption is likely to be only temporary. The retail sale outlook remains good, with merchants generally expecting a strong spring season. The underlying demand for housing continues at a high level, although some concern was voiced over an actual or potential rise in mortgage rates. Business inventories generally are still in line with sale expectations, and there were signs of a strengthening in the business capital spending sector. Concern over inflation continues, reinforced by the implications of the coal negotiations. The demand for business loans seems to have strengthened, on balance. The impact of the coal strike on production and employment appears to be limited so far. Cleveland thus reports that electric power shortages have affected employment in its district only ""minimally"" and far less than indicated in widely publicized estimates, and notes that its economic respondents were ""unconcerned"" about the long-range effect of the strike. Richmond reports further curtailment of energy supplies to commercial and industrial users, but expects losses in terms of employment and production to be small if coal shipments are resumed shortly. Atlanta notes that so far only from Tennessee and Alabama have reports of strike-related ""significant"" disruption of production emerged, although it feels further curtailments might induce massive layoffs if coal shipments are not forthcoming quickly. According to Chicago, the coal strike began to adversely impact output in late February, but the effect so far has been ""relatively minor"", largely confined to Indiana, and is expected to be quickly reversed after the strike is settled. St. Louis also reports only ""relatively minor"" effect from the strike, and, indeed, sees modest gains in manufacturing activity in recent weeks. Minneapolis feels the strike is not affecting industrial activity in its area, as do New York and Boston, although concern was expressed in those two districts over the potential adverse impact should the strike be prolonged much longer. That for the present underlying manufacturing conditions remain firm, however, is suggested by the number of reports of increases or continued strength in manufacturers' shipments, new orders, and the growing backlog of orders, emanating from, among others, Boston, Philadelphia, Richmond, Dallas and St. Louis. Consumer spending continued to be depressed by inclement weather over large parts of the country, with more than half of the districts mentioning this as a factor. Retailers, however, generally remain relatively optimistic about the near-term outlook. Boston thus reports that retail sales in New England have weakened, but that bad weather was ""undoubtedly"" a contributing factor, while New York notes that consumer spending in that District appears to be shaking off its ""winter doldrums"" with retailers throughout the District looking to a strong spring season. Similar sentiments are expressed by several other banks, including Philadelphia, Cleveland, St. Louis and Kansas City. Richmond sees continued improvement in total sales, with retailers remaining optimistic. Atlanta reports year-to-year sales gains of 10 to 15 percent in most areas of that District, and a rise in late February in retail sales is reported by Dallas. Minneapolis characterizes consumer spending as ""good to normal"", except in rural areas particularly hard hit by cold weather, and while San Francisco reports that unusually heavy rains have dampened sales in Southern California, consumer spending remains strong in the northern part of the state. While bad weather also hampered construction activity in a number of areas, underlying demand in that industry appears to remain strong according to those banks that comment on this subject. Atlanta thus reports that recent high rates of residential construction have not been able to keep pace with demand, while St. Louis reports that demand for new homes continues at a high level. Cleveland notes that while bad weather has depressed housing activity in its District, demand for mortgage money continues strong, as do Minneapolis and Dallas. Some concern was expressed in several districts, however, that rising mortgage interest rates associated with a weakening of deposit inflows at thrift institutions might eventually reduce mortgage demand. Business inventories by and large remain in balance. Retail inventories thus are characterized as ""well under control"" by Boston, and at or near desired levels by Richmond, Dallas, Kansas City and St. Louis. Some respondents in the Chicago, San Francisco and Cleveland districts felt inventories to be too high, but others too low. Retailers' inventories in the New York district were regarded as a bit on the high side. At the manufacturing level, inventories in general appeared to be in line with expected sales, although Chicago reports a buildup in farm equipment inventories and there remains a widespread feeling among Richmond manufacturers that current stocks exceed desired levels. There were indications of some improvements in business spending on plant and equipment. Boston thus reports increases in machine tool orders, while Atlanta notes that tool and diemakers are enjoying excellent business. A steel economist in the Cleveland district sees signs of ""accelerating"" orders from capital good producers. Chicago reports an expected rise this year in business capital outlays, both for equipment and structures, while Philadelphia characterizes the capital spending plans of its respondents as remaining strong. Concern continued to be expressed over actual and prospective increases in prices and wages. More specifically, Chicago expects the ""very large increase"" in compensation which the eventual coal settlement will entail to stimulate wage demands in other industries. Minneapolis reports that the coal negotiations have already affected wage demands in that district, while respondents in the Cleveland district expect a sharp rise in coal prices this year. The demand for business loans is reported as strong or on the upswing by several banks, including St. Louis, Dallas, Chicago and Philadelphia, but as flat or below expectations by San Francisco and New York. Reports on the demand for consumer and other types of loans were mixed. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1282 -beige_book_pure_text_pre2000,1978,"Reports from the twelve District Banks this month unanimously indicate an expanding economy. The effects of a severe winter appear to have been largely overcome, and economic activity in the regions affected by the now-settled coal strike has returned to normal levels. Retail sales are generally strong, as is the manufacturing sector. Crop prospects for this year are good, but spring planting is reported to be behind schedule, a result of the harsh winter weather. Construction activity is strong overall. Mortgage demand is maintaining its strength, but business loan demand is mixed. The fear of accelerating inflation is pervasive, and is seen as a major stumbling block to continued real growth. Retail sales are a major source of strength in the renewed expansion, according to this month's reports. Boston and Cleveland observe some softness in this sector, but virtually all of the other Districts indicate a strong up-tick this month. Chicago notes that big-ticket items are the best sellers. In addition to gains in department store sales, automobile purchases are also reported to be up substantially. This, however, stems partly from suppressed demand in the first quarter. Expansion in the goods-producing industries is evident in all Districts with a sizable manufacturing sector. Durable goods industries are particularly strong. Capital goods production is said to be on the upswing in Boston, New York, and Chicago, while Richmond indicates consumer goods output to be strong also. Improvement in the steel industry is cited across the board, a result of both the surprisingly effective trigger-price system, instituted by the Administration earlier this year, and a generally rising demand for steel in recent months. Construction activity is generally strong in April. Atlanta and Cleveland report optimism among builders that 1978 will be a good year for housing. Nonresidential construction is expected to fill any gap that may occur in the housing market later this year. Chicago, on the other hand, expects commercial and industrial construction to lead the way, and housing starts to decline. Economic conditions in the agricultural sector are favorable. Kansas City, Atlanta, and Richmond all report stronger farm prices, and farm income is projected to increase in 1978. Adverse weather conditions have delayed spring planting to some degree, but this is not thought to be a serious setback. In the banking sector, District reports show business borrowing to be mixed this month. Minneapolis, Richmond, and Boston say demand for C&I loans is strong, while New York and Philadelphia banks show softness. Future loan demand projections are no less varied. At the same time, deposit growth in most Districts is slack. Although cash flows are said to be tightening in some areas, disintermediation doesn't appear to be a major cause for concern at this time. The mortgage market is reported to be generally tight. San Francisco and Cleveland say some S&Ls are now refusing mortgages on certain types of dwellings. Mortgage rates have risen recently and now stand in the 9 1/4 - 9 3/4 percent range. Several Districts commented on the widespread fear of accelerating inflation in the near future. Boston, Cleveland, Minneapolis, and Atlanta all indicate concern among businessmen about a higher rate of price inflation later this year. Higher price increases are deemed a deterrent to both consumer and business confidence, and therefore to continued economic expansion. Moreover, half of the District reports indicate that inflation is, in fact, expected to heat up as we move into the second half of 1978. One reason for the upward revision of price forecasts is the coal settlement. As Chicago points out, many consider the pact to be inflationary in itself, and expect it to set the tone for labor negotiations in the future. Other factors feeding the fires of inflation are recent steel price hikes and utility rate increases. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",820 -beige_book_pure_text_pre2000,1978,"All Districts report that the economy has strengthened further in recent weeks, but inflation is a dominant concern. Consumer spending is mixed, with cold weather dampening sales of seasonal merchandise although car and hard goods sales are generally strong. Further improvement in manufacturing activity is noted, as orders and backlogs continue to rise and scattered signs surface of tightening labor and special product markets. Loan demand at banks continues strong, except in New York City, and savings and loan associations have raised mortgage rates as demand exceeds supply. Crop plantings are behind schedule and may hamper production this year. District reports uniformly indicate that the economy continues to expand rapidly. Although there is some uncertainty over prospects for housing and some doubts about the strength of consumer spending later this year, there appears to be growing confidence that capital spending is strengthening (Chicago and Cleveland). Several Districts report officials are optimistic that the expansion will continue at least through 1978 but Chicago and Cleveland, looking further ahead, anticipate it may end in 1979. Philadelphia also reports less optimism among industrial officials than at any time during this expansion. The concern that underlies most District reports, however, is that the rate of inflation is accelerating. Practically each District notes a worsening in inflation last month, and some comment that it is their primary concern. Indicative of the expanding economy is the continued strengthening in manufacturing activity, as reported by half the Districts. Further increases in shipments, orders, and backlogs are noted in a variety of industries, including steel, machine tools, food, apparel, electrical machinery, nonelectrical machinery, appliances, chemicals, and home building and construction materials (Boston, Chicago, Cleveland, New York, Philadelphia, and, St. Louis). Accompanying this increased activity are reports of shortages of skilled labor (Atlanta, Chicago, Dallas, Minneapolis and St. Louis) and of castings, transportation and storage space for wheat and grain, small electrical components and cement (Dallas and Kansas City). Retail sales present a mixed picture between and within districts. Half of the districts report strong gains in sales for April, but several others note mixed spending patterns. Generally, hard goods and automobiles are selling well, but sales of seasonal merchandise, including summer apparel and air conditioning units, have been sluggish or below expectations. Unseasonable weather apparently has hampered sales. Nevertheless, most retailers are cautiously optimistic, though they expect sales increases to moderate in coming quarters. As a result of less than expected increases in retail sales, inventories are described as at or above desired levels in several districts (Boston, Cleveland, Kansas City, New York, Richmond and St. Louis). Credit demands are generally strong and expectations are for continued moderate strengthening during the balance of 1978. No District reports on concerns of a credit squeeze, although some look for additional firming in interest rates (Atlanta, Boston, Philadelphia). Business loan demand has been rising rapidly in some areas (Atlanta, Kansas City, San Francisco and St. Louis) but is still sluggish in New York City where alternative sources of funds tend to constrain demand (New York). Demand for mortgage credit continues strong in all districts and mortgage rates have firmed in most districts. In response to strong demand and generally inadequate supplies of mortgage funds, savings and loans in a number of Districts have curtailed commitments or loans (Atlanta, Chicago, Cleveland, Dallas and Minneapolis). A few districts report net outflows in deposits at savings associations, (Kansas City, San Francisco and St. Louis) while others note only moderate or small increases in deposits. Uncertainty about prospects for homebuilding later this year is expressed in a number of reports that cite further increases in building costs and housing prices, higher mortgage interest rates, and a shortage of mortgage credit (Dallas, Minneapolis, San Francisco and St. Louis). Planting is behind schedule in key agricultural regions of the country (Chicago, Kansas City, Richmond and St. Louis) because of wet spring weather and below-normal temperatures, thus raising some uncertainty over prospects for crop output in 1978. Richmond reports replanting of seeds will be necessary. While cold, wet weather has improved production prospects for winter wheat, corn planting has been delayed and initial estimates of production of corn and soybeans for 1978 are highly uncertain (Kansas City). Dallas reports drought is hampering plantings and livestock production. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",960 -beige_book_pure_text_pre2000,1978,"Business has been brisk throughout the nation, and nearly all Reserve banks expect it to stay that way for at least the next few months. The manufacturing, retail trade, building, and banking industries report strong growth, with little evidence or expectation of an imminent slowdown. Concerns are growing, however, that tightening input markets, accelerating inflation, and rising interest rates may soon stifle the expansion. A SRAC-requested survey by district banks on recent changes in Regulation Q reveals little impact so far: nearly every district has had only modest responses to the new six-month CDs. Regular surveys of manufacturing activity conducted by Philadelphia, Richmond, and Minneapolis document a strong growth trend in manufacturing sales in their regions. The remaining Reserve banks report similar quickening in both durable and nondurable manufacturing activity of firms serving industrial as well as consumer markets. The goods being produced for consumer markets have not been sitting on the shelf for very long either. Retailers have enjoyed substantial sales gains. Every district noted either an upward trend or at the very least some firming in consumer spending. Consumer durables, especially automobiles, were often cited as the best sellers (New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco). And despite rapidly rising construction costs and mortgage interest rates in the neighborhood of 10 percent, individuals have continued to demand new homes. That demand has been sufficient to fuel a resurgence of last year's homebuilding boom in some parts of the country (Atlanta, St. Louis, and Minneapolis). In some other regions where homebuilding activity has not resumed last year's pace nonresidential construction has picked up the slack (Chicago and San Francisco). As usual expanding economic activity in the real sector has coincided with increased financial sector activity. Particularly strong loan demand was noted by district banks in Boston, Richmond, St. Louis, Kansas City, and Minneapolis. That loan demand and the business activity with which it coincided isn't expected to let up in the near future either. Boston expects economic growth to continue throughout the year. The outlook for capital spending has strengthened in New York. Manufacturers and retailers continue to expect gains through the next two quarters in Philadelphia. Cleveland predicts expansion will continue into the first half of 1979. Chicago notes strength in capital spending plans. And Minneapolis looks for continued growth in manufacturing and retail sales through the rest of 1978. These optimistic forecasts are tempered with a few notes of caution though. Some input markets have tightened noticeably. Skilled labor (Boston, New York, Chicago, St. Louis, Minneapolis, Kansas City, Dallas) and freight car (New York, Atlanta, Chicago, San Francisco) shortages were judged to be the most acute. In addition, fears relating to accelerating inflation were common among many businesspeople. Several districts report widespread speculation that the recent rally in retail sales resulted from consumer attempts to beat expected price increases and thus could not be counted on to continue as those expectations were realized (New York, Cleveland, Atlanta, Dallas). Rising interest rates, pushed up at least in part by accelerating inflation, were also cited as a reason for caution. Chicago, Minneapolis, and San Francisco each mentioned the negative impact on residential construction of the continuation of current trends in mortgage interest rates. It was hoped by some that upward pressure on these rates would be substantially mitigated by recent changes in Regulation Q allowing for the marketing of a new six-month CD. So far, however, these instruments are contributing only modestly to the easing of tight credit markets. Each district summary includes comments on early developments in the market for the new six-month CDs. Those comments revealed a fairly homogeneous experience across districts and can be summarized as follows: Most banks and thrifts have been offering the new CDs at the ceiling interest rate. There has been a wide variation in the aggressiveness of promotional efforts with large urban financial institutions typically the most aggressive. As a rule consumer response to the new instrument has been mild. Most funds for the six-month CDs have been coming from existing deposits. Most financial institutions expect the new six-month certificate will have little net impact on their deposit inflows during the next six months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",907 -beige_book_pure_text_pre2000,1978,"District reports continue to point to a slowdown in economic activity in the second half of the year. However, current retail sales and manufacturing activity continue to advance at a rapid pace, although some industries have entered their normal midsummer doldrums. Businessmen continue to manage inventories closely, and growing uncertainty is deterring some capital spending. Higher prime rates are expected as loan demands strengthen and bank deposit inflows slow further. Although higher interest rates are not expected to impact significantly on business borrowing, they have led to fewer mortgage commitments. The prospects for farm income are improved, and the demand for new equipment in some areas is rising. Modest to brisk gains in retail sales are being reported across the country, although the expected strength of sales at year-end remains uncertain. New cars continue to sell well, but sales of other durable goods are mixed. Minneapolis and Dallas suggest that retail sales are increasing at unsustainable rates, while Atlanta indicates a similar situation for new car sales. Chicago reports that consumers continue to use installment credit freely, and there is concern in the New York district that mounting consumer debt will soon slow sales. Inventory levels remain within manageable limits, although Boston, Cleveland, Richmond, and Kansas City indicate stocks are on the high side. Atlanta is the only district where retailers plan to build inventories through the summer. Industrial production continues to grow at a brisk pace in most districts, as evidenced by expanded employment, increased shipments, and rising prices. Although some industries, such as autos and coal, have geared down to slower rates of summer output, production in such durable goods industries as fabricated metals, transportation equipment, construction materials, and defense goods are on the rise. Nonetheless, many manufacturers are pessimistic about business conditions at year-end and are keeping a tight rein on factory inventories. Despite the recent runup in imports, steel companies in the Cleveland and Chicago districts remain heavily booked, and production is expected to remain strong. But inventory levels, especially in the distribution channels, are building and may hamper further price increases. Capital spending plans vary widely. Low rates of return and uncertainties over inflation, government regulations, and economic policies are listed as obstacles to increasing capital outlays. San Francisco notes investment plans by several industries are short of that needed to meet future product demand. While no significant changes in capital spending are anticipated by Philadelphia, large expenditures are in the offing for commercial aircraft, rail cars, and heavy trucks and trailers, according to New York and Chicago. Credit demands at commercial banks are expected to strengthen for the remainder of the year. Continued slowing in deposit growth is holding down the liquidity positions of most banks, and bankers are becoming more selective in processing loan applications. While business loans, consumer installment credit, and agricultural lending account for much of the growth in bank loans in many districts, New York points to the financing of mergers and acquisitions and inventories as sources of loan demand in that district. Interest rates are expected to continue to rise with the prime rate climbing 25 to 100 basis points by year-end, according to Philadelphia and Kansas City. Although the new six-month money market CD's appear to be adding little to overall deposit growth, they are helping many banks, and especially S&Ls, to hold on to some savings deposits. Residential construction in many areas is being pinched as tight mortgage markets are leading to sharp reductions in new commitments. Chicago indicates that residential permits and sales of existing homes are down 30 to 40 percent in some areas from a year ago. The uncertainty of property tax cuts promised by Proposition 13 is an additional factor that is holding back home sales, according to San Francisco. Slowdowns in residential construction are anticipated by St. Louis and Minneapolis, while Cleveland reports housing starts will remain strong for the remainder of the year, regardless of sales. Demand for mortgages also remains vigorous in the Atlanta and Dallas districts. Financial conditions in the agricultural sector show some improvement with higher livestock prices. But Atlanta reports some weakening of farm prices in recent weeks, and Kansas City indicates that the abundant wheat harvest should preclude a runup in wheat prices. Prospects of improved farm incomes are adding to demands for farm equipment, according to Chicago, Minneapolis, and Dallas. Soil moisture conditions are generally adequate, but shortages are reported in the Southeast and portions of the plains. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",947 -beige_book_pure_text_pre2000,1978,"Economic activity continues to advance, according to this month's district comments. While there is concern in some areas that a downturn may be in the offing, business activity generally appears to be strong with little evidence of current weakness. Some shortages of skilled labor and certain materials have developed, but building activity and industrial production continue to post healthy gains. At the same time, capital goods orders are strong, suggesting that capital spending will expand further. Retail sales generally remain robust, and inventories appear to be at moderate levels. Furthermore, higher farm prices and good crop prospects have improved the outlook for agricultural incomes. Demand for bank credit appears to be strong and broadly based. Moderate to strong gains in consumer spending were reported in most districts, although Cleveland and Dallas experienced some recent softening. Sales continued to be vigorous in most of the San Francisco District, but some hesitancy was noted in California in response to uncertainties about the impact of passage of Proposition 13. Automotive sales were strong in many areas of the country. Nevertheless, sales were generally not expected to continue at the current brisk pace. Richmond, for example, reports that at least part of its strong auto loan demand reflects buying in anticipation of higher prices. Retail inventory levels generally appear to be in good balance with overall sales, although some overstocking in a few lines was noted by several districts. Major exceptions to this view were New York, where several merchants expressed concern that stocks were higher than desired, and Cleveland, where the level of inventories of a wide range of merchandise is considered high. In general, retailers appear to be optimistic about the near-term outlook for sales. Among those districts reporting on building activity, most are continuing to experience relatively high levels of residential and/or nonresidential construction. Atlanta reports little or no slowdown in housing starts or mortgage lending to date, and nonresidential construction is also at a rapid pace. Housing activity also remains high in the St. Louis and Cleveland districts and in the latter, most lenders report no slowing in mortgage commitments and loan applications. Dallas characterizes nonresidential construction as the fastest growing sector in its regional economy and notes that home building is also strong. Faced with rapid growth, both Dallas and Minneapolis cite shortages of cement as a constraint on their building activity. Nonresidential construction remains high in San Francisco though home building has slowed. A recent spurt in California residential permits reflects the imposition of more costly energy regulations beginning in July rather than a pickup in activity. Many of the districts reported that the new six-month money market time certificate resulted in better-than-expected deposit flows to thrift institutions. Chicago and St. Louis note a leveling off of mortgage rates in their areas. Industrial activity expanded in many areas during July. The volume of new orders was strong in the Boston, Cleveland, Philadelphia, and St. Louis Districts, while order backlogs have increased sharply for transportation equipment in Chicago. A survey in the New England area indicated that 80 percent of small businesses had higher backlogs than a year earlier. Manufacturers responding in the monthly Philadelphia and Richmond surveys also reported gains in shipments and employment. Boston and Chicago report some industries operating at or close to capacity. While inventories rose in the Richmond District in contrast to a decline in Philadelphia, Richmond manufacturers state that inventories more closely approximate desired levels than in earlier months. Activity in the steel mills of the Chicago and Cleveland Districts is reported to be robust. Chicago steel producers are witnessing the best demand in four years and orders in Cleveland have been strong due to automotive demand and some stockpiling in anticipation of an August price hike. The outlook for continued growth in capital expenditures appears promising, judging from the reports of districts commenting on capital spending. Cleveland expects good business fixed investment ahead based on strong orders in its capital goods industry. At the same time, producers of machine tools and other capital equipment in some other districts report strong new orders. Nevertheless, there were a few reports of continuing caution. For example, Philadelphia's manufacturers expect to ""hold the line"" on such spending. Prospects for agricultural incomes in much of the country have brightened considerably. Higher prices for livestock and crops, along with a good harvest in view have raised farmers expectations. Chicago contrasted the current farm situation to the dismal conditions of last winter that prompted a strike. San Francisco says its farmers are in the process of recouping the losses from the heavy spring rains. As a result of the improved financial situation, sales of farm equipment and farm spending in general have risen and loan repayment problems have declined. However, as Kansas City notes, continued reduction in beef production together with liquidation of cattle inventory indicate even higher meat costs for consumers in the months ahead. Demand for bank credit was reported strong in most districts. The source of recent demand appears to be broad based. Business loans were strong in Philadelphia and St. Louis while Kansas City had heavy demand for real estate loans and Dallas for real estate and construction loans. Consumer borrowing was a major source of bank loan demand in the Richmond and New York areas. Consumers in the Chicago District also made liberal use of credit. So far, there is no evidence of an increase in delinquency rates. Minneapolis and Dallas were the only areas to mention the possibility of a liquidity problem. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1156 -beige_book_pure_text_pre2000,1978,"Reports from the twelve District Banks this month indicate continued expansion of the national economy but at a moderate pace. Retail sales growth continues in most Districts but at varied rates. Expanding manufacturing activity and generally strong loan demand continue to be major sources of strength to the economy. Construction activity is on the upswing despite some labor and materials shortages in the Midwest. With the exception of cotton, crop prospects are reported to be favorable. Retail sales volume is growing in all Districts in September, but at various rates. Boston, Richmond, Chicago and Minneapolis report strong sales growth, while the other Districts indicate only modest or marginal gains after accounting for inflation. Automobiles and/or big-ticket items are mentioned as particularly strong areas by New York, Cleveland, Richmond, Chicago, Minneapolis and San Francisco. There is scattered concern that inventories may be becoming excessive. As for the future, retailers have mixed opinions. Several Reserve Banks mention that merchants are concerned about the possibility of overextension of consumer credit within the next few months. Manufacturing activity is reported to be generally strong. Although New York and San Francisco report little or no growth in this sector, an actual decline in activity is not observed anywhere. Supplies of most commodities appear to be adequate at this time. For the longer term, manufacturers seem to be considerably less optimistic and a little more uncertain than they have been in recent months. In fact, Philadelphia and Richmond report that manufacturers in those Districts are anticipating a decline in economic activity within the next six months. Expansion in the construction industry is indicated across the board, despite an acute shortage of cement noted in Chicago, Minneapolis, and Dallas. Although no wholesale shutdown of work has been observed in those areas, some cutbacks are noted and jobs are being delayed. Nevertheless, gains in residential and/or nonresidential construction are noted in these three Districts, as well as in Atlanta and St. Louis. Economic conditions in the agricultural sector are generally favorable. Farm income is reported to be rising and crop prospects, with the exception of cotton, are said to be good. Hot, dry weather has been a problem in cotton producing areas for some time now and the cotton yield is expected to be well below normal. The prolonged drought has also led to the liquidation of cattle in the St. Louis and Dallas Districts, affecting prices in those markets. In the banking sector, loan demand is reported to be generally strong. Consumer borrowing, especially for mortgages, is reported to be particularly heavy. However, the demand for business loans, while strong overall, is showing signs of weakness in Atlanta and Richmond. Looking ahead to 1979, bankers are generally projecting continued loan demand growth and foresee little difficulty in meeting that demand. Although tight money conditions currently prevail in Minneapolis and San Francisco, these conditions may be, at least in part, only seasonal. Bankers do not generally foresee funds drying up as a result of disintermediation in the coming months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",654 -beige_book_pure_text_pre2000,1978,"The tone of District reports is one of high employment of resources, accompanied by high operating rates in basic industries, shortages and lengthened deliveries, and generally tight labor markets. Upward price pressures remain intense. There is also an undertone of uncertainty and, indeed, concern over a slowdown or recession next year. Perhaps best illustrating the uncertainty are mixed comments on consumer spending and residential construction. On the other hand, capital spending and nonresidential building appear to be stronger than earlier expected. Credit demands are somewhat mixed, with softening noted for both C&I and mortgage loans. Crop prospects are generally favorable. District reports frequently mention continued expansion in manufacturing activity and high utilization of capacity. New York notes some producers appear to be nearing limits of capacity. Both Chicago and Cleveland are relatively optimistic about steel production this quarter, which if it matches last quarter, would amount to about 85 percent of capacity, far better than a year ago. Some Districts expect slowing in business early in 1979 (Philadelphia, Minneapolis and Dallas). Accompanying high levels of utilization in manufacturing and construction are reports of shortages of materials and labor. Districts report shortages of industrial and construction-related materials, ranging from cement (Chicago, Minneapolis and San Francisco) to drill pipes (Dallas). While shortages may not be a widespread problem, some Districts note stretching out of deliveries (Boston, New York and Kansas City). Similarly, complaints of labor shortages in a variety of industries are also noted (Boston, Chicago, Kansas City and San Francisco). Still, uncertainty and concern mark comments about economic prospects over the short term. New York, for example, points out that respondents expect slower economic growth in the next half, but not a recession, and Chicago reports that pessimism is widespread in that area. A majority of Districts indicate that retail sales have softened or have shown slower growth in recent weeks than earlier in the summer. Slower sales of major appliances are noted in some Districts (Boston, Chicago and Kansas City). Still, there are some exceptions to slowing tendencies. New York, Atlanta, Dallas and San Francisco report larger increases in sales in the past month than in the previous month. There is also a mixture of views concerning prospective sales. Retailers are optimistic in New York, Richmond, Minneapolis and Dallas, but those in Boston and Cleveland see further deterioration in sales. The pace of housing and mortgage loan demand throughout the District appears to have softened. High mortgage rates, high housing prices and in some cases, more selective lending terms account for the lessened pace. Chicago, for example, notes that houses over $100,000 are selling more slowly than earlier in the summer. In California, mortgage demand generally exceeds supply, but in other parts of the West, high mortgage rates seem to have slowed demand. The investment sector provides more encouraging developments. Plant and equipment spending and nonresidential construction appear to be either accelerating or stronger than generally expected. Chicago reports that producers' durable goods sales appear stronger now than earlier in the year and that office building construction in that city is in a full-fledged boom. Atlanta notes that inflationary psychology has given an additional boost to an already large volume of nonresidential construction underway. Dallas also indicates construction of new plants and expansion of existing ones already exceeds all of 1977 and that the boom in oil and gas drilling continues. San Francisco remarks construction is still booming in most parts of that District. Several Districts characterize inventory policies as cautious (New York, Atlanta and Minneapolis) or at about desired levels (St. Louis), but there are also reports of excess stocks, especially at the retail level (Boston, Cleveland, Richmond and Dallas). Also, inventories held by steel distributors are believed to be higher than desired (Cleveland and St. Louis). Continued strong upward price pressures for a spectrum of industrial materials are reported in a number of Districts. Reports show continued widespread and substantial increases in prices (Philadelphia, Richmond and Kansas City). Atlanta stresses a fear of double-digit inflation has contributed importantly to the latest strength in consumer spending, capital investment and housing. Credit demands are generally strong, but softening tendencies have surfaced in several Districts. Slower growth in C&I loans is reported in some Districts (Boston, Cleveland, Atlanta and Dallas). Boston considers the slowdown temporary, while New York comments that commercial banks are generally optimistic over growth in loan demand through the first half of 1979. They point out a ""spill-over"" loan demand from regional banks in the form of loan participations. Latest increases in interest rates apparently have not slowed loan demand except for mortgages. The prevailing view seems to be that consumer installment and business loan demand has not yet slowed in response to higher rates (New York, Cleveland, Richmond, Minneapolis and San Francisco) but some other Districts express some concern over higher rates. Boston and Philadelphia see some signs of disintermediation and Chicago points out that recent increases have convinced some of the ""inevitability"" of a slowdown or recession next year in response to tightened credit markets. Crop output in key farm belt regions is generally described as ranging from good to record harvests. Kansas City reports corn yields are good. St. Louis expects an above average crop sufficient to depress prices from a month-ago. Chicago expects a record year for corn and soy beans. On the other hand, Richmond and Dallas complained that dry weather has affected output of some crops. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1191 -beige_book_pure_text_pre2000,1978,"Generally good economic conditions prevail across most of the nation, although there is notable uncertainty over economic prospects. Retail sales have been fairly steady overall—consumer durables have been selling somewhat better than nondurables. Agricultural and industrial production has been strong. Construction activity is mixed, with some increases in commercial construction and some decreases in homebuilding. Inventories are lean almost everywhere. Financial markets continue to be tight. But despite fairly positive assessments of current economic conditions, reports from most districts reveal substantial uncertainty regarding future economic developments due in part to the evolving anti-inflation program. Retail sales have held up in recent weeks throughout most of the nation. Strong consumer demand was reported in Boston, Chicago, St. Louis, Dallas, Minneapolis, and San Francisco. The weakest demand was observed in New York, Philadelphia, and Atlanta. In between, retail sales ranged from slightly above last year to 10 percent above last year in Kansas City. Chicago was the only district reporting relatively better soft goods sales than hard goods sales. In Richmond, Atlanta, and Minneapolis the reverse was noted. Several districts indicated that auto and light truck sales did not adequately reflect demand, as slow deliveries held actual sales below potential levels. Auto dealers aren't the only business people with low inventories. Nearly every district notes the lean inventory positions of most retailers. Some soft goods dealers in Boston, Atlanta, and Minneapolis are concerned about inventory creep, but this concern is much less prevalent than satisfaction with inventory levels. Reports from manufacturers throughout the U.S. reveal that the overwhelming majority are maintaining very tight inventory positions. Since inventories are low, strong demand for manufactured goods has been reflected in healthy industrial activity. For instance, Chicago reports that most producers of capital goods continue to report rising shipments, new orders, and backlogs. Only New York characterizes manufacturing activity as flat, while all other districts cite improvements. Improvements in agricultural production are also widespread. Richmond, Atlanta, Chicago, St. Louis, and Minneapolis all note good agricultural production. And prices are holding up so that crop values are quite impressive. Livestock producers throughout the nation are also reaping the benefits of high prices.> Recent trends in the construction sector are not so clear-cut as they are in agriculture—commercial construction remains strong but homebuilding has weakened. Atlanta, St. Louis, and Minneapolis each report active commercial building. Meanwhile, most districts state that a homebuilding slowdown is imminent or had already begun. High interest rates are cited most frequently as the reason for the housing slowdown. St. Louis, Minneapolis, and San Francisco remark that usury laws are making mortgage funds particularly scarce in parts of their districts. Regulation Q is also mentioned as having a detrimental impact on the ability of banks and thrifts to attract funds. The newly legalized automatic transfer service at commercial banks was supposed to have relieved some of the negative aspects of Regulation Q, but at least according to Atlanta, Minneapolis, and Dallas consumer interest in the ATS is currently quite limited. This lack of interest contrasts with the public response to other recent Administration and Federal Reserve policy actions. New York, Atlanta, and Chicago report skepticism concerning the likelihood that wage-price guidelines would work. Furthermore, each of these banks notes public concern that the guidelines will turn into mandatory controls with the attendant inefficiencies. Reactions to discount rate and reserve requirement increases are mixed. For example, Atlanta finds that some observers are ""reassured that something concrete has been done toward alleviating the inflation and exchange rate situations,"" while a few others feel the actions were ""excessive or dangerous."" Uncertainty associated with the evolving anti-inflation program complicates economic forecasting. Districts report widely divergent opinions on the probability of a recession and on the chances that inflation and interest rates will moderate during the coming year. Boston's panel of experts reflects this diversity of opinion; Professor Eckstein argues that the odds now favor a recession in 1979, Professor Houthakker feels the odds are against recession in 1979, and Professor Samuelson suggests that government policy will have a substantial influence on what transpires and that recession is not inevitable. Similarly, opinions on inflation prospects range from less than the guidelines, according to some Philadelphia respondents, to substantially higher, according to some observers in Atlanta and Cleveland. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",939 -beige_book_pure_text_pre2000,1978,"Business conditions in most districts continue to improve, but more signs of weakness are cropping up. Most businessmen look for a slowdown in economic activity next year. Christmas sales are slightly ahead of a year ago. Production in manufacturing continues to advance slowly; no significant shortages, excesses, or bottlenecks have developed yet. Bank lending is expected to increase at a faster rate despite higher interest rates and tighter restrictions on terms for loans. Money market certificates continue to provide substantial amounts of funds to banks and S&Ls. Home building has begun to weaken. Net farm income has risen sharply with higher farm prices and bumper crops. Most districts report the dollar volume of Christmas sales is running slightly ahead of a year ago, and much of the strength is in soft goods since purchases of big ticket items other than autos are generally slowing. The biggest sales gains are on the West Coast where California's Proposition 13 property tax cut has helped to boost consumer spending. Early holiday sales were slowed by warmer than normal weather which dampened consumer enthusiasm for shopping, but sales in some areas are expected to rebound before Christmas. Heavy promotions account for much of the strength in sales reported by New York, Atlanta, and Dallas. Retail inventories are high, according to most districts, but remain within manageable limits. Philadelphia, however, reports stocks at national chain stores are beginning to accumulate at unplanned rates. New York, Minneapolis, and San Francisco, on the other hand, indicate sales are reducing inventory levels. New car sales are strong in the Chicago, St. Louis, Dallas, and San Francisco districts but are running below year ago levels-in Atlanta. Sales of trucks and used cars are growing also. Most reports indicate new car inventories are adequate, but new trucks are in short supply. Manufacturing output continues to rise, although the rate of increase is slowing. High levels of capacity utilization are reported in many districts, but no major bottlenecks have developed. Boston reports a slippage in the number of small firms reporting increases in new orders, and Philadelphia and Richmond indicate factory payrolls have leveled off. Manufacturers' inventories are fairly well balanced. However, Richmond and St. Louis indicate stocks are excessive, and a cutback in reorders for consumer goods in the Cleveland district has led to involuntary additions to stocks. Atlanta and Chicago, on the other hand, report a tightening in factory inventories. Shortages of materials and labor continue to be confined largely to construction, but some easing in the supply of building materials was noted by Dallas and San Francisco. Price increases for major materials should be more widespread next year according to Philadelphia, Richmond, and Kansas City. Despite higher interest rates, bank loan demands continue to increase, and liquidity positions of most banks remain adequate to meet foreseeable requirements. However, bankers are becoming more selective in approving loan applications, and St. Louis reports a number of small outlying banks are loaned up. Money market certificates of deposit continue to be a major source or funds for banks and S&Ls, and most existing certificates are being rolled over as they mature. Deposit inflows continue weak in time and passbook accounts, and some disintermediation is noted at banks by Philadelphia and at S&Ls by St. Louis. Construction activity remains at a high level, as a weakening in home building is being offset by increases in nonresidential construction. Residential construction is slowing as a result of substantial tightening in mortgage markets. Home building in New York state remains moribund, and an increase in that state's usury ceiling is not expected to reduce a heavy backlog of mortgage applications or increase sales significantly. Condominium sales are bright spots in the housing markets in the Chicago and San Francisco districts as conversions have continued to rise. >Higher farm prices and bumper crops, except for cotton and peanuts, are raising net farm income. Improved financial conditions for farmers and ranchers have led to substantially higher land values in the Kansas City district. Shortages of railroad cars have delayed grain movements from farms according to Minneapolis. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",881 -beige_book_pure_text_pre2000,1979,"The economy continues to advance but there is increasing evidence of a slowing, judging from this month's district comments. Among the positive developments, consumer buying generally remains robust, apart from the middle part of the nation where retail activity was temporarily disrupted by especially severe winter weather. Manufacturers continue to report substantial order backlogs and commercial construction appears to be strong. Business inventories are being closely watched in all sectors of the economy. On the darker side, there is apprehension over an economic downturn and the rate of inflation. Residential construction activity recently appears to have slowed perceptively. At the same time, automobile sales appear mixed with several districts noting a slackening in demand. Increasingly, there are reports of shortages of skilled labor and materials. On the financial scene, loan demand appears to have eased somewhat. After a sluggish start, consumer spending was generally strong during the holiday and post-holiday selling seasons. Purchases of big-ticket items in particular were noted in the New York, Atlanta and Richmond districts. In the San Francisco district, several department stores are reporting record sales, some exceeding last year by as much as 25 percent. The Philadelphia district, too, reported robust holiday sales. In the middle part of the nation, however, retailing activity was unusually slow in early January. Chicago, St. Louis and Dallas attributed this to the dislocations created by heavy snows and extremely cold weather. Minneapolis felt that the severe weather conditions contributed only slightly to the normal post-holiday slowdown. In the Cleveland district, retailers see little sales improvement in real terms and there is some fear that widespread promotions and markdowns in December will dampen January sales gains. Automotive sales reports were mixed, continuing strong in the Boston, Chicago and Dallas districts, but somewhat weaker in large parts of the Atlanta, St. Louis and San Francisco districts. Manufacturing activity and business sales continue to advance in most districts, but signs of weakness appear to be emerging. Several districts noted a lengthening of lead times for some products, citing shortages of building materials and machine parts. Cleveland reports that machine tool builders are operating at capacity and expect to continue at current production levels through most of the year. Capital goods producers in the New York and St. Louis districts report sustained activity as do Chicago and Cleveland steel producers, but some slowdowns in consumer goods are reported in Boston, Cleveland and St. Louis. In the Philadelphia district, manufacturers appear less than sanguine about the prospects for the economy, expecting a drop-off in new orders along with declining shipments. As a result, some marginal cuts in factory payrolls and further shortening of the average workweek may be in the offing. In the Richmond district, too, there is some pessimism as a result of scattered employment reductions and shortening of the workweek. Some shortages of skilled and semi-skilled labor were reported by Boston, Minneapolis, and Kansas City. Against a background of an uncertain outlook for the national economy, businesses are closely watching inventory levels. At the retail level, inventories generally appear closely aligned with sales. In the current environment, merchants appear to be very wary about adding to their stocks. In manufacturing, the reports varied. Philadelphia reported the manufacturers continue to reduce stocks, while Cleveland noted that capital goods producers are building inventories in response to further increases in backlogs and prices. Construction activity is mixed. Nonresidential building has remained strong in Atlanta, Chicago, Dallas, San Francisco, and Minneapolis. In contrast, residential building activity has slackened in most districts. Even in San Francisco, residential real estate activity seems to be weakening in virtually every part of the district, with inventories of unsold homes on the rise. Much of this weakness in residential construction is being attributed to the limited availability of mortgage funds. In Richmond, tighter lending terms are having a depressing effect on residential mortgage loan demand. Similar tightening is also reported in New York. Respondents in Atlanta, St. Louis, Dallas and San Francisco blame part of the mortgage money shortage in their districts on state usury laws. Other types of loan demand also appear mixed. Individual loan demand remains strong in Richmond but has tapered off in Philadelphia, St. Louis and Dallas. Business loan demand remained strong in several districts, but slackened in others. With respect to agricultural lending, several districts reported improved repayments from a year ago on farm loans, reflecting substantially higher crop prices. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",960 -beige_book_pure_text_pre2000,1979,"Reports from the Twelve District Banks this month indicate continued strength in the economy as many parts of the nation recover from a severe winter. The only exception is Atlanta which reports mixed activity in the Southeast. Strong loan demand and overall expansion in manufacturing continue to be major sources of strength to the economy. And, although residential construction is suffering in some states, nonresidential construction is generally doing well. Retail sales appear to be expanding with a few exceptions. Crop prospects are reported to be favorable with the exception of Southern California. March retail sales volume is reported to be growing in all Districts except Philadelphia, Richmond, and Atlanta. Minneapolis reports some weather-related constraint in consumer spending. Sales of big-ticket items are reported to be spotty in some areas, but lower-priced goods such as apparel and fabrics have been big sellers. Retail inventories are reported to be in good shape, except in Kansas City where merchants are expressing concern over some unplanned stock accumulation. One notable exception to the sluggishness of big- ticket items is auto sales. Cars, especially small, fuel efficient models are reported to be in great demand. In fact, in one area of the Twelfth District, Ford Pintos are completely sold out. Looking ahead, retailers have varied expectations, and are cautious. Manufacturing activity is said to be strong and expanding in virtually all Districts this month. Capacity utilization is high, and in Cleveland and Chicago, 100 percent utilization is being approached. Electrical components and appliances, auto products, and a broad spectrum of producer components are mentioned as some of the strongest industries. Supplies of most inputs, with the exception of labor, appear to be adequate at this time. San Francisco and Boston mention a shortage of skilled labor, particularly engineers. For the longer term, there is much less agreement about the industrial sector. Manufacturers in some Districts are fairly bullish, but Philadelphia and Richmond report a bleak outlook for industry through the balance of 1979. Expansion in nonresidential construction is generally the rule, but residential investment seems to be suffering. One possible cause of the home building slowdown is the mortgage funds situation. As market interest rates creep up, mortgage money in states which have usury ceilings is becoming scarce. Some states are reacting to this by eliminating or altering those ceilings. March 15th changes in regulations governing interest paid on money market certificates (MMCs) also have mortgage lenders worried. They fear that without their advantage in attracting funds, the flow of funds into the mortgage market will dry up. Economic conditions in the agricultural sector are generally favorable. Although some sluggishness is reported by Minneapolis, this is weather-related and should clear up when the snow melts. Atlanta reports favorable weather conditions and strong farm prices. Chicago paints a similar picture, and Kansas City indicates good strength in cattle. The only trouble spot is California, where a farm labor strike is disrupting the harvest of lettuce and several other crops. A freeze in Southern California has also caused considerable damage to the grapefruit crops. The agricultural outlook is, again, mixed. In the banking sector, loan demand is reported to be good overall, but deposit growth is not strong, as consumers increasingly become aware of interest rate differentials. The demand for auto loans is quite healthy. The prime rate is at 11 3/4 percent over most of the nation currently. Although tight money conditions do not prevail everywhere at this time, there seems to be a general fear that slack deposit growth will cause funds to dry up in the near future. The residential construction industry is particularly worried about such a possibility, because mortgage credit, as noted above, is already difficult to find in some areas. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",805 -beige_book_pure_text_pre2000,1979,"Based on the latest reports from the twelve district banks, business activity continues at a generally healthy pace. Outside of the automotive industry, where the Teamsters strike has hampered production, manufacturing activity is at high levels in most districts. With some industries operating at or close to full capacity and new orders strong, delivery lead times appear to have lengthened in a number of districts. Business inventories are generally reported manageable, although some stockpiling in anticipation of higher prices was noted. The retail sales picture across the nation is somewhat mixed. While merchandising activity continued to grow nationally, some districts reported a less-than- satisfactory Easter buying season and a cautious outlook among retailers. Nonresidential construction continues strong in several areas, but home building activity has declined. On the financial scene, businesses, consumers, and farmers appear to have been substantial borrowers at commercial banks recently. Manufacturing activity is strong and continuing to expand in many districts. While inventory accumulation presents no problem in most areas, many districts reported a lengthening of delivery lead times. Actual shortages of raw and intermediate materials were noted in only a few cases. Boston finds the strength in its industrial sector to be widespread, citing automotive products, aircraft engines and parts, machine tools, instruments and housing products. While thousands of automotive workers have been laid off in the Cleveland, Chicago and St. Louis areas as a result of the Teamsters' strike, manufacturing activity in other sectors is at a high level. In Cleveland, for example, the steel and aluminum industries are reported operating at effective capacity while the primary metals, machine tools, rubber and plastics, and paper and paperboard industries are at high or near peak operating rates. Chicago area machine tool builders see no letup in demand, which is the strongest since World War II. Most other districts report strong industrial activity, although less robust activity was recorded by Philadelphia and Atlanta. Consumer spending continues to grow, but the pace of growth is mixed across the nation. Reports from Minnesota and San Francisco suggested that retailers were enthusiastic about the pace of retail sales. Dallas, Atlanta, St. Louis and Kansas City also reported some further expansion and Richmond found signs that the normal Easter buying spree was underway. Sales remain strong in northern New England, but some slight weakening may be occurring in other parts of the Boston district. Auto sales were strong in many areas of the country, led by strong demand for small, fuel-economizing cars. Philadelphia reports very soft retail sales in early April, while sales in New York were mixed in recent weeks. Cold weather dampened spending in Chicago. By and large, retail inventories were reported in good balance with sales, although New York and Atlanta noted evidence of excesses accumulating at particular retailers. Commercial and industrial building continues strong in several districts but residential construction is declining in most areas. An exception was noted by Atlanta, where construction of apartment houses increased modestly and most new office space is rented before construction is completed. The effects of the recent change in Regulation Q relating to money market certificates are mixed. Some areas report thrift institutions are only slightly affected, while in others there is fear of reduced mortgage flows. The outlook for agricultural income generally appears good. Farmers are getting higher prices for many items and are optimistic about the year's prospects. Beef prices reached record levels, and corn and soy bean prices remained strong. Minnesota reports that its dairy farms are also doing well and optimistic crop producers in Atlanta have increased their plantings. San Francisco notes higher yields and prices for its dairy and crop production. On the financial scene, loan demand was strong in reporting districts, with the exception of Atlanta and Dallas. Even in Dallas, however, commitments to lend in the future show a sharp rise, indicating strength ahead. Demand was apparently widespread among businesses, consumers and farmers. Increased consumer loans to finance auto purchases were noted in several areas. Deposit flows were reported adequate in most districts. Some deposit gains were attributed to the recent change in Regulation Q which, for yields over 9 percent, prohibits thrift institutions from paying 1/4 percentage point more on money market certificates than commercial banks. Boston and Dallas, however, reported little or no deposit growth in some areas. Boston noted that some banks in northern New England had responded to the lack of deposit growth by becoming restrictive in their lending. In New York, there are reports of liquidity pressures on small- and medium-sized firms, but large corporations do not appear to be affected. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",976 -beige_book_pure_text_pre2000,1979,"Most Districts report expansion of economic activity in recent weeks. Characterizations of this expansion range from very strong activity in the Boston District, to expansion at a moderate pace in New York and Philadelphia, to a rebounding from adverse weather or strikes in other areas. Atlanta, on the other hand, describes its reports as downbeat and Chicago and St. Louis perceive a slowing of activity already taking place. Nationwide, strength appears to be concentrated in manufacturing with producers goods providing much of the impetus. Those Districts commenting on construction generally cite strength here also. On balance this month's comments suggest less than buoyant retail activity but continue to reveal strength in some lines and general strength in some areas, California and the Pacific Northwest being notable examples. Inventory levels do not appear to be of particular concern among either retailers or manufacturers. Gasoline shortages, real or potential, have had little effect on economic activity other than in some closely related product lines: recreational vehicles, power boats, and light trucks, especially the four wheel drive varieties. Severe winter weather in the Northern Plains and recent flooding in the Southeast may affect crop production adversely, but increased plantings in several areas may offset much of the potential loss of output. Reports on manufacturing activity are generally favorable, almost ebullient in the case of capital goods. Chicago sees the demand for most capital goods and their components continuing to tax capacity. New York reports manufacturing at near full employment with inventories low and backlogs extending into 1980. Minneapolis finds commercial and industrial activity expanding rapidly as does San Francisco. In the Dallas District industrial output is expanding at a moderate rate from already high levels, and capacity utilization remains high. Reports from other Districts also indicate strength in steel related industries, transportation equipment, machine tools, electronic equipment and computers, cement, and aircraft. Consumer goods industries are less buoyant. St. Louis and Richmond detect softening in production of apparel and furniture while St. Louis and New York see more broadly based weakness in consumer durables. There is little agreement among Districts as to the state of retail sales, and even within some Districts sales are depicted as mixed. St. Louis, Kansas City, Atlanta, and Chicago all see sales as flat or declining, at least in real terms. In several Districts sales of furniture, appliances, and gasoline consuming lines are sluggish. New York terms the softening in sales of recreational vehicles remarkable. Automobile sales, while generally weak, are being hampered in several Districts by low inventories of small cars. On the other hand, retail sales are described as healthy by Boston, strong by Dallas, and booming by San Francisco. Construction activity was mentioned by only a few Districts but those reports are basically consistent. Residential construction is down from last year, but only Chicago reports a significant decline. Strength in nonresidential activity seems to be more than offsetting weakness in residential building. Kansas City finds housing starts down from 1978 but still good. Atlanta reports thin inventories of housing and existing home sales holding up well. Loan demand, particularly of businesses, appears to be strong throughout most of the nation. Boston terms commercial loans exceptionally strong across all segments of the economy. New York reports a surge in business loan demand at NYC banks due in part to growth in plant and equipment expenditures and inventory investment. Philadelphia, Richmond, and Minneapolis also note strength in total loan demand. Atlanta perceives some easing in business loan demand but brisk consumer and real estate lending. The overall picture concerning deposit inflows is less clear. Demand for money market certificates continues firm at commercial banks, but in some Districts bankers are reported to be seeking nondeposit sources of funds. Savings and loan associations have apparently experienced reduced deposit inflows, or even net outflows, since March. Several Districts are concerned that State usury laws are or will soon inhibit real estate lending. There are reports, however, that several States have revised or intend to revise those laws so as to keep funds in real estate loan markets. The outlook for agricultural output is mixed. St. Louis and Minneapolis anticipate reduced yields of winter wheat, corn, and cotton due to adverse weather conditions. Atlanta now expects a significant shift from cotton to soybeans, also weather related. Kansas City, on the other hand, reports generally favorable conditions in the Southern Plains. All in all, the severe winter and the cold, wet spring will hold output below its potential, but the extent of the damage is, at this point, undetermined. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",988 -beige_book_pure_text_pre2000,1979,"On balance, a slowing of business activity in recent weeks has been accompanied by a significant deterioration of businessmen's expectations for the remainder of 1979. Reserve Banks' characterizations of the current picture seemed to follow a geographical pattern: the northeastern, Midwestern, and western districts view it as largely positive with some trouble spots, while negative factors dominate the reports of the north central, southern, and mid-Atlantic regions. Tight gasoline supplies, on top of more basic problems, have cut noticeably into consumer spending, with pronounced effects on tourism and sales of large cars. To date, the Independent Truckers' strike and diesel fuel shortages appear to have caused only minor disruptions of manufacturing activity, but the agricultural impact has been more severe in some areas. Apart from the fuel-afflicted sectors, industrial activity seems to be holding steady or coming off slightly from an elevated pace. Capital spending, for both plant and equipment, is unquestionably the best thing going, but many districts foresee some easing of growth there as well. Inventories, both retail and manufacturing, are heavier but seem to be of concern to retailers only. Job markets remain tight, for the most part. Bank lending, particularly to businesses, is almost universally described as strong; deposit growth has been slow to moderate. Housing has continued to wane. Those districts commenting on the availability of gasoline regard supplies as ""generally adequate."" Odd-even rationing, purchase restrictions, reduced gas station hours, and curtailed driving have alleviated the crunch and avoided long waiting lines. The travel cutback has taken a heavy toll on the tourist industry—estimates of year-over-year declines in tourist-related businesses, where given, were double-digit. Philadelphia, however, reports increases at two major vacation spots and sees other factors contributing to the sharp fall in Jersey shore resort traffic. Diesel fuel stringencies and/or the Independent Truckers' strike have resulted in relatively minor disruptions of coal mining (Minneapolis), construction work (Chicago), and manufacturers' input or finished product deliveries (New York, Cleveland, Minneapolis, Dallas). Some farmers have been harder hit. Atlanta and Richmond report cases of excellent crops of perishables rotting in the fields or at shipping points; Chicago and Boston have seen reduced supplies and unseasonably high prices of produce. Movement of animals to slaughter has been curtailed, forcing temporary shutdowns of meat processing plants in five districts. However, farm operations have been relatively unaffected in most of the Kansas City and Dallas districts. Retail sales have fallen, in real terms if not dollar volume, say Boston, Philadelphia, Cleveland, Atlanta, and St. Louis; weakness has been particularly apparent in the latest week or two. Other districts (except Kansas City, which reports slowing sales gains) convey an impression of ""mixed,"" ""spotty,"" or ""flat"" sales. Retail stocks have crept above desired levels. A majority of retailers have revised downward their sales projections for the rest of the year and are likely to be rather aggressively thinning out inventories. The gasoline situation has been widely blamed for at least part of the sales slowdown, but those who believe that more plentiful fuel will spur a dramatic revival are a small minority. Gasoline probably does account for an apparent change in shopping patterns—several districts noted that downtown or neighborhood stores are faring much better (or less badly) than far-flung suburban or regional shopping centers. The gas-related decline in sales of large cars, RVs, and light trucks and resulting inventory overhang have reached troublesome proportions. Production cutbacks and layoffs have occurred in the Atlanta, St. Louis, and Chicago districts; San Francisco reports one dealership closing and three others for sale in Portland. Three Banks note a substantial drop in prices of large used cars. Small economy cars are moving briskly, where available, but supply constraints for the best sellers have probably meant a decrease in total new car sales. Although manufacturing activity is generally characterized as strong, a number of exceptions were noted. Auto output, of course, is off considerably, and some districts have seen or expect some slowing in other consumer goods—appliances, jewelry, some types of apparel—and in products auxiliary to production of new cars and homes, like tires, glass, and furnishings. Capital goods producers are enjoying vigorous demand, in general, but orders have slipped in some product lines. Steel orders are down from a lofty peak and other metals show signs of softening. There are conflicting reports on the direction of activity in some industries: paper products, heavy trucks, and chemicals. Atlanta, Chicago, Kansas City, Minneapolis, and San Francisco depict industrial activity as somewhat tighter than in other districts. By and large, producers now expect further reductions in activity in the months ahead but few seem worried by recent inventory accumulations; there were no reports of radical changes in capital spending plans. New York, Philadelphia, Richmond, Chicago, and Kansas City report rapid increases in industrial prices, particularly for petroleum products or derivatives. Most expect more of the same, come rain or come shine. Wheat, soybean, and other grain prices have advanced sharply of late and livestock prices remain high, but an excellent wheat harvest and favorable prospects for other crops should ease food price pressures within the next few months. The combination of strong prices and good production makes robust gains in farm income probable this year. Except for layoffs by automakers, meat packers, and some tourist businesses, labor markets still look pretty tight; Banks cite heavy help-wanted advertising, vigorous recruitment efforts, and reported shortages of some types of labor. Chicago indicates that recent wage settlements have exceeded guidelines by a wide margin, but Richmond's regular survey of manufacturers actually turned up fewer instances of wage boosts. Nonresidential construction is advancing briskly in the Richmond, Atlanta, Chicago, St. Louis, and Minneapolis districts, and booming on the West Coast. Home building, however, has continued downward except in some rapidly growing Sunbelt areas. Substantial sales declines and the prospect of a shift to a buyer's market were mentioned by Cleveland, Chicago, and Minneapolis. Virtually every district used the word ""strong"" to characterize loan demand. Commercial and industrial borrowing, particularly short- term, has been especially heavy. Richmond and Kansas City suspect that inflation (but not stockpiling) accounts for much of the increase in inventory financing and/or constructions loans. Major NYC banks are among the most optimistic about lending prospects; they are joined by bankers in several other districts in their forecast of no further increases in the prime rate. Requests for consumer installment, mortgage, and real estate loans seem to be tapering but apparently still exceed the volume that lenders are willing or able to supply. Dallas reports an acceleration of deposit growth but most other Banks view inflows as modest at best. Some thrifts have been having problems as the drawing power of MMC's has waned. Recent increases in usury ceilings have freed lendable funds in New Jersey and Tennessee, but New York State's new mortgage cap, still below market rates, has had little impact. Higher ceilings are scheduled to take effect soon in Texas and await the governor's signature in Missouri. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1558 -beige_book_pure_text_pre2000,1979,"This month's REDBOOK reports carry a clear message: a general softening in activity began in the second. quarter and. no early reversal is in sight. The decline has centered in housing and. consumption spending, but attempts to prevent buildups of inventories, and dimming prospects for capital spending are also factors. Despite weaknesses, total activity is still at or near record levels and job markets remain surprisingly strong. Motor fuel supplies have improved, but sectors affected by shortages are not returning to normal. Inflation continues unabated. Credit is tight, but generally available. Agriculture is prosperous, but transport problems are hampering movements of grain. Pessimism is widespread. as reflected in consumer attitudes, surveys of executives, and opinions of directors. The main causes of pessimism are continued inflation and. concerns associated with the long-tern availability of energy. Philadelphia's survey of manufacturers shows a decline in activity after ""three months of no growth."" Richmond's survey reveals declines in shipments, new orders, and. order backlogs. >Most districts reported that gasoline and diesel shortages had eased significantly in the past month, because of both increased supplies and conservation induced by sharply higher prices and concern over availability. The main direct adverse impact of fuel shortages has been on low-mileage vehicles and tourism. A number of' districts, notably Atlanta and Dallas, remarked that tourism had recovered significantly as fuel supplies improved, but summer tourism certainly will be off substantially nationwide except for some favorably located areas. Although scattered layoffs have occurred, most districts reported demand. for labor still strong. San Francisco finds that layoffs in some manufacturing industries have been offset by continued gains in other manufacturing industries. Virtually all districts reported sluggish retail sales, especially of items adversely affected by energy. New York was particularly concerned. Some districts, for example Richmond, found offsets in increased sales of items used in and around the home. Consumer credit use has been curtailed along with purchases of big-ticket items. St. Louis reported an increase in installment credit delinquencies and personal bankruptcies. Residential construction and sales of existing homes are off almost everywhere, but the impact varies substantially. Chicago reports residential permits down 40 percent, while Cleveland is ""encouraged by the strength of the housing sector."" Shortages of materials have eased as activity has slowed, particularly in the case of building materials. Inventories are not generally excessive except for products such as big cars where sales have dropped sharply. However, steps taken to prevent the buildup of burdensome inventories are reflected in reduced demand for manufactured products. Both Cleveland and Chicago report a decline in new orders for steel, but output prospects are favorable for the short term. Vigorous activity in nonresidential construction contrasts with the residential picture. San Francisco mentions a shortage of office space. Demand for capital equipment remains strong overall, but some weak spots are appearing. Boston, New York, and St. Louis report some manufacturers scaling back expansion plans. Among the capital goods sectors that remain strong are commercial aircraft, railroad equipment, electronic controls, machine tools, and energy-conserving items. Demand for most types of credit remains strong. Terms are stiff, but good risks are readily accommodated. Usury ceilings which had limited activity in Texas and Louisiana are being liberalized. Business loan demand is reported as ""exceptionally strong"" by both Boston and New York, but Philadelphia says business loan demand is ""mixed."" Several districts comment on the lack of deposit growth. Farm income prospects are favorable with high prices and excellent yields indicated for wheat, corn, and soybeans. Kansas City believes that ""outstanding"" wheat yields imply the USDA has underestimated the crop. Facilities to move and store grain are fully utilized. Minneapolis fears that a strike at the port of Duluth will cause loss of one-third of the area's wheat crop. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",840 -beige_book_pure_text_pre2000,1979,"This month's Redbook reports indicate that there are areas of weakness in the economy, but also that evidence of a recession is not widespread. The major area of decline has been automobile manufacturing. Other manufacturing activity—particularly capital goods production—appears to be holding its own. Residential construction remains weak, but its losses have been offset by gains in non-residential construction. Record crops are reported in most parts of the country, and no petroleum supply problems have been noted. Demand remains strong for most types of credit, and with the exception of thrifts, lending institutions report relatively strong deposit flows. Widespread price inflation continues, however, apart from declines in prices of certain farm products. Also, most businesses surveyed remain pessimistic about the future strength of the economy. Virtually all of the districts reported continued weakness in retail sales, although back-to-school purchases have added temporary strength to the figures. New York was the major exception to this picture; one large chain headquartered there reported sales 20 percent ahead of last year. The more typical response was that of Boston, which reported ""disappointing"" retail sales volume. Automobile sales have recovered somewhat in most districts. The manufacturers' program of rebates on large cars generally has stimulated sales and pared inventories, although St. Louis and Minneapolis still report excessive inventories. Small-car sales are especially brisk in Atlanta and New York. Heavy truck sales appear to be holding at record levels, but the recreational-vehicle market Is still very weak.> Automobile manufacturing, however, shows pronounced signs of weakness. All three plants in St. Louis have reduced their work force substantially. Chicago reports that about one-third of Chrysler's hourly workforce is on indefinite layoff. It is feared that at least one major plant will be closed permanently. Most other manufacturing activity has been flat or growing, although Philadelphia observes deterioration in the industrial sector. Capital-goods manufacturers in the various districts generally report increases in sales and backlogs. Machine-tool manufacturers in the Cleveland district, for example, report delivery times extended well into 1980. Although new orders for steel dropped sharply in August—in line with the cut in automobile production schedules—shipments to most other industries remain above last year's level, and the industry does not expect a worsening picture. Residential-construction activity continued its slide from last month in most districts, although there are spots of strength in areas such as Florida. Nonresidential-construction activity has compensated for this weakness in many districts, however. >As a result of the relatively stable condition of the non-automotive sector, employment remains high in most areas. Several districts—notably San Francisco and Kansas City—report shortages of specialized labor. Demand is particularly strong in commercial construction, aerospace, aluminum and tool-and-die manufacturing. The continued rapid growth of the Pacific Northwest economy has particularly strengthened the demand for labor in that region. Farm production reports are generally favorable. Kansas City and Chicago expect record crops in such commodities as wheat and soybeans, although storms recently damaged grapefruit crops in Florida and 600,000 acres of cotton in Texas. Pork and poultry production have increased. As a result of the increased production in many commodities, farm prices have fallen, so that farm incomes are likely to fall considerably short of earlier Department of Agriculture forecasts. The. Rock Island strike and the grain- handler's strike at Duluth/Superior pose grain transportation problems. Most districts report continued strength in demand for all types of loans. However, Atlanta reports slack loan demand, and Dallas reports resistance to high residential-mortgage rates. The supply of funds at commercial banks appears to be holding up, with money- market certificates compensating for outflows from other savings categories. Cleveland and Richmond observe, however, that thrifts are experiencing more difficulty obtaining funds. Atlanta sees a ""softening"" of deposit flows in general. Although the economic picture remains relatively good at the present time, the business community generally appears pessimistic about the future. Respondents to Philadelphia's Business Outlook Survey appear to be bracing for a further slowdown. Boston reports that business firms have learned a lesson from the last recession, and that they are watching inventories closely; throughout the districts, this is reflected in moderate levels of inventories in most industries. Meanwhile, reports of continued inflation in input prices are widespread. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",945 -beige_book_pure_text_pre2000,1979,"This month's District reports indicated that the economy did not show any distinct signs of slipping further. The business situation actually strengthened a bit in some districts, although it did little more than hold steady in most areas of the country. Department store sales remain lackluster, but automobile sales have rebounded somewhat from their recent lows. Automobile and steel production continues to be sluggish, but strength in other industries such as aerospace and capital goods has buoyed the economies of many districts. Inventories remain generally in line with anticipated sales. Total construction activity remains strong with increases in non-residential building offsetting declines in residential. Farm income is expected to rise with the recent bumper harvest. Although inflation continues unabated, some letup is expected before the end of the year. Demand for business loans continues at a high level. Department store sales remain mixed across the country. Boston and Kansas City have recently experienced some modest improvement, and New York reports fairly robust gains. In many districts, the increases in retail sales have outpaced inflation. However, retailers are anxious about the future, and in Cleveland where sales growth has slowed there is concern over falling profit margins and rising loan delinquencies and bad debt losses. Automobile sales have recently picked up, and appear to be quite strong in New York. In several districts, it is feared, though, that the recent spurt in sales was the result of the extensive price incentives and that sales will weaken once these incentives are ended. Other vehicle sales remain weak, particularly for the larger cars, recreational and four-wheel drive vehicles, and light trucks. Meanwhile, Chicago reports that auto assemblies in October are scheduled to be 12 percent lower than last year and truck assemblies 33 percent lower, thus continuing the pattern of the third quarter. In certain parts of the country, tourism has rebounded from the nadir reached during the gasoline shortages. Recent increases in northern New England may even be sufficient to offset earlier losses. In Atlanta, tourism is now about equal to last year, and the recent groundbreaking in Florida for Disney's Experimental Prototype Community of Tomorrow bodes well for the future there. In contrast, tourism remains depressed in San Francisco. Other business activity appears to be holding up fairly well. Automobile production and steel orders have stabilized at lower levels. Strength in aerospace, electronics, and small appliances has led to input shortages in Kansas City. Conditions in Boston have improved, partly as a result of increased export sales. San Francisco reports continued strength, but industrial output slipped again in Philadelphia. In Richmond, although employment fell, it did so at a slower rate than in the two previous months. In general, the capital goods industry remains strong despite a slowdown in orders. Order backlogs are still high, and St. Louis reports that in some companies they have continued to increase. Capital spending plans continue undiminished, although investment activity is not uniform across sectors. Boston reports capital spending by industries producing consumer appliances and electrical equipment for the home is already weak, but that spending by the chemical, rubber, and non-automotive transportation industries is at record levels. Inflation continues rampant, but the rate of increase varies by industry and section of the country. For example, robust building activity in Dallas has contributed to the rapid price increases of building materials there. In contrast, the decline in the demand and hence the price of steel scrap has helped to lower steel prices. Overall, there seems to be the feeling that price increases for the rest of the year will be less dramatic than they have been. However, continued inflation combined with the recent GM-UAW settlement has raised some concern over the future level of wage demands. Inventories are still reported to be on the lean side, as firms continue to be extremely cautious. Those few cases in which retail inventories are reported to be somewhat high are not expected to result in any large or sudden corrections. In fact, the moderate build-up previously experienced in St. Louis has already been worked off. Even the large auto inventories have been greatly reduced. Business inventories range from ""adequate"" in Chicago to a level somewhat-above-desired for materials in Richmond. Still, in Richmond and other districts, inventories of finished goods seem, if anything, to be a little on the low side. Recent declines in residential construction seem to have been largely offset by increases in non-residential construction. In St. Louis, for example, housing permits are down but total construction employment is at or above last year's level. In some districts such as Chicago and Atlanta, speculative housing starts have been dampened by the very high financing costs. Many banks and financial intermediaries are also becoming much more restrictive in issuing mortgages. In Dallas, although the burst in non-residential construction has been welcomed, it has raised concern of a future oversupply of commercial space. In many areas of the country, farm income is higher than anticipated. Bumper crops, however, have created storage and transportation problems; the recent settling of the grain haulers' strike should, according to Minneapolis, provide some relief. Production is down in Southern California, but price increases have more than compensated for the smaller volume. In contrast, Atlanta reported some farm areas were severely hurt by hurricane Frederic. Losses are also being experienced by those farmers raising hogs and broilers. In most districts, business loan demand remains strong. Cleveland considers this a bad sign, fearing that the borrowing reflects a deterioration in the financial condition of industry. Many of the loans in New York are not for expansion but are for added inventory and acquisitions. Although the higher interest rates have not yet choked off overall demand, Minneapolis is concerned that small businesses are now being hurt. Consumer loans have weakened, but, in Philadelphia, they have not weakened as much as expected. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1260 -beige_book_pure_text_pre2000,1979,"Current conditions vary considerably among the Districts. General characterizations range from ongoing growth in the Minneapolis District to emerging recession around Boston. Near consensus exists, however, as to pervasive weakness in the automobile and housing sectors. Strength persists, nonetheless, in some other manufacturing sectors, and non-auto retail sales. There is also general agreement that inventories, in general, across the economy, pose no immediate problem, although there are underway widespread efforts to pare current stocks and reduce what have become heavy carrying costs. Financial market conditions are tending to depress the growth of loan activity in most districts. Mortgage and automobile lending are generally weak, but business lending continues to expand moderately, at least in most regions. In general, loan demand continues buoyant despite some moderation in its recent growth. Real personal consumption expenditures are being depressed by the dearth of automobile sales, but continue to show resilience in other sectors. Only Boston and Minneapolis see general weakness in retail sales. Dallas has perhaps the strongest report, with unit sales at department stores ahead of a year-ago. In several districts sales continue to advance from earlier in the year despite being down somewhat, in real terms, from a year ago. Chicago finds consumption of durables, luxury goods, and services down, while Kansas City perceives recent strength in sales of appliances, home furnishings, and energy related home improvement items. In several regions, however, much of the recent vigor of sales is attributed to aggressive promotional activity. In the Richmond District, where sales are up, retailers are preparing promotion programs for an expected softening in demand. Most districts report marked slowing in residential construction and in sales of existing homes. Usury ceilings are cited as a major impediment in a number of states, but even in the states with no such restrictions, financial market conditions are not conducive to vigorous activity in the housing sector. In some areas, notably the St. Louis, San Francisco, and Atlanta Districts, commercial construction remains strong, offsetting the weakness in residential activity. Dallas reports that substantial construction in progress is propping up the volume of real estate loans outstanding. New York, on the other hand, finds construction to be ""the principal exception to near-term strength in business activity."" Manufacturing activity is particularly spotty. The automobile sector is exhibiting pervasive weakness, but there exist definite areas of strength. St. Louis finds, with the exception of autos, a relatively high level of manufacturing and particular strength in several industries including most capital goods, basic metal products, aircraft, and textiles. Minneapolis reports broadly based strength in industrial production. Dallas characterizes manufacturing as flat with weakness in consumer durables being about offset by strength in nondurables and construction related areas such as primary metals and stone, clay and glass products. Meanwhile, the Third District is reportedly five months into a general downturn in manufacturing activity. Chicago reports high operating rates, but declining order backlogs at most capital goods producers. The capital goods sector in the Cleveland District is still experiencing backlogs amidst some concern that they might soon face reductions in orders. San Francisco sees most sectors except auto and construction related ones doing well. Despite the prevailing level of interest rates, more stringent non- price lending terms, and tighter credit standards business loan demand continues to expand in most areas. Funds apparently remain available to businesses who are taking advantage of that availability. The most common characterization of business loan activity is a moderate slowing in the rate of growth. Kansas City and Atlanta report credit demand dampened by interest rates and Boston perceives a softening in commercial loan demand, but these cases appear to be exceptions. Mortgage lending, on the other hand, seems to be severely and broadly depressed. In regions where mortgage money is available interest rates and down payment requirements have increased sharply in recent weeks. Some district report non-price rationing of funds, while other find some lenders having withdrawn completely from mortgage lending activity. Reports on agricultural activity are generally favorable with good crops and firm prices holding farm incomes up in the Midwest and plains states and in the Far West. Atlanta, however, reports sharply higher feed costs and low market prices for broilers and hogs widening loss margins of producers. Cutbacks in production of hogs and broilers is resulting. In the Midwest transportation bottlenecks and inadequate storage facilities are impeding marketing efforts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",949 -beige_book_pure_text_pre2000,1980,"Sharp drops in residential construction and new car sales reinforced the growing conviction that the recession has arrived. Christmas spending was good throughout most of the nation and provided a welcome boost. Manufacturing activity declined in several Districts, and new orders slackened in most Districts. Input prices are expected to continue escalating. Mortgage funds are available, but high interest rates cut demand sharply. Demand for commercial and consumer loans lessened. Employment held steady despite some cutbacks. Retail sales, except for automobiles, held their own in December. Inflation-adjusted sales were equal to or slightly better than last Christmas for New York, Philadelphia, Richmond, and Atlanta. Holiday purchases were sluggish for Boston and Chicago. Sales and promotions were prevalent. Amidst increasing concern about a recession during the first half of 1980, most retailers are keeping inventories under very tight control; none report excessive inventories. New car sales dropped substantially, with large- and mid-size autos taking the brunt of the decline. Compacts remain popular; some sales were lost because of shortages and delivery problems. Inventories of large-size autos are high nationwide. However, New York reported promotions and markdowns helped clear out 1979 leftovers. Residential construction, mortgage lending, and real estate sales slid markedly, except for Boston, where several directors observed a relatively high level of sales and also an increasing number of purchases in cash. Several Districts report an availability of mortgage funds, but reduced demand due to high interest rates. Mortgage lending is at a virtual standstill in New York and Texas because of usury ceilings. Additionally, usury ceilings imposed during December noticeably hampered lending in numerous other states. Contacts in many Districts believe real estate activity will turn down even further in several months when commitments are used up. A resilient commercial construction sector continued to partially offset declines in residential building for most Districts. San Francisco, Dallas, and St. Louis report commercial construction proceeding at a rapid pace. However, builders in the St. Louis and San Francisco Districts are apprehensive about the smaller number of new projects in the planning stage. Production for industries related to automobiles and residential construction is off sizably. Steel firms in the Cleveland District noted a sharp contraction in auto-related orders. A spokesman in the same District states that new-car tire production shrank 12 percent this year. Aluminum orders for automobiles fell, but notable support was provided by above-normal demand for aluminum by the canning industry and for exports. A major manufacturer of plastics in the St. Louis District encountered a reduction in orders for all products used by automotive and residential building industries. In the First District, manufacturers of housing fixtures and other housing products noted a drop in demand. In the Second and Twelfth Districts, the slump in home building crimped sales of lumber products. Some smaller mills in the West have been closed. Manufacturing activity leveled off for Boston, dropped for Philadelphia, declined slightly for Dallas, and remained stable for San Francisco. New orders were down broadly for Richmond and declined for St. Louis. In the New York District, new orders eased, but the shipments remained robust. New orders lag shipments in the Chicago District, and businesses have started to cut back on ordering in the Minneapolis District. However, electrical equipment industries located in the Boston, Cleveland, and Chicago Districts report a continued high level of activity. And, machine tool firms in the Cleveland and Chicago Districts are experiencing sustained growth of new business. Input prices for materials and parts continue to rise. Some discounting in steel occurred. Nearly all manufacturing executives in the Philadelphia District predicted higher costs for raw materials by summer, and 80 percent planned to charge more for their own products by then. No input availability problems were reported. Loan requests for the Boston and Philadelphia Districts remained at a high level. Kansas City and Dallas reported notable declines. A softening in demand was experienced in the remaining Districts. High costs of borrowing rather than the availability of funds discouraged businesses and consumers from applying for loans. Reduced inventories contributed significantly to the tempering in commercial loan demand. Many Districts observed cutbacks in consumer loans, particularly loans for automobiles and higher-priced consumer durables. On balance, employment levels were unchanged. Areas of strength remained, but some Districts reported weaknesses. Philadelphia and Richmond noted reduced workweeks, and Atlanta reported layoffs in automotive and residential building industries. Employment levels in Michigan declined due to the slump in auto production. Labor markets were relatively strong for Minneapolis, Kansas City, and Dallas. In the Northwest, employment continued to grow in response to expansion in the electronics and aircraft industries. Agricultural reports were generally upbeat. Grain and livestock sales, and also profits, increased in the Kansas City and Minneapolis Districts. Transportation bottlenecks in the Midwest eased. Atlanta reported that prices for broilers and hogs finally rose. A record apple crop was harvested in Washington State. An improvement in agricultural bank liquidity occurred in the Kansas City District, where abruptly higher interest rates reduced loan demand and favorable agricultural sales increased deposits. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1107 -beige_book_pure_text_pre2000,1980,"The REDBOOK reports this month indicate that business activity is holding quite steady in most districts, with few widespread signs of weakness. High technology and defense-related industries are performing particularly well. The major exceptions to this pattern are the housing and automobile industries, which are exhibiting considerable weakness. Most districts report very strong volumes of retail sales—a phenomenon which several reports ascribed to a pervasive ""spend it now"" psychology on the part of consumers. Reports of continued inflation are also widespread. With the exception of home mortgages, loan volumes were reported to be strong in most districts prior to the recent runup in rates. Spotty current reports indicate a subsequent weakening of loan demand. Financial institutions are experiencing considerable conversion of savings deposits into money-market liabilities, and there is widespread concern about the consequent effect on the cost of funds and institutional profitability. The agricultural sector is apparently in good shape in most districts. Most districts report generally strong industrial activity. New York, for example, reports brisk new orders and generally steady activity. Minneapolis finds industrial output and employment expanding; manufacturing employment is up 14 percent from a year ago. Dallas finds continued, but slowing, growth in manufacturing. Activity related to high-technology, defense and energy-saving products is reported to be particularly vigorous by Boston, New York and San Francisco. Dallas finds high levels of activity in the petroleum industry. In contrast to these reports, Philadelphia describes weakening manufacturing activity and the trimming of factory payrolls. Kansas City and Richmond also find some softening in the general level of business activity. The automobile industry continues to be weak, evidenced by a pattern of temporary furloughs of workers. Chicago calls the industry ""seriously depressed."" The housing industry has been hit hard by recent high interest rates. Starts are reported down 20 percent or more by Kansas City, for example, with prices weakening on new homes. Chicago and San Francisco report that homebuilding activity has been sensitive to interest-rate movements; softening of rates earlier in the quarter caused some builders to develop new tracts but the recent runup in rates has curtailed this development. Dallas reports that non-residential construction is helping to offset the impact of the housing decline on the construction industry. Throughout the economy, retail sales have been holding steady or growing relative to this time last year. Boston reports ""good"" sales volumes. Department store sales were 8 to 20 percent over last year according to Philadelphia. Some New York retailers report ""staggeringly good"" sales, although this is partly ascribed to the exceptionally mild weather in the region. The volume of sales in the Dallas district has held up well in real terms. Kansas City describes sales gains as ""moderate,"" and Minneapolis reports ""spotty"" or ""steady"" sales volumes. Throughout the districts, sales of large automobiles are weak, however, with 15 percent declines in overall sales reported by Minneapolis and San Francisco despite vigorous small-car sales. Loan demand generally appears strong, except for mortgages. Philadelphia, for example, finds commercial-loan volumes up 5 to 18 percent over last year. Richmond and St. Louis find that demand is particularly strong on the part of corporations for interim financing rather than long-term credit. In locations where usury limits are not binding, consumer loan flows appear to be strong. Chicago reports an increase in consumer-credit delinquencies, however, and Philadelphia notes that repayments are slowing. The high interest rates have had a significant effect on the mortgage market. Applications for mortgages are down 75 percent in Tennessee, for example, and New York describes a ""collapsed"" mortgage market. Many of the reports for the REDBOOK this month were received before the recent runup in interest rates. However, a few very current reports suggest that high rates have sharply reduced credit demand. New York City recently withdrew a $125 million bond offering, for example. Chicago reports that the ""bite"" of high rates is particularly apparent from reports from car dealers. San Francisco indicates that frozen-food processors and other industries for whom inventory is important are being hurt by high rates. Financial institutions throughout the various districts are experiencing conversion of savings accounts to money-market forms of liabilities. Deposit outflows are not widely reported, although Dallas and New York report some disintermediation at district S&Ls. Kansas City reports that S&Ls are pessimistic about deposit inflows, and St. Louis finds that fears of a ""liquidity bind"" are growing at financial institutions. The agricultural sector appears to be relatively healthy in most districts. Strong Pacific Rim export demand is helping farmers in the San Francisco district. Also, grain prices have not been depressed by the embargo of sales to the Soviets, according to San Francisco and Minneapolis. Atlanta reports that the Florida citrus crop escaped major damage from recent frosts, but Richmond reports extensive damage to poultry operations in North Carolina. Reports of continued inflation are widespread. Boston reports that a large food chain has experienced price increases from a greater number of vendors than ever before. Philadelphia's poll of manufacturers reveals that three-quarters of the respondents report paying higher prices for raw materials this month, and 70 percent plan price hikes for the goods they sell. Chicago notes that rumors of wage and price controls abound and that this has triggered anticipatory price increases. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1156 -beige_book_pure_text_pre2000,1980,"Economic activity has weakened across the country according to this month's Redbook reports. There is, however, considerable variation in the degree of softening; some districts do not see an actual downturn, only fewer and fewer areas of strength, while others, particularly Chicago, see a pervasive weakness. Retail sales are increasing in nominal terms but not as rapidly as prices; big ticket items have been disproportionately affected by the decline in real demand. Auto sales have slumped with the ending of rebate programs. Signs of weakness are also beginning to appear in the manufacturing sector. Overall production is still holding up in most districts but new orders have fallen off. Manufacturers supplying the automobile and construction industries are cutting back production and several districts report substantial layoffs. Both manufacturers and retailers are thought to be watching inventories closely, although recent developments have induced further trimming in some areas. Residential construction is said to be at a standstill. Mortgage lending has fallen sharply; financial institutions are reluctant to lend and customers are reluctant to borrow at interest rates of 16 and 17 percent. Commercial and industrial loan demand remains strong. There has been an abrupt deterioration in farm incomes. Almost every district has seen a softening in retail sales. San Francisco is the exception reporting firm to brisk activity. Department store sales are down across the country in real, if not always nominal, terms. Big ticket items requiring financing are said to account for a disproportionate share of the decline according to Richmond, Atlanta, Kansas City, and Dallas. Despite the real decline retail inventories are generally thought to be under control. Richmond, however, reports that a majority of their retailing respondents now feel stocks are too high. Domestic auto sales are continuing to decline. Cleveland and Atlanta attribute some of the weakness to the end of rebate programs. New York, Chicago, and Dallas report that the combined effects of weak sales and the record costs of carrying inventories are causing auto dealerships to close. Residential construction is very weak. Several districts describe the level of activity as at ""a standstill."" Boston, Dallas, and San Francisco report an increase in the number of homebuilders declaring bankruptcy. However, Minneapolis finds that nonresidential construction is an important source of strength. Reports on manufacturing activity are highly varied. Weakness in construction and sales of domestic autos is now forcing production cutbacks in related manufacturing industries. Atlanta and San Francisco report substantial cutbacks and layoffs at sawmills, plywood manufacturers, and brick makers; Chicago and San Francisco have seen a decline in the demand for construction equipment associated with residential construction. According to Chicago and St. Louis, layoffs have increased again at the four major automakers and suppliers of brakes, auto bodies, and tires. Boston also reports further cutbacks in the tire industry. On the other hand, demand continues to be strong for commercial aircraft (Chicago, St. Louis, and San Francisco), certain types of electric and electronic equipment (Chicago, St. Louis, and San Francisco), and machine tools (New York and Chicago). Manufacturing inventories are believed to be satisfactory in most districts, although Philadelphia and Richmond report that manufacturers would like to cut back further. Chicago cautions that inventories which look conservative as long as sales hold up are excessive when demand declines. High interest rates are inducing businesses to rethink capital spending plans, according to New York, Cleveland, and Atlanta. However, Richmond finds no sentiment for reducing expansion plans and Philadelphia reports that capital expenditures are expected to be somewhat higher in six months. Boston and St. Louis observe that the demand for capital goods remains strong. Farm incomes have deteriorated. All districts with large agricultural sectors report that increases in energy costs and interest rates coupled with low commodity prices have seriously cut into farm earnings. Kansas City and Dallas report that bankers in their districts are concerned about farmers' ability to repay loans. Farmers are trying to reduce borrowing by delaying purchases of equipment and reducing livestock inventories. There appears to have been a general slowdown in the growth in loan demand. The volume of mortgage lending is very low. Several districts report that a number of financial institutions are temporarily withdrawing from the mortgage markets; at the same time consumers are resisting current high rates. Cleveland, Atlanta, Chicago and St. Louis report mortgage rates around 16-17 percent. Other consumer lending has also weakened. Again this reflects both demand and supply factors; banks are trying to limit consumer lending in response to the credit restraint program and low profit rates on consumer lending. However, respondents in Philadelphia and Cleveland believe that consumers were already reducing their borrowing. On the other hand, the demand for commercial and industrial loans remains strong in many districts. Dallas and Kansas City report that banks in their areas may have difficulty staying under the 9 percent ceiling on credit growth. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1038 -beige_book_pure_text_pre2000,1980,"Economic activity slowed markedly across the country according to this month's district reports. Led by a sharp falloff in automobile sales, consumer spending has weakened substantially. There is evidence of a contraction in sales of other durable goods as well as of nondurables. The outlook outside the consumer sector was generally pessimistic as well. Residential construction has ground to a virtual halt, although nonresidential building remained brisk in several districts. With a few notable exceptions, mainly the defense, energy and machine tool industries, a wide cross section of manufacturing firms reduced their workforces in the face of declining new orders, shrinking backlogs and rising inventories. Many firms also began to reassess capital spending plans, but other than in the auto industry, there has been little actual retrenchment thus far. On the financial scene, despite lower interest rates, business and consumer loan activity remained dormant. Agricultural loan demand, however, rose about in line with past seasonal patterns. Consumer spending weakened across the nation in April. While the largest cutbacks continued to be in big-ticket durable items especially autos, purchases of nondurable goods also slackened. As a result, there were reports of excessive retail inventories in several districts. In the Chicago area, where demand was particularly depressed, merchants offered large price reductions and discount programs to trim accumulating stocks. In contrast, inventory-sales ratios were reported as acceptable in both Philadelphia and New York. Auto stocks were generally lean. Nevertheless, many dealerships have gone out of business in the Atlanta, Dallas and San Francisco regions. Declining consumer credit card usage nationwide contributed importantly to weakening demand. Existing credit balances were significantly reduced according to Atlanta and Richmond, and new credit purchases were down as much as 20 percent from last April in Dallas with cash buying, as evidenced in the weak growth in currency nationally, not taking up the slack. Slower debt collection and bill payments were noted in Philadelphia, Chicago and San Francisco. Outside the consumer sector, overall business conditions deteriorated in recent weeks. Backlogs were worked down, as new orders declined and lead times were shortened in a variety of industries ranging from steel in Cleveland and Chicago, to furniture and floor covering in Boston, to chemicals and electronic supplies in New York. Inventory liquidation was reported in Philadelphia, Chicago and Kansas City although excessive stocks are not yet a problem for New York manufacturers. As a result of decreased production activity, workweeks were shortened in Richmond, Philadelphia and Chicago, and layoffs—both temporary and permanent—have spread. Both hourly and salaried employees have been dismissed in the automobile and related industries in the Chicago and Cleveland areas, while workers in homebuilding and construction industries have been particularly hard hit in Atlanta and San Francisco. Reassessments of capital investment plans were underway by firms in Boston, New York and St. Louis, but little actual retrenchment has taken place except in the auto industry. As with auto employment, these cutbacks have been concentrated in the nation's midsection. Input prices continued to rise in Philadelphia and Kansas City although metals, lumber and paper prices have all softened in the Boston district. In contrast to these generally bleak conditions, machine tool manufacturers in New York and Cleveland appear relatively insulated from the recession. In Boston, Dallas, San Francisco and St. Louis the manufacturing base has been strengthened by the defense industry. In Minneapolis, defense procurement contracts have grown by 30 percent in the last two years. Residential construction continued to stagnate with activity at a virtual standstill in Atlanta, Cleveland and St. Louis. Housing starts are 50 percent below last year in Kansas City. Industries related to home building have also been especially depressed. The plywood industry in San Francisco has been operating at less than half capacity. Estimated joblessness in construction and related industries ranged between 20 and 40 percent in Chicago. At major lumber and plywood mills in the San Francisco district, one-sixth or more of the workers have been furloughed. Nonresidential building, however, remained brisk in Minneapolis, St. Louis and San Francisco. Reflecting weakening loan demand across the nation, short- term interest rates declined sharply. Still, relatively high interest rates and growing economic uncertainty continued to discourage business and consumer borrowers alike. Moreover, nonprice lending terms were tightened in Kansas City, New York and San Francisco. Business loan demand eased in all districts although demand by energy industries remained strong in Dallas. New York reported some companies shifted to the long-term bond and commercial paper markets to meet credit needs. Although home mortgage rates are well below recent peaks, little activity was noted in Kansas City or Cleveland although in Chicago and St. Louis, a few loans were made. In Atlanta, a surge in personal bankruptcies was noted. Auto installment loans were especially weak in Richmond. Agricultural loan demand rose seasonally but this sector, as others, was affected by comparatively high interest rates and escalating uncertainty. Some bankers are concerned about repayment ability because of generally rising agricultural costs and declining prices for food. Farm credit was tight in Chicago but adequate in Atlanta, Dallas and Richmond. Slower repayments and increased renewals and extensions, however, became common in Richmond, while in Chicago many farmers restricted purchases, especially of equipment, in order to ease their credit needs. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1149 -beige_book_pure_text_pre2000,1980,"Business activity among the Districts continues to weaken in June, with mounting evidence that declines in consumer spending and construction are spreading to the capital goods sector. Consumer spending remains soft, especially for big ticket items. An inventory buildup is widely noted, although swift adjustments in production are generally thought to have kept inventories close to desired levels. There is little indication that capital spending plans have been altered, although scattered reports of cutbacks and delays are cited. Loan demand has not improved from last month's low levels despite easing of restraints and lower interest rates. Substantial declines in mortgage interest rates and improved credit availability has sparked some improvement in mortgage loan inquiries and sales of existing homes. Manufacturing of durable goods declined further this month, with signs of the recession spreading to the capital goods industry. Production of auto and steel-related products is being cut sharply. A sharp fall in new orders of consumer and producer durables is reported by New York, Richmond and Philadelphia. Some weakening in capital goods orders are reported in Cleveland, and Chicago notes an increase in order cancellations, although not on the scale of 1974- 1975. Manufacturing sales, especially of defense goods, however, are continuing to hold up in Boston, and backlogs of capital goods orders remain large in New York. Despite a decline in manufacturing activity, Minneapolis points out that the District has been able to avoid an employment decline as a result of significant strength in industrial output and nonresidential construction, as well as sustained demand in energy exploration and production. San Francisco notes that a continuing healthy aerospace industry has helped to buoy the retail business in the northwest. Consumer spending, especially for automobiles, appliances, and furniture, remains weak throughout the nation, with little improvement expected before the end of the year. Real retail sales in nondurable consumer goods generally are holding better than durable goods, although Atlanta and St. Louis note declines in both. There are, however, signs of a pick up in retail sales in the Minneapolis area, and fashion items continue to do well in St. Louis and New York. Sales of new cars and trucks are well below year-ago levels, but improvements over the May level are cited in Dallas and Cleveland. New York notes that discount stores have been benefiting from the growth of price-conscious consumers. Rising inventory levels at the producer and retail levels are a growing concern to businessmen across the nation, but most still believe that accumulations have not become excessive. Chicago reports that output has dropped faster than consumption as a result of substantial downward adjustments in production schedules. However, trouble spots are noted, especially for major appliance firms, by Cleveland and St. Louis. Energy stocks are reported to be well above year-ago levels in Cleveland, and storage facilities in the Dallas area are full. Further production and employment reduction may be necessary through the summer months to prevent inventory building among manufacturing firms. Most firms appear to be reluctant to reduce capital spending programs, but there are widespread reports that reassessments are underway. Boston reports a sharp decline from the previous month in the number of firms planning to increase capital spending over the near term. New York and Chicago note that some existing programs are being stretched out rather than being reduced. Cleveland, however, cites announcements of substantial reductions in the steel and rubber industries. Weakening cash flow and declining market demand are the most common reasons given for delays and cutbacks. Lending activity continues to decline virtually across-the-board, although consumer loans appear to be flattening out. Recent easing of credit restraints and lower interest rates do not appear to have increased consumer borrowing. Atlanta reports that many banks are aggressively seeking new loans, but Cleveland notes that banks have been reluctant to lower interest rates. Some banks report that interest rates have been slow to adjust to weakening demand. Industrial loans have dropped because smaller business firms fail to qualify, while large firms have access to commercial paper markets. A rise in bankruptcies, especially among auto dealers and home builders, is reported by Chicago area bankers as a result of the recession and new bankruptcy laws. Thrift institutions have been aggressive in lower mortgage rates, but note only a mild pickup in inquiries. Loan commitments have been slow to respond because of a recognition lag and consumer uncertainty about the economy. Thrift institutions across the nation are experiencing sizable increases in deposit flows, which are frequently used to rebuild liquidity positions and repay borrowings. St. Louis and Chicago report some pickup in loans on previously owned houses, and San Francisco expects a turnaround by late summer. The agricultural sector continues to be adversely affected by rising costs and falling farm income. Chicago expects that real farm income for the year will be at one of its lowest levels since before World War II, although income from livestock will improve in the second half of 1980. Dry weather has been a problem for crops and livestock in Atlanta and Richmond during June while heat in Dallas and cool weather in San Francisco have adversely affected agricultural production. While funds for agricultural loans are available, loans have been very weak. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1092 -beige_book_pure_text_pre2000,1980,"While a number of Reserve Banks (Boston, Philadelphia, and Richmond) report further slowing in overall business activity in July, others (Chicago, St. Louis, and Kansas City) report a leveling off, and New York, Cleveland, Minneapolis, and San Francisco report signs of recovery. Economic weakness characterizes the Atlanta District, and activity in the Dallas District continues to expand slowly. With the exception of farm products, prices continue to increase but at a slower rate than previously (New York, Cleveland, and Kansas City), and some price cutting was noted in wholesale markets (Chicago). Farm commodity prices have increased rapidly in recent months. Although commercial loan demand is either flat or weak (Boston, Atlanta, St. Louis, and Kansas City), some Districts (Chicago, Minneapolis, and San Francisco) reported that mortgage lending is increasing. Consumer spending apparently began to increase in July. An upturn in retail sales was reported in about one-half of the Districts (New York, Cleveland, Chicago, Minneapolis, and Kansas City), while most of the others reported that sales were unchanged. Automobiles and air conditioners were among the items that gained during July. Rising credit sales were apparently a factor in the increased sales in July. Three Federal Reserve Banks (New York, Cleveland, and Chicago) reported the beginning of a slowdown in the capital goods sector. This is the first indication of a decline in this sector at New York and Cleveland. Chicago reported that capital goods are weakening on a broad front. Most Districts report that retail inventories are at satisfactory levels with the exception of San Francisco where such inventories remain high. Some inventory excesses were also reported by purchasing agents in the Kansas City area. In contrast, commercial construction in the West remains plagued by materials shortages. Manufacturing activity continues to decline in most of the Districts. Orders are down in numerous sectors such as consumer durables, steel and other primary metals, and some nondurables. Philadelphia reported another large drop in industrial activity this month, Boston reported some declines in manufacturing, and Richmond foresees further declines over the remainder of the year. Some leveling off, however, was reported by St. Louis and some rebound in manufacturing was reported by Minneapolis and by manufacturers of construction supplies in Dallas. Residential building is beginning to recover, and commercial construction continues at a high level in those Districts where mentioned (Dallas and San Francisco). In the latter District commercial construction is described as booming. Residential construction rose somewhat in July in several Districts from the relatively low level of May and June, but remains low when compared to year ago levels. Of those Districts that commented, all except Chicago reported an upturn in residential construction in July. Rising unemployment was reported by most Districts that commented on the subject. Further layoffs were reported by Philadelphia, Cleveland, Atlanta, and Richmond, and unemployment is expected to rise further in the Twelfth District as the recession affects a wider range of industries. Layoffs, however, have slowed in the Minneapolis area, where unemployment remained at a relatively low 6.0 percent rate in the second quarter. Unusually hot and dry weather conditions in July over most of the nation have reduced current and future prospects for agricultural production. Partially in response to these developments, agricultural prices have risen, and overall farm income prospects have improved. Livestock production has been affected by substantial deaths of broiler chickens (Richmond, Atlanta, and St. Louis) and by cutbacks in livestock herds due to poor pasture and range conditions (Kansas City and Dallas). These cutbacks have led to some increase in current meat supplies, but will reduce future supplies. Extreme heat and drought have also reduced crop prospects throughout the major growing areas of the nation. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",823 -beige_book_pure_text_pre2000,1980,"Overview Reports from Reserve Banks this month are, on balance, more cheerful than were those of last month, at least with regard to both current and prospective business activity. The improvement in the assessment of business conditions is attributable primarily to several Districts who see the recession as having bottomed out or as ending soon. Several other Reserve Banks, however, continue to report weakening economic activity, with no prospects for a recovery beginning before the end of the year. With regard to inflation, a consensus view is not clearly discernible. Some Districts report an easing of price pressures at the materials and retail levels because of weak demand, while others hear nothing from manufacturers that suggests a slowing rate of inflation. Most Districts report slowly rising deposits at commercial banks and at thrift institutions. Commercial banks say their interest rates are higher and their lending is on the weak side. The most notable development appears to have been in mortgage lending, where renewed strength is being sapped by rising mortgage rates. Business Conditions and Outlook Production and sales in the United States stabilized further in recent weeks and prospects for recovery improved, judging from Reserve Bank reports. Boston, Philadelphia, Richmond, St. Louis, and Minneapolis, who last month reported further deterioration in their District economies, now report business conditions are firming up. Atlanta and Chicago are also more upbeat in their assessments this month. Cleveland respondents still expect a sluggish recovery will begin next quarter. Dallas sees a quickening in the pace of economic activity, up from the slow rate of expansion reported last month. San Francisco identifies several favorable developments, but believes the recession has months to go, while New York and Kansas City report, as they did a month ago, continued weakness in their District economies, with a likelihood of more weakening until yearend. Prices Weak demand is apparently reducing price pressures at the retail and commodity levels. St. Louis, Kansas City, and Dallas report reduced profit margins at retail stores, where cost increases are being absorbed rather than passed on, and prices are being cut to move merchandise. Boston and Chicago are hearing about moderation in price pressures for some materials, but manufacturers responding to Philadelphia and Richmond say they can relay no evidence of relief from inflation. Recent increases in farm product prices are reported by Chicago, Minneapolis, and Kansas City. Chicago and San Francisco call attention to the inflationary implications of the rising cost of inputs, especially labor. Financial Developments Commercial bank lending continues sluggish except in parts of the Southwest, and scattered exceptions elsewhere. Weakness in consumer credit is explicit in the reports of most Reserve Banks, and implicit in the rest. San Francisco says financial institutions are concerned that the rise in interest rates may result in deposit outflows, although neither San Francisco nor any other Reserve Bank tells of any decline in deposits. Atlanta notes the rapid growth of international banking in south Florida. Consumer Spending Lackluster retail sales characterize District reports. Atlanta and Chicago think consumer confidence is improving, but San Francisco does not. Dallas and Atlanta find their dealers in domestic autos increasingly optimistic about the new model year, but New York does not. Most department stores are not counting on sales to improve much in coming months. Residential Construction The summer improvement in homebuilding activity has been reversed by higher mortgage rates, according to Chicago, St. Louis, and San Francisco respondents. Other Districts relay concern about the possibility of such a reversal, or point to recent declines in mortgage lending (New York, Cleveland, Richmond, Atlanta, Minneapolis, Kansas City, Dallas). Business Fixed Investment Business spending on plant and equipment is expected to decline. New orders for capital goods are weak, except for oil field equipment (Cleveland, Chicago, St. Louis, Dallas). Boston and New York report that sales of capital goods are holding up, but only because of backlogs of unfilled orders. Richmond notes that low rates of capacity utilization in most manufacturing worsen the outlook for business fixed investment. Inventories With a few exceptions, businesses consider their stocks of goods and materials to be just about where they want them (Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Minneapolis). Agriculture The hot dry weather this summer seriously damaged several crops, reduced weight gains in livestock, and forced sales of livestock intended for breeding herds. Although farmers in some regions will suffer large income losses, net farm income in certain other areas and perhaps in the nation as a whole, will be higher than it would have been otherwise because of higher farm product prices resulting from reduced marketings (Richmond, Atlanta, Chicago, Minneapolis, Kansas City, Dallas, San Francisco). Professors and Financial Panel. Professors Eckstein, Samuelson, and Tobin agree that monetary and fiscal policies now in place will generate a sluggish recovery. Eckstein, concerned about the snugness of monetary growth targets, says allowing another housing setback would be ""pointless nonsense."" Samuelson believes the Fed should make clear its willingness to violate the targets if they interfere with a satisfactory recovery. Tobin thinks an incomes policy is required in addition to monetary and fiscal policies to reduce inflation, and he considers targets for monetary aggregates to be ridiculous. New York now features the views of a Financial Panel as a regular part of its report, beginning this month with Henry Kaufman, James O'Leary, and Albert Wojnilower. Kaufman expects the economy to begin recovering next quarter, despite the backup in interest rates which, he says, is slowing the reliquefaction of businesses. O'Leary finds a universal expectation of no decline in the basic inflation rate-an expectation that he believes is not fully appreciated by the authorities. Wojnilower feels the recession is ending, and anticipates surprises on the high side in business conditions. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1251 -beige_book_pure_text_pre2000,1980,"Overview With respect to current and prospective business activity, reports from Reserve Banks this month are generally less optimistic than they were last month. The recent deterioration in financial conditions is seen as responsible for a slowing of economic activity in several districts in September. The rise in interest rates is the major reason many respondents have adopted a less sanguine view of the strength of the recovery next year. The outlook for inflation is about unchanged from last month, with some districts reporting an easing of price pressures and others reporting a resurgence. While commercial lending is up in several districts, mortgage lending has slackened everywhere. Automobile dealers are ""cautiously optimistic"" on balance about the prospects for the 1981 model year, although there is widespread concern that the combination of high prices and high financing costs will dampen new car sales. However, most respondents agree that it is too soon to know if these factors will significantly weaken car sales in the months ahead. Business Conditions and Outlook With few exceptions the recent rise in interest rates apparently has stalled the recovery and caused many respondents to revise downward their forecasts for 1981, judging from Reserve Bank reports. Boston and St. Louis report little change in business conditions since last month, while the recession is still on in San Francisco. Defense spending is mentioned as a source of strength by Boston and Dallas, but in the latter case this is offset by an expected decline in construction caused by rising interest rates. The effect of higher interest rates on construction also has slowed the recovery in Minneapolis. Philadelphia, Cleveland, Richmond, and Chicago say that business has improved since last month, but Cleveland and Chicago are concerned that the recent improvement in steel demand may evaporate if high prices and interest rates weaken auto sales next year. Respondents in New York do not expect the economy to improve significantly before the middle of next year, and Atlanta and Kansas City note that the rise in interest rates has caused growing concern about the future in their districts as well. Prices Where mentioned, district reports indicate that price pressures are about unchanged from last month. While Dallas notes that lumber prices are off significantly from a year ago and purchasing agents in Boston and Kansas City report a stabilization of input prices in recent months, surveys conducted in Philadelphia and Chicago indicated that industrial input and output prices are rising and probably will continue to do so for the rest of the year. Financial Developments The most notable feature of district reports was the widespread decline in mortgage lending due to recent interest rate increases. New York and St. Louis report an increase in the use of VRMs and RRMs; Atlanta notes that equity participation mortgages issued by a Florida S&L have been well received. Auto loans are available and rates and terms generally are unchanged from last month. Business loan demand is strong in Philadelphia, Cleveland, and St. Louis. Deposits are up in Kansas City and Dallas but down in San Francisco. Consumer Spending Although retail sales are reported as steady or up slightly (Boston, Cleveland, Richmond, St. Louis, Minneapolis, Kansas City, Dallas), mixed (New York, Philadelphia), or sluggish (Atlanta, Chicago, San Francisco), the overall tone of the district reports indicates that consumer spending remains flat in real terms. Hard goods are doing relatively well in Philadelphia, consumers buying in advance of price increases have buoyed big ticket sales in Richmond, catalog shopping is growing in Atlanta, price cutting and sales are common in Chicago, St. Louis and San Francisco, and soft goods are doing better than durables in Kansas City and Dallas. Auto sales are the best in months in Cleveland and are up a bit in Minneapolis, but other districts report car sales are flat or down slightly. Chicago notes that auto loans are available at commercial banks in the 14-16 percent range but that lenders are becoming more selective; Cleveland and Kansas City note that in-house financing at below market rates still is available for some makes; New York, Atlanta, Chicago, and Dallas note that the high interest rates are reducing dealers' desired inventories of new cars. High new car prices seem to be at least as important as high interest rates in explaining weak car sales. Most districts conclude that it is too soon to tell what effect these factors will have on 1981 sales volume, however. Residential Construction Conditions in the housing market have deteriorated in the past month in all districts. Higher mortgage rates are cited by all Reserve Banks as the cause of the downturn. Rates have increased as much as two percentage points in some districts (New York, Chicago, St. Louis, Kansas City) and mortgage demand has dried up almost everywhere. Descriptions of the housing market range from severely depressed (Chicago) to weak (Richmond) with no district citing improved conditions. Business Fixed Investment The outlook for capital spending is mixed. Cleveland, Chicago, and St. Louis see a continued gradual downward trend in overall spending plans. Cleveland and Chicago also note that order cancellations are becoming a problem, although not as severe as in the last recession. On the other hand, Philadelphia reports that increased capital outlays are planned at a third of the firms they surveyed; Atlanta says that order backlogs at high technology firms are the highest ever; Dallas cites an ongoing boom in oil drilling, commercial building, and power plant construction; and New York, Cleveland, and Chicago report strength in sales of machine tools. Inventories Both retail and manufacturing inventories are described as lean but generally acceptable by most districts. New York, Chicago, and Minneapolis note that high carrying costs have reduced desired inventories of some respondents, especially automobile dealers. Agriculture The outlook for agricultural production and farm income is mixed. Drought has reduced crop yields in Richmond, Atlanta, St. Louis, and Dallas. The resulting price increases are not expected fully to offset the decline in output in these areas, so farm income probably will decrease further. Atlanta and Dallas also note a heavy use of emergency credit in their districts. While Kansas City expects meat supplies to tighten next year, San Francisco expects them to increase. Chicago and Minneapolis are optimistic about the corn and soybean harvests this year, both citing favorable weather and high prices. Academic and Financial Consultants The academic consultants agreed about the current state of the economy but disagreed about monetary policy. Professor Houthakker believes the economy is stagnant and will remain so for another year at least. He thinks the weak economy has restrained price increases, and he expects a modest improvement in the balance of payments and the exchange rate in 1981. Professor Samuelson foresees a weak recovery during the coming year. It is his view that the money growth targets for 1981 are consistent with this outlook and probably will not induce additional weakness. Professor Eckstein thinks the recession is over but that real GNP will expand only 1.9 percent in 1981. He believes 1981 money growth targets may be inconsistent with the prospective growth of the economy. Professor Tobin thinks that the money growth targets for next year are unrealistically low given the high core inflation rate and probably will cause stagnation. He advocates an incomes policy to alter wage and price behavior in addition to restrictive monetary and fiscal policies. The financial consultants urge the Fed to hit its money growth targets. Mr. Riefler argues that the Fed will gain credibility and reduce inflationary expectations only by hitting its announced targets. Mr. Schott believes that the recent round of interest rate increases is related to the deteriorating Federal budget outlook for next year. He thinks another crunch can be averted if the Fed stands firm now. Provided that Ml does not erupt again, reigniting concerns over further interest rate increases, Mr. Wojnilower expects a relatively strong recovery in 1981. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1673 -beige_book_pure_text_pre2000,1980,"Overview Reports from Reserve Banks this month indicate, on balance, some improvement in economic activity. Manufacturing bounced back in several areas as have retail sales and to a lesser extent capital investment, but conditions in the agricultural sector are mixed as the effects of the summer drought continue to be felt. Any optimism, however, is tempered by concern over the recent run-up in interest rates. Accordingly, many respondents are looking either for a pause in the present upturn or for a very sluggish recovery. Despite the weak outlook for the economy, inflation is expected to continue at high rates. While the demand for business loans varies among Districts, the decline in home mortgage activity appears rather pervasive. Business Conditions and Outlook The extent of the recent strengthening in production and sales activity varies from District to District. An upturn in manufacturing is reported in Boston and Atlanta but in Minneapolis, after three months of improvement, production is down. Economic conditions in Cleveland, Chicago and St. Louis were spurred by an increase in steel production, but this heightened demand is viewed as temporary-mainly the result of inventory replacement. Retail spending is generally stronger with the exception of San Francisco, where sales remain below last year's level. In New York and Chicago, the market for domestic automobiles is lackluster. While the majority of industrial respondents in a Philadelphia survey look forward to a pickup in business activity during the next six months, there is widespread concern among respondents that the recent surge in interest rates will hurt the economic recovery. Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco all cite some deterioration in local housing markets which they attribute to rising mortgage rates. Prices Purchasing agents in Kansas City report some slowing in the rate of increase in input prices, but this is expected to be shortlived. Sharply higher prices for both raw materials and finished goods are also anticipated in Philadelphia and Cleveland, and wage rates continue to accelerate in Chicago. Dallas also notes a further run-up in labor costs, particularly in energy-related industries, but lumber prices there are well below the leve1s of a year ago. Financial Developments Business loan demand remains sluggish in Boston and New York. In Dallas, however, commercial and industrial lending has been buoyed by heavy demand from energy-related industries. While declining mortgage activity is linked to sharply higher mortgage rates by Atlanta and Minneapolis, continuing economic uncertainty and falling real incomes are considered more significant factors by Cleveland respondents. A falloff in loan applications is reported by Philadelphia, and some San Francisco S&Ls have completely dropped out of the mortgage market. Chicago and Atlanta note a growing trend towards renegotiable and variable rate mortgages. Mortgage demand remains high in Dallas, but few commitments are being made as loan defaults and FHA-VA foreclosures increase. Strong savings inflows are reported by Kansas City S&Ls, while at San Francisco banks, large outflows have taken place. Consumer Spending New York, Philadelphia, Richmond, Chicago, Atlanta and Dallas all indicate retail sales gains spurred by heavy marketing and promotional activity. Advances are led by moderate to expensive apparel items and other soft goods, but low priced soft goods and consumer durables still lag. Only a very modest improvement in sales is noted in reports from Cleveland, St. Louis, Minneapolis and Kansas City. In San Francisco, retail sales remain at recession levels. In Boston, however, stronger sales, even in constant dollars, are reported for the first time in months. Despite the short holiday selling period due to the late Thanksgiving holiday, merchants in New York, Philadelphia, Atlanta and Dallas are looking forward to a strong Christmas season. Automobile sales are being bolstered by the introduction of 1981 models in Kansas City and San Francisco. In Cleveland, only small cars are selling well. In New York, foreign car sales are brisk, but the demand for domestic models, remains weak. With sales still sluggish, another wave of dealer closings in the New York area is anticipated. Automobile sales are described as disappointing in Chicago. Residential Construction Housing market conditions continue to deteriorate as rising mortgage rates further discourage demand. A decline in home sales is reported by Chicago, St. Louis and Minneapolis and housing starts are falling in Cleveland, Kansas City and Dallas. While new home prices are up slightly in Kansas City, prices are reported stable in Philadelphia and softening a bit for higher priced homes in Dallas. Business Fixed Investment The outlook for capital spending is mixed. Atlanta notes strong investment in many parts of its District as a result of both state and local tax incentive programs, but Boston reports a downturn in orders for heavy metalworking equipment and machinery for paper and pulp production. In New York, machine tool orders are stronger although industry spokesmen do not expect full recovery until late 1981. Construction of manufacturing facilities is up in parts of New England, particularly among defense-related industries. Military hardware production is also strong in St. Louis, as is production of oil and natural gas equipment. Chicago respondents expect the demand for heavy trucks to rebound in 1981. Agriculture The outlook for agricultural production and farm income is mixed as many Districts continue to feel repercussions from the summer drought. Richmond reports farm loan demand is weaker than normal, while repayment rates are falling sharply. Renewals and extensions are higher and collateral requirements are stricter. Dallas also notes slower loan repayments, while Kansas City respondents expect a doubling in the number of farmers not expected to meet credit standards in 1981. Many of these farmers, however, will be eligible for low-cost emergency loans from the Farmers Home Administration. The outlook for crop yields is good in Minneapolis and San Francisco, but the Atlanta Reserve Bank reports that crop production estimates for the southeast have been lowered again. Inventories Retail and manufacturing inventories are generally lean. In Boston, stocks of home furnishings are so tight that any strengthening in demand is expected to translate into an immediate increase in production. Auto inventories, in particular, are being held down because of the high carrying costs according to respondents in New York. Other retail inventories are reported in line with sales with the exceptions of Kansas City and some areas of St. Louis where demand remains weak. These stocks, however, are expected to be worked down during the Christmas selling season. Academic and Financial Consultants All of this month's academic respondents agree that the recovery will be weak by historical standards as a result of tight monetary and fiscal policies. Professor Eckstein thinks that there will be a recession in 1981 as a result of the 15 1/2 percent prime rate. Eckstein believes that because of the essential inconsistency between the structure of the economy and the goal of price stability, only a 3 to 4 year recession will reduce the inflation rate significantly. Professor Houthakker believes 1981 will be characterized by the slow real growth necessary to control inflation, which he expects to moderate slightly next year. Houthakker is not convinced further tightening is warranted and warns the Fed not to fine tune monetary policy. Professor Samuelson believes there is a 20-25 percent chance for a 1981 recession but 2 to 3 percent real growth is more likely. He feels that the inflation outlook is unfavorable and counsels the Fed to try to hit the money growth targets if the price is not exorbitant. Professor Tobin believes there is a good possibility that rising interest rates will cause a downturn next year, and he would not tighten monetary policy any further as a result. The financial consultants continue to urge the Fed to persist in its determination to reduce the inflation rate. Mr. Kaufman expects a slowing in the pace of recovery in the early part of 1981. At about the same time, he anticipates a temporary decline in short-term interest rates along with a wave of new corporate bond offerings. Mr. O'Leary strongly urges the Fed to continue pursuing a policy designed to reduce the inflation rate and to defuse expectations of inflation. Mr. Stone feels that the Fed should soon achieve success in slowing the aggregates sufficiently to meet its longer term growth targets. He perceives a drop in short-term rates over the balance of the year, and while he does not foresee a double dip recession, a pause in the recovery within the next three months should be expected. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1803 -beige_book_pure_text_pre2000,1980,"Overview Reports from Reserve Banks this month indicate, on balance, a definite weakening in the economy, with widespread prospects for a W-shaped recession resulting from sharply rising interest rates. While manufacturing is generally slowing, modest gains in orders are still prevalent. Inventories at the manufacturing and retailing levels are considered to be satisfactory, but in some cases are described as lean. Consumer spending in the early part of the Christmas season has been disappointing, but retailers expect heavy discounting to provide a strong finish. Bank loan demand is weak, with business loans generally holding up better than consumer loans. Mortgage lending is depressed, as rates reach as high as 16% in some districts. Farm price increases have strengthened the agricultural sector. Outlook The effect of rising interest rates on housing, autos, and business investment is blamed for a weakening economic outlook. Economic activity in the past month has been relatively unchanged in Boston and St. Louis, but is becoming sluggish in most other Reserve Banks. Only Atlanta reports strengthening, except for housing and auto sectors. Expectations of a resumption of recession are mentioned by Philadelphia, Cleveland, Chicago, and San Francisco. Several bank economists in Cleveland now view the recent recovery as a temporary lull from the recession. Respondents in New York, Philadelphia, Cleveland, and Richmond expect conditions to improve by the second half of 1981. Manufacturing Activity Sluggish or slowing manufacturing activity is indicated in Boston, Chicago, Minneapolis, St. Louis, and Kansas City. However, high interest rates have not prevented widespread gains in manufacturing employment in Atlanta, or increases in new orders in Boston and Chicago. Manufacturing has improved somewhat in Dallas, based on strength in chemical and energy industries. Richmond reports mild declines that cut across most industry groups, while Philadelphia reports a sharp downturn in early December. Cleveland and Chicago are experiencing sustained strength in steel orders, partly related to a turnaround of inventories, but both report that no revival in capital goods orders has occurred yet. Some machine toolmakers in New York report weakening sales. Inventories Inventories are generally reported to be under tight control at both manufacturing and retailing levels, mostly because of the high cost of financing. Several Reserve Banks note that inventories of some items are quite lean at the retail level. However, inventory problems with autos and housing are cited by Boston and Richmond. St. Louis and Cleveland expect quick adjustments to inventories, notably in steel and autos, following an economic slowdown. Chicago reports that retailers may still find January liquidation sales necessary despite clamps on stocks. Consumer Spending Retail sales have shown mild strength in Kansas City, Dallas, Richmond, and Atlanta, but are flat or sluggish in most other Reserve Banks. Heavy traffic is reported by Chicago, but buying is said to be restrained, especially for big-ticket items. Consumer durable sales fell substantially in San Francisco, and Richmond reports durable goods sales remain weak. Heavy promotions are reported in most districts and are the basis for relative optimism among retailers for a healthy Christmas season. Auto Sales Auto sales are generally described as weak or declining, according to most Reserve Banks, because of rising interest rates and high prices on new models. Sales are off in Minneapolis, Kansas City, Dallas, and San Francisco. Some gains are noted in Boston over year-ago levels and in St. Louis over summer levels, but dealers view such gains as unsatisfactory. While domestic sales are stagnant in New York, foreign car sales picked up. Dallas sales are hampered by a usury ceiling that makes auto loans unprofitable. Some banks in Cleveland and Chicago are reluctant to finance dealer floor plans. Housing Mortgage lending activity continues to weaken, with Boston, Chicago, Atlanta, and San Francisco experiencing a virtual halt in mortgage loans. Mortgage rates at or near 16% in Chicago and San Francisco are apparently the highest in the nation. Philadelphia reports that seasonal declines and tight mortgage money have contributed to curtailed sales at a level 40 to 65% below last June. The difficulty over qualifying for financing is particularly noted by San Francisco, while St. Louis reports that three-fourths of loan applications are rejected. Some banks in Cleveland are providing preferential rates to builders who they financed, and St. Louis reports that builders are subsidizing home buyers by offering below market rates. Banking Although loan demand is generally soft, some improvements in business loan demand are cited by Dallas, Kansas City, and St. Louis. Sources of the loan strength are restricted to energy and agricultural industries, although business loans in St. Louis appear to be supporting Christmas inventories. Richmond reports a mild increase in installment credit. Bankers in Minneapolis state that funds are available, and several districts report that deposit growth is supported by large CDs. Both St. Louis and San Francisco stress that much of the business borrowing is short-term. Strong business loan demand, centered in inventory financing and in substitution of business loans for commercial paper, is also reported by New York. Agriculture Agricultural production and farm income are relatively strong as a result of rising farm prices. St. Louis reports a sharp increase in wheat acreage and expects a substantial increase in double cropping of wheat acreage in 1981, if prices hold. Kansas City states that credit conditions have shown sustained improvement and Dallas notes an increase in the usage of Government agencies for loans at lower interest rates than banks. However, farm income prospects have dimmed in Atlanta, as prices for meat, citrus crops, and cotton decline. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1181 -beige_book_pure_text_pre2000,1981,"Overview The Federal Reserve Bank reports indicate further slowing in economic activity in January in some Districts and generally sluggish growth over most of the nation. Slower growth was reported by Cleveland and Richmond; Chicago reported the economy of the Seventh District was probably the weakest in the nation. Activity was described as sluggish or showing little strength in the Third, Ninth and Tenth Districts. In contrast, improvement in economic activity was reported in the Eleventh District, and factory employment and hours worked rose moderately in the Sixth. Consumer Spending Retail sales slackened in most Districts in January following an upsurge around Christmas. An upsurge during or prior to Christmas was reported by New York, Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, and Dallas. Most of the Districts, however, report sales declines and softness following the holidays. Those specifically reporting declines include San Francisco, Dallas, Kansas City, Minneapolis, St. Louis, Cleveland and Philadelphia. Manufacturing Manufacturing activity is varied among the Districts. With few exceptions the reports indicate some slowing or sluggishness in manufacturing. Boston reported a slight decline in output and new orders; Philadelphia, small cuts in payrolls and working hours; Richmond, a slight reduction in shipments and a decline in new orders; and, Chicago, that serious problems exist for the major District industries (motor vehicles and components, farm equipment and construction equipment). Philadelphia reported no change in overall manufacturing activity, while Cleveland reported strong steel shipments, aerospace business in excess of capacity and very strong petrochemical business. Rising manufacturing activity was reported in both the Sixth and Eleventh Districts led by a strong wood, pulp and electronics industries in the Sixth, and a booming oil and gas drilling equipment industry in the Eleventh District. Construction Homebuilding activity is quite weak or declining according to District reports. On the other hand, relatively strong commercial and industrial construction was noted in the Richmond, Chicago, St. Louis, and Dallas Districts. High interest rates were commonly cited as the main factor depressing home sales. San Francisco, for example, reported that most potential homebuyers cannot qualify for loans at present interest rates. Cleveland and Dallas noted, however, that home sales were somewhat higher than might be expected at these high interest rates because of special financing arrangements. These include lower rates to buyers of homes on which the lender holds the construction loan (Atlanta), federal government programs (St. Louis) and local housing bonds (Dallas). Inventories Relatively high interest rates have reduced the desired level of inventories according to several reports (Chicago, Minneapolis, Dallas and San Francisco). No widespread inventory buildup was reported but some Districts noted inventory excesses. Richmond reported that nearly one-half of all manufacturers in their District felt that current stocks are excessive even though actual stocks of materials and finished good were down slightly. Some retailers and manufacturers in the Tenth District reported slightly higher than desired inventories. Dallas noted that inventories of unsold new homes are rising, although builders did not consider them excessive. Financial Developments Recent loan activity is mixed. Increases in business loan activity were reported by Philadelphia, Dallas, and at New York at year-end. Declining or sluggish activity was reported by Richmond, Minneapolis, and St. Louis. Among other types of loans, such as real estate, agricultural, and consumer loans, declining activity was generally noted. Financial officials reported a somewhat greater response to NOW accounts than expected. Most funds placed in NOW accounts are coming from existing accounts at the institutions, according to Dallas and San Francisco. San Francisco reports that NOW accounts appear to be creating a higher cost structure for all financial institutions, and St. Louis reports that some bankers expect their introduction to depress profits. Agriculture Lack of moisture throughout much of the nation is reported to be endangering the nation's winter wheat crop and, if sustained, could endanger spring-planted crops as well. The Kansas City District, a primary wheat growing area, reports that the winter wheat crop is in ""reasonably good condition,"" but that moisture will be needed soon to prevent its deterioration. Atlanta reported that Florida's orange and vegetable crops were substantially reduced due to unusually cold weather. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",913 -beige_book_pure_text_pre2000,1981,"Overview The reports from the Federal Reserve Banks suggest little overall strength in economic activity. Current economic conditions are generally characterized as ranging from weak or sluggish to stable, flat, and mixed; with the exception of the Tenth and Eleventh Districts where business activity is seen as somewhat better. Expectations for the future are in contrast to the current situation, with optimism prevalent in varying degrees among most Districts commenting on the outlook. San Francisco's report of ""gloomy"" expectations for economic activity in the Twelfth District is the major exception. Consumer Spending The current performance of consumer spending varies across the country from improving slightly to remaining sluggish. Dallas, Kansas City, Chicago, New York, and Boston report sales as slightly improving. Sales in the San Francisco, Minneapolis, and Cleveland Districts are described as weak or sluggish, while the Atlanta and Richmond Banks report sales to be essentially flat. Substantial gains in new domestic automobile sales-due to the rebate programs-are reported by most Districts, but the gains are expected to disappear with the termination of the rebates. Manufacturing While manufacturing activity varies considerably from District to District and from industry to industry, there is little evidence of strength. New York and St. Louis emphasize the different levels of activity in various industries, as does Boston where the demand for high technology output is softening. Philadelphia and San Francisco call industrial activity unchanged or flat, while Minneapolis reports current weakness. Cleveland notes that capital goods spending may have reached a trough, but Chicago says that ""orders for business equipment remain at depressed levels in real terms."" Steel demand, however, is showing surprising strength. Inventories Inventories of both retailers and manufacturers are being kept under tight control, and are generally viewed as being at satisfactory levels. The only significant difference was reported in the Richmond District where, although retailers' inventories are generally at desired levels, there has been some recent buildup in stocks. Also, manufacturers' inventories in the Fifth District are now reported as somewhat higher than desired. Prices Moderation in recent price increases and optimism over the price outlook were reported by some of the Reserve Banks. Although Philadelphia noted that ""industrial prices have jumped again in the Third District,"" Boston, Chicago, and Kansas City reported observations of moderating tendencies in price increases. Optimism about deceleration in inflation was expressed in the reports from Cleveland and Kansas City. Construction Housing activity continues to be weak according to most District reports. Atlanta and St. Louis note an increase in potential customer traffic recently, but with little effect on sales. The effects of weakness in housing include continued depressed demand for home furnishings and building materials (Boston) and great financial strain on small builders (Cleveland). In some Districts (Atlanta, Richmond, St. Louis) strength in commercial and/or industrial construction is helping to offset the weakness in housing. Chicago, however, also reports weakness in nonresidential construction. Dallas stands alone in reporting overall strength in construction activity, with residential construction advancing steadily and commercial activity booming. Financial Developments Reserve Banks generally describe loan demand as flat or weak and sluggish, occasionally noting a direct relationship to weakness in the District economy. Business loan demand is sluggish at large commercial banks in New York, while Richmond and Atlanta note a slight pickup in business loan activity. In the Tenth District, business loan demand is flat-to-weak except in energy areas. Total bank loan volume is up in the Dallas District, with energy-related industries accounting for most of the growth. In both Philadelphia and New York below-prime lending activity has increased. Agriculture In most reporting Districts recent rainfall has eased the problems of low soil moisture conditions. As a result, wheat and pasture conditions have improved in the St. Louis, Kansas City, and Dallas Districts. In the Minneapolis District, however, continued drought and falling farm prices threaten the agricultural sector. Chicago and Kansas City report financial difficulties for livestock producers, and Chicago notes that farm income estimates for the year have been adjusted downward. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",877 -beige_book_pure_text_pre2000,1981,"Overview Economic activity remained mixed in April, according to the District reports. Sales at retail stores were up sharply in many areas. Manufacturing activity, however, was uneven although there were more positive signs this month than last. Loan demand generally was weak despite scattered strength in some sectors and in some geographic areas. While residential construction continued to be severely depressed, in a few Districts several large commercial and industrial projects were underway. Recent rains relieved drought conditions in many areas of the country, but Richmond, Atlanta, and Minneapolis still reported insufficient soil moisture. Economists boosted their forecasts for real GNP growth to the 2-3 percent range, but high interest rates were still anticipated. There is little evidence that expectations for inflation have been altered. Consumer Spending Retail sales picked up sharply in April in many areas of the country although Boston, St. Louis and Atlanta were exceptions to this pattern. In several Districts this degree of selling strength was unexpected; Chicago reported its best increase in years. Although ""big ticket"" items continued weak in Philadelphia and Kansas City, they contributed significantly to sales growth in Richmond. Inventories were not a problem. In contrast to the marked improvement of retail store sales, the demand for automobiles decreased in most Districts after rebate promotions ended. Nevertheless, Minneapolis and Richmond experienced modest recoveries after the post-rebate decline, and New York indicated some strength for foreign and high-priced domestic models. In Dallas some improvement in automobile sales was expected this month as the removal of state usury ceilings could make more loan money available. Manufacturing While manufacturing activity continued to vary considerably from District to District and from industry to industry, a few new signs of strength have emerged. Cleveland, Richmond and Dallas reported growth in specific sectors; shipments in New York still were strong despite decreases in new orders. Energy-related industries continued to be a source of strength, and most steel plants were operating near capacity, with the exception of those supplying automobile manufacturers. However, overall activity in most Districts was generally flat, and levels remained especially depressed in Boston and Chicago. Further, demand for manufactured products by Japan and European countries was down in some areas, in part a result of the strong dollar and the slowdown in Europe. Construction Residential construction continued sluggish as a result of high interest rates. Kansas City reported that mortgage interest rates varied between 14 3/4 and 17 percent; several other Districts reported rates in the neighborhood of 16 percent. Housing starts weakened in Dallas and Chicago. Only Atlanta reported that homebuilding rebounded in March and April and even this recovery was attributed to mistaken expectations of lower interest rates. Philadelphia and Richmond indicated some pockets of residential demand, but housing construction generally remained at low levels. In contrast to the weakness in the residential sector, Richmond, St. Louis, and Dallas reported strong nonresidential construction activity, each with large commercial and industrial projects boosting activity. Chicago's boom in downtown office construction, however, was believed to have peaked. Financial Developments Loan demand in most Districts continued to languish in April. Consumer loans were generally weak; Philadelphia reported levels 16 percent below last year. In Chicago there was no evidence that the recent easing of variable rate mortgage regulations had any significant effect on the home loan market. Loan demand remained depressed in Minneapolis with banks there reporting increases in federal funds sales. Commercial and industrial loan activity, however, was strong in Kansas City for energy-related activities and was strengthened in Dallas by attempts to borrow in advance of the raising of the state's usury ceilings. In San Francisco, financial institutions were coping with volatile interest rates by making almost all loans on a variable rate basis. Agriculture Further rainfall has ended soil moisture problems in several Districts, but Richmond, Atlanta and Minneapolis still need more rain in some areas. In Minneapolis, agricultural prices are rising, but still lie below last year's levels. Given current price levels farmers will have trouble repaying loans according to the Kansas City and Dallas reports. San Francisco projects a continuation of ample food supplies that will provide low prices for consumers. Outlook The generally strong showing in the first quarter has prompted economists to boost their estimates for real GNP growth in 1981 to the 2-3 percent range. Some weakening is anticipated in the second quarter, but growth is expected to resume by the end of the year. High interest rates have led some to fear further setbacks to housing demand, deferment of capital spending, and trimming of inventories. However, manufacturers in New York, Philadelphia, and Richmond anticipate improvement in coming months. Although there are reports of some abatement of inflation, there is little evidence that expectations have changed. The impact of the United Mine Workers strike so far has been limited to railroads. Utilities in the Atlanta area reportedly hold large stockpiles, but those near Philadelphia have only a 60-day supply of coal. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1068 -beige_book_pure_text_pre2000,1981,"According to this month's district reports, economic activity in the nation remains mixed. Agriculture probably offers the most consistent observations, with most districts indicating bright prospects for crop yields and farm prices later in 1981. The construction industry is in the doldrums for the most part, with residential building still not showing any real life, and commercial construction beginning to lose its momentum. Manufacturing remains soft in many areas, but reports from Minneapolis and Dallas hold some hope for the industrial sector. Factory inventories are generally in good shape. Retail trade is one of the brightest spots on the economic horizon at this time, with sales running well ahead of the June 1980 levels in most districts, and ahead of most projections as well. Auto sales remain a blemish, though. Financial institutions continue to show very little, if any, loan growth and are experiencing deposit flow problems as well. Agriculture The prospects for agriculture have brightened somewhat across the nation. Excessive rains in parts of the Midwest have subsided, and although plantings of corn, cotton, and soybeans are behind schedule, normal yields are projected. Other parts of the nation, suffering from drought conditions earlier this year, also got some relief in recent weeks, improving the outlook for farmers in those areas too. In particular, a record crop of winter wheat is forecast, despite previous frost and drought damage. Farm prices are generally depressed at this time. Some recent strengthening has been noted in Atlanta, though, and is expected in most other districts as well. Construction Every district reporting on residential construction tells the same story in July-very little activity, owing primarily to high mortgage rates. Creative financing appears to be offering very little help to the sagging homebuilding industry, with many institutions offering VRMs, GPMs, VMMs, etc., but few potential homebuyers accepting the new instruments. Commercial construction is generally stronger than residential, but it too has started to show some signs of tailing off. Commercial building continues to move at a good clip in Atlanta, Minneapolis, and Dallas, but has started to soften in Chicago, St. Louis, and San Francisco. High rates are said to be responsible in part for the dropback. Many of the projects already in progress when credit conditions were initially tightened are now reaching completion but are not being replaced with new ones, as developers are scared off by high financing charges and economic uncertainty. Manufacturing Industrial activity is mixed in July. While Minneapolis and Dallas report improvement in the manufacturing sector, some production cutbacks are reported in Boston and Chicago. New York, Philadelphia, Atlanta, and St. Louis all indicate little or no change in factory activity in those areas. Both Boston and New York say there has been little interest on the part of manufacturers to increase plant and equipment outlays. Manufacturers' inventories are generally ""in line"" to ""a little tight,"" except in St. Louis where some curtailment of production is planned to reduce excessive stock levels. Retail Trade Consumer spending on general merchandise is reported to be quite strong in most districts, with sales outpacing both year-ago levels and expectations as well. The exceptions are in St. Louis, where sales are up in nominal terms but flat after adjusting for inflation, and in San Francisco where ""a rather widespread and substantial weakening in consumer spending"" is noted. Part of the unexpected strength is a result of heavy promotions, mentioned in a number of district reports. Growing consumer confidence, as evidenced by a pickup in recent credit sales, and the anticipation of a tax cut are also cited as explanatory factors, however. As for the future, most retailers are projecting a strong finish for 1981, with perhaps only a temporary slackening in the third quarter. Auto sales are almost universally very, very soft. Sales in many districts are only slightly ahead of last year's depressed levels, remaining well below the prosperous volume of 1978. Finance Loan demand is variously described as ""flat,"" ""sluggish,"" and ""weak"" across the country, as both consumers and businessmen appear to have trimmed borrowing to the bone. The prime rate ranges from 19 1/2 to 20 1/2 percent. Bankers have tried to bolster borrowing with a variety of floating rate schemes, as noted by New York, but apparently without much success. Deposit flow problems are mentioned in a number of reports and seem to be especially acute in the Twelfth District where there has been an increased call for legislative action allowing thrifts and banks to more effectively compete with money market funds. Services A fair amount of strength in the services related to tourism is implied in the district reports from Atlanta, Chicago, St. Louis and Minneapolis. Summer tourist trade is picking up in those areas, aided by adequate gasoline supplies and some recent softening in gasoline prices, and has been giving tourist-related retail sales a boost. An exception is noted by Atlanta. In South Florida, the usual wave of foreign tourists has been checked a bit by recessionary conditions in Europe, a stronger American dollar, and some political unrest in nearby Central America. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1109 -beige_book_pure_text_pre2000,1981,"Nine Redbook reports indicated weakening in activity since the last FOMC meeting, with varying degrees of emphasis. Exceptions were Dallas and Philadelphia, where activity was judged to be expanding, and St. Louis with ""no marked change"". Inflation appears to have moderated, but most observers fear a resurgence. Virtually all reports commented on the depressive impact of current high interest rates, especially on housing, but also on nonresidential construction, capital goods, motor vehicles, and inventory investment. Employment is sluggish, at best, in most districts. Retail trade is mixed, but with auto sales severely depressed everywhere. Labor unrest, highlighted by the air controllers' strike, is increasing. Capital goods demand is generally weaker. Energy development and defense procurement are among the few strong sectors. The higher value of the dollar has tended to slow exports and increase imports, but quantification is difficult. Consumer credit use has slowed. New residential mortgages are difficult to negotiate under current terms. The S&L crisis deepens. C&I loan demand varies, with merger-related loans a big factor in money centers. Crop prospects are ""good to excellent"" in most of the nation. The new fiscal package is viewed as favorable, but no substantial early impact is foreseen. Many observers anticipate a revival in activity late in the year or in 1982, but only if interest rates decline. Exchange value of the dollar All districts found that the higher value of the dollar was affecting imports and exports, but the picture is confused by the weak economic situation in Western Europe. Also, most observers expect the full impact to be delayed. Boston comments on reduced exports of ""high-tech"" items. New York finds exporters ""worrying"", but with few specific examples of declines in sales. Cleveland reports increased foreign competition for machine tools and pigments. Richmond finds textiles affected. Chicago reports a drop in inquiries from abroad as to the availability of U.S. products. San Francisco finds demand for aircraft and forest products seriously affected. Various districts pointed to reduced foreign demand for agricultural products, with accompanying downward pressure on domestic prices. Inflation Boston, Richmond, and Kansas City reported a trend toward price stability with fewer purchasing managers reporting paying higher prices. Prices of building materials, especially cement, are generally weak. Cleveland economists still see a ""core"" inflation rate of about 9 percent. Chicago reports prices rising faster in July than last year, and business equipment prices up at least 10 percent this year. Financial institutions Most districts commented on the growing S&L crisis. A New York analyst fears ""a mass failure of the thrifts"", and a shock to the economy. Outflows of funds continued heavy in July, and net worth is declining. The new adjustable mortgage loans and tax exempt ""small savers"" certificates may be of some help. But the basic problem is high interest rates. Atlanta points out that many people could not now afford to buy the houses they live in, and Dallas warns of a wave of foreclosures when creative financing deals must be renegotiated. Housing The housing industry remains depressed throughout the country, even in the relatively strong economy of the Eleventh District. Mortgage rates up to 18% and high prices are preventing many potential buyers from entering the market. Some developers are cutting prices. Bankruptcies of small builders are increasing. Related industries continue to suffer, including building materials, manufacturers, forest products, and appliances. Mortgage lending activity is reported nearly nonexistent in some areas. Manufacturing Manufacturing production was generally reported unchanged to down in the latest month. Industries linked to the construction and auto sectors were particularly adversely affected, while those producing military hardware and oil and gas equipment benefited. In contrast with other districts, Dallas reported continued expansion of manufacturing output, and Philadelphia noted signs of improvement following a decline earlier. Retail sales Reports on consumer spending are mixed though indications of lower, softer, or spotty sales predominant. Autos, appliances, furniture, and building materials are particularly sluggish. Discounting and heavy advertising to boost sales are being reported. Auto sales are benefiting from the recently announced promotion programs of the automakers. Additional parts and servicing business is partially offsetting weak new car sales in some areas. But additional auto dealers were reported to have gone out of business. The air traffic controllers' strike is exacerbating the problems of the airlines. Tourism, ""already anemic"" in the South, has been hit hard by the strike. Inventories Businessmen are generally reported to be watching inventory levels closely. Nevertheless, excessive levels have developed in a number of industries. High interest rate levels are encouraging tight inventory control. Kansas City noted that inventory cutting appears to be taking place at all stages of production. Types of inventories noted as being excessive include motor vehicles, farm and construction equipment, construction supplies, steel, certain lines of retail goods, and crude petroleum. Capital investment The Cleveland and Chicago districts, which emphasize durable consumer and capital goods, continue to send in pessimistic reports. Nonresidential construction is now softening in most regions as a result of financial stringencies. A number of districts reported reduced demand for producer equipment, including private and commercial aircraft, freight cars, trucks and trailers, and especially farm and construction equipment. Energy development items, defense equipment, and high-tech items are relatively strong. Agriculture Among the districts reporting good-to-excellent agricultural conditions are Richmond (tobacco), Chicago (near ideal weather for corn and soybeans), St. Louis, Kansas City, and San Francisco. However, Atlanta finds dry weather again restricting crop growth, and Minneapolis complains that excess moisture now endangers crop yields. Farm income is depressed by low farm prices and rising costs, and farmers are restricting new investments. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1246 -beige_book_pure_text_pre2000,1981,"The nation's economic activity, as reported by the twelve District Banks, was generally slow during August and September. Only Dallas reported a relatively strong regional economy. Consumer spending was weak for most goods and services in most districts. Automobile sales, even with rebates and promotions, were strong in only three districts. Manufacturing orders and production were sluggish. Some inventories increased in some districts. Construction, particularly for new homes, was slow almost everywhere. Agricultural growing conditions were very good in most districts, and farm prices generally declined. The demand for most types of loans slowed, and the quality of loan portfolios at financial institutions deteriorated somewhat. Consumer Spending Consumer spending generally has declined in most districts, with only a few bright spots. General merchandise sales are reported weak or mixed by nine districts, and San Francisco reports that even retail food sales are slowing in some areas. Sales of consumer durables, such as major appliances, have been languid in most of the nation. Sales are ""down"" in St. Louis, ""disappointing"" in Kansas City, ""weak"" in Cleveland, and similarly slow in many other districts. Only Dallas reports that appliances are ""selling well."" Sales of automobiles have been stimulated by rebates, interest subsidies, and other promotions, but they are still low in most areas. Richmond calls auto sales ""weak."" Chicago notes that production schedules for the fourth quarter have been cut. Only Dallas, St. Louis, and New York have experienced strong auto sales. Some districts observe that certain other goods and services were selling well. St. Louis and Philadelphia report strong sales of electronic equipment and entertainment systems, such as video tape recorders; Philadelphia and Boston report a good showing in sales of soft goods, such as apparel; Dallas indicates that back-to-school sales were strong; and Minneapolis reports that tourist spending was good. Manufacturing Manufacturing orders and production have been sluggish. Except for Philadelphia, all districts report that orders and production have been weak or declining. Boston attributes the weakness in manufacturing to the strong U.S. dollar making U.S. goods uncompetitive overseas. Minneapolis, St. Louis, Atlanta, and San Francisco attribute the weakness to the soft homebuilding industry, which has depressed the forest products industry. Cleveland and New York attribute it to cutbacks in capital spending; St. Louis attributes it to poor auto sales; and Chicago attributes it to both of these developments. Oil field equipment is the only product that has enjoyed strong orders and production. In spite of the sluggishness in new manufacturing orders, there are no reports of serious general increases in inventories. A few districts do report some build-ups. Minneapolis and Richmond report slight general inventory build-ups; Cleveland reports build-ups in steel; and Atlanta reports build-ups in forest products. Chicago, on the other hand, reports that inventories of certain manufactured products are below comfortable working levels. Construction Construction, particularly homebuilding, was weak in most districts. Home construction and sales were depressed almost everywhere. Atlanta, for example, reports that housing construction has been ""reduced to a trickle"" by high interest rates. St. Louis reports that single-family housing permits in the St. Louis area were down about 50 percent from a year ago. In some areas, weak homebuilding activity was partially offset by strong commercial and industrial building. Dallas, Richmond, and Atlanta report vigorous activity in nonresidential building. Agriculture Crop production has been very good in most districts. Virtually all districts indicate that crops and harvests have been robust. Richmond expects gains over last year in peanuts, cotton, soybeans, and corn. St. Louis expects above average output in corn, soybeans, milo, and rice. Kansas City looks for record production in corn and near-record production in soybeans. Minneapolis anticipates a 20 percent increase from last year's corn crop, which was harmed by drought. Farm prices have generally declined. Minneapolis reports that cash grain and livestock prices since July have remained the same or declined. San Francisco reports that crop prices in its district have been depressed by the impact of the strong U.S. dollar on crop exports and by fears of the Mediterranean fruit fly infestation. The one exception to the soft farm prices is tobacco prices, which Richmond reports up 15 percent over last year. Financial Conditions High interest rates and weak economic conditions appear to have slowed demand in most districts for most types of loans. Weak consumer or mortgage loan demand is reported by half the districts: Philadelphia, Richmond, Atlanta, St. Louis, Kansas City, and San Francisco. Richmond and St. Louis report that business loan demand is easing. However, energy-related loan demand is reported as strong by Kansas City, Dallas, and Chicago. The quality of loan portfolios also has declined at financial institutions in some districts. Farmers in the Kansas City district are continuing to have trouble servicing their debt, and Dallas reports that its banks expect more carry-over loans this year because of low prices for grains and cotton. San Francisco reports that much of the business loan demand in its district is attributable to cash flow problems, and Boston reports that problem loans are showing up among home developers and home furnishing firms. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1121 -beige_book_pure_text_pre2000,1981,"Deteriorating economic conditions appear to be spreading, and most respondents do not anticipate a recovery before spring, according to this month's District reports. Exceptions are energy, non-residential construction, defense, recreation, and some high technology firms. Real consumer spending has slipped, and the outlook for Christmas sales is mixed. New car sales declined sharply in October, and the depressed housing market continues to slump. Declines in manufacturing and employment are spreading, but inventory levels are generally not reported to be excessive. Bumper crops are in prospect, and farm incomes are depressed. Demand for most loans has slowed, but business borrowing is up in some districts. Concerns about a continued deterioration in the quality of loan portfolios are cited. Consumer Spending All districts report further weakness in consumer spending, as increases in nominal sales failed to keep pace with inflation. Prospects for Christmas sales are described as strong-to-optimistic in Philadelphia, Cleveland, Atlanta, and Kansas City and cautious- to-pessimistic in New York, Chicago, Dallas, and San Francisco. Consumer durables account for much of the current weakness, although sales of soft goods and apparel are off in Boston and Richmond. Non-auto retail inventories do not appear to be excessive in most districts. New car sales declined sharply in October after the rebate and incentive programs expired. High prices and interest rates, a lack of new models, and consumer caution are primary reasons cited for why auto sales are not likely to improve soon. Construction Most districts indicate the depressed housing market continues to deteriorate. Even a softening in home prices and creative financing have failed to stem the decline in sales. Atlanta and San Francisco noted a growing incidence of foreclosures and real estate related bankruptcies. Residential builders in those districts also resorted to auctions to reduce inventories. Nonresidential construction remains active in the Dallas District and is holding up reasonably well in Cleveland, Richmond, and Atlanta. Chicago and San Francisco report postponements in some projects. Manufacturing and Employment Weakness in manufacturing is becoming more widespread, and price discounting is evident in some districts. However, output remains steady in St. Louis and Dallas, and the backlog of unfilled orders has temporarily sustained production at a low level in New York. Declines in factory output center on motor vehicles, household appliances, and construction materials. Boston and Cleveland report demand for packaging products has begun to fall, suggesting a further slowdown in the economy. Nonetheless, production of oil field equipment, defense-related goods, and recreational items remains high. Most factory inventories appear to be within manageable limits, although semiconductor firms in California are planning shutdowns to reduce inventories, and steel producers in the Cleveland District are liquidating stocks. Cleveland and Minneapolis note businesses are financing unplanned inventories. Richmond reports some buildups of finished goods, but Chicago indicates ""pipelines are virtually empty"" in various wholesale markets. Demand for labor is softening, as evidenced by increased layoffs and reductions in hours worked. Two exceptions are St. Louis where total employment rose and Atlanta where increased demand for high-technology and communications workers continues. Chicago indicates the demand for workers may be at the lowest level since the 1930's, and many employers are seeking substantial concessions when renewing labor contracts. Financial Conditions Deteriorating economic conditions dampened loan demand in most districts, but a pickup is generally expected before next spring. Consumer and mortgage loan demands remain weak, and lackluster business loan demand is reported by several districts. Cash shortages, the poor bond market, and inventory financing are noted as key factors contributing to non-production business loan demand. Rising delinquency rates and business borrowings to finance interest payments on prior loan commitments are causing concern for bankers in Cleveland. Signs of growing financial strain are also noted by Boston, Richmond, Atlanta, Kansas City, and San Francisco. Richmond cites increasing financial difficulties among auto dealers, farm machinery and equipment dealers, construction firms, and wholesalers. Deposit growth is generally sluggish. Sales of all-savers certificates, although below expectations, were strong initially but generally fell off in mid-October. However, Atlanta indicates growth in these certificates at thrifts remained rapid, and Boston and Philadelphia note renewed growth in sales. Estimates of new funds in those deposits ranged from 5 to 50 percent. Agriculture Agriculture production is up, but dry weather has constrained yield prospects further in Atlanta and heavy flooding caused damage to the cotton and wheat crops in North Central Texas. Minneapolis reports wet weather has delayed corn and soybean harvests. Continued weakness in farm and livestock prices and higher production costs have severely squeezed farm incomes and are causing concern among agricultural lenders. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1012 -beige_book_pure_text_pre2000,1981,"Overview Economic conditions deteriorated further during November, according to the District reports. Growth in consumer spending slowed or tell in many regions. The slump in manufacturing worsened, and layoffs, production cuts, and plant shutdowns appeared to be spreading. Residential construction failed to revive despite a decline in interest rates. Nonresidential construction activity continued strong in some Districts. While consumer lending remained soft, business borrowing strengthened in a few Districts. Low prices depressed agricultural incomes and created anxiety about farmers' abilities to meet loan obligations. Economists have revised their forecasts of near-term economic growth sharply downward. Many believe the downturn will reach the trough by the first or second quarter of 1981 and that the economy will then rally over the second half of the year. Consumer Spending The retail sector was soft throughout the country during November. Many areas experienced reduced sales growth or actual declines, although the pace improved after Thanksgiving in the Northeast. Real sales, however, were lower in Richmond, Atlanta, Chicago, and Minneapolis. After falling in October, nominal retail spending in San Francisco recouped the loss in November, but in real terms holiday expenditures are not expected to reach last year's mark. Although high quality products were selling better than low- cost goods in Boston, durables and other big-ticket items were moving especially slowly in many other locations. Merchants in numerous Districts were counting on a late surge to produce an acceptable holiday season, with some stores relying on heavy promotions and price markdowns to increase activity. Despite the overall sluggishness in retail sales, inventories were mentioned as a problem in only five Districts. No improvement in automobile sales was evident, and dealers in Cleveland were prepared for one of the worst months ever. Manufacturing Manufacturing activity nationwide appeared to be worsening from last month's depressed levels. All Districts reported drops in new orders or shipments for at least some industries. Hard hit by the downturn were producers of capital goods, building materials, textiles, paper, steel, and consumer durables. Even demand for high technology products has slipped. Difficult conditions persisted in mining in Minneapolis and San Francisco. Strong spots were noted in defense industries in Boston and New York and energy-related industries in St. Louis and Cleveland. Layoffs rose in all Districts but Dallas. Manufacturers in Philadelphia and Chicago indicated an easing of price pressures. Construction Residential construction and home sales remained virtually at a standstill, as little additional activity resulted from recent declines in interest rates. Housing prices have begun to fall in Atlanta and Chicago, but Dallas reported that further interest rate reductions were likely to cause prices to jump sharply. Nonresidential construction continued to be strong in New York, St. Louis, and Dallas. Office construction in Chicago received a boost when financing problems were resolved for some large projects. Richmond, Atlanta, and San Francisco had moderate activity in the nonresidential sector. Financial Developments Consumer loans continued to languish, but increased demand for business loans was observed in some areas. In Philadelphia, consumer loans declined by as much as 20 percent. In contrast, business loans were rising in New York, Philadelphia, Kansas City, and Dallas. Inventory financing, mergers, cash shortages, energy development, and below-prime lending were cited as factors contributing to the upturn. Agriculture Although good-to-excellent crops were reported in several Districts, lower-than-expected prices were reducing net returns in agriculture. Consequently, the financial positions of farmers prompted growing concern. In Kansas City, the low prices prevented any improvement in customers' creditworthiness as interest rates fell. Agricultural loan delinquencies continued to climb in Atlanta, but lenders hoped foreclosures could be held to moderate levels. In Dallas, private lenders were carefully watching their agricultural loan portfolios, although few immediate problems were foreseen. The Outlook In the face of widespread sluggishness, economists lowered their forecasts of real GNP growth. Fourth quarter declines are projected to be as large as 7 percent, but the recession is generally expected to bottom out in the first or second quarter of 1982. Many observers anticipated a strong recovery by the second half of the year, although Chicago warned that any subsequent upturn expected next year; would leave that District far short of full prosperity. Manufacturers differed about when they thought that business would pick up. At the extremes, Philadelphia firms hoped for expanding orders between now and June, while many Richmond companies believed the slump will deepen over the same period. Fears that increased inflation will accompany the recovery were voiced. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",988 -beige_book_pure_text_pre2000,1982,"According to this month's district reports, economic activity in the nation remains very weak. Retail sales, after finishing 1981 with a robust performance, have sagged again, and prospects for a quick recovery are not widely perceived. Auto sales are down across the country. In the manufacturing sector, softness cuts across geographic and industry lines, as unwanted stock piles up and leads to production cutbacks. Financial institutions say business loan demand continues to be strong, but consumer borrowing is still in the doldrums. Deposit flows are mixed, and response to IRAs has been disappointing for the most part. The housing market is universally acknowledged to be depressed, and will probably remain so until interest rates come down and the economy picks up, according to builders and brokers. Finally, reports from the agricultural sector indicate falling commodity prices, with farmland prices dropping too, as many farmers find it impossible to stay in business. Retail Trade Most districts report weak consumer spending in early January, the result of a combination of factors. Many retailers feel that the strong sales experienced in the week before Christmas were basically borrowed from January sales. That is, consumers simply burned themselves out taking advantage of unusual pre-holiday markdowns, and simply have no money to spend now. Frigid weather has also played a part in holding sales down, with a large portion of the country held in the icy grip of one of the coldest winters on record. Finally, there is some feeling on the part of retail merchants that the flow of dollars into IRA accounts has also acted to take the wind out of the consumer's sails. (This is unlikely, given the reports on IRAs. See FINANCE.) The softness in retail spending has led to an inventory buildup in some areas. Atlanta, Chicago, and St. Louis all report inventory accumulation. On the other hand, stock levels in Minneapolis, Kansas City, and Dallas are reported to be in reasonable shape. Looking ahead, retailers around the country do not seem to expect much from the first half of 1982. Although contacts in Kansas City and Philadelphia are optimistic, they are exceptions. Most other districts say merchants expect the current sluggishness to continue at least through the first quarter, and possibly through the first half of the year. Auto sales are depressed nationwide. The recession has combined with high interest rates to give auto dealers their worst year in many. There is some hope for improvement though, should price reductions follow the General Motors-United Auto Workers negotiations. That might be good news for consumers, but, as noted by St. Louis, could put a squeeze on used car dealers if price cuts in that market follow. Manufacturing Weakness in the manufacturing sector is widespread according to district reports, and industry still appears to be on a downtrend in many areas. While the softness spreads across many industries, a few seem to be particularly hard hit-automotive products, building materials, and steel. Inventory growth has led to production cutbacks, furloughs, and temporary plant closings in an effort to let accumulated stock run off. Just where the industrial sector is heading, and how long it will take to get there, is a matter of diverse opinion. Manufacturers in Philadelphia, New York, and Richmond seem to think that the trough is near. On the other hand, reports from St. Louis and Minneapolis point to further deterioration. Contacts that do see improvement in the situation don't expect it to come until at least the second quarter, and many expect it to be only slight at that. Finance The year-end surge in business loan demand has held over into 1982 in most districts, but some bankers interpret that as a sign of weakness on the part of borrowers. Many firms are borrowing to finance unwanted inventory accumulation. Some cutbacks in credit extension may be anticipated, as banks are becoming more and more concerned with the creditworthiness of their customers. Consumer lending remains weak across the board. Deposit flows are mixed. S&Ls continue to have trouble attracting money in most areas. The response to IRA plans has been sluggish in most districts, despite heavy promotion in some parts of the country, and banks that have experienced a strong demand for IRA deposits have often found very little new money going into them. Real Estate and Construction The residential housing market is universally depressed, with the worst conditions indicated by Philadelphia, Richmond, San Francisco, and New York. Only houses in the highest price brackets are selling. A retightening of the mortgage market has held home loan rates in the 17 to 18 percent range and effectively choked off demand. Home prices are reported falling in several districts. Residential construction is at a virtual standstill in many districts, as homebuilders try to work off inventories. As for the future, reactions are mixed. While most real estate businesspeople agree that a large drop in mortgage rates will have to proceed any increase in demand, there is also some feeling that that alone won't be enough. Public confidence in the economy may have to be restored, through general economic improvement, before a housing recovery is seen. Commercial construction, while sluggish in some areas, is generally better than residential, and is even reported to be strong in Dallas. Agriculture Weakness in agriculture rounds out the generally gloomy economic picture painted by this month's Redbook reports. Falling commodity prices combined with rising costs have put a squeeze on many farmers and placed them in a precarious financial position. Agriculture banks, concerned over the creditworthiness of many farmers at this time, have been monitoring borrowers closely and tightening policies on credit extension. The result has been foreclosures in some areas, and an increased number of farms on the market. Farmland markets are thus weak in many areas, with price declines noted by Chicago, Minneapolis, and Kansas City. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1252 -beige_book_pure_text_pre2000,1982,"Introduction While economic conditions remain very depressed throughout the nation, there is a widespread view that a bottom was reached in the first quarter, possibly in January when severe weather hampered activity over a large portion of the nation. Allowing for weather effects, retail sales, manufacturing, employment, and construction have been about level since late last year. Despite deep pessimism, panic has been avoided. Sluggishness is expected to continue in the second quarter with some improvement about midyear, hopefully aided by lower interest rates. Price inflation continues to slow. With a downturn developing in oil and gas development, defense procurement becomes the principal expanding sector. Finished goods inventories are too high in some sectors, but most purchased materials are under close control. Capital spending plans generally are being reduced. Auto and appliance sales remain weak. Extreme caution holds back decisions on consumption and investment, especially on major items. Housing remains severely depressed everywhere, but some districts report incipient improvement. Office building construction is still vigorous in some large centers. Crop prices remain low partly because of large harvests projected for this year, but livestock prices have increased. Several districts report increased bankruptcies and more problem credits for consumers, business, and agriculture. The financial condition of S&Ls continues to deteriorate and they probably will not be able to finance a resurgence in housing. Several districts report business loan demand as ""flat,"" but outstandings are buoyed up by expanding energy loans, and loans that are not being paid on schedule because of financial problems afflicting various borrowers. Regional differences All of the district reports follow, in general, the outline described above, but there are noticeable differences. The Chicago and Cleveland districts with their emphasis on hard goods continue to present the blackest pictures. New York, on the other hand, finds that the Second District is ""weathering the recession quite well."" Philadelphia may be ""on the verge of a turnaround."" Minneapolis sees ""hints of recovery."" Dallas reports autos and housing ""showing initial signs of recovery."" At the other extreme, San Francisco (in the past one of the most vigorous growth regions) has ""slipped deeper into recession,"" with home-building at the lowest level since World War II, and distress in housing replacing the fabulous boom of the late 1970s. Inflation Price increases clearly have slowed, with exceptions in some lines. Philadelphia reported, however, that increases in industrial prices were more prevalent in March. Cleveland and Chicago note substantial pressure by producers on labor and suppliers to cut costs. Goods and services are readily available, and price discounting is widespread. Chicago noted far-reaching ramifications of the declines in crude oil and oil product prices, as a result of the world-wide excess supply of oil. Employment Additional layoffs and reduced hours, affecting full-time and part-time workers in a wide variety of lines of business, were reported by most districts. New York characterized overall labor market conditions there as relatively strong. Dallas noted deterioration since December, due to layoffs and immigration of the unemployed from other districts, but reported an unemployment rate in February of only 5.8%. Layoffs in the Fourth District included workers from the last auto passenger tire plant in Akron. San Francisco indicated that most of the boost to employment from rising defense spending will occur in 1983-1984, not this year. In response to widespread layoffs and reduced job opportunities, unionized workers have been increasingly willing to grant concessions. Consumption Retail sales reports are mixed, but generally indicate sluggish or weak spending. Lack of confidence and negative expectations were noted as restraining outlays. Those who commented on the outlook project a rise in consumer expenditures in the second half of this year. Minneapolis and Dallas noted signs of recovery in auto sales in response to rebates. Evidence of financial strains—consumer loan delinquencies, rising personal bankruptcies, and closing of retail stores—was reported. Inventories Reports on inventories are difficult to characterize because of a highly mixed picture by industry, by stage of fabrication and distribution, and by region. In general, raw materials and purchased components are low, while finished goods have become excessive when sales sagged. San Francisco tells of ""involuntary"" accumulation. Philadelphia reports retail inventories ""pretty clean"", in general. Richmond notes a rise in manufacturing inventories. Boston finds stocks generally too high, but packaging materials ""very low."" Cleveland says oil product inventories are being cut, but not crude oil. Aluminum is high at the producer level, and ""extremely low"" at the fabricator level. To sum up, except for particular imbalances, inventories are low relative to normal standards because of heavy finance charges and uncertain sales prospects. Chicago and Kansas City warn that a rise in final sales could quickly bring longer lead times and higher prices. Capital spending District reports suggest a significant decline in capital spending in 1982. Low business confidence is a major factor. San Francisco and Boston are affected by layoffs related to reduced demand for commercial aircraft. The drop in oil prices has brought a reduction in drilling in all producing regions. Demand for related equipment has dropped, and a proposed oil pipe mill has been canceled. New York and Cleveland report cancellations of orders for machine tools. The TVA has halted construction on three nuclear plants. Commercial construction is weak except for large office building in centers such as New York, Chicago, Cleveland, and Dallas. Manufacturing Defense procurement is vigorous, but these activities are most significant in a few districts: San Francisco, Dallas, St. Louis, and Boston. Steel and motor vehicle output are down sharply, but there are signs of improvement. Appliance output also is down currently. Textiles are down in Atlanta and apparel in Dallas. Petrochemical output is off in several districts. Richmond reports a rise in demand for cigarettes. Overall, manufacturing output remains depressed but may be past its low point. Housin g The housing picture varies from bad to worse throughout the nation. Dallas and Minneapolis report a recent rise in home sales, but Richmond, San Francisco, St. Louis, Chicago and most other districts have observed no improvement in starts from an extremely low level. A backlog of demand for housing is building up with few unsold units, as reported by Kansas City. Lower interest rates are the only hope for home building this year and time is running out, at least for the northern states. More builders and subcontractors are leaving the field. ""Creative financing"" has not proved of much help. Agriculture Large crops are forecast for the South, the Midwest, and the Great Plains—especially wheat, soybeans, and corn. Production plans indicate large plantings, and subsoil moisture conditions are excellent. Large crops suggest further downward pressure on prices. Livestock prices have been rising, but most experts project a further decline in net farm income. Farm land prices are declining and delinquencies and bankruptcies are rising. Heavy debts at high interest rates, combined with lower income, could cause further deterioration in the financial condition of agriculture. Finance Uncertainty continues to characterize the financial markets. Business loan demand is described as weak or flat in most districts. Business credit ratings are being downgraded, and more loans require special attention. New York experts say business liquidity continues to deteriorate, and more ratings will be downgraded soon. Mortgage credit is very tight, both for housing and commercial projects. Usury rates are impeding credit use in some states, especially for credit cards and auto loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1620 -beige_book_pure_text_pre2000,1982,"Overview Economic activity in most sectors slackened further in April and early May, according to District reports. Consumer spending was generally lackluster although automobile sales picked up in a few Districts. The weakness in manufacturing became more pervasive, spreading to energy-related and high technology fields. Layoffs did not appear to slow, and capital spending continued to decline. New residential construction remained depressed, but some very modest improvements were noted in a few local housing markets. In the agricultural sector, liquidations and bankruptcies rose as farm incomes and land values continued to fall. Consumer borrowing was sluggish although commercial lending varied somewhat among Districts. In contrast to last month, none of the District reports expressed any optimism that a turnaround was at hand. Consumer Spending Retail sales were lackluster in most areas of the country although automobile sales picked up in a few Districts. Despite the general weakness among department stores, merchants in Boston, Philadelphia and Dallas experienced moderate gains in their overall sales. In many Districts, increased reliance on markdowns and promotional activity spurred lagging sales but put considerable pressure on profit margins. Only retailers in Cleveland, St. Louis and Kansas City reported excessive inventories. As for automobile sales, strong response to rebates and special financing plans was noted in St. Louis and Minneapolis but such measures did little to stimulate sales in San Francisco. Manufacturing Activity Throughout most of the country, conditions worsened in the manufacturing sector, with weakness spreading even to industries which had been weathering the recession well. In many Districts, already distressed industries deteriorated further, including steel, machine tools, building materials, and textiles. The weakness spread to other, previously strong industries which had bolstered the economies of several Districts. Conditions softened in such high technology industries as computers and telecommunications equipment, according to the Boston, Atlanta, and Minneapolis reports. Orders for oil production equipment dropped sharply in Dallas, Atlanta, and Chicago. Cutbacks in state and local government dampened purchases by the public sector. Layoffs and reduced hours were widespread, and many Districts reported several plant shutdowns, both temporary and permanent. Capital spending was being postponed or canceled. Inventories were generally lean, although manufacturers in Richmond still viewed stocks as excessive. Construction New residential construction was uniformly described as depressed, although modest improvements were noted in a few local housing markets. Demand for luxury cooperative apartments remained high in Manhattan and housing sales showed some strength in other parts of New York City. In Dallas, housing sales and new starts regained year-ago levels, but the slight upturn in new housing starts in San Francisco—February had marked a post-World War II low—was offset by further declines in the sales of new homes. Creative financing was cited as providing some support to sales in a number of Districts. In the nonresidential sector, construction activity remained strong in a few urban centers, but San Francisco reported the cancellations of several commercial projects. Some softening was evident in New York's previously buoyant office rental market. Agriculture Conditions in the agricultural sector remain generally grim, especially in the Midwest and California. In California, heavy rains impeded the Spring plantings, according to the San Francisco report. With crop prices having fallen to low levels, crop farmers throughout the country are caught in a squeeze of high interest charges and low income. As a result, land prices have fallen sharply, and farmers have had difficulty in paying their bills. Farm foreclosures and bankruptcies have increased sharply. Livestock producers, however, have benefited from the recent rise in livestock prices which, in combination with the low crop prices, have widened their profit margins. Nevertheless, the generally bleak conditions in agriculture have strained the solvency of such related businesses as farm machinery, seed and fertilizer sales, and elevator operations according to reports from Cleveland and Minneapolis. Finance Consumer borrowing was generally weak, while commercial lending varied somewhat among Districts. In Philadelphia, business borrowing was slightly ahead of last year, but bankers expected loan demand to soften. Slackening in the energy sector had divergent effects on loan demand, increasing lending activity in Dallas and decreasing it in Kansas City. Flat loan demand was reported in Cleveland, St. Louis, and Minneapolis. San Francisco banks experienced a sharp rise in problem and delinquent loans as bankruptcies increased among forest products; and construction industries and small firms in general. Outlook In contrast to last month none of the District reports expressed any optimism that a turnaround was at hand. Instead, conditions appear to have worsened and forecasts of a recovery have been postponed until later in the year. Economists in Boston felt an upturn, albeit an ""anemic"" or ""modest"" one, would begin in the second half of the year despite deteriorating conditions in April and early May. Among manufacturers, some were looking for a pickup in business activity within the next six months, while others were less sanguine. Retailers, too, were divided with some expecting an upturn to follow the July tax cut while others, such as those in Richmond and in Kansas City, did not see any imminent upturn in sales. As for the price outlook, there was little feel for whether the recent slowdown was cyclical or permanent. In Chicago, price discounting is more common than at any time since the l930s and is especially prevalent in steel, nonferrous metals, building materials, paper, and transportation, though a large surge in these prices is anticipated with recovery. Similarly, in Kansas City, prices for new materials were down between 5 and 18 percent from last year but are expected to be stable or rise slightly for the rest of the year. Wage settlements not far below those of a year ago were reported by several Districts. For example some Chicago firms in depressed industries recently negotiated contracts calling for 8 to 10 percent first year wage increases. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1281 -beige_book_pure_text_pre2000,1982,"Overview Reports from the twelve Districts suggest that on balance the economy may have reached its trough but few signs of recovery are seen. Only Atlanta, St. Louis, and Kansas City report signs of improvement. Other Districts report either flat or deteriorating conditions. Retail sales improved in May but were mixed in June, and retailers remain very cautious. Manufacturing activity remains depressed with new production cutbacks seeming to outweigh the few production increases. Additional, although slower, inventory liquidation seems likely. Construction, mining, and agriculture remain weak. There are some signs that inflation continues to abate. Consumer and real estate lending is weak, while business loan demand is mixed. Bankers are concerned about delinquencies and loan quality. Retail Sales Retail sales improved in May but were mixed in June and retailers are cautious about the second half. The May improvement reported by most Districts was mostly in non-durable goods. Sales of household durable goods generally are weak, except in San Francisco. Several Districts report sales gains were achieved only because of strong promotions and large markdowns. Discount stores are doing better than full-price stores. San Francisco, St. Louis and Minneapolis report improvement in car and/or light truck sales, but Dallas reports car sales fell after GM's low interest rate promotion ended. Some Districts report continued improvement in early June while others report retail sales falling back from their May levels. Retailers are at best cautiously optimistic about sales for the second half. They are reported to be conservative about ordering goods and keeping a tight rein on inventories. While some look for sales to increase in response to the tax cut and social security increase, others expect consumers to emphasize saving and paying down debt. Manufacturing and Mining Manufacturing activity generally remains depressed, with new production cutbacks seeming to outweigh the few production gains. Most Districts report either declining or flat orders, shipments and backlogs. Some increases in motor vehicle production are reported, but production of steel and machinery is depressed. Dallas reports firms selling to the petroleum industry are making particularly large cutbacks. Paper production is still being cut but lumber production has stabilized at a depressed level. San Francisco reports cutbacks in commercial aircraft and electronic equipment production more than offset gains in aerospace defense equipment. Reductions in mining activity are widespread. Minneapolis reports sharp curtailment of iron and copper output, a modest reduction in coal production, and oil and gas drilling activity at less than half the year-ago level. Dallas reports oil drilling rates are low, but increased slightly at the beginning of June. San Francisco reports copper and silver mine production at 50 percent of capacity. Inventories Many firms have reduced their inventories to desired levels, but there are widespread reports of continued liquidation, and few reports of plans to build inventories. Most Districts report retail inventories are at desired levels but some suggest inventories are still on the high side. Retailers are reported to be extremely cautious about building inventories. Cleveland reports that liquidation of inventories of consumer goods and some industrial products ""has probably run its course"" but further liquidation of inventories is likely in primary metals and capital goods. Other Districts generally report significant proportions of manufacturers still planning further reduction of inventories. Richmond reports nearly one-third of manufacturers still view inventories as excessive, and Boston reports many manufacturers plan to reduce inventories over the next three to six months. Dallas reports many firms have excess inventories, particularly those selling to the petroleum industry. Philadelphia reports the pace of inventory liquidation is tapering off from May's peak rate of reduction. Construction Most Districts that commented on residential construction report very low levels of activity with no indications of improvement. Two exceptions are Dallas, where starts are ""up strongly from April,"" and San Francisco, where homebuilding ""appears to be picking up,"" albeit from a post-World War II low. The outlook for commercial construction is weakening. New York and Chicago report postponements of new projects and Dallas reports a decline in the number of new project announcements. Softening in office rental markets is reported by New York, Atlanta, Chicago, and San Francisco. Agriculture The situation in agriculture is generally gloomy. Grain prices are depressed while input prices continue to rise. Low farm income, high interest rates, and falling land prices make financing difficult. Financial strains are reported by Atlanta, St. Louis, Dallas, and San Francisco. Several Districts report spring planting delayed by wet weather. A bright spot for farmers is livestock prices, reported up by St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Inflation There are some signs that inflation continues to abate. Prices in department stores are reported to be sharply discounted in most Districts. San Francisco reports food supermarket price wars. Commercial property rental markets are soft in some Districts. Chicago reports construction project bids ""10 to 20 percent below estimates,"" and sharp price discounts in building materials and paper prices. Prices for basic metals and grains also are weak. Manufacturers in the Richmond District report declines in prices paid and received in the past month. Chicago reports ""unilateral cuts"" in salaries of nonunion employees and negotiations with unions to adjust compensation and work rules. Philadelphia reports industrial prices stabilized in May and June. However, prices of livestock and crude oil are rising. Financial Conditions Consumer loan demand is generally weak and business loan demand is mixed. Bankers are concerned about delinquencies and loan quality. Little, if any, growth is reported in bank consumer lending. Loans to finance purchases of automobiles are reported to be constrained by usury laws. No strength is reported in real estate lending. Business loan demand is reported strong in some Districts and weak in others. Where strong, it is variously described as distress borrowing and as a substitute for tapping the bond market, but there is little indication of borrowing for plant expansion. Several Districts report bankers are concerned with the quality of existing loans and are very cautious about the quality of new credits. Delinquencies have risen, and San Francisco reports concern about the ""level of nonperforming business loans, particularly to the construction, forest products and aerospace industries."" We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1330 -beige_book_pure_text_pre2000,1982,"Overview District reports suggest that economic activity in most sectors has slowed in recent weeks retracing some of the progress made in late spring and early summer. Manufacturing activity has declined broadly giving rise to new layoffs and plant closings in most Districts. Consumers are widely described as extremely cautious, buying very selectively, and almost totally avoiding any major commitments. As a result of excess capacity and weak orders, many businesses are scaling back or deferring capital spending plans. The construction industry is confronted by continued weakness in the residential area and a recent fading of support from the commercial and industrial sector. Crop prospects are generally quite good, but the resultant prospect of falling prices implies further financial difficulties for farmers. Loan demand is soft with only widely scattered pockets of resurgence. The outlook is very subdued and cautious, although a few Districts discern traces of optimism. Manufacturing There is little in the District reports to suggest any recent improvement in industrial activity. Production, shipments, and orders are generally below the June-July levels and cost cutting measures are being pursued vigorously. Inventories are modest for the most part, but there is widespread determination to trim them further. Layoffs continue to exceed recalls; vacations and plant shutdowns are being extended; and average workweeks are being reduced. Capital spending plans are being scaled back since plant and equipment capacity is far in excess of current needs. Dallas, St. Louis, and Philadelphia report that industrial activity has stabilized. All other Districts but Kansas City report production cut backs that have resulted in layoffs and plant closings. New York, Cleveland, and Chicago cite capital goods industries, in particular, as an example. Cleveland finds major steel producers in great difficulty with inventories high, prices low, orders weak, and capacity utilization at 40-50%. In the Chicago District over half the freight car plants are closed. Only defense related industries, noted by Boston and St. Louis, and some seasonal industries such as food processing, seem to be offering much support to the broad industrial sector. Consumer Spending In the retail sector, consumers are generally described as cautious despite aggressive promotional and discounting programs by retailers. The net effect has apparently been to hold real sales at or near year ago levels. There is virtually no indication of a consumer led recovery being imminent. Dealers are keeping inventories very tight and squeezing profit margins but have been disappointed recently, particularly by the apparent failure of this summer's tax cut and social security benefit increase to boost sales. Retailers have adopted extremely cautious buying plans, hoping that stronger back to school and Christmas spending will materialize, but basically waiting to see before committing heavily. Durable goods still seem to be the most affected, but San Francisco finds even grocery store sales sliding. Only two areas of relative strength appear: tourist trade is doing well in the mountains of Pennsylvania and in the western half of the Minneapolis District; also, Chicago and Kansas City report recent strength in automobile parts and repairs. Construction and Real Estate A very weak but stable residential sector and a stronger but fading commercial and industrial sector sum up the current construction picture. The housing sector is almost uniformly weak, although regional differences do exist. San Francisco reports homebuilding picking up slowly while in the New York and Chicago Districts there is no revival in sight. Mortgage rates have drifted down in some areas, but so far without effect. Commercial construction is generally stronger than residential building, but varies considerably from District to District. Most Districts remarking on commercial building find it slowing somewhat or being sustained only by projects already in progress. Dallas reports a high level of activity, however, and Atlanta notes an upturn in permits in early August. Agriculture With few exceptions District reports on agriculture are bleak. Farmers are generally faced with high and rising production costs and the prospects of falling crop prices. Weather conditions have been good to excellent and forecasts call for bumper crops of grains and soybeans, which along with large inventories and weakening export demand are widely expected to depress prices significantly further as harvests proceed. The livestock sector is somewhat stronger as feed prices continue soft and smaller hog and cattle supplies lend support to meat prices. Continuing deterioration of price to cost ratios is depressing farmland prices and eroding the equity position of many farmers. Minneapolis reports storage facilities already near capacity and Kansas City sees the possibility of a shortage later. Furthermore, Minneapolis and Chicago expect relatively small portions of the corn crop to be eligible for support programs. The implications of these conditions for farmers, lenders, and agribusinesses are, in Chicago's view, ominous. Financial Sector Loan demand is widely described as soft. Businesses have slashed inventories and otherwise cut costs, greatly reducing credit needs. Philadelphia also notes that declining interest rates are attracting some borrowers into the long term debt market, further dampening business loan demand. New real estate loans are very weak, but in some areas outstandings are on the rise due to lower turnover rates of residential properties and a modest increase in second mortgages. Additional financing for ongoing commercial projects is also lending support in some areas. Consumer borrowing is showing few signs of life. In the Third District there has been a mild recovery, but even there outstandings remain slightly below year ago levels. Recent bank difficulties have reportedly prompted a great deal of caution by banks contemplating extensions of credit. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1154 -beige_book_pure_text_pre2000,1982,"Overview The economic retrenchment reported earlier this summer appears to have slowed or stabilized in August and September, but District reports continue to show almost no indications of recovery. Consumer spending remains cautious, and after a disappointing back-to-school season retailers as well are ordering with prudence. Manufacturing activity is widely described as deteriorating: new layoffs are reported; capital spending plans have been further deferred; and inventories in many industries are mounting. Residential construction shows signs of improvement in a few Districts, but commercial building activity is still on the wane. Abundant agricultural supplies threaten to depress many crop prices, thereby reducing net farm income even further despite more favorable conditions for livestock producers. In the financial sector demand for both business and consumer loans in most Districts is characterized as soft, while deposit growth remains sluggish. Most Districts are not optimistic regarding the outlook for recovery in 1982. Retail Sales There is virtually no indication that a consumer-led economic recovery is underway. Back-to-school and total retail sales are generally reported as sluggish or disappointing. Sales of soft goods continue to outperform such consumer durables as household furnishings, and new auto sales remain depressed. Caution seems to be the key trait in the retail sector. Despite slow-rising retail sales, due in part to buyer uncertainty about jobs and still high interest rates, merchants are apparently satisfied with inventory levels. Retailers have been trying to keep a tight rein on inventories and are buying cautiously for the December holiday season and winter. Scattered signs of optimism for faster-growing retail sales later this year include reports from Boston and Philadelphia that a strong post-Thanksgiving selling season is expected and from Kansas City that merchandise cost and profit margins are stabilizing. Chicago, on the other hand, finds orders of goods for the winter season considerably below normal and store closings increasingly frequent; Dallas notes a faster-than-usual deceleration of sales following the back-to-school selling period. Manufacturing With the exceptions of Dallas and New York, most Districts describe a further slowing of industrial activity in September. Production, employment, orders, and shipments are weak, and additional layoffs and shortened workweeks are reported. Cleveland finds that manufacturing activity has yet to trough and the outlook for the steel industry is dismal. Inventories of oil- field equipment continue to climb; Dallas and Atlanta report that petroleum refineries and chemical plants are operating far below capacity. With the exception of defense-oriented industries, orders at most manufacturing firms have contracted further. Defense contracts are shoring up electronics, aerospace, and related manufacturers in Dallas, San Francisco, Atlanta, and St. Louis. Chicago observes that imports, aided by the high value of the dollar, are taking a growing share of the markets for machine tools and farm and construction equipment. Capital spending plans are conservative at best. Low demand for the services of plant location advisors in Atlanta and Chicago suggests little new capital expansion for some time. San Francisco reports scant response to the recent decline in interest rates from corporate investors. Construction and Real Estate Residential construction evidences some signs of improvement in several Districts, but the nonresidential sector continues to decline slowly almost everywhere. The number of building permits issued and of new homes sold has increased in several areas, particularly Dallas and Atlanta. Lower mortgage rates have attracted more buyers to the housing market, but most are waiting to see whether rates continue to fall or stabilize before they purchase. Realtors claim the industry needs a 12-13 percent ""stable"" mortgage rate before activity perks up substantially. Commercial construction is no longer supporting the rest of the construction sector to the extent it did earlier in the recession. In the Cleveland District industrial construction is in a state of ""depression""; only St. Louis reports any improvement in commercial building activity. The market for office space remains soft to weak. Agriculture Substantial stocks, expected large harvests, and weak demand have caused prices of most field crops to fall sharply. In the Minneapolis and Kansas City Districts late plantings and delayed maturation of crops have given rise to fears of frost damage. Large grain harvests in the Midwest threaten to overtax storage capacity. Higher costs and lower prices render increasingly remote the possibility of substantial debt reduction for the farm economy in 1982. Atlanta finds growing indications that farm bankruptcies and liquidations will rise in coming months. Bright spots in the farm economy do exist, however. Hog producers and tobacco farmers are in a position to take profits, and lower feed costs should benefit the entire livestock and poultry sectors. Nonetheless, net income for the farm sector as a whole is likely to be below that of 1981. Financial Conditions Reduced inventories and low utilization rates are keeping business lending soft. Philadelphia, however, notices an increase in such lending and attributes it to distress borrowing. Dallas reports a similar rise but points instead to greater stability as the cause. Other Districts characterize business loans as flat or down. Although isolated, there are reports of increased consumer borrowing in the aftermath of declining interest rates. Kansas City finds improved loan quality as well. San Francisco, in contrast, witnesses a sharp increase in delinquencies and foreclosures. Deposit growth remains sluggish. Atlanta and San Francisco observe little interest in the 7- to 31-day certificates. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1147 -beige_book_pure_text_pre2000,1982,"Overview The economy is still entrenched in the recession, with District reports giving few indications of an imminent recovery. Lower interest rates and a slower rate of economic decline are cause for optimism, particularly in the North East, which has fared better than the rest of the country. Consumer spending, especially auto sales, remains weak in much of the country as consumers are cautious in the face of higher levels of unemployment. Manufacturing, mining and lumber industries are still experiencing widespread layoffs and plant closures, with no increase in orders to signal a recovery; defense-related industry remains strong. Lower mortgage rates are bringing optimism to the housing industry, but construction has yet to increase; commercial construction has turned down in many areas. Low prices, weak demand and bad weather are keeping farm income down, with only livestock producers benefiting from low feed prices. Corporations and households are taking advantage of the recent drop in rates to restructure their balance sheets rather than buying new capital equipment or homes. Many fear that a rise in interest rates will stall any recovery next year. Retail Sales Retail sales, especially sales of durables, remain weak throughout the country, and are being sustained in many areas only by promotional activity and aggressive pricing. Inventories, however, are now at acceptable levels. Retailers are optimistic about the holiday season in most Districts, but weak October sales are keeping some retailers cautious. In the North East and the St. Louis District, recent advances in retail sales are seen as encouraging. Auto sales, however, are still depressed, especially in the Atlanta District, where many dealers are failing. Lower interest rates are generating some optimism among dealers, but high prices and high unemployment continue to deter buyers. Despite the declines in interest rates, consumer lending has not increased significantly. Manufacturing and Mining Though the view that the economy has hit bottom is widely expressed, signs of an imminent recovery remain scarce. Many of the Districts report further layoffs and plant closures, with expectations of more of the same, albeit at a slower pace. In the Chicago and Cleveland Districts, the capital goods industry is particularly distressed, with no upturn in new orders to signal a recovery. Low sales and imports continue to plague the auto and steel industries, and are now affecting truck manufacturers. Mining is down everywhere, and the lumber industry continues to experience very low demand, leading to further mill closures. Recent increases in drilling activity are attributed to tax motives, not to a recovery in the oil and gas industry. With widespread excess capacity, weak prices and pared inventories, some believe the conditions are now ripe for recovery. Others, however, are afraid that higher interest rates next year will continue to curtail economic activity and prolong the recession. There appears to be more economic strength in the North East than elsewhere, with the Boston, New York and Philadelphia Districts reporting strength in the business of their defense contractors, high technology manufacturers, finance and other service companies. Though some weakening in the high technology industry is evident there and in other Districts, defense-related business is expanding everywhere. One positive sign is the pervasive weakening of prices, which indicates continued low levels of inflation. It remains to be seen whether the moderating decline of business activity is indeed a precursor of the long-expected recovery. Construction and Real Estate Lower mortgage rates have returned some life to the housing industry, with real estate agents, builders and lenders all reporting an increase in home-buyers' inquiries. Only in the Atlanta and Dallas Districts, however, is the improvement being translated into an increase in permits and construction. Elsewhere, the housing industry remains on hold till rates stabilize at this lower level and spring comes. Commercial construction is weakening, as there are few new projects to replace completed or canceled projects. Excess office space in the San Francisco District is expected to slow the construction of office buildings. while many Districts report cutbacks in plans for commercial construction, demand for construction loans is up in the Kansas City District, and commercial construction improved in the St. Louis District in October. Agriculture Agricultural income continues to suffer from large stocks, weak domestic demand, poor export demand and bumper crops. Bad weather has caused problems in the San Francisco and Minneapolis Districts. Prices of many crops—such as cotton—are well below last year's. Cattle, hog, dairy and poultry producers are doing better because of lower feed costs. Low farm income is threatening some farmers with the loss of their farms, but widespread foreclosures are not expected. Values of farm land continue to fall. Lower interest rates will bring relief, but only in the future. Financial Conditions The recent drop in interest rates has spurred a restructuring of corporate balance sheets. In the Minneapolis and Philadelphia Districts, for example, many firms have issued new equities and long-term debt to replace bank loans. Mortgage borrowers are also restructuring their debt, particularly in the San Francisco District where creative financing and balloon payment loans have created large demands for refinancing. Despite the length of this recession, delinquencies, foreclosures and problem loans do not appear to be causing unmanageable difficulties for most financial institutions. Depository institutions appear to be retaining a large proportion of the funds that were in all savers certificates, and some deposit gains have come from new types of accounts. Most institutions are preparing to offer the new money market account, but express concern about the likely increase in their cost of funds. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1176 -beige_book_pure_text_pre2000,1982,"Overview Economic activity in most Districts showed some signs of improvement except in the manufacturing sector. Weakness in manufacturing remained pervasive with some further layoffs reported and, for the most part, little or no upturn in new orders. Consumer spending strengthened in November but several Districts noted sluggish early-December sales. Housing sales and starts registered gains in most regions although the oversupply of office space kept nonresidential construction generally slow. In several agricultural areas a further decline in farm income and land values overshadowed the few bright spots that appeared. Commercial bank lending was essentially flat in most reporting Districts. The general outlook ranges from a slight upturn during the next six months to little pickup until late 1983. Consumer Spending Since the last report, consumer expenditures posted some gains on both a month-to-month and year-over-year basis, helped in part by promotional activity. Nonetheless, no real exuberance was displayed. Auto sales picked up in several areas in response to lower finance charges but these lower rates are scheduled to end soon. With regard to the overall outlook for retail sales during the holiday season, the most optimistic report was from Boston (""solid but unspectacular""). Several Districts experienced good consumer buying immediately after Thanksgiving but sluggish sales thereafter. One factor cited was the trend in recent years of a shift in sales to the end of the holiday season. Inventories were generally in line though one District reported that inventories overall were high. The San Francisco and Atlanta Banks noted relatively strong tourist demand at areas in Hawaii, Oregon and Florida. Manufacturing and Mining Activity The manufacturing and mining sectors continued to languish throughout the nation. Although a few Districts observed scattered signs of improvement, most reported that shipments and new orders remained stagnant or declined further in a broad range of industries. San Francisco, Minneapolis, and Chicago reported that timber mills, iron mines, and producers of steel, industrial equipment, and castings were operating at half capacity or less. In Cleveland, manufacturers of steel mill and other industrial equipment were hurt by the cancellation of customers capital expansion plans. Boston and New York expressed some concern for future bankruptcies in manufacturing if sales did not turn up soon. Even the business of high technology firms slackened in some areas. In many industries, widespread cost-cutting measures continued, including layoffs, shorter workweeks, and longer-than-usual Christmas shutdowns. Despite the pervasive sense of sluggishness, however, a few bright spots emerged. In Richmond, sales of textile firms increased significantly, and in St. Louis, food processors noted a slight improvement. Several Districts indicated that suppliers of building materials and selected home furnishings were beginning to feel a pickup from the increased activity in the residential construction sector. Defense contractors were still doing well. Construction and Real Estate The housing market improved in many parts of the country. A few Districts even experienced substantial gains. St. Louis, for example, reported that new home sales were greater this November than in any other November in recent years. In Kansas City, increased activity reduced new home inventories to an all-time low, and led to a significant increase in housing starts. These improvements in the residential real estate market were largely attributed to the decline in interest rates and to stable or lower home prices. The office market, however, continued weak in most areas of the country due to a glut of existing office space from overbuilding and decreased demand. Chicago and San Francisco were especially hard hit, whereas New York and Richmond reported modest strengthening in some areas of their Districts. These latter two Districts, along with Dallas, also noted a slight pick-up in industrial construction activity. Agriculture In general the agricultural sector continued to experience low net income resulting from depressed prices and little or no decline in overall costs. Grain, corn, and soybean farmers saw only a small chance of profit from the 1982 crops and Dallas beef producers were preparing cattle for slaughter rather than for breeding because of unfavorable economic conditions. Some farmers, however, were doing well. For example, prices were up and the cost of feed held steady or declined for Minneapolis and St. Louis hog producers, and good crop yields were expected to bring a profitable year for Atlanta cotton growers. The downtrend in the price of farmland continued in areas such as the Richmond District where, in addition, farm business failures were still above normal. In the Northwest the timber industry remained depressed due to low domestic and foreign demand. Finance Commercial bank lending was essentially flat in most reporting districts. In Minneapolis and Philadelphia corporate lending was down as businesses turned to the bond market, but consumer borrowing strengthened. In Kansas City, however, the reverse occurred: corporate loans increased while consumer loans were flat. Deposit flows improved somewhat at most commercial banks and at some thrift institutions. Outlook In many Districts, a number of signs pointed to somewhat brighter prospects for consumer spending and construction. Retailers were cautiously optimistic that recent gains would continue into the new year. While the outlook for commercial construction remained weak, homebuilders were hopeful that their modest pickup would accelerate. As for manufacturing, there was no consensus on how soon the advances in retail and construction activity would result in increased production. Several Districts did note that orders of a few firms were beginning to improve. But manufacturers in many Districts saw little chance of a general upturn before the second half of 1983 or even early 1984, and many have turned more pessimistic because the recovery has been so slow in coming. Inventories in manufacturing are lean in most regions and when business activity does turn up, production should rise quickly to meet the higher demand. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1226 -beige_book_pure_text_pre2000,1983,"Outlook and Overview The outlook seems considerably brighter compared to the December Redbook. Most Districts report definite signs of improvement in economic activity, or at least judge that improvement is imminent. Least optimistic are Richmond and Dallas (both reported ""little change"" recently), Cleveland (""the bottom may be near"") and Kansas City (""recovery to get underway during the second or third quarter""). Retail sales (ex-autos) are brisk and expected to remain strong in most Districts. Sales of domestic automobiles, especially large models, are improved. Manufacturing activity is mixed, with improved orders from the automotive, electronics and housing sectors, while only the business equipment sector continues to decline. Inventories appear to have fallen to desired levels in most sectors. While further declines are more likely than increases, there is no indication that declines would be sharp. Residential construction continues to improve as sales of new and pre-owned homes have been boosted by mortgage interest rate declines. Agriculture remains a weak spot with farm income down and many farmers in financial difficulty. Bank lending activity is generally flat; business loans are expected to stay flat while consumer loans are expected to improve. Consumer Spending Retail sales (ex-autos) in most Districts are brisk and are expected to remain strong. January department store sales were especially good in Philadelphia (""off to a flying start"") and in Cleveland (""a fundamental upswing in demand""). Exceptions were Kansas City, Dallas, and San Francisco, where either sales showed less strength or retailers were cautious about the outlook. Sales of non-auto consumer durables were generally weak except in Atlanta, where they have been spurred by a resurgence in housing. Some Districts report retail sales have benefited from unseasonally warm weather, but Chicago reports warm weather has hurt apparel sales. Automobile sales, especially of large domestic models, are improved in most Districts. Dallas reports sales of imported cars remain low. Atlanta notes that sales have been assisted by exceptionally low financing rates (""5.9-6.9 percent and even as low as 2.9 percent""). Manufacturing and Mining Activity Industrial activity is mixed, suggesting that a trough may have been reached. Most Districts report orders and activity up at some firms but down at others. Orders have improved for automobiles and trucks, defense and consumer electronics, and products to construct and furnish new houses. Some improvement in orders for steel are reported but steel plant shutdowns continue to be announced. Mining continues very weak, with additional mine shutdowns reported. Business equipment manufacturing is probably the weakest sector, with additional declines in sales and production expected for 1983. Inventories Inventories seem to have fallen to desired levels in most sectors, but declines remain more likely than increases. Retail inventories are lean and at desired levels almost everywhere but there is little sentiment for increasing them. Some manufacturers continued to cut inventories in January while others had already reached their desired inventory levels. Few manufacturers plan to build inventories, even those with rising orders. Inventories of oil drilling supplies remain excessive, and Richmond reports many manufacturers' inventories are well above desired levels. Construction and Real Estate Residential construction continues to improve. Most Districts report sales of new and pre-owned homes have been spurred by declines in mortgage interest rates, and permit issuance and housing starts have increased. Exceptions are Southern California, where the unsold inventory is still large; Philadelphia, where ""housing starts remain stalled and new home prices continue to drop;"" and Richmond, where the pace of the housing recovery has moderated in recent weeks. Chicago reports house construction has benefited from unusually mild weather. There are scattered reports of improvement in non-residential construction, but Chicago expects a downturn. Agriculture Farmers continue under pressure. Farm income has fallen in several Districts and farmers are reported having difficulty repaying loans. Chicago reports agricultural land prices 20 percent below their late-1970s peak. The payment-in-kind or crop-swap program is expected to achieve a high farmer participation rate in several Districts, reducing production expenses in 1983 and increasing crop prices in 1984. Suppliers of seeds, fertilizer, pesticides, and fuel are expected to be hurt by the program. Finance Bank lending activity is mixed. Several Districts describe business loan demand as relatively flat, with little growth expected in the next few months. Consumer loan demand, commented on by only three Districts, is flat or up slightly, with near-term growth expected as consumer optimism improves. Minneapolis reports demand for new agricultural credit is low but demand for farm debt refinancing is greater than normal. Demand for mortgage loans is reported up in a few Districts, and the 30-year fixed rate loan is the most popular. Conventional mortgage rates edged up in January in Atlanta. The new deposit accounts differ sharply in popularity. The money market deposit account (MMDA) has been marketed aggressively and has achieved rapid growth. Atlanta reports very little attrition from these accounts following expiration of bonus interest rates. Estimates of the share of MMDA deposits that are ""new: money"" to the institution range from 15 to 60 percent. Public response to the Super NOW account seems to be uniformly unenthusiastic. Kansas City attributes the apathetic response to weak promotion, consumer confusion, and MMDA competitive superiority because of higher yields and lower service charges. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1153 -beige_book_pure_text_pre2000,1983,"Overview District reports are nearly uniform in the suggestion that an economic recovery began shortly after the first of the year. In most areas the recovery is being led, in many cases exclusively, by personal consumption expenditures and residential real estate sales and construction. Automobile sales are generally improved relative to year earlier levels, but are not consistently sustaining the levels reached in January of this year. The manufacturing sector remains spotty. Housing and auto related industries are improving. Capital goods, on the other hand, remain severely depressed in most areas. Inventories are generally characterized as light to moderate but there is no clear pattern of intentions with respect to changes over the near term. Despite the improvement in business activity the employment picture seems to have improved little, if at all. Banks and thrifts continued to experience strong deposit inflows, primarily into MMDAs. Loan activity is essentially flat with modest gains in real estate and consumer lending about offsetting declines in business loans. The Manufacturing Sector Manufacturing activity is mixed both nationally and in most districts. Generally speaking, consumer, automobile, and housing related industries are showing marked signs of recovery. Building materials, in particular, are buoyant and upward pressures on their prices are developing. Minneapolis, Dallas, and San Francisco all indicated that their lumber and forest products industries are strengthening. Chicago reports some gypsum plants operating six days a week with output above rated capacity. In the Boston District, housing activity is boosting production of roofing materials, building parts, wiring, electrical devices, and appliances. In the Philadelphia and Richmond Districts the strength in manufacturing activity is more broadly based. New orders and shipments have zoomed according to Philadelphia, while in Richmond's area there has been broad improvement in shipments, orders, and order backlogs. In other areas developments are less encouraging. Cleveland notes little change on balance, although steel orders are responding to increased auto production. Mills are operating at 50 percent of capacity as compared to 30 percent some months ago, and the price of scrap is up sharply. Industrial production remains depressed in the St. Louis District where several large plant closings are reported. Energy related industries also remain weak, and in Chicago's words, ""machine tool order backlogs have evaporated."" Consumer Spending Consumer spending appears to be strengthening on balance, but the improvement is spotty, both across districts and across the various segments of the retail sector. The relatively robust sales of January have moderated, in some areas because of extreme weather conditions. The composition of sales also varies from district to district. Soft goods, particularly apparel, seem to be doing well generally. Activity in durable goods is less consistent. Only Richmond, Atlanta, Dallas, and San Francisco specifically note strength in big ticket items. New York, on the other hand, reports that big ticket items remain weak. Retailers' inventories are modest to trim over all, but there appears to be no widespread tendency or intention to add to them. Atlanta sees stocks at department stores on the rise, responding to brisk sales. Boston characterizes inventories as high but satisfactory. New car sales, although up from recent levels, are still below expectations. Nonetheless, they are sufficient to have fostered some optimism and have encouraged production among suppliers, with the notable exception of tire manufacturers. Construction and Real Estate The most consistent and widespread source of strength is the residential real estate sector. Sales of existing houses are up sharply in most areas. Construction of new structures is beginning to follow, and information on applications for and issuance of building permits suggests further progress in coming months. In the Minneapolis metropolitan area, home sales for the first two months of 1983 were up 34% from a year earlier, while in the San Francisco District housing starts are running at twice the level of the comparable period in 1982. Kansas City describes the situation there as a boom in housing starts. Commercial and industrial construction, however, is pervasively weak and, in many areas, is slowing. Only St. Louis specifically notes any strength in non-residential construction. Banking and Finance There has been little tendency to date for loan demand to respond to the gains in economic activity. Modest and scattered strength in real estate and consumer lending is offset by continued weakness in business lending. Even consumer lending by banks and thrifts does not appear to have matched the gains in consumption expenditures. It is conjectured that captive finance companies may be handling some of the new car financing. The low level of business lending is attributed to sounder financial positions rather than to reduced business activity. Banks and thrifts are continuing to experience heavy inflows of funds into MMDAs. Kansas City suggests that other classes of deposits are actually declining, but that MMDA growth is so strong that it is holding the growth of total deposits up. There are indications from several areas that institutions are coming under increased pressure to find outlets for these new funds and are therefore becoming somewhat more aggressive in marketing loans, especially in the retail lines. Agriculture Despite some improvement, the farm sector remains troubled. Production costs are moderating and land prices have stabilized. Winter wheat conditions are good in the Kansas City District, where a mild winter and higher prices are also helping livestock producers. Bad weather has caused heavy crop losses and delays in planting in the western part of the country and is expected to lead to price increases later in the spring. Heavy participation is generally expected in the PIK program, which will result in reduced acreage in some crops and areas. The Outlook The outlook is generally positive. The failure of activity to match January levels is considered transitory. Many industries still languishing are expected to feel the upswing before long. There is little optimism regarding the capital goods industries, however. Further, there is little expectation of significant gains in the employment over the near term. There is some scattered concern over the potential for higher inflation rates. Recent rises in non-petroleum industrial prices are seen as ominous in some quarters. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1295 -beige_book_pure_text_pre2000,1983,We serve the public by pursuing a growing economy and stable financial system that work for all of us.,20 -beige_book_pure_text_pre2000,1983,"Preface This edition of Redbook contains a special section. In addition to preparing their regular reports on general economic conditions, District Bank staffs assembled and summarized additional information on conditions in their regional construction industries. The construction industry was selected for special attention because it appears to be playing an especially important role in the current economic recovery and because analysts have been concerned about the sustainability of the first quarter's marked pickup in housing starts. District Bank contributions were assembled at the Federal Reserve Bank of New York, where a summary was prepared. That summary appears as an appendix to this Redbook. Summary District reports suggest that the recovery is gaining momentum. Consumer spending has strengthened further across the nation. Manufacturing activity is generally on the upswing, although weakness persists in some industries, capital goods for example. Lending activity is mixed, with mortgage loans showing a widespread increase and commercial loans sluggish. Agricultural conditions vary considerably; bad weather continues to plague farmers and there is no consensus on how much the payment-in-kind (PIK) program will help them. As more signs of recovery have emerged, businessmen have gained confidence that economic activity will continue to pick up through the rest of the year. Consumer Spending The recovery in consumer spending intensified in recent weeks, expanding both geographically and across product lines. All Districts reported continued or growing strength, except for Kansas City, where gains over 1982 were smaller than at last report. Boston reported the largest sales growth, more than 10 percent above 1982. Apparel and electronics continued to move well in most Districts. Many also noted increases in sales of furniture and other home durables, which some attributed to the recent strength in housing demand. Automobile sales strengthened in seven Districts. Retail inventories generally remained lean, but there were some signs of expansion in Atlanta, New York, Philadelphia, and Richmond. Optimism for future sales growth is widespread; only Atlanta reported expectations of weakening, and only for the short term. Manufacturing and Mining Activity District Banks reported that recovery in the manufacturing sector advanced broadly, but areas of weakness remained. Substantial increases in orders have led to backlogs and longer delivery times in many regions, and production has been stepped up accordingly. Average workweeks have been growing, and a majority of Districts indicated that employment was moving up as well, albeit slowly in many cases. Boston, Richmond, and St. Louis reported broad-based improvements affecting a wide variety of industries such as inks, castings, textiles, and furniture. In other Districts however, strength was narrower. In Atlanta, the signs were uneven, with revival in lumber and phosphates countered by continued slack in textiles and petrochemicals. The pickup in San Francisco was confined to housing-related and defense sectors, with many others still reducing production and employment. And Minneapolis reported that the pace of improvement slackened in all but paper and building input industries. Capital goods and mining remained dark spots. Producers of machine tools and other business equipment have seen no turnaround and future prospects are uncertain. Chicago was concerned that few capital projects were being planned, and St. Louis and Cleveland also foresaw no improvement in the next few months. However, Boston and Philadelphia noted that businesses were at least beginning to express some interest in capital projects. Mining also remained depressed, with low energy prices hurting coal mine operators in the Midwest and Far West. Finance Loan activity remained mixed in almost all Districts. Commercial and industrial borrowing continued to be weak across the country; only St. Louis reported an increase in volume. Demand for consumer loans was somewhat stronger, growing in St. Louis, Richmond, Philadelphia, and Cleveland. Mortgage lending continued to pick up throughout most of the nation. On the deposit side, funds continued to flow into MMDA and Super NOW accounts. The inflows appeared to be moderating in a few Districts though. Banks are reported using these accounts primarily to fund short-term or adjustable rate loans, and are selling off fixed rate mortgages in the secondary market. Agriculture Agricultural conditions varied among Districts in recent weeks. Unusually wet and cool weather continued in many parts of the country. As a result, planting of corn is behind schedule in a number of areas. Farmers in California face additional losses due to delays in plantings of important crops such as lettuce, tomatoes and onions. In Atlanta, however, recent improvement in the weather allowed farmers to make up much of their planting. In addition, Kansas farmers are expected to harvest the second largest wheat crop ever. There was no consensus on the effects of the PIK program. Dallas, St. Louis, and Minneapolis expected the resulting crop reductions to improve the incomes of grain farmers. However, Atlanta noted the program was disrupting the poultry industry by pushing up feed prices. Some agricultural suppliers were aided by the increased spending associated with higher farm incomes, but others were hurt by the removal of land from cultivation. Outlook The emergence of more signs of recovery has engendered a climate of optimism. Businessmen in many Districts are now confident that strong consumer spending and residential construction will spur increases in demand through the rest of the year. Accordingly, they expect manufacturers to continue expanding output and employment. However, in Boston, New York, and Minneapolis, there still is concern that the recovery will be weaker than usual. And Chicago reports that much of the ground lost during the recession will not soon be regained in the Midwest. On the inflation front, the evidence is encouraging. While prices are beginning to edge up, economists do not foresee a significant acceleration of inflation over the next year. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1213 -beige_book_pure_text_pre2000,1983,"Overview Economic conditions are improving. Reports of solid increases in retail sales are widespread; hard goods such as appliances and home furnishings are moving particularly well. In manufacturing, orders and shipments have increased for consumer products and for the materials and parts used to fabricate these products. Demand is also strong for construction materials. However, most capital goods industries are still waiting for the recovery. Housing sales and construction remain vigorous, but in some areas the pace has slowed from that set earlier in the year. Financial institutions continue to experience deposit growth; inflows to MMDAs have slowed but are still substantial. Loan demand remains sluggish. Retailing Retail sales are up in almost all Districts, with Boston, Philadelphia and San Francisco reporting year over year increases in double digits. Sales of appliances, furniture and other hard goods are generally stronger than sales of nondurables, although apparel is selling well in a few areas. Auto sales have picked up; bigger cars are in the greatest demand. Low interest rate programs are an important stimulus to car sales according to Dallas and San Francisco. Retailers are optimistic about prospects for the rest of the year. Inventories have increased, but for the most part are considered satisfactory. Manufacturing and Mining Manufacturing orders and shipments are increasing. The demand for lumber, gypsum and other building materials is especially strong. Atlanta reports that cement plants and lumber mills expect to operate near capacity in the next few months and Chicago finds gypsum board plants already at full capacity. Production of consumer products and inputs to consumer products has also strengthened. The improved outlook for auto sales is having a broad impact, with Boston, New York, Cleveland, Chicago, Minneapolis and San Francisco reporting increases in a variety of auto-related products. Defense is another source of strength in the St. Louis and San Francisco Districts, high technology products in New York and Dallas. The major area of weakness is the capital goods industries; Boston, New York, Cleveland, St. Louis and San Francisco all note that these industries have seen little evidence so far of a recovery. An important exception is Chicago which reports an upturn in capital goods production, mostly for replacements rather than expansions. Both Chicago and Boston note that the high value of the dollar is discouraging exports. The increases in manufacturing activity have been achieved largely through increases in the workweek, but the Philadelphia, Cleveland, Richmond, Atlanta, Chicago and San Francisco Districts have also experienced increases in manufacturing employment. Manufacturing inventories have fallen recently, according to Cleveland and Chicago. A large part of the decline observed by Chicago was involuntary, with sales exceeding expectations; rebuilding is now underway. Richmond and St. Louis find that a majority of firms are satisfied with current inventory levels. Decreases in drilling costs have stimulated oil and gas exploration in the Minneapolis and Dallas Districts. Metals mining in the Minneapolis District remains depressed. Construction and Real Estate Housing sales and construction remain vigorous, well above 1982 levels; but Philadelphia, St. Louis and Cleveland report that the pace has slowed from that set earlier this year. Demand has shifted towards smaller less costly homes according to New York and San Francisco and to more expensive homes according to Cleveland and Atlanta. Realtors in several districts expressed concern about the effects of rising mortgage rates; however, Atlanta and Chicago speculate that the small rate increases so far may have spurred sales, as potential buyers sought to lock-in current low rates. Boston and Chicago note that buyers continue to show a strong preference for fixed rather than adjustable rate mortgages. Those districts commenting on nonresidential building activity generally see a lot of work in progress but few new projects. An exception is San Francisco which reports that although construction activity is below year ago levels, nonresidential building permits are increasing. Banking and Finance Deposits continue to grow at financial institutions in all districts reporting on this subject. Inflows to MMDAs account for a large part of the deposit growth, but Philadelphia, Cleveland, Atlanta and San Francisco note that the growth in MMDAs has slowed. Loan demand remains sluggish, with only Philadelphia, Atlanta and Minneapolis reporting substantial growth overall. Commercial and industrial loan demand is especially weak. Faced with a shortage of attractive loan applications, financial institutions in the Dallas and San Francisco Districts are increasing their holdings of securities. Agriculture Cold and wet weather delayed plantings in most Districts. Crop development is back to or close to normal in the New York, St. Louis and San Francisco Districts, but still behind schedule in Chicago and Minneapolis. Kansas City notes that while plantings of row crops were delayed, the wet weather has produced an excellent wheat crop and good range conditions. The PIK (Payment-in-Kind) program is seen as having a positive effect on the incomes of wheat, corn and cotton farmers, but Atlanta warns that livestock farmers and agricultural suppliers will be adversely affected. Chicago and Minneapolis see abundant world supplies and weak export demand putting downward pressure on agricultural prices. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1078 -beige_book_pure_text_pre2000,1983,"Introduction All districts reported that economic conditions continued favorable in July. Atlanta, Kansas City. New York, and San Francisco noted a further ""quickening"" or ""acceleration"" in the expansion. Job markets continue to improve, but at a disappointing pace in much of the Midwest. All districts emphasized strength in retail sales, especially big ticket items. Price inflation continues moderate. Capital expenditures by business continue to lag the consumer sector. Inventories remain lean and businesses are cautious about restocking. Virtually all goods are in ample supply. Manufacturing output is rising gradually, except for most heavy capital goods. Higher mortgage rates threaten the upswing in housing, but momentum in new construction is still strong in most regions. Nonresidential construction is relatively weak because of overbuilding of office space, but several districts note signs of improvement. Hot, dry weather has seriously damaged corn, soybean and other crops. Business loan demand continues very slow, while consumer credit is relatively strong. Boston, Chicago, and Richmond expressed concern over increased foreign competition related to the high value of the dollar. Industrial Output Further increases in factory output, shipments, orders, and backlogs were widespread. Atlanta, Dallas, New York, Philadelphia, and Richmond emphasize the breadth of the recovery including building materials, textiles, apparel, chemicals, electronics and other sectors. Boston, New York, and St. Louis report further gains in defense procurement. Cleveland points to a contrast, strength in aluminum accompanied by continued sluggishness in steel. Minneapolis mentions depressed iron ore mining and Dallas the much reduced rate of oil and gas development. Employment Although job markets have strengthened in most regions unemployment remains generally high. Rehiring of laid-off workers is cautious. Despite relatively low jobless rates, Boston says employment figures show ""no recovery."" Chicago reports substantial worker recalls in motor vehicles, but not in capital goods. New York reports shortages of skilled workers in residential construction. Cleveland notes rising employment but no improvement in unemployment. Consumer Purchases Retail sales and other consumer outlays have been excellent. New York, Philadelphia, and San Francisco report merchants to be highly enthusiastic. Large autos, compact trucks, recreational vehicles, furniture, and appliances are selling especially well. Air conditioners and summer apparel benefited from the heat wave. Consumers are using credit more freely and delinquency rates are low. Dallas notes weakness in sales near the Mexican border associated with the weak peso. Several districts commented on strong tourist business. Housing Residential construction continued high relative to a year earlier. But higher mortgage rates since May have reduced home purchases. Realtors have lowered their expectations for the year. The backlog of contracts already signed will keep many builders busy throughout year-end. Demand for adjustable rate mortgages has held up better than for fixed rate financing. Nonresidential Construction Some improvement in office building or leasing activity was reported by New York and Atlanta. San Francisco expects increased commercial construction activity in coming months despite high vacancy rates. Cleveland and Dallas reported substantial excess office and suburban shopping center space, with sizable incentives offered to secure tenants. Significantly increased highway building is expected in the second half of this year. Capital Expenditures In general, business capital expenditures are not as vigorous as consumer buying. Electronic type equipment is doing much better than mechanical equipment. Chicago reports little improvement in producer equipment from the ""abysmal"" levels of the recession. Richmond sees emphasis on modernization and replacement. Dallas reports a slight improvement in oil and gas well drilling, which had dropped sharply last year. San Francisco notes a recent rise in orders for commercial aircraft. Minneapolis reports computer sales ""unexpectedly strong."" Business Inventories Retailers and manufacturers report inventories to be lean but adequate. Inventory investment policies are described as ""conservative"" or ""cautious"" in most districts, but New York reports some rebuilding by retailers. Additional merchandise is generally available when needed, prices are expected to remain relatively stable, and carrying costs continue high. All these factors encourage business to keep inventories low relative to activity. Agriculture Several districts noted the adverse impact of hot, dry weather on growing crops. Corn, soybean, cotton, alfalfa, tobacco, and vegetable yields have been seriously affected and further damage is possible if moisture conditions do not improve. The reduction in supply caused by the drought reinforces the large acreage cuts associated with PIK and other government programs. On the bright side, Kansas City reports a record winter wheat crop harvested before the drought struck. Also, San Francisco reports improved supplies of fresh fruits and vegetables following the losses caused by wet weather earlier in the year. Financial Business loan demand at banks generally has remained sluggish. Balance sheets have strengthened as cash flow has increased, inventories have been reduced, and short-term debt has been refinanced. Consumer and mortgage borrowing have been growing, but higher mortgage rates are expected to dampen demand for real estate loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1063 -beige_book_pure_text_pre2000,1983,"Overview The economic expansion continued through August and the early part of September in all 12 Federal Reserve districts. Retail sales continued to be strong, and both factory orders and production rose. The level of employment has increased, and the rate of unemployment has fallen from its peak in the early part of this year. Manufacturing output is increasing at a slow pace relative to most other sectors of the economy. The demand for heavy capital equipment, which had been particularly sluggish, is showing signs of improvement. Auto sales continue to be brisk and would have been even stronger were it not for short inventories of larger domestic and Japanese models. Housing sales have declined recently throughout the nation, and the hot dry weather that has persisted over much of the Midwest has severely damaged many crops. Retail Sales Consumer products have been setting well for some time now. Chicago and St. Louis report that demand has been particularly strong in the areas of autos, furniture, appliances and floor coverings. Boston reported smaller-than-expected sales increases in July and August. However, retailers expect a return to the levels established earlier in the year, and merchants generally expect the Christmas season to be particularly good. Manufacturing On the whole, moderate increases in manufacturing production have continued. Dallas reports unusually large orders during July and August. Backlogs of orders have developed at electronics firms which have been producing at near capacity. Minneapolis, San Francisco and Boston report increased orders at high technology and electronic companies. Sales of heavy capital equipment, on the other hand, continue to be sluggish. Many plants in the Chicago District remain closed or are operating at less than 50 percent capacity. However, the manufacture of tandem trailers, permitted under the new federal law, has been particularly strong. Employment Employment in most districts is responding to the turnaround in economic activity. Dallas indicates that job growth has been particularly strong in durable goods manufacturing and primary metals. New claims for unemployment compensation are down sharply in the Chicago District, and St. Louis notes that many construction, manufacturing and service firms expanded their work forces during August. Employment has increased modestly in the Boston District, with job opportunities in the professional and technical areas particularly strong. Construction and Real Estate Housing starts, construction and the sales of new and older homes were mixed during July and August. San Francisco reports that sales of new homes fell by 14 percent in August, and many respondents expected sales to slow further. Atlanta, Philadelphia, Dallas and Chicago indicate that residential construction slowed in July. In each case, the reductions were attributed to higher interest rates. However, New York, Richmond and Kansas City indicate that construction activity remains an relatively high levels. Construction activity in New York has been so brisk that shortages of supplies and labor have developed. Finance Commercial and industrial loan activity at banks has been soft over much of the nation. Any increases in loan activity have been concentrated in the areas of consumer installment credit and auto loans. San Francisco indicates that these loans have increased at a 12 percent rate over the past three months. Demand for mortgage loans continued at the relatively high levels established earlier in the year. However, a number of districts, indicating that this is a result of previous commitments, report a drop in applications for new mortgage loans. Agriculture The hot and dry weather that has continued over much of the nation has severely damaged the corn and soybean crops. Kansas City and Chicago estimate the yields of these crops to be roughly 50 percent below normal. Crop prices have risen in anticipation of the poor yields. The marketing of livestock has increased due to higher feed cost and poor pasture conditions, and the price of livestock has fallen as a result. San Francisco reports that unseasonable rains in Southern California have damaged a number of crops. However, farm income in this District is expected to be relatively high this year due to the combined effects of the drought experienced in the rest of the nation and large PIK transfers. Tourism The tourist trade continued to be strong in July and August this is expected to continue into the early fall. Occupancy rates at hotels and motels in the St. Louis, Atlanta and Minneapolis districts were generally higher than year-ago levels. Respondents attribute the brisk trade to lower room rates, discounted airfares, and reduced gasoline prices. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",925 -beige_book_pure_text_pre2000,1983,"Overview Economic expansion continued through the early fall in all Federal Reserve districts. Generally increasing strength is reported in retail sales, as consumer confidence improves along with income and employment. Retailers in most districts are anticipating excellent Christmas season sales. Manufacturing activity is growing at a moderate pace, but only limited improvement is reported for capital goods industries. House sales are generally reported to weaker. Crop production was restricted by drought and acreage reductions, but farm income is being supported by higher prices and federal farm programs. Nearly all districts report increasing bank loan demand, while reports on deposit growth are mixed. Consumer Spending Continuing and generally increasing strength in retail sales is reported in all 12 Federal Reserve districts. Some districts, such as Cleveland and Kansas City, mentioned the widespread or broad- based nature of sales increases. Many other districts noted that sales were especially good for apparel, and for home furnishings and other household items. New automobile sales were also reported as a source of strength in consumer spending. In addition to growth in income and employment, most-often-mentioned sources of the strength in consumption were a turn to more favorable weather conditions and a significant improvement in consumer confidence. While Philadelphia and St. Louis reported heavy promotional activities by retailers, Atlanta noted a strong rise in sales with negligible sales promotions. Retailers in most districts appear optimistic about sales in the fourth quarter, and are reported to anticipate excellent Christmas season sales. Retail inventories described as generally satisfactory to a little high, are apparently not regarded as troublesome in the light of sales expectations. Chicago notes, however, that some retail inventories are tight enough to lead to sales losses if the Christmas season is as strong as expected. Industrial Sector Overall manufacturing activity continues to grow at a moderate pace according to most district reports. Gains in production and orders are generally reflected in reports of increases in employment and length of work week, though Boston reports a cautious recalling of production workers only and San Francisco notes weak manufacturing employment growth in its district. Manufacturers' inventories are generally reported as stable to accumulating somewhat, and appear to be generally regarded as satisfactory. Prices in the manufacturing sector are reported as ranging from stable to increasing moderately. Cleveland and Chicago note that steel orders are continuing to rise, but emphasize differences among types of steel products. Cleveland notes the most improvement in demand for flat-rolled steal, while Chicago reports demand concentrated in lighter products with plates and structurals very slow. Cleveland notes some increased demand for steel from capital goods producers. Both Chicago and Cleveland report only limited improvement in their districts' capital goods industries. Construction Although there maybe mixed results within a given district, residential construction activity is reported by most districts as down from earlier this year. Clear expectations are New York, which reports ""Homebuilders have been quite busy and expect to remain so over the next few months,"" and St. Louis, which notes that ""construction of homes...continued at a rapid pace."" House sales are generally reported to be down, except in the Atlanta district where a recent revival is attributed to the increasing popularity of adjustable rate mortgages. In the Chicago district, however, variable rate mortgages are reported to be ""shunned by most home buyers."" Several districts report increases in nonresidential construction activity, and New York notes that some state governments in its area have authorized increased spending on infrastructure restoration. Agriculture Drought and reduced acreage cut crop production in a number of districts, but farm income is being supported by higher product prices and federal farm programs. Results varied according to geographical area and type of farm enterprise. For example, Minneapolis reports a good year for soybean farmers in its district, while Atlanta notes that producers of peanuts and tobacco—not covered by the PIK program—sustained heavy income losses because of the drought. Livestock farmers and ranchers are feeling the impact of high feed costs and low livestock prices. Meat prices may fall in the short run due to increased marketings, but are expected to rise again next year. Financial Developments Nearly all districts reported increasing bank loan demand, although Atlanta noted slower recent loan activity following ""healthy"" growth last summer. The picture for business loans is somewhat mixed, but they appear to have been an important part of total loan growth in a number of districts. Aggressive seeking of new customers by banks was noted by New York, Richmond, and Philadelphia. The latter reports that ""consumer credit demands have responded very positively new-marketing efforts."" Reports on deposit growth also vary among districts and by type of deposit. Several districts commented on the actions of banks and customers with regard to the deregulation of time deposits on October 1. New York noted that many banks and thrift institutions offered ""very attractive rates"" but Cleveland reported that its district banks were not aggressive about the new deposits. Richmond and Kansas City agreed that there was little effect on their financial institutions and little response from customers. San Francisco saw some significant early growth in new deposit accounts, but does not expect them to generate substantial inflows of new funds. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1087 -beige_book_pure_text_pre2000,1983,"Overview Strength in retail sales continues to be a major factor contributing to economic growth in most parts of the country. Still, for a few isolated regions—the mining areas of northern Minnesota and Michigan, the State of Oregon, and the energy-dependent areas of the Dallas District—the economic recovery has not yet begun. But in many of the regions that bore the brunt of the 1982 recession—Cleveland, Pittsburgh, St. Louis and upstate New York, for example—the recovery is well established. The 1983 Christmas season looks to be the best for retailers since 1978. In manufacturing the reports are of across-the-board improvement, while real estate sales and construction activity appear to be suffering little more than seasonal slowdowns in some areas and are quite strong in others. On the financial side, business loan demand at banks has been sluggish, reflecting the strong cash position of many firms. Agriculture, however, remains a troubled sector. Retail Sales With striking uniformity the twelve Federal Reserve Districts report very strong growth in retail sales. Apparel, home furnishings, and home appliances are most frequently mentioned as the fastest moving items, and automobile sales continue to increase. In Boston and Dallas retail sales are so strong that many stores report especially tight inventories. Only Chicago and Kansas City report a somewhat mixed picture, with the former noting a few areas of weakness and the latter mentioning a general slowdown in sales growth over the past three months. Despite the continued marked improvement in sales, retailers continue to be cautious. Chicago and San Francisco indicate that retailers have been slow to expand inventories, and only Philadelphia reports much optimism about rapid growth continuing into next spring. Manufacturing and Employment Manufacturing activity continues to expand: orders are up, backlogs are increasing, and many firms are implementing capital acquisition plans. Capital spending, however, still appears to be mostly aimed at productivity improvements rather than capacity expansion. Several districts report particularly high levels of activity in the pulp and paper and aluminum products industries. Defense orders have started increasing again in St. Louis, and Cleveland indicates that plants manufacturing flat rolled steel products are now operating at close to capacity. The capital goods industry is beginning to pick up in New York and Dallas, but continues to lag the recovery. One of Chicago's informants indicated the level of activity in the machine tool industry remains at only about 50 percent of a ""good"" year. San Francisco and Cleveland report that manufacturers, like retailers, remain quite cautious about accumulating inventory. The expansion in industry continues to lead to lower unemployment rates nationwide. However, the labor markets in Chicago and parts of New York are still weak, with both employment and unemployment lower than at this time last year. Real Estate and Construction Conditions in the real estate market differ somewhat across districts, but sales and construction activity appear to be strong in more places than they are weak. In New York, St. Louis, Dallas and Atlanta levels of activity remain high, especially in the commercial sector, although analysts in Dallas expect a slowdown before long. Finance Commercial and industrial loan demand has been sluggish in recent months, and most districts attribute this to strong cash positions in the business sector. Only Cleveland reports a general increase in loan demand, while San Francisco notes an increase in such lending but only by smaller banks. Bankers in the Philadelphia District expect business lending to pick up in the spring as corporations use up their cash and begin to finance plant expansion and inventory accumulation. Consumer lending is strong in most districts, but the picture is mixed with respect to mortgage lending. Richmond reports that the recent stabilization of mortgage interest rates has led to some increase in demand. Cleveland, however, is still experiencing a slowdown in lending attributable to the earlier rise in mortgage rates. Agriculture The PIK program has added to the 1983 incomes of farmers, but not all farmers are out of trouble. Atlanta, Minneapolis and Dallas report that increases in feed prices have narrowed margins on livestock operations. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",861 -beige_book_pure_text_pre2000,1984,"Overview Retailers across the country enjoyed an excellent Christmas season. Year-over-year sales increases, largely real, were well into double digits. Post-holiday sales were also relatively strong. Increases in manufacturing activity were widespread. Price hikes are becoming core frequent; delivery times are lengthening. Capital spending is picking up; the emphasis is on modernization but some capacity expansion is also planned. In the banking sector, commercial and industrial loan demand increased modestly, consumer loan demand strongly. Homebuilding and housing sales have held up well in most districts. Severe weather damaged citrus and vegetable crops in the South, but did not affect winter wheat in the Midwest. Retail Trade Retail sales were very strong this Christmas. Year-over-year sales gains in December were in the 10 to 25 percent range. Several districts noted that these increases were largely real. Sales of big ticket: items such as appliances, consumer electronics and recreational equipment were particularly strong. Apparel also fared well in some areas. Credit use was heavy, according to Chicago, Minneapolis and San Francisco. Sales volumes in early January were also goad, but the year-over-year increases were not as large as in December. Inventories are generally satisfactory. Retailers are optimistic about 1964 and in the Philadelphia district they are more worried about losing sales than about accumulating excess inventories. Automobile sales have been brisk, although low inventories have been a limiting factor in several districts. Manufacturing The manufacturing sector continues to recover. Increases in orders and production were widespread. Among the industries for which increases were reported were motor vehicles and automotive products, especially trucks; nonelectrical machinery; electronics; some types of steel; chemicals; semi-conductors; paper and paper board. However, an expected upturn in farm equipment did not materialize. The demand for aircraft remains depressed in the Cleveland district, but has improved in San Francisco. Boston notes that export sales remain very weak, although sales by foreign subsidiaries are improving slightly. Capital spending is picking up. Philadelphia, commenting on its survey of manufacturers, observes that ""for the first time in seven years, half of the respondents...intend to increase outlays for plant and equipment during the next six months."" The emphasis is on modernization and productivity enhancement, but some expansions are planned. Price increases are reported to be more frequent but, for the most part, still moderate. Lead times are lengthening. According to Chicago, cutbacks in domestic capacity have contributed to the scattered supply problems. In the Atlanta and Dallas districts, higher rig counts point to a recovery in drilling activity. Minneapolis also reports an upturn in oil activity, but not in gas and coal. Increased manufacturing activity has been reflected in more trucking and railroad business in the St. Louis district. Barge traffic has also been increasing gradually. Banking Commercial and industrial loan demand increased modestly in several districts, declined in St. Louis and rose sharply in Cleveland and Kansas City. Demand for consumer loans is strong in most districts. As loan demand has increased, banks have improved credit quality but become somewhat less liquid, according to Richmond. Real Estate Homebuilding and housing sales have held up well in most districts, although New York, Kansas City and Cleveland report a slowing in sales at year-end. Respondents in New York and Cleveland do not expect 1984 to be as strong as 1953 because most of pent-up demand has been satisfied. New York and Atlanta are also concerned about the effects of shortages and the increasing prices of housing materials. However, Chicago builders expect 1984 to be a better year and Richmond reports an upturn in speculative building, indicating that industry expectations are high. Variable rate mortgages are becoming more prevalent in the Chicago and San Francisco districts; initial rates are substantially below those on fixed rate mortgages. Agriculture Severe weather damaged citrus fruit crops in the Dallas and Atlanta districts. Fresh vegetables were also affected. However, San Francisco growers expect to benefit from the resulting price increases. The weather does not appear to have harmed the winter wheat crop, but cattle are not gaining weight at normal rates. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",893 -beige_book_pure_text_pre2000,1984,"Introduction The expansion continues in all Federal Reserve Districts, but with variations in vigor among regions and sectors. Several banks emphasize a revival of consumer and business confidence, and widespread views that strong momentum will sustain the recovery through the year. Virtually all sectors are expanding or at least holding level, with oil and gas well drilling a significant exception. Geographically, the strongest gains are occurring on the West Coast, with much of the Midwest and Northeast still reporting substantial slack in durable goods manufacturing. Almost all districts noted exceptional strength in retail sales, often exceeding expectations. Demand for housing also is showing surprising strength, helped by wider use of adjustable rate mortgages. Capital expenditure plans are being raised cautiously, with emphasis on productivity and cost cutting. Employment and consumer income are rising at a good pace, but markets are still generally soft in many northern states. Inventories, overall, remain quite low relative to sales. Inventory rebuilding is expected, mainly at the retail level. The farm sector remains depressed, but is being aided by higher prices and increased plantings. Pressures are building on capacity in some industries. Some shortages are reported. Price inflation is accelerating, but still only moderately overall. Credit demands are stronger, especially for home mortgages and installment loans. Retail Trade Consumers continue to lead the expansion, increasing spending since the turn of the year more than had been expected. While all products are selling well, the list is headed by larger domestic cars, imported cars (limited by quotas), small trucks, appliances, consumer electronics, furniture, and recreational equipment. Philadelphia and San Francisco report a rising share of retail sales on credit. Housing Demand for new and used homes continued ""surprisingly"" strong in January and February. The housing revival has been particularly vigorous in the West. Cleveland reported a leveling in activity. Stronger than expected buying is widely attributed to adjustable rate mortgages offered at interest rates initially well below those charged on fixed-rate mortgages. Richmond notes a revival of speculative building, in anticipation of strong spring sales. Atlanta notes a sharp drop in permits for multifamily construction, as first-time buyers move out of apartments. Dallas also reports concern about overbuilding of multifamily structures. Employment Job markets have strengthened in all districts, but unemployment remains disturbingly high, especially north of the Ohio river. Cleveland reports that cautious employers are increasing use of overtime and part-time help in preference to permanent increases in force. Chicago notes much slower advance in wages than in past years, and widespread moves to curtail non-wage benefits, especially soaring medical costs. Manufacturing and Mining Factory output continues to advance on a broad front. Output of some car and truck models is at capacity, restricted by component availability. District reports tell of strength in paper, carpets, farm chemicals, and fertilizer (Atlanta), defense and high tech capital goods (Boston, New York, and Minneapolis), and lumber, aircraft, and missiles (San Francisco). One of the few weak areas is oil and gas well drilling (Dallas), with associated manufactured goods. Steel is up sharply from the low point, but still far below capacity. Agricultural equipment output remains at low levels. Capital Goods The upturn in outlays for business equipment, earlier concentrated in electronic types, is becoming more widespread among heavier mechanical equipment. Further improvement is expected. A few capital goods industries are operating near effective capacity, but most are well short of these levels. Investment is frequently oriented toward controlling costs and enhancing productivity, rather than adding to capacity. Industries experiencing strong demand or sharply improved orders include electronics and robotics, heavy trucks, trailers, and aircraft. Machine tool orders have improved modestly, restrained by severe foreign competition. Orders are also up for freight cars, construction equipment, and mining equipment, but remain far short of prosperous levels. Nonresidential Construction Although office building construction continues strong in Chicago, New York, and Dallas, there are fears of excess space in some areas. San Francisco sees a strong rise underway ~n shopping centers and hotels. Richmond notes an improving outlook for commercial construction. With manufacturers' capital spending mainly to improve productivity, factory space is still generally ample. But some firms are expanding. San Francisco indicates that electronics and defense suppliers are investing in new structures. Most firms, however, are reluctant to add new space or even bring marginal facilities back on stream. An expected increase in highway construction this year may be hampered by Congressional delays in approving funding. Agriculture Higher farm prices and increased plantings, mainly because of the expiration of the PIK program, suggest a stronger agricultural sector in 1984. However, farmers continue under financial stress. Atlanta reports a high rate of farm loan delinquencies, especially on government agency loans. Kansas City finds farmland sales sick and values soft. Chicago mentions the low sign-up for the new dairy program intended to reduce the milk surplus. San Francisco reports plantings of fruits and vegetables going well, with good prices for product, partly because of the freeze in Texas and Florida. Inventories Manufacturers and trade firms are keeping inventories at low levels relative to activity. Boston, New York, and St. Louis report retailers building stocks to accommodate stronger sales. While most companies say inventories are at ""acceptable"" levels (Richmond) or ""satisfactory"" (Kansas City), leadtimes are increasing; and some shortages are evident. A number of districts report low inventories of motor vehicles—especially imported cars—electronic components, paper and paperboard, and gypsum board. Inflation Prices are rising at a faster pace, but still not to an alarming degree. Philadelphia and Kansas City state that purchasing managers expect prices to rise faster as the year moves on. Higher prices are related to shortages and longer leadtimes, which reflect pressures on capacity. So far the largest price increases have been for purchased materials, but increasingly tags are being raised on finished goods. Chicago finds large rate increases under discussion for electric utilities and telephone service. College tuitions have been boosted sharply. Cleveland states that price increases for tires have been held back by availability of imports, an observation that also applies to a wide range of products. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1327 -beige_book_pure_text_pre2000,1984,"The overall economic picture in the nation is fairly bright, according to reports from the twelve Federal Reserve Districts, although a few industries are still weak. Retail sales in many Districts bounced back in April from a March slump and are expected to continue their growth. Auto sales are very strong, with near-capacity production levels at many auto plants. Other manufacturing industries are also doing well, especially paper products and consumer durables. Residential construction remains strong, although some signs of slowing have appeared in recent weeks. Bankers in the Eastern and Southern parts of the nation report increases in both business and consumer loans, while borrowing in other areas has remained flat. Probably the weakest sector in the economy at this time is agriculture. Agriculture The agricultural sector has suffered in recent months due to a combination of factors. Plantings in the Southeast and Midwest have been delayed by heavy rains, while Dallas and Minneapolis report that overly dry conditions have held down winter wheat production. Both Dallas and San Francisco, however, say cotton growers are having a good year. Pork farmers in the Atlanta District have been reducing inventories in response to higher feed prices, but that cutback might be near an end. Dairy farmers in the northern Midwest continue to experience financial problems, and they do not expect much help from the new Federal diversion program. Contacts in Kansas City say this year's calf crop is about average. Poultry farmers in the Richmond District continue to be troubled by avian influenza outbreaks. Both Chicago aid Kansas City report a further drop in farmland values. Kansas City also says farm credit problems are as bad this year as they were last year, and that farm asset liquidation is likely to increase unless debt is reduced. Mining/Energy Business activity in the mining and energy sector appears to be mixed in April. Both production and prices are up in the coal industry in the Midwest. Cleveland attributes some of the strength to utilities' stockpiling coal against the possibility of a strike by the United Mine Workers in September. San Francisco reports, however, that the coal companies in the West have been laying off workers. The oil industry remains weak. The increase in drilling apparently stems from lower costs and more favorable leasing terms rather than from growth in demand. Dallas says these factors have accounted for a 38 percent increase in the number of offshore rigs since the first of the year. Construction/Real Estate The underlying upward trend in the residential construction industry persists, according to most Districts, despite a recent slowdown and anxiety about the future course of interest rates. New York and Cleveland report brisk sales of homes, but indicate that buyers and builders are very conscious of mortgage rates. In most other Districts, residential sales slowed in recent weeks, the result of a combination of bad weather and higher mortgage rates. Higher rates have given a further boost to adjustable rate mortgages (ARMs). Kansas City reports that over 80 percent of new mortgage loans in that District are ARMs. Nonresidential construction remains generally strong despite concern about overbuilding. In New York and Chicago the demand for office space continues to grow. The market for industrial space, however, is mixed. Manufacturing The nation's industrial sector is continuing along a path of expansion. Although capital goods industries are weak in some Districts, the overall picture is bright in virtually all areas. The paper industry is probably the strongest at this time, followed by consumer durables, primary and fabricated metals, and electronics. San Francisco indicates rapid gains in the production of missiles and space vehicles, and Cleveland and Chicago both report that many motor vehicle manufacturing plants are operating at capacity. Manufacturers' stock levels are generally stable, and there are no reported plans for significant inventory-building. Industrial prices are mixed. The only real weakness in manufacturing is in exports. Boston reports, however, that there has been a pickup in sales of foreign subsidiaries of domestic firms. Retail/Consumer Spending About half of the District report that retail sales have made a brisk comeback in April after a sluggish March. The strongest gains were posted in Philadelphia, where sales are running as much as 35 percent ahead of the same time last year; about half of that gain was due to the later Easter holiday this year. In other Districts reporting rebounds, gains range from 8 percent to 26 percent. Even in those areas which have not seen an increase in sales, retailers believe the underlying strength in consumer spending is still present. Consumer durables appear to be leading the surge in spending, bolstered by the strength of the housing market. Nondurables, however, are also doing quite well. Retail inventories in most Districts have increased relative to sales, but merchants are not concerned and are not planning any special moves to cut back. At least part of the inventory buildup is intentional and being undertaken in response to continued strength in demand. Auto sales are also reported to be vigorous. Foreign cars and larger domestic autos seem to be leading the pack, although Atlanta reports healthy sales of compact vehicles as well. Some shortages of the more popular domestic models are reported, and delivery times for foreign cars are being stretched out. Recent increases in consumer loan rates in some parts of the country do not appear to have dampened the demand for cars. Banking and Finance Virtually all Districts in the Eastern and Southern parts of the nation report strong growth in loan demand this month. Business loans remain brisk in those areas, with both large and small companies borrowing for a variety of reasons. Consumer borrowing is also up, especially loans for autos. Deposit flows, however, are weak at many financial institutions, and loans are being made with borrowed funds. Districts in the Western part of the country say there has been little or no loan growth in March and April. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1243 -beige_book_pure_text_pre2000,1984,"Overview The pace of economic expansion appear"" to have slowed recently. Retail sales are strong and retailers are optimistic. Manufacturing activity continues to use but at a reduced pace from earlier this year. Retail and manufacturer's inventories appear to be close to desired levels. No strong upward price pressures are reported. Sales and starts of new houses are slowing. Rising interest rates and adverse weather are reported to be hurting the firm sector. Loan demand continues to grow in most districts. Retail Sales Retail sales for May and early June are reported to be strong and better than expected in most districts. Year-over-year gains of between 10% and 20% are common. Sales of summer apparel, fans, air conditioners, outdoor furniture and grills were stimulated by exceptionally hot weather in the east. Minneapolis reports sales, depressed by cold weather in May, are firming in June. Inventories are generally at satisfactory levels, although a few districts report them to be slightly larger than desired. Retailers are optimistic about the outlook for sales during the remainder at 1984. Automobile sales continue to be strong, although St. Louis notes that sales are sluggish at sane dealers. San Francisco reports auto sales at their highest level since the late 1970s, are being supported by subsidized financing by dealers, and some auto dealers in the Cleveland district say that consumer lending rates haven't risen enough to damp sales. St. Louis observes that small cars are selling better than large cars, and Minneapolis reports recreational vehicles sealing exceptionally well. Manufacturing Manufacturing activity continues to expand, but at a slower pace than earlier this year. Manufacturing employment is rising slowly in most districts. Production of aluminum, paper, tires, heavy-duty trucks and trailers, and medium- and full-sized cars is reported by various districts to be at full capacity. Demand for electronic equipment continues its strong growth. San Francisco reports lumber producers are cutting payrolls because of the national homebuilding slowdown, and Atlanta adds that softening housing demand has also cut the furniture industry's demand for lumber. Various districts report foreign competition is crimping production of copper, steel, furniture, and machine tools. Dallas, however, notes strong production growth and lengthening lead tines for primary metals. Modernization and cost cutting are still emphasized in capital investment but there are a few reports of capacity expansion. Boston reports demand for capital goods used by the energy, steel, and farm equipment industries remains depressed. Inventories are generally near desired levels and are growing slowly. There are only a few reports of shortages and lengthening lead times. Price increases are being restrained by vigorous domestic and foreign competition. Cleveland reports that major steel producers expect little or no profit this year because of weak prices. Construction and Real Estate Sales and starts of new houses slowed in May and early June in most districts in response to rising mortgage interest rates. Chicago reports lenders have tightened credit standards. San Francisco notes the slowing has been moderated by ""increased public acceptance of adjustable rate mortgages and the increased offerings on 'buy-down' programs by builders."" Dallas observes caution in multifamily construction because of fears of overbuilding, but St. Louis reports some building of apartments. In contrast, New York reports house sales and starts are so strong that some builders have ""suspended"" sales because they are producing at capacity, and Richmond says the trend in housing construction is quite strong. Nonresidential construction is reported to be strong by San Francisco and New York, ""active"" by Minneapolis, and down by Atlanta. Dallas reports a decline nonresidential construction. Atlanta reports lumber prices are falling while Kansas City reports price increases for sheetrock and cement. According to Chicago, a shortage of gypsum board has ended because builders and distributors have stopped adding to inventory. Dallas comments that the high level of construction has some lumber, concrete, and brick plants running multiple shifts. Agriculture The agricultural sector is reported to be hurt by rising interest rates and bad weather. Reports of adverse weather are widespread. Droughts, blizzards, and excessive rain are reported to be hampering agricultural production. Minneapolis comments that many counties in that district have been declared disaster areas because of weather. San Francisco notes that abundant vegetable harvests have pushed prices to or below the break-even point for many producers. Rising interest rates and weak income prospects are reported to be placing extreme financial pressure on some farmers. Minneapolis reports that it is increasingly difficult for banks to find acceptable agricultural loans. In the St. Louis district, this year's crops are reported to be ""critical"" to the financial survival of many farmers. Kansas City says bankers in that district are concerned by the ""increasing number of farm bankruptcies."" Energy Cleveland reports coal production is rising as users increase inventories as a strike hedge. Richmond reports coal output has risen significantly in 1984 but is facing strong foreign competition. San Francisco reports the coal industry is laying off workers because of foreign competition. Dallas reports oil drilling activity is substantially above the year-earlier level, and drill pipe inventories have fallen to desired levels. Atlanta reports better prospects for its energy sector because of ""sharply lower drilling costs"" and rising demand for oil. Commercial Banking Several districts report commercial end industrial loan demand is growing strongly. Philadelphia says commercial and industrial lending has been ""especially strong"" in the last six weeks. An exception is Cleveland where business lending has not expanded in the last month. Consumer installment lending is ""brisk"" in Philadelphia and ""robust"" in Cleveland, but down in St. Louis. A few districts report rapid deposit growth and Atlanta says banks are very liquid. San Francisco notes a large runoff of funds from money market deposit accounts. Two districts comment on the safety of deposits: St. Louis reports that ""a few corporate treasurers have expressed concern about banking problems, and have lowered some balances to decrease exposure at any one institution,"" and San Francisco notes that some depositors at a few smaller institutions have shifted some deposits into U.S. Treasury securities. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1300 -beige_book_pure_text_pre2000,1984,"Overview Economic activity is continuing to expand in most regions and industries, but at very different rates. Consumer spending is still providing much of the strength, particularly in the automotive sector, where vigorous activity is leading to supply constraints and buoying a variety of supplying industries. Construction activity has been mixed, with most regions showing continued strength in nonresidential building, but various degrees of slowing on the residential side. Foreign competition and slower housing construction are seen to be restraining activity among producers of building materials. Foreign competition is also being blamed for lagging demand in the textile and apparel, furniture, lumber, and primary metals industries. Inventories are generally near desired levels, and price increases remain moderate. Loan demand remains generally strong, with the exception of the residential mortgage component. Deposit behavior has been mixed, but, on balance, growth appears to have slowed, which has caused some institutions to increase their issuance of CD's. On the agricultural front, crop conditions appear generally improved, although trouble spots remain. Manufacturing and Industry Manufacturing activity is continuing to expand in most areas, but more slowly in several, and with actual declines in some industries. Apart from seasonal factors, the automobile industry and related industries are operating at high and increasing rates. Atlanta finds suppliers of the auto industry bringing long idle capacity back on line and struggling to keep up with demand. The paper-related industries are also near capacity according to Atlanta, Chicago, San Francisco, and Richmond, and high levels of activity are reported for the chemicals, construction equipment and electronic equipment industries in several districts. In contrast, Cleveland and San Francisco report declining activity in the steel industry due in part to increased steel imports. Foreign competition is also reported to be restricting activity in the textile, apparel, and lumber industries. Producers of building materials are facing weaker markets as housing activity softens, although Boston and Dallas find significant continuing strength in that sector. Consumer Spending Retail sales are still generally strong, although there are indications of weakness in some areas. Both Boston and San Francisco reported that sales accelerated in July, but Cleveland found some weakening in general merchandise sales, and Minneapolis reported spotty results in rural areas dependent on agriculture. Retail inventories have declined slightly overall and seem to be generally at comfortable levels. Automobile sales remain robust across the country. In lines other than automobiles, apparel was doing well in the Philadelphia, Richmond, and San Francisco Districts, and strength was also reported in sales of home entertainment electronics goods, furniture, and appliances. Atlanta, Minneapolis, and Richmond all reported mixed results at tourist and vacation sites in their districts. Some areas appeared to be meeting expectations, while others were having disappointing peak seasons. Construction Most districts report some degree of slowing in the residential sector, although Chicago found surprising stability, and in the St. Louis District backlogs of orders are continuing to support single- family construction. Where activity is slowing, recent increases in mortgage rates appear to be a principal factor. Also, several comments suggest that both borrowers and lenders are becoming disillusioned with adjustable rate mortgages. Nonresidential construction is apparently holding up well, with increased building reported in several districts. San Francisco reports that several metropolitan areas in the Twelfth District are ""on the brink of a boom,"" and an increase in commercial construction is expected soon in downtown Chicago. New York, however, reports rising vacancy rates in office buildings in lower Manhattan and Long Island. Finance With the exception of residential mortgages, loan demand is continuing to make substantial year-over-year gains. Business and consumer loans are still rising strongly in most areas, although some banks in the Boston District reported a leveling off of loan demand, and Kansas City found loans flat to up slightly. Deposit growth has slowed in the Atlanta, Cleveland and San Francisco Districts, but remains steady in the Dallas. Minneapolis. and Philadelphia Districts. Agriculture Crop conditions have improved in recent weeks, although conditions remain poor in areas along the Gulf Coast, in central and southwest Texas, and in parts of California and New York. Kansas City reports generally good wheat, corn, milo, and soybean crops, with only isolated and relatively mild weather problems. Despite improvement in the near-term outlook, however, debt levels and falling land values continue to plague farmers. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",931 -beige_book_pure_text_pre2000,1984,"The economic expansion appears to be moderating to a slower but still quite brisk pace. Manufacturing remains strong despite weaknesses in certain sectors that have been adversely affected by the increased strength of the U.S. dollar. Defense and energy are the chief sources of current expansion. Retail spending remains generally strong, but several Districts are experiencing a slower growth rate. Auto sales continue to advance in most areas; where some deceleration has occurred, the reason is lack of inventory rather than dampened demand. Consumer spending for domestic travel, however, has been disappointing in some areas because of the high exchange rate of the dollar as well as rainy weather. Residential construction is slowing in most Districts, but nonresidential building is proceeding at such a heady pace in certain areas that concerns about overbuilding are mounting. Lending remains strong primarily because of expanded consumer borrowing. Farm conditions are mixed: several Districts anticipate higher yields and revenues, but poor weather reduced supplies in some states. Manufacturing and Industry Manufacturing activity generally remains strong, but most regions report slower growth in orders and employment. Inventory levels are satisfactory, for the most part, although some steel customers are cutting inventories in anticipation of an auto strike. Price increases have been modest, at worst, and some Districts report flat or declining supply prices. There is no evidence of materials shortages. Capital goods spending has been strong, but Boston reports that plans for 1985 show no increase over current levels. Defense orders are a source of manufacturing strength for St. Louis, New York, San Francisco, and Atlanta. Energy demand is sustaining industry's momentum in the Dallas, Minneapolis, Richmond, and Atlanta Districts. Demand for coal as well as pulp and paper is contributing to the strength of manufacturing reported by Richmond, Minneapolis, and San Francisco. Auto and related production is another source of continuing growth, especially in New York, Richmond, and St. Louis. Weakness is concentrated in industries sensitive to import competition, but this effect appears widespread geographically more than half the Districts mention it. Industries affected include aluminum, steel, copper, machine tools, shoes, textile, apparel, and lumber. Setbacks in the lumber industry are also attributable to slower residential construction, which is precipitating layoffs by furniture producers and building material suppliers as well. Consumer Spending Retail sales, spurred by back-to-school spending, generally strengthened in late summer. However, Cleveland, Minneapolis, Dallas, and San Francisco report a slower rate of growth. The relative strength of spending on hard goods and soft goods varies. Boston and Richmond report that hard goods are increasing their share, but Dallas and San Francisco note a softening of spending on consumer durables. Auto demand remains strong in most parts of the country and would be higher if more of the popular models were available. In contrast to the shortage of new cars, inventories of other retail goods generally are reported to be satisfactory. Inventory-to-sales ratios in the Philadelphia District are intentionally high because of anticipated strong demand through the fall. Price competition and promotions appear to be helping retailers attract buyers and move goods. Many buyers are using available credit lines but seem to be paying their bills without difficulty. Looking ahead, retailers, as usual, are optimistic, although auto dealers fear the consequences of the threatened strike. Summer tourist expenditures are below expectations in most areas. The effect is greatest on attractions; business and convention travel is helping to boost the lodgings and air transportation sectors of the industry. However, St. Louis and Philadelphia report that late summer visitations at certain resort areas were up substantially. Boston, Philadelphia, Atlanta, and Minneapolis attribute the lackluster performance of vacation goers on rainy weather and the strong value of the U.S. dollar, which discourages Canadian tourists from visiting border resort areas and encourages increased travel abroad by Americans. Construction The residential sector continues to slow in most Districts despite generally declining mortgage rates. Atlanta, New York, Cleveland, and Richmond are experiencing continued or renewed strength, but most other Districts report substantial slowing in residential construction and sales, particularly of single-family houses. The August issuance of mortgage revenue bonds in Ohio stimulated an otherwise sluggish residential sector there. High-income home buyers, many of whom are making purchases with cash, account for New York's strong showing. Apartment vacancy rates are increasing, and some regions express concern about overbuilding in the multifamily sector. Nonresidential construction is characterized as surging in Atlanta, Minneapolis, Richmond, San Francisco, and St. Louis. Concern over high and rising office vacancy rates is widespread and mounting, especially in Atlanta, Dallas, and San Francisco. However, commercial vacancy rates in Minneapolis have been declining, and New York reports low office vacancy rates in Manhattan. Finance Loan demand remains firm in most Districts. Consumer lending is the leading component of current growth. At least half the Banks report increased consumer borrowing, and New York and Chicago note that delinquency rates are quite low, given the increase in consumer credit. Many Districts report an increased pace of real estate lending, especially for nonresidential projects, although Philadelphia, San Francisco, and Dallas report a slowdown in such lending. The rate of business loan growth varies between regions. Deposit growth is advancing in Atlanta and Kansas City, but Dallas, Philadelphia, and Cleveland describe the pace as flat or declining, and deposit growth has slowed in Minneapolis. Agriculture The outlook for agriculture is mixed. Notwithstanding a drought in June and potential crop damage from Hurricane Diana, the Southeast is experiencing favorable growing conditions, and farmers may enjoy near-record yields. St. Louis and Minneapolis also anticipate good yields except in areas most affected by poor weather. The Philadelphia District had adequate rain, and farm income there should be improved, especially for growers of corn, potatoes, soybeans, and blackberries. Several Banks also note the positive effect of increased Soviet purchases. However, droughts in portions of the Dallas and Kansas City areas should depress yields. San Francisco describes price conditions for fruit and vegetable farmers as ""dismal."" In addition, the farm sector, especially in Minneapolis and Kansas City, continues to face financial difficulties exacerbated by low prices for many commodities, falling land values, and the high cost of servicing existing debt. Farm equipment sales are below expectations, and Chicago notes manufacturers are cutting back even more. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1378 -beige_book_pure_text_pre2000,1984,"The economic expansion has slowed in most districts, but a resurgence in consumer spending suggests that the slowdown may only be a pause in a recovery that has not run its full course. With the exception of Boston, which reports a continuation of steady growth, the districts report moderating economic recoveries in the third quarter. Slower growth has been especially apparent in residential construction and manufacturing activities. Agricultural conditions are mixed. Generally, crop conditions continue to improve, but low prices are expected to keep most districts farm income depressed. There is a very bright spot, though, in the economy. Consumer spending in September and early October was robust throughout the country. These developments in real economic activity are reflected in financial conditions: business loans have been somewhat weak, while consumer loans have been strong. Construction Part of the recent slowdown in the recovery can be attributed to residential construction activity. While the reports are mixed, half the districts report that housing starts have weakened, even though they remain at a high level. Philadelphia, Cleveland, St. Louis, Minneapolis, Dallas, and San Francisco all report that either housing starts or home sales have slowed. New York and Atlanta are the only obvious exceptions; housing is reportedly doing quite well there. Several districts also report strength in commercial construction. Manufacturing and Industry The slowdown in the recovery is also being caused by some slowing in manufacturing activity. Although manufacturing continues to expand in most districts, it is doing so at a modest pace. New York, for example, reports that upstate managers recently experienced a slower growth of new orders and a considerable number of actual declines. Similarly, Philadelphia, Cleveland, St. Louis, and Dallas-districts that specifically report on new orders-say that demand generally remained unchanged or declined somewhat in recent weeks. Agriculture Agricultural conditions are mixed. Most areas expect average to above average crop yields this year. For example, Minneapolis reports favorable crop conditions in its district, and St. Louis expects its crop production to be near the 1982 levels. However, crop prices remain low and continue to fall. Minneapolis reports that the farm price index for Minnesota fell 3 percent between July and August. With low and declining prices, districts expect cash receipts and farm income to be depressed this year. Only Richmond is optimistic for its farm sector. It expects production gains to outstrip falling prices, leaving farmers with higher cash receipts and income than last year. Consumer Spending Consumer spending is the clear bright spot in virtually all district reports. While somewhat restrained in most of July and August, consumers started to spend again in September and early October. Richmond reports that consumer activity is back on its earlier strong trend, with a significant rebound in durable good purchases. Atlanta reports that retail sales were generally robust in September, with department store sales in its metropolitan areas outpacing those in the nation. St. Louis points to retail sales as the greatest strength in its district economy. Only Chicago and San Francisco report that consumer spending has been mixed. Both see some weakness in durable good sales. San Francisco, however, notes a recent pickup in retail sales in the Pacific Northwest. Overall, inventories appear to be satisfactory relative to sales. Finance Loans at commercial banks generally mirror the slowdown in the recovery and the recent strength in consumer spending. Business loan demand is reported to be sluggish and very soft in several districts. Yet most districts that report on consumer loans say these loans are quite strong and are expected to remain so. Philadelphia, for example. reports that over the past six weeks business loans in its area grew only between zero and 2.5 percent, while consumer loans grew from 4 to 10 percent. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",799 -beige_book_pure_text_pre2000,1984,"The economy continues to show a widespread pattern of slowing expansion across both regions and industries. Manufacturing output is growing overall, but most Districts report substantial variation among industries. Retail sales growth on a year-over-year basis is sluggish compared to earlier this year. Auto sales continue to increase more than is seasonally normal. Residential construction is still weak, but lower interest rates are leading to some signs of a pickup. Most Districts note steady loan demand overall, although consumer lending is strengthening in some Districts. In agriculture, crop prices continue to fall while cattle prices are rising further. Agricultural debt remains a concern in several Districts. Manufacturing and Industry Manufacturing is growing slowly in every District, although some industrial sectors continue to perform vigorously. Growth is highest among paper and allied product firms and electrical equipment producers. Atlanta, Minneapolis, and Dallas report strong performance by the former, while Dallas and San Francisco indicate a good showing by the latter. Increased orders from defense firms and the automobile industry are contributing to demand in some manufacturing sectors. The weakest industries are those most exposed to import competition, especially the textile, apparel, wood product, and metal working industries. Boston, St. Louis, Richmond, Chicago, and Minneapolis all report deteriorating performance in at least one of these industries. Several Districts report that inventories are rising, but among those reports only a few indicate that inventories are above desired levels. Input prices are stable or rising only slightly. Uncertainty about future growth is increasing, as evidenced by Chicago's notation of recession fears on the part of some respondents. Oil and gas drilling activity is continuing to improve, but the recent oil price decline threatens the industry's recovery. Consumer Spending Retail sales are increasing on a year-over-year basis, but they are slower than expected in several Districts. Boston and New York attribute slower sales growth to relatively warm fall weather. Richmond, on the other hand, reports quite strong sales. The pattern of sales is also uneven between consumer durables and nondurables across Districts. Many stores are increasing their advertising and markdowns to stimulate business. Respondents anticipate increased holiday sales, but the expectations regarding the strength of Christmas sales are lower than earlier. Automobile sales are above year-earlier levels in each of the nine Districts reporting them. Inventory shortages are responsible for slower expansion in some areas. Availability problems persist, but increased production and recent strike settlements lead many dealers to expect further gains in sales. Construction Lower mortgage interest rates are contributing to an upturn in some previously declining residential construction markets. Philadelphia, Cleveland, and St. Louis report growth in residential construction New York is reporting exceptionally strong residential construction levels despite a shortage of skilled labor. San Francisco, Dallas, Chicago, and Minneapolis note general weakness in their residential markets, although some regions within these Districts are doing well. Atlanta and Kansas City expect strengthening residential construction on the basis of lower interest rates. Nonresidential construction is generally more vigorous than residential. Several Districts comment that commercial construction is proceeding at a strong pace. New York is the exception with ebbing markets for nonresidential construction in all parts of the District except mid-town Manhattan. Banking and Finance Mirroring the slowdown in the overall economy, asset growth is moderating. Commercial lending is remaining flat, although St. Louis reports a recent pick-up in local demand and Philadelphia expects such an increase soon because of continued economic expansion. Consumer lending still appears strong with widespread reports of sizeable increases. Atlanta and Cleveland report slight increases in mortgage lending. Mortgage loan demand is generally steady elsewhere despite the decrease in rates. Several Districts expect a demand pickup in the future. Dallas indicates that declines in oil prices may limit the availability of bank funds to the oil and gas industry. Agriculture The agricultural situation varies among Districts reflecting the diversity of products, weather, and market conditions. Harvests this year will be considerably larger than last year, but declining prices are blunting the possibility of substantial gains in farm income. Atlanta reports that late gains have significantly damaged the cotton and soybean crops in portions of the District. Both San Francisco and Chicago comment on the importance of poor export markets as one cause of low U.S. prices. Improving cattle prices are helping ranchers in many parts of the country, although St. Louis notes that increased herd liquidations are putting downward pressure on cattle prices. The brightest agricultural picture is offered by Richmond where a better growing season and stable input costs are improving repayments of agricultural loans. Several Districts note that many farmers are having difficulty meeting interest payments given current prices. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1000 -beige_book_pure_text_pre2000,1985,"The economic expansion continued in most districts. The pace of recovery, although slower than early in the year, was moderately strong at year end. Retail sales activity during the holiday season was satisfactory and, in some cases, better than expected. Home sales and construction activity appeared to have rebounded significantly in response to declining mortgage interest rates. Manufacturing, employment and output continues to grow in most districts and manufacturers are reportedly optimistic about future sales prospects. The major sources of weakness appear to be agriculture and the mining and minerals industries. Overall, however, most districts report favorable trends in unemployment and continued low inflation. Construction and Real Estate In sharp contrast to reports of just a month ago, most districts report increased strength in home construction and sales activity. The recent decline in mortgage interest rates is credited with fueling this turnaround. Only Chicago, Minneapolis and St. Louis report continued significant weakness in housing activity. Nonresidential construction activity also is reported to be at satisfactory levels in most districts. Some overbuilding and weakness in commercial rental markets is reported by New York, however. Manufacturing and Industry Manufacturing employment and output growth was reported by many districts in December. Major sources of strength include the automobile, aerospace and electronics industries. San Francisco and Atlanta also report improved conditions in the paper and wood products industries. Chicago reports cut-backs in year-end steel production, however, and manufacturing activity appears to be generally sluggish in Dallas. Agriculture Agriculture appears to be broadly weak. The continued strength of the dollar and heavy debt burdens have depressed product prices and affected adversely the financial conditions of many farms. San Francisco estimates that 15 percent of agricultural loans in California are currently nonperforming. Kansas City estimates that this percentage may be as high as 90 percent in some areas of that district. The new federal debt adjustment program appears to be having only limited success in offsetting these developments. Consumer Spending Retail sales activity over the holiday period was healthy in virtually all districts. Boston, for example, reports sales increases of 6 to10 percent. In the Philadelphia district, retail sales were up 5 to 10 percent over December, 1983. A few districts- such as Cleveland-ascribe the strength of Christmas retail sales growth partly to unusual, pre-holiday promotional events and price- cutting. In most districts, however, retailers appear to be optimistic about future sales volumes as well. Finance Loan demand generally reflected the upturn in economic conditions with reports of increased commercial and consumer lending. Mortgage rates have declined significantly and increased home sales have generated increased demand for mortgage debt. In New York, however, the rebound of housing has yet to be reflected in mortgage lending data. Normal seasonal borrowing patterns also needed to be considered in evaluating year-end financial activity. As Atlanta reported, year-end commercial borrowing often softens as the result of reduced inventory financing requirements. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",630 -beige_book_pure_text_pre2000,1985,"Economic activity throughout the nation continues at a modest pace, though the agricultural and mining sectors are depressed in some areas. Most Districts report small but steady gains in overall employment levels, though there has been little growth in manufacturing employment. Unemployment rates have remained steady or fallen slightly in most Districts. Retail sales continued strong in February and promotions remained prevalent. Industrial activity increased from January to February in most Districts. All Districts reporting on new orders indicate they were up or unchanged with New York the only exception. Some Districts report involuntary inventory accumulation although equally as many note that inventories were at desired levels. Nonresidential construction continues at a strong pace in most Districts. Construction While multi-family residential construction was robust in many Districts, single-family construction was mixed, despite lower mortgage interest rates. Kansas City reports housing starts slightly lower than high year-ago levels and Dallas indicates that all residential construction is declining at an accelerating rate. Nonresidential construction continues to be strong in most Districts. Many report that commercial construction is outpacing absorption rates for office space, however, and several express concern that a weak period may be in store as vacancy rates increase. Industry Manufacturing output has improved in most Districts. Weakness was cited in the following manufacturing industries: textiles and apparel, chemicals, machinery and equipment, furniture, and semi- conductors. Automotive parts and aerospace were among manufacturing industries contributing to strong growth. Increases in steel production are cited by Cleveland, Atlanta, and Chicago. Indicators of manufacturing activity were inconsistent from District to District. New orders are reported to be up by respondents in the Boston and Philadelphia Districts and unchanged in the Cleveland and Richmond Districts while New York reports a sizable increase in the number of agents whose orders had decreased. Order backlogs generally were unchanged or declining. Manufacturers' inventories were at desired levels in the New York, Philadelphia and Kansas City Districts. Some involuntary inventory accumulation is reported by Richmond, St. Louis and Dallas. Agriculture The recession in the agricultural economy remains widespread. Grain farmers dependent on export markets appear to be most affected. Livestock producers have enjoyed a slightly better fate although some weakness is expected in the near future. Land prices continue to decline particularly for cropland. Dallas, however, reports modest gains in the value of ranch land. Kansas City estimates 5 to 10 percent of banks' agricultural borrowers will be denied credit for planting and that 5 percent or less of the District's farmers will leave farming this spring. Consumer Spending Retail sales are widely reported to have been strong in February, despite the colder-than-normal weather experienced in many areas earlier this year. Many Districts mention that price discounting and promotions remained prevalent as retailers attempted to increase sales volume. Inventories have been reduced to desired levels in most cases. Automobile sales ranged from vigorous in January and February in the Chicago and Dallas Districts, to slow in Atlanta due to cold weather. Most other Districts report generally strong auto sales. Auto dealers across the nation are optimistic about sales for spring and summer, and some are building inventories in anticipation. Cleveland indicates that sales of small trucks are at a record pace, but sales growth of heavy-duty trucks has slowed. Minneapolis and Chicago also report that trucks sold well in their Districts. Banking and Finance Most Districts are experiencing sluggish loan growth mainly due to seasonal factors. Atlanta, Cleveland, Dallas, and San Francisco, however, cite healthy commercial and industrial loan growth while New York reports a contraction in business lending at large banks. Consumer lending increased after the Christmas season although many districts have experienced a slowdown in the most recent periods. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",805 -beige_book_pure_text_pre2000,1985,"The pace of economic activity in moat Federal Reserve districts appears to reflect the slower first-quarter rate of national economic growth. Retail sales generally are showing modest growth through early spring, while strength in auto sales is continuing. Retail inventories are viewed as generally satisfactory. Residential construction activity remains strong and the short-term outlook is optimistic. Commercial construction appears to be thriving in most areas. Indicators of manufacturing activity, however, are mixed. Due partly to international trade effects, the performance of many industries is weak, although steel production is increasing as is the demand for machine tools. Conditions remain depressed in the agricultural sector where downward pressures on prices, a tight cash flow situation, and increasing financial stress are pervasive. Reports on bank loan demand are mixed, both across the country and within individual districts. Consumer Spending Retail sales are generally reported to be showing modest growth through early spring. A notable exception is the Dallas district, where sales are reported below 1984 levels and are expected to remain sluggish in the near future. Some slowing in sales growth is reported by Boston, New York, and Cleveland, while Chicago calls recent sales gains ""disappointing."" Greater strength in retail sales is evident in the reports from Philadelphia, Richmond, and Atlanta. Apparel sales are frequently mentioned as an area of strength, and auto sales are reported as continuing strong in most districts. Retail inventories are reported to be generally satisfactory. Strong growth in tourism in the Richmond and Atlanta districts has contributed importantly to economic activity there. Manufacturing and Industry Indicators of manufacturing activity vary considerably from district to district. Recent improvement is reported by New York, Cleveland, and Richmond. But manufacturing activity has slowed in the Boston district, especially in the high-technology sector which was formerly a rapid-growth sector. Furthermore, nearly all districts report significant variations among industries and among geographic areas. Foreign trade effects continue to be very important. Atlanta reports that import competition is still adversely affecting its district industries. While growth of textile and apparel imports has recently slackened, increased imports of refined petroleum products are hurting Louisiana's petrochemical industries. Minneapolis notes that Ninth District pulp producers are being hurt by low foreign pulp prices. San Francisco reports that, due partly to vigorous foreign competition, forest products industries and primary metals industries are still the weakest sectors in the district, with a number of plant closings occurring in each industry. On the other hand, Richmond notes that coal production is off to a good start in 1985, partly due to increased exports of metallurgical coal. And exports of southern pine to Europe are on the increase, according to the Atlanta report. Steel production is rising, but remains below early-1984 levels. The stronger demand is centered in cold-rolled and coated sheets, primarily for motor vehicles, appliances, and light construction. Cleveland notes that the steel industry remains in difficulty, however. Both Chicago and Cleveland report growing demand for machine tools, but orders are still below past levels. Cleveland also states that ""major producers of capital goods believe spending on plant and equipment is not likely to be slower in the second half than in the first half of 1985, despite the results of the recent survey of spending plans."" Construction Residential construction activity remains generally strong and the short-term outlook is generally optimistic. Builders remain cautious, however, with speculative building reported only by Atlanta. House sales seem to be keeping pace with construction in most instances. Strength in multifamily unit construction was noted particularly by Atlanta and St. Louis. But Kansas City reports housing starts off from a year ago, and Dallas indicates a continuing slide in all residential construction. Commercial construction appears to be thriving in most areas, including both Philadelphia (where vacancy rates are below the national average) and Chicago (where the vacancy rate is described as ""substantial""). Atlanta cautions about potential oversupply, however, and Dallas reports a first- quarter decline in nonresidential activity as evidence of oversupply there becomes more apparent. Agriculture Conditions in the agricultural sector continue to deteriorate in most areas, Weak export demand and large domestic supplies contribute to more downward pressure on prices of farm products. A tight cash flow situation leads lenders to foresee increasing financial stress for farmers. Kansas City reports that liquidations and partial-liquidations of farm businesses are much higher than considered normal by lenders. Farmland values are still falling, off in Iowa by 40 percent from the previous peak. A decline in pork marketings has been accompanied by weaker prices, as poultry production increased and more pork was imported from Canada. In spite of large declines in corn and soybean prices, surveys show farmers intend to increase plantings. Minneapolis suggests that overproduction of dairy output is again likely. Atlanta reports that, even with a growing imbalance between the demand and supply of cotton, Sixth District farmers plan to expand cotton acreage. Kansas City notes that the winter wheat crop is in good to excellent condition, with the potential for harvesting a large crop. In spite of soft prices and weak exports, the condition of the more diversified western agriculture appears to have stopped worsening, according to San Francisco. And Dallas reports that cropland values in Texas have risen, on the average, keeping farm bankruptcy rates lower there than elsewhere. Banking and Finance Loan growth appears to be mixed across the country and within individual districts. Large New York City banks show relatively modest growth of assets, but small Second District banks have rapid loan growth in all categories. Philadelphia and Richmond report strong loan demand growth, while weakness in loans is reported by Cleveland and Atlanta. San Francisco cites steady loan demand and an improvement in loan quality, particularly among agricultural loans. Some districts report softness in consumer lending due to aggressive nonbank competition for auto loans. St. Louis notes considerable legislative activity on regional interstate banking, among the states of its district. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1263 -beige_book_pure_text_pre2000,1985,"The pace of economic activity in all Districts seems to be slowing across most sectors. Retail sales generally continue to sag yet inventory levels appear satisfactory and the outlook remains optimistic. An important exception is auto sales which are strong in most areas and the strength is extending to suppliers. While primary metals manufacturing is improving in some areas, manufacturing growth in general seems to be modest or declining. Residential construction is a source of strength throughout the country, but signs of weakness exist in parts of some districts. Non-residential construction is mixed. Agricultural conditions remain difficult almost everywhere, but financial problems appear concentrated in the Plains states. Mining and drilling activity is declining throughout the country. Bank loan activity is mixed with most growth occurring in the consumer sector. Consumer Spending Consumer spending has slowed in recent weeks and continues to vary widely across the country. Six districts report generally weak sales; strong sales are reported by Richmond and St. Louis. Atlanta and San Francisco report a more mixed picture with significant growth in much of their districts but still some sluggishness in certain areas. In general, demand in the automotive sector appears strong, as a result of lower interest rates and promotions by manufacturers and dealers. Retailers' inventories were generally at satisfactory levels, but Chicago, Minneapolis, and Kansas City report that some actions have been taken to reduce stocks. Automobile dealers reported tight inventories, especially for imports, in three midwest Districts. The outlook for consumer spending was generally optimistic across the country; lower interest rates and increased mailings of tax refunds were commonly expected to boost demand. Only Dallas mentioned expectations of further slowing. Industrial Activity Manufacturing activity seems to have slowed in much of the country, but remains varied across districts and industries. Five districts reported weak or slowing industrial activity, and four reported stable levels or only modest growth. The only report of sharp improvement was for Missouri. The outlook generally is for little change, but Philadelphia and Cleveland report moderation of growth forecasts, Dallas reports an increase in optimism, and some observers in the Eighth District expect a slight improvement. Business for primary metals producers was mixed. Continued distress for steelmakers was reported in the Cleveland district and in the Chicago area. Minneapolis noted that iron ore processing cutbacks are soon expected. However, steel and other metals producers report gains in the Dallas District as well as in New York. Alabama, and the Detroit area. Two districts report slowing in high-tech industries, Boston and San Francisco both report weakness among semiconductor firms (with signs of recovery only in Arizona), attributed to weak domestic demand. Business for New England computer manufacturers was mixed. Suppliers to the auto industry have benefitted from that industry's strength, according to reports from Boston and Chicago. Energy-related producers in three districts report slack demand. Then were several reports of hardship caused by import competition and the strong dollar. Reports of adverse impacts come from steelmakers (Cleveland), manufacturers of home appliances and capital equipment (Chicago), paper producers (Atlanta and Dallas), the lumber industry (San Francisco), and apparel and textiles firms (Richmond and Atlanta). Construction and Real Estate Construction activity varied greatly across the United States. Residential construction has been proceeding at an exceptionally rapid pace according to New York, Boston, Minneapolis. and Richmond; but Atlanta, St. Louis and Kansas City report some areas with significant weakness. Non-residential construction slowed in the New York and St. Louis districts, and Cleveland indicates that no new construction contracts are expected for the next few years due to recent overbuilding. In contrast, absorption is ""strong as ever"" in Atlanta. The market was ""vigorous"" in the Chicago district but observers believe a glut may develop next year when a great deal of space comes on line. Industrial construction has been increasing according to reports from Richmond. Agriculture and Mining Weak prices across commodities continue to compound the difficult conditions in the farm sector. Dairy prices and output are weakening largely due to reduced federal support. St. Louis, Dallas, and San Francisco report attempts to reduce inventory in livestock. Good weather and early planting using full acreage should yield large harvests in the autumn in most areas except South Dakota and Montana, where dry conditions currently prevail. This may put additional price pressure on farmers. Vegetable, fruit, and poultry producers in the Mid-Atlantic and the West coast, however, seem to face a much better outlook than others. Most natural resource industries seem to be hard hit. Dallas notes a continued slide in the number of drilling rigs, primarily due to declining petroleum prices. Richmond and San Francisco report employment declines in mining. Minneapolis contacts, however, observe a boom in the wood products industry as a result of strong construction activity. Forest fires in the Sixth District have created tremendous, and largely uninsured, timber losses. Finance Despite the sluggishness of retail spending, growth in total loans seems to be sustained primarily by consumer lending. St. Louis, for example, reports a retail lending increase of more than 30 percent over last year. Chicago notes, however, that the rapid rise in consumer credit is accompanied by a rising delinquency rate. For the most part, real estate lending remains strong, while weakness in commercial lending seems widespread and Dallas has even been experiencing a decline in business loan volume. Only Philadelphia and San Francisco report continued strength. Financial pressures in agriculture seen to remain concentrated in the Plains states. Kansas City reports that agricultural bank closings have shut many farmers out of the credit markets due in part to higher credit standards of the remaining banks. Chicago adds that pressures seem to be increasing on the cooperative Farm Credit System. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1210 -beige_book_pure_text_pre2000,1985,"The economy remains sluggish. Retail sales have been disappointing, but some districts see signs of a pickup in July. Despite the weakness in retail sales, inventories remain under control. The manufacturing sector is stagnating; orders and shipments are flat and employment seems to be declining. Residential and nonresidential construction continues to be a source of strength; several districts report increased activity. Consumer lending continues to rise. Commercial lending is up in some districts and down in others. Agricultural prices are below year ago levels and decreasing. While harvests are expected to be good in general, some parts of the country are suffering from very dry weather and grasshopper infestations. Consumer Spending Retail conditions are mixed. Most districts report that recent sales have been disappointing. However, in about half the districts, July appears to be an improvement over June. Exceptions occur in the San Francisco district where sales are well ahead of a year ago but. slowing and in Richmond where there has been a marked softening in recent weeks. Minneapolis cites especially slack sales in distressed agricultural areas. A majority of districts find soft goods performing better than durables. Prices are relatively stable, partly because of promotional markdowns. Inventories have generally been kept in check, even in areas with slackening sales growth. Automobile and light truck sales are up in a number of districts but down in others. Foreign cars are said to be selling better than domestic, at least partly because the loosening of quotas for Japanese cars has increased availability. Economic activity in resort areas is stronger than last summer, although New York reports reduced foreign tourism. Industrial Activity The manufacturing sector continues to stagnate. While Philadelphia reports that new orders and shipments have picked up marginally, Cleveland and Richmond find that business is flat to down slightly. Industries cited as experiencing difficulty outnumber sources of strength. Both Cleveland and Chicago observe that orders for heavy trucks have fallen recently. The steel industry remains troubled as do a number of capital goods Industries in the Chicago district. Semiconductor and related firms are a source of weakness in the San Francisco district, and in Dallas a weak energy sector is depressing sales in many industries. Experience varies among districts, however. For example, while Richmond reports that textiles, apparel and furniture are losing market share to imports, Dallas observes that apparel orders are well above year ago levels and furniture makers in the Atlanta district are looking forward to increased sales. Reductions in manufacturing employment are taking place in a number of Districts including some in which manufacturing activity is flat or up slightly. Chicago reports deep cutbacks in such industries as steel, capital goods and electronics. The mining sector remains weak, with activity generally below year ago levels. There have been a few encouraging developments, however. In the Richmond district coal production is expected to increase shortly because stocks have been drawn down sharply. Gold mining has strengthened in the San Francisco district. Dallas reports that the rate of decline in drilling appears to be slowing, with the seasonally adjusted rig count actually increasing in July. Construction and Real Estate The pace of residential construction differs across the country. New York, Richmond, Atlanta and San Francisco report continued strength in homebuilding. Construction activity has picked up in the Cleveland and Dallas districts. However, the level of activity in Dallas is said to be low relative to a year ago. Residential construction is also below year earlier levels in the Chicago, St. Louis and Kansas City districts. Nonresidential construction activity is strong in a number of districts. Construction has increased substantially in the St. Louis district while Chicago and Dallas report small advances. Dallas observes that the city of Dallas is now said to lead the nation in vacant office space; New York also notes that vacancy rates remain high. Finance Consumer lending is continuing to increase, with several districts reporting substantial gains. Richmond, however, finds weakness in retail sales reflected in consumer loan demand. Commercial lending also appears to be increasing but rates of growth are generally smaller than for consumer loans. Dallas reports a decline in business loans, while at Kansas City banks commercial, industrial and agricultural loans are unchanged or down. Agriculture Agricultural prices continue to weaken. Corn, soybeans and cotton have been particularly hard hit, with prices down substantially from last year because of ample supplies and weak export demand. Drought conditions and grasshopper infestation pose severe problems in parts of several districts. Poor pastures have speeded up the sale and slaughter of livestock, causing prices to decline. Minneapolis reports live cattle prices at their lowest level since 1978. Chicago reports continuing declines in farmland values; however, Dallas finds that the decline in land values in its district abated in the second quarter. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1011 -beige_book_pure_text_pre2000,1985,"Introduction This month's commentaries on economic developments by the twelve Federal Reserve banks suggest general stability, with neither accelerating growth nor significant deterioration as near term prospects. This is indicated in key words and phrases in district summaries: Boston, ""retail sales improving, manufacturing in the doldrums""; New York, ""little growth""; Philadelphia, ""same as August""; Cleveland, ""soft and uneven""; Richmond, no ""broadbased improvement""; Atlanta, ""healthy on balance""; Chicago, ""no overall pickup or weakening""; St. Louis, ""continues to lag""; Minneapolis, ""a bit weaker""; Kansas City and Dallas, ""sluggish""; and San Francisco, ""signals are mixed"". Among economic sectors, however, there are significant variations. Perhaps the most troubled sector, at present, is agriculture, with prices and income severely depressed. Total employment is growing moderately, but with great variation by region. Manufacturing output, overall, is about stable. Mining, including oil and gas development, is depressed. Retail sales are somewhat stronger, but mainly disappointing. Auto sales have been stimulated by special financing. Inventories are in fairly good balance, and all types of goods readily available. General price inflation is still in check—partly because of the heavy influx of imports of a wide range of goods. Business purchases of equipment are cautious. Residential construction and demand for building materials is vigorous. Nonresidential construction is strong, but with concern about overbuilding. Bountiful harvests arc pushing down farm prices and income, and causing increasing concern over farm credits. Interest rates have not changed much in recent weeks. Private credit demand is about stable, with mortgage and consumer loans growing, and business loans soft. Inflation Little change is expected in wholesale prices, which are held down by ample domestic capacity, large agricultural crops, weak oil and gas prices, import competition, and sluggish growth in total spending. Surveys in Kansas City, Richmond, and St. Louis suggest little change in input or selling prices of manufacturers, and only moderate increases at retail. Employment Several districts are not participating in the strong employment growth reported for the nation in recent months. Weakest job markets are in the Midwest, especially in the Chicago, Cleveland, and St. Louis districts. But even San Francisco reports widespread layoffs because of the slump in electronics. The strongest job markets may be in the Northeast, especially parts of' the Boston and New York districts. Consumer Spending Reports on retail sales are mixed. Boston, Philadelphia, and Richmond see improvement, while Kansas City and San Francisco find sales stable or down somewhat. Consumer price resistance and heavy promotion activity to move merchandise are common. Inventories, overall, seem to be in good condition, with increases in line with plans. Auto sales have responded strongly to cut rate financing programs, but Philadelphia reports concern that sales may drop when incentives expire. Cleveland indicates some car dealers regard inventories as excessive and may cut orders significantly. Atlanta reports increased attendance at District tourist attractions, except during the Labor Day weekend, disrupted by Hurricane Elena. Manufacturing Factory output, overall, has changed little in the past year, and is not likely to rise significantly in the months ahead. Imports continue to account for a large, and often growing, share of domestic consumption of steel, vehicles, machinery, wood products, furniture, textiles and apparel, and chemicals. Among the strongest manufacturing sectors are building materials and food processing. Motor vehicle production is holding at high levels, but is not expected to rise further. Producers of advanced electronics are in a severe slump after a rapid rise in 1983-84. Capital Expenditures Business capital spending prospects appear somewhat weaker, with cuts in plans in Philadelphia, Boston, and San Francisco. Chicago and Cleveland report reduced demand for heavy trucks and trailers. Machine tool orders are mainly for the auto industry and defense, with total backlogs far below the levels of the late 1970s. Inventories With some exceptions, business inventories are at acceptable levels, even low. Cleveland states that some manufacturers are cutting stocks, but Boston reports factory inventories to be ""very lean"". All items are readily available, and, with wholesale prices soft, there is no incentive to accumulate. Extractive Industries Declines in oil and gas drilling and synfuel facility construction are depressing activity in the Atlanta, Dallas, Minneapolis, and San Francisco districts. A further drop in world oil prices could hit these activities even harder. Mining of metal ores is very depressed. Richmond reports coal mining as ""flat"", but likely to improve because of low inventories. Housing Residential construction is generally strong, though Chicago reports activity far short of peaks in the late 1970s, and Minneapolis and San Francisco note that activity varies widely among areas. Respondents in Cleveland expect current strength, helped by state subsidized mortgage funds as well as lower mortgage rates, to wane. New York, however, reports that a high level of activity is expected through 1985, with shortages of skilled labor and certain materials. Home prices are generally rising in the New York District but co-op and condo prices have fallen. Atlanta and San Francisco note that the condo market is depressed in some areas. Dallas, in contrast, has seen a rise in multifamily permits, after earlier declines. Apartment building has been vigorous in the Chicago area, and has been boosted in Manhattan ahead of expiration of a local tax break. New York and Cleveland report minimal speculative building. Philadelphia and Cleveland say demand for mortgages is concentrated in fixed-rate loans. San Francisco reports strong demand to refinance fixed-rate mortgage loans at lower fixed rates. Nonresidential Construction Commercial construction is reported strong in several districts, but vacancy rates are rising. Boston and New York note use of concessions such as free rent. Bidding volume suggests continued strength in nonresidential building in Chicago into 1986. However, Dallas reports that plans are being deferred, suggesting a decline in contracts soon. Kansas City notes a shift from office building construction toward shopping centers. Construction of streets, highways, and water treatment plants is also strong, according to several reports. Agriculture All districts with extensive agriculture report excellent harvests, low farm prices, and depressed income. Farm sector problems in paying bills and servicing debt are growing. Strong statements on the ""plight or the farmer"" are made by Atlanta, Chicago, Dallas, Kansas City, Minneapolis, St. Louis, and San Francisco. Perhaps the greatest stress is in the corn and soybean areas. Farmers in the western plains have the additional problem of low yields caused by drought. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1423 -beige_book_pure_text_pre2000,1985,"This month's commentaries by the twelve Federal Reserve Banks suggest that the economy has advanced slightly since the end of summer and is poised for further growth. Representatives from the retail trade sector say auto sales have been strong and sales of general merchandise, though lower than expected, are still well ahead of last year. Retailers expect a good fourth quarter and continued strength as the economy resumes growth. Bankers say loan volume continues to expand, with strong gains in consumer and real estate loans leading the way. Residential construction, especially of single family houses, is also up in early fall. Sales of homes are brisk and are expected to remain so. Nonresidential construction also remains healthy, and, although some signs suggest a slowdown say be starting, projects already underway should provide momentum to keep the industry going at least through the first quarter of 1986. In the manufacturing sector, industrial activity remains unchanged, but manufacturers are more optimistic about the outlook for 1986. The sector with the most significant problems and the bleakest outlook remains agriculture. Farmers continue to face financial distress in many areas of the country. Crop farmers in particular may find themselves sinking deeper as near-record crop yields depress already low farm prices further. Manufacturing and Mining Business conditions in the industrial sector appear to be holding steady in October with most districts reporting mixed or unchanged manufacturing activity. Specific indicators, such as new orders and shipments, vary among geographic areas and among industries, but reveal no clear trend. Employment also varies across districts and businesses, but little change is noted. Producers' inventories appear to be at acceptable levels, except in electronics, where some involuntary accumulation has resulted from the slump in that industry. Prices are generally steady; some districts report some downward movement. Among the stronger industries are autos, auto related products, defense products, and aerospace products. Housing related items, chemicals, and building materials are mixed. The paper industry, one of the strongest in this expansion through 1984, is starting to show signs of weakening according to reports from Atlanta, Minneapolis, and San Francisco. Steel, electronics, and farm equipment are reported to be the biggest drags on the industrial sector at this time. The energy industry is also lagging far behind, with Dallas reporting the lowest oil rig count in Texas since 1976. Looking ahead, some districts report a slightly better outlook for manufacturers for 1986, which is reflected in increased capital spending plans for the coning year. In many cases, however, planned increases will only replace spending originally scheduled for 1985 and then cancelled. Moreover, according to indications from Boston and Richmond, most of the expenditure on plant and equipment will be for cost containment, productivity enhancement, and the introduction of new products, rather than for capacity expansion. Cleveland reports that coal mining remains very depressed in many areas with unemployment in many mining counties running in double-digits. Richmond also notes that coal production is down from last year, although many mines are producing at high levels. Consumer Spending Cut-rate financing arrangements provided by auto manufacturers gave auto sales a strong boost in September and helped overall retail sales to turn in a good third quarter performance in most parts of the nation. Sales of general merchandise, while still posting gains on balance, have slowed from their pre-Labor Day pace and are behind retailers' projections in some areas. Some merchants say general sales might have been stronger and on target, but were weakened by bad weather conditions in many areas and a surge in spending on autos. Reports of retail inventories range from slightly tight to a little heavy; overall stock levels appear to be about where retailers want them, and no significant change is planned aside from the fourth quarter seasonal buildup. Merchants' near-term outlook is generally optimistic, with renewed economic growth expected to result in continued strength in sales. Many store managers expect the fourth quarter to be good, with year-over-year gains in the 5 to 10 percent range, despite a shorter shopping season and growing concern over the consumer debt burden. Finance Total loan demand remains strong in most areas, with loan volume outstanding at major U.S. banks running 8-to-9 percent ahead of a year ago and nearly 1 percent higher than in August. San Francisco notes that small banks are experiencing greater loan demand than are large banks, as many customers of larger institutions have turned to the commercial paper market and have reduced bank borrowing. Loan categories posting the biggest gains include real estate and consumer loans. Consumer loans might have been even stronger were it not for special financing deals offered by auto manufacturers. A major portion of the demand for real estate loans results from refinancing of existing mortgages. The weakest performance is observed in agricultural loans. Farm loans are falling in many districts, as banks both cut back borrowing and increase write-offs. Deposit growth is strong in most areas. Bankers in Philadelphia say they have been able to meet time deposit targets without aggressive pricing. Kansas City reports that many thrifts have yet to lower minimum balance requirements on MMDAs and SuperNOWs. Real Estate and Construction Residential construction is reported to be stronger in September, except in Kansas City and St. Louis, where homebuilding is continuing at the same rate as in late summer. The most significant gains are being posted in single family housing construction, while multi-family construction is holding steady in some areas and weakening in others. No shortages of either labor or materials are reported, except in parts of New York where Hurricane Gloria caused substantial damage. Residential sales are strong in most areas, spurred by stable mortgage rates at just over 12 percent, rising incomes, and the availability of subsidized mortgage money in some states. House prices are reported to be firm and new listings strong. Nonresidential construction is generally weaker than residential building, but still healthy in many regions. There is some evidence that new construction may be slowing slightly, but projects already underway should provide continued strength. Many observers are surprised that nonresidential construction has not already lost steam, in view of rising vacancy rates and a general feeling that the office market is already overbuilt. Chicago notes that some projects have been started recently so that they will be grandfathered under the current tax code and thereby protected from future tax changes. Office leasing activity is mixed, with vacancy rates at suburban locations generally higher than in downtown areas. As a result, rents in suburban areas may hold steady or even fall in coming months. Agriculture While livestock farmers have gotten some measure of relief recently from higher livestock prices, crop farmers remain in financial stress in many areas, and may find their plight worsening. Harvests currently underway are likely to yield bumper crops that will drive farm prices and revenues even lower. Many farmers are storing their harvest under Commodity Credit Corporation loans. Others, however, are selling at current prices in order to get cash to pay off loans and stave off foreclosure. Farm land values dropped further in the third quarter. Kansas City reports that a great deal of farm land is for sale, but that very little is actually changing hands. Credit has become tighter and many suppliers have become less willing to deal in terms other than cash. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1542 -beige_book_pure_text_pre2000,1985,"Overview The economy appears to be growing slowly at best. Only Richmond describes its District economy as strong, although there is some optimism in the reports from Philadelphia and New York. Retail sales gains are uneven, and less-than-robust Christmas sales are expected. Auto sales are low now that special interest rate incentives have largely ended. Industrial activity continues quite sluggish with few gains yet from dollar depreciation. Residential construction is improving but non-residential construction is uneven. Agricultural prices remain weak despite some rises in meat prices; agricultural land prices continue to fall and farm finances remain weak. Commercial bank consumer and real estate lending is rising further but business lending is declining in most Districts. Retail Sales October retail sales other than autos are mind, with most Districts reporting moderate year-over-year gains. Sales are frequently described as strong for apparel and weak for various hardgoods. Inventories are generally at desired levels and are being built cautiously as most retailers expect Christmas sales to show only moderate increases from 1984. New car sales continue to run well below year-ago levels in most Districts in reaction to the end of most special financing. However, Richmond and Dallas report sales were stronger than usual in October. Manufacturing and Mining Industrial activity continues to be quite sluggish. There is little indication in the District reports that dollar depreciation has resulted in higher prices or stronger demand for domestic producers, although Chicago reports ""limited evidence of increased orders for mechanical capital goods."" Defense goods producers report order gains and rising production. Domestic auto manufacturers are said to plan to continue high production levels into early 1986. Production and sales of heavy trucks have declined. Prices and sales of primary metals remain weak. Cleveland reports continued weakness in machine tool orders and prices. Atlanta reports textile employment has stabilized in recent months after a sharp decline, and Richmond reports ""some pickup in textile and apparel exports"" and that a recent small gain in textile employment is being sustained. Manufacturing firms generally report prices of materials and components are stable. Boston reports many firms are unable to raise their own prices and large firms ""are refusing to accept increases from suppliers."" Inventory levels are generally considered satisfactory, although Dallas reports semiconductor industry inventories are excessive and Cleveland reports raw materials inventories falling sharply. San Francisco reports that the lumber industry in the Northwest continues to be hurt by competition from the South and British Columbia, and by low prices, even though the price decline has been smaller this year than last. Coal production continues lower than in 1984. Drilling activity in the Dallas District ""continues to decline at accelerating rates."" Construction and Real Estate Residential real estate markets are doing well generally but not in all areas. Listings and sales of used homes are rising and plans for construction and starts of new homes are increasing. Mortgage rate declines are a source of strength, but credit standards are being tightened by lenders and mortgage insurers, leading to some concern that effective demand may be crimped. District reports generally are moderately optimistic about 1986. Non-residential property construction and vacancy rates are uneven. Construction is reported as still strong in some parts of the Atlanta, Chicago, St. Louis, and Dallas Districts. San Francisco reports high commercial vacancy rates in many areas are causing construction permits to slow. New York reports that overall demand for commercial real estate generally remains satisfactory and that work has recently begun on a ""$10 billion community planned for the New Jersey waterfront across from Manhattan."" Chicago and Dallas report strong road building and repaving activity. Agriculture Most harvests are bountiful, most agricultural prices are low, and farm financial difficulties continue. Although vet weather has delayed the corn and soybean harvest in some parts of the midwest, yields are high and prices remain weak. Grain sorghum yields are high. Cattle and hog prices are low but have risen recently, and meat production is lower. Atlanta and Minneapolis report favorable conditions for poultry producers. Cotton yields are expected to be normal in Oklahoma but high in the Atlanta District, and the cotton price remains low. The Louisiana sugarcane crop has been damaged by hurricanes. Kansas City reports that continuing liquidations and foreclosures have ""saturated the farm real estate market,"" causing farmland prices to continue to fall although very little land is changing hands. Commercial Banking Most Districts report increases in commercial bank consumer lending, with some noting it has been boosted by the ending of most special financing rates on autos by automobile finance companies. Real estate lending continues to grow, partly because of mortgage rate reductions. Business loan volume is falling in most Districts. However, Philadelphia reports substantial growth in business loan demand, particularly ""from middle-market companies that do not have convenient access to the commercial paper market."" Kansas City reports agricultural lending is flat or slightly down, and Kansas City and Minneapolis report continued banker concern about the quality of agricultural credit. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1057 -beige_book_pure_text_pre2000,1986,"This month's commentaries on regional economic activity suggest that the economy is growing at a moderate pace on balance. Several Banks, including Philadelphia, Richmond, Minneapolis, Kansas City, and San Francisco, pointed to signs of improving business activity in their respective Districts. Most other Banks reported little change. Dallas reported that its economy remained sluggish, and St. Louis noted a continuation of the conflicting signals reported earlier for its region. Chicago pointed to continued weakness in its District and indicated that it expected business activity there to lag the national economy in 1986. The economic picture is uneven across sectors. Consumer spending appears to have been moderately strong during the Christmas season in most regions, although Chicago reported that sales were disappointing. Construction activity was also reported to be relatively strong, especially in the residential sector. Manufacturing activity, however, is mixed, ranging from a boom in military electronics in the San Francisco District to activity that remains in the ""doldrums"" in time Cleveland District. Elsewhere, several reports noted continuing problems in agriculture, including declining livestock prices (Minneapolis and Dallas), rising delinquencies on farm loans (St. Louis), low orange prices (Atlanta), and low tobacco prices (Richmond). Several pockets of strength in the agricultural sector were mentioned, however, including poultry, almonds, and winegrapes. Consumer Spending Much of the comment on consumer spending focused on sales during the Christmas season. Most of the reports indicated satisfactory sales despite the shorter-them-normal selling period between Thanksgiving and Christmas. Sales were 5 to 10 percent higher than last year in the New York District. They were up 3 to 7 percent in the Philadelphia District, and were described as relatively strong in the Kansas City District, above expectations in the Dallas District, and either level or up moderately in the Boston, Atlanta, Chicago, St. Louis, and Cleveland Districts. Retail inventories appear to be under good control for the most part; they were variously described as relatively low, satisfactory, or well-balanced. Profits of retail merchants were reported to be well above the year-ago level in most districts, due to reduced price competition this Christmas. St. Louis, however, reported that profits were about equal to 1984 levels. Automobile sales have apparently responded to the latest round of interest rate incentive programs. Cleveland, for example, noted that sales in early January were up as such as 30 percent from year-ago levels. Dallas, however, reported that sales have recently weakened and that inventories of domestic cars were excessive. There were mixed views of the outlook for consumer spending. While sales are generally expected to increase, some of the reports suggest the increase may be modest in some regions. For example, Kansas City reported that sales are expected to increase only slightly, and Philadelphia indicated that most retailers expect flat sales in the first half. Manufacturing Manufacturing shipments and orders, on average, appear to be growing at a slow rate, while manufacturing employment continues to decline. Conditions vary widely, however, across industries and regions. Philadelphia noted that orders and shipments are up in its District, but that employment is steady. Boston reported that orders are flat, or increasing modestly, while employment is being cut by attrition. Cleveland indicated that employment had fallen substantially at more than half of the establishments it had surveyed. Atlanta and Sam Francisco reported that defense spending had stimulated industrial activity in their Districts, particularly in the electronic equipment and shipbuilding industries. Richmond and Atlanta reported that activity in the textile industry, hit hard in recent months by imports, had recently stabilized, albeit at a low level. Sam Francisco and Dallas stated that the output of lumber and wood products in their areas had continued to decline. Several Banks noted little tangible response to the recent decline in the foreign exchange value of the dollar. Richmond, however, indicated that several District manufacturers had recently reported renewed contacts with former customers. Also, Boston reported that sales to European buyers had picked up quite markedly in the second half of 1985 due, at least in part, to the dollar's decline. Mining Dallas reported that the drilling rig count was at its lowest level since 1976, and that the seismic crew count was continuing to fall. Minneapolis also noted declining oil and gas activity but mentioned that a copper mine was reopening. San Francisco indicated that mining activity for metals such as copper remained depressed, but that gold and silver mining were expanding. Construction and Real Estate Seven districts reported moderate to strong increases in residential building activity. Dallas, however, painted a bleak picture of construction activity in its District. It indicated that the value of both residential and nonresidential construction contracts had fallen in each of the last three months. Atlanta reported that office construction had outpaced leasing recently, and Cleveland reported concern that speculative construction of new office space was excessive in some midwestern cities. Agriculture Several Banks mentioned low farm prices and the resulting low farm incomes. Richmond reported low tobacco prices, Atlanta noted low orange prices, and Minneapolis and Dallas found falling livestock prices. Dallas also reported a continuing decline in foreign demand for cotton, and San Francisco noted generally weak farm prices. The reports on agriculture were not uniformly bleak, however. Richmond indicated that the demand for poultry was strong, and San Francisco found that the lower dollar had aided producers of almonds and winegrapes. Chicago and Minneapolis stated that recent increases in some farm commodity prices were a positive factor. Also, Kansas City reported that excellent crop yields and higher livestock prices had produced a better than expected farm loan situation. Banking and Finance Several Banks reported that both household and business loan demand were strong. Kansas City, however, indicated that loan demand in its District was flat, and Dallas noted that both consumer and business demand were below the year ago level. Only two Banks mentioned the removal of minimum balance requirements on Super-NOW accounts, and both reported that the removal had not yet produced any significant change in deposit pricing policies in their Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1297 -beige_book_pure_text_pre2000,1986,"Moderate economic expansion has continued in most regions of the country in recent weeks, despite unevenness across sectors. Recent improvements in economic activity are noted by New York, Cleveland, Kansas City, and Philadelphia. Richmond and Atlanta report sustained growth at a relatively strong pace, while Minneapolis and Boston indicate mixed conditions with no clear direction for the overall economy. The major sectors of strength included construction and selected manufacturing industries. Although industrial activity varied across Districts, general improvements were noted for energy-intensive manufacturers such as the lumber, paper, aluminum, and steel industries. Both commercial and residential construction continue strong in most Districts, with several reports noting benefits from falling mortgage interest rates. Major economic weaknesses continue to be concentrated in the agricultural and energy producing sectors, and further deterioration is anticipated because of continuing price declines, especially for oil. Consumer spending growth, although characterized as moderate, was noted in nearly all Districts. Industry Industrial activity appears mixed, according to District reports. Solid improvement in manufacturers shipments and orders was reported by Cleveland in contrast to substantial declines earlier. Philadelphia reports continuing healthy increases in orders but little change in employment. Orders are improving for both the aluminum and steel industries, according to Cleveland and Chicago. Boston reports increased orders for manufacturing products related to housing, and signs of an upturn for the forest products industry are reported by San Francisco, Cleveland, and Richmond. In contrast, Minneapolis reports mill closings due to continuing Imports of forest products from Canada. The aerospace industry is prospering. The steep drop in oil prices has stimulated energy-intensive industries, according to Atlanta. Although chemical firms have yet to benefit from lower prices for petroleum based inputs, producers are optimistic about the outlook. Richmond states that textile producers' workweeks are increasing and inventories are favorable. Other Districts continue to show declines in industrial activity. Large scale cutbacks in manufacturing employment were cited by New York, and staff reductions related to business mergers and cost containment programs are noted by Chicago. Manufacturers' inventories are reported to be tolerable, and there appears to be little upward pressures on prices. Minneapolis, Dallas, San Francisco, and Atlanta report further weakness in their recent declines in oil prices. Minneapolis reports rig counts in North Dakota at the lowest level in five years, and Dallas reports a 30 percent reduction from last year's depressed levels. In Alaska, where oil revenues contribute 85 percent of state revenues, the Governor has already taken steps to reduce state spending. Consumer Spending There was widespread agreement among commentaries that consumer spending was up moderately in January-February from year-earlier figures. Consumer goods inventory levels across much of the country tended to be lean and under control. Boston reported that sales were somewhat volatile, in part because consumers are promotion-minded. ""Cautious"" consumer spending was reported by Chicago and New York, with the latter attributing it to uncertainty over the course of the economy. As usual early in the year, sales of nondurable goods tended to outpace durables. Dallas suggested that declining seasonally adjusted housing activity also contributed to relative weakness in durable goods sales there, and that sales in energy- dominated regions were rising less than in other areas. Kansas City reported some unwanted inventory build-up at retail with slightly reduced prices as a consequence, while Boston noted that prices of imported goods are rising. The outlook for tourism in the Southeast has improved as a result of discount airfares, according to Atlanta. Auto sales are apparently showing varied temporal and geographical results. Atlanta's report of volatile activity, related to waves of limited-time cut-rate financing deals, was a typical commentary. However, Cleveland reported fairly strong and stable growth of sales, while Kansas City, Dallas, and San Francisco reported flat, disappointing, or declining auto sales. The dominant range of outlooks for overall consumer spending and for autos, particularly, seems to be moderate-to-bright. Philadelphia reported that retailers are raising their sales forecasts. Exceptions are those areas most adversely affected by declining energy prices, where spending growth prospects are considerably dimmed. Construction Residential real estate markets are generally strong, and most Districts report some improvement in both sales and construction. The notable exceptions were in the Dallas District, where residential activity declined due to the uncertain regional economic outlook, and in the New York District, where cold weather, snow, and a labor shortage have slowed construction. Atlanta reports severe residential real estate weakness in Louisiana, which shares the energy sector problems of the Dallas District. Commercial construction also continues strong generally, although it is clearly weakening in the Dallas District. Atlanta noted a significant shift of commercial construction resources away from offices and stores toward light industrial buildings. Financial Services Although reports vary among regions, the nation's total loans continued to increase in recent weeks. Dallas, Richmond, and Philadelphia indicate an increase in total loan growth, while Atlanta reports that the decline in growth in its region was checked for the first time in almost a year. New York, Philadelphia, and San Francisco reported that declining mortgage rates are sustaining mortgage volume and boosting the rate of refinancings. There are indications of declining or softening commercial lending at Dallas, Kansas City, and Atlanta and weaker consumer lending at Cleveland and St. Louis, the latter probably due to competition from auto dealer special financing packages. Agriculture Most of the farm sector remains under heavy financial pressure resulting from large crop supplies and weak demand, which have continued to reduce market prices of most farm commodities. Depressed returns prevent heavily indebted borrowers from meeting scheduled loan payments, and farm foreclosure rates are rising principally throughout the areas of field crop production. Kansas City reports that from 6 to 10 percent of farm borrowers will be denied credit this spring. The Farmers Home Administration has mailed notices of potential foreclosure to 40 percent or more of their borrowers in several states in the Southeast. Minneapolis reports a banker's projection that one-third of indebted farmers in South Dakota will eventually leave farming. San Francisco relates that in addition to low prices and heavy import competition, some orchard producers suffered severe losses from recent flooding. On the brighter side, Richmond and Atlanta point out that poultry producers are doing relatively well with firm prices, expanding output, and falling feed costs contributing to growing profits. Conversely, Dallas indicates beef cattle feeders are stressed by depressed cattle prices and declining marketings. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1370 -beige_book_pure_text_pre2000,1986,"Virtually all districts report continued moderate economic growth. With the exception of Dallas, which is plagued by problems related to railing oil and gas prices, no district reports general stagnation. Energy sector problems, coupled with problems in agriculture and some manufacturing sectors, have led to unbalanced growth in the Kansas City, Boston, Cleveland, and Minneapolis districts. New York, Philadelphia, and Richmond report a more general improvement. Consumer spending—particularly for housing—appears to have been strengthening lately. Active housing markets in almost all districts have generated much construction activity, boosted the demand for building materials, and caused a spurt in mortgage lending. Sources of weakness include the energy and agriculture industries and some manufacturing sectors. Oil and gas price declines have led to drastic cutbacks in drilling activities and related supplies and spending. Low prices still hinder many farmers' attempts to return to profitability. While many districts mention that manufacturing output has been steady or rising, a few point out that manufacturing employment is still falling. Consumer Spending Most districts say that retail sales of general merchandise have registered gains, with San Francisco noting particular strength. Richmond and Kansas City say that sales have been improving—in the Richmond district, significantly in recent weeks. New York has seen greater strength in sales at stores that cater to high-income shoppers. Inventories have rarely been excessive. Auto sales, though, have leveled off lately. Kansas City, Dallas, and Philadelphia all say that vehicle sales have fallen off. But Boston has received mixed reports, and Cleveland believes that sales have been high, but flat. Most districts report very active housing markets—as one New York contact says, in this industry ""business is booming."" Only the Dallas district reports the opposite. Chicago mentions that housing permits are 40 percent above their level last year at this time. Atlanta also adds that, except in New Orleans and Jackson, single-family home sales throughout the Southeast are higher than a year ago. Atlanta and Richmond report healthy levels of tourist spending. Some districts are looking forward to more of the same, fueled by lower gas prices, the lower dollar, and citizen concern about overseas travel. Construction Housing activity has led to a lot of construction in most parts of the country, particularly of single-family homes. Several districts, including New York and San Francisco, see signs of strength in commercial construction as well. Nonresidential construction contracts in the St. Louis district increased in the first quarter. The Boston and Chicago districts report much demand for commercial space in their Reserve cities. Atlanta notes that Southeastern industrial space construction is beginning to accelerate. But Richmond notes that high vacancy rates have been hindering urban office construction there. Manufacturing Reports from manufacturers are mixed. While Chicago notes that auto and steel production plans are being cut back some, Cleveland reports that sales of Ohio-made Hondas have been particularly strong. Demand for wood- based products is also strong. Chicago reports ""near-boom conditions"" at its cardboard box plants, while Minneapolis notes that waferboard production is high. Aerospace manufacturing—both commercial and defense—is a welcome help in the San Francisco and Dallas districts. Among the weaker sectors, computer equipment production has remained sluggish in the Boston district. Both San Francisco and Dallas haven't seen a turnaround in the faltering electronics industry, but they think the worst times may be behind it now. While apparel production has remained steady in the Richmond district, Dallas reports a big layoff, but hopes that modernization and marketing efforts will help this sector. Resource-Related Industries Mixed conditions also characterize the resource-related sectors. Drilling activities have plunged with oil and gas prices. The rig count is down 50 percent from a year ago in the Dallas district, 40 percent in the Kansas City district, and substantially in North Dakota and Montana. Atlanta reports that this has made Louisiana's unemployment rate the nation's highest. Cleveland points out that coal prices are down, too. But Richmond and San Francisco note growing lumber demand driven by housing starts. Agriculture With a few noteworthy exceptions, the nation's agricultural conditions aren't good. Low grain prices are hurting Minneapolis and St. Louis district farmers. St. Louis observes that corn futures prices recently reached their lowest level in nine years. Winter wheat has suffered substantial winter kill in the Chicago district, and dry weather is hurting spring-planted crops in the Atlanta district. Demand for Kentucky horses is down, and cattle ranchers in the Minneapolis and Kansas City districts are upset about the aftermath of the government's dairy herd buy-out program. But San Francisco reports that production of many fruits and vegetables is still profitable, while Atlanta says that poultry production is more profitable than last year. Finance Lending activity appears to be fairly good. Leading the way is mortgage lending. In Cleveland, for example, mortgage lenders report that lending increased 100 percent over last year. Home refinancing is up across the country. Regional differences have occurred in commercial lending—picking up in Boston, Philadelphia, and San Francisco while falling off in Cleveland, Atlanta, and Dallas. Only Boston and San Francisco also note increased consumer loan growth. More agricultural loan losses are foreseen in the Dallas and St. Louis districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1116 -beige_book_pure_text_pre2000,1986,"Moderate growth is being reported by most Federal Reserve Districts, although the regional variations in economic conditions are substantial. Retail sales are expanding slowly, but several Districts report an acceleration in sales in recent months. Automobile sales are declining from their year-earlier levels and inventories have grown, but remain within acceptable ranges. Manufacturing activity is weak, especially in energy-dependent industries and regions. Past reductions in oil prizes have led to significant declines in drilling. Residential construction activity remains strong overall. Nonresidential building, while maintaining a high level, is beginning to decline. Loan demand has been stable in most Districts. Agriculture is still facing low prices. Consumer Spending Retail sales have been growing moderately in most Districts. Cleveland, New York, Chicago, and Philadelphia report accelerating rates of expansion, but Dallas and St. Louis note absolute declines from a year earlier. Little change is cited in inventories, which are generally said to be tightly managed. Prices are stable, although some Districts say that respondents expect price increases for imported goods. Automobile sales are sluggish in most Districts. The exception is Chicago, where sales have been matching last year's levels. Respondents report that a significant portion of the decline was anticipated because of the exceptionally strong sales of preceding years. In the Atlanta, Minneapolis, and Cleveland Districts, sales have been increasing in the second quarter over the first quarter levels, but remain below a year earlier. Inventories are growing, but are still within acceptable levels. For some particularly popular models, however, inventories are lean. Early reports on tourism support the outlook for increased domestic travel this summer. Respondents report that lower gasoline prices, the weaker dollar, and preference for domestic vacations are the contributing factors. New York reports that foreign tourism is buoying retail sales. Manufacturing Manufacturing remains weak overall. Although several Districts note growing manufacturing output and employment, Cleveland, Chicago, and Dallas all report that the slump in energy has markedly reduced demand for manufactured goods, particularly steel and machinery. A number of Districts, however, cite industries such as tire manufacturing and petrochemicals that are benefiting from lower energy costs. Increased construction activity nationally is buoying orders to lumber and wood products firms and paper goods producers in the Atlanta and Minneapolis Districts, but it is providing little impetus to these industries elsewhere. Richmond notes that furniture manufacturers have excessive inventories due to lower-than-expected orders, and that longer-than-normal plant closures are planned for this summer. Boston's respondents have noticed some increased prices for imported manufactured goods, but they have seen little effect on sales or output. San Francisco's comments on weak employment growth in the electronic equipment sector seem to reflect this industry's national experience, especially with regard to computer-related goods. Construction In general, the strongest construction sector is single-family residential building, but this strength is not uniform. New York, Cleveland, and San Francisco all describe booming residential construction, aided by falling mortgage interest rates. In the Boston and Chicago Districts, shortages of skilled construction labor are now providing a drag on residential building. In contrast, home building in the Dallas District, and in some states of the Minneapolis and Atlanta Districts, has been stymied by weak economic conditions in these areas. Atlanta, Kansas City, and Dallas all cite sluggishness in multifamily building. Growth rates of nonresidential building activity are declining or negative in every District that mentions this indicator. Nevertheless, the pace of nonresidential construction remains high in some Districts, notably Chicago, Atlanta, and New York. Retail building is generally the most active nonresidential category. Office construction is the weakest category, with rent concessions resulting from overbuilding in many major cities nationwide. St. Louis and Dallas report absolutely declining commercial construction. Mining The oil and gas extraction industry continues to reel as a result of falling oil prices. Dallas, Atlanta, San Francisco, and Minneapolis note reduced exploration and development activity in their Districts. The number of drilling rigs in operation is dropping nationwide. Richmond and Cleveland say that competition from oil and gas is reducing output and employment among coal mining firms. Agriculture Favorable weather is facilitating crop planting in the Chicago, St. Louis, and Minneapolis Districts, while adverse weather has hindered such activities in the Richmond, Atlanta, and Kansas City Districts. Low crop prices are mentioned as a concern in most agricultural regions. Chicago and Minneapolis note that increased dairy herd slaughter is depressing prices for cattle. Despite their uncertainty about the effects of the federal program to buy out dairy herds, cattle feeders in the Kansas City District are marketing their livestock on schedule. Both beef and poultry producers are expected to benefit from reductions in feeding costs. A slowing rate of increase in overdue agricultural loans is cited by St. Louis. Banking and Finance Loan demand has been stable in most Districts. Continuing strong demand for mortgage refinancing is cited by San Francisco, Richmond, Chicago, and Kansas City. A result has been higher mortgage rates and delays in closing. Cleveland, Philadelphia, Atlanta, and Dallas note growth in real estate and construction lending. The demand for commercial and business loans has been soft in Cleveland, Minneapolis, and Dallas, while increasing in Philadelphia. Consumer lending has been rising with particular vigor. New York, Cleveland, Atlanta, and Philadelphia all report strong growth in this asset category. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1164 -beige_book_pure_text_pre2000,1986,"Available information suggests that slow growth continues in most Federal Reserve districts, although conditions vary substantially across both sectors and regions. Retail sales appear to be growing modestly overall, with substantial regional variation, and domestic automobile sales also show a mixed performance. Summer tourist traffic appears strong in most areas. Manufacturing activity remains weak. The decline in oil prices has hurt manufacturers in some areas, in addition to energy producers. Agricultural producers in the Midwest expect high crop yields, contrasting sharply with the drought-plagued Southeast. Homebuilding continues strong in most areas, although some districts report weakening from the frenzied pace of the spring months. Commercial construction and real estate activity remains in the doldrums in many areas. Total bank loan demand has grown in most districts, with residential real estate portfolios showing particularly strong growth. Trade and Services Retail sales have shown modest growth overall, with considerable variation across regions. Boston reports that sales were weak in May and June, but picked up in the beginning of July. New York, Philadelphia, Cleveland, and Chicago report relatively strong sales growth, while Minneapolis, Kansas City and Dallas report weakness. Atlanta, St. Louis, and San Francisco report that their sales performances varied considerably in different parts of their districts. Prices generally are flat, and inventories appear under control. All districts reporting on tourism cite it is a source of strength. Chicago and Minneapolis report that sales of domestic automobiles are outpacing last year's, while the Kansas City and Dallas districts have seen reduced sales during the past year. Philadelphia, Cleveland, and Atlanta report improved sales in recent weeks although sales remain below last year's levels. Manufacturing Manufacturing activity remains flat or down slightly in most parts of the country. Aerospace industries are providing a boost to the Boston and San Francisco districts, but in both districts the expected upturn in electronics has not yet materialized. Prime defense contractors in the Atlanta district report that new orders have fallen, although defense spending continues to bolster that region's economy. In the Philadelphia district, manufacturers report marginal improvements in orders and business volume. Cleveland reports that threatened labor disputes are hurting steel orders. Weakness in energy related industries has hurt manufacturers in the Chicago and Dallas districts. Many districts report that efforts to cut costs and retool are crucial to maintaining profitability in the current competitive climate. Mining Problems related to low oil prices continue to plague most energy producing parts of the nation. In Virginia and West Virginia, however, coal production reportedly is up because demand for electrical power has risen due to hot weather, and because new emphasis on environmental protection has increased the demand for low-sulfur coal. Agriculture Favorable weather conditions in the Midwest should result in excellent crop yields in that region. In contrast, extreme heat, drought, and insect problems are causing severe crop damage along the eastern seaboard as far north as Delaware. In the Southeast's inland regions, the damage is less acute, and in some areas late rains could salvage crop production. Recent surveys suggest that deterioration in farmland prices is continuing in the Minneapolis district, slowing in the Chicago district, and accelerating in the Dallas district. Prices of most farm products remain low, and Kansas City reports that a shortage of storage space for corn could reduce corn prices further. Construction and Real Estate Most districts report strong homebuilding activity, with single family construction stronger than multifamily building. There is however substantial variation among regions. Although Cleveland, Atlanta, St. Louis, and San Francisco report a recent slowdown in housing starts, strength remains and is expected to continue. Some areas, however, report weak homebuilding activity, including New Orleans, Montana, parts of West Virginia, and the Dallas district. Nonresidential construction and leasing activity are slowing in most areas, and concessions to tenants are becoming increasingly common. Despite the widespread weakness, particularly in the oil belt, some areas report strength, including New York City, Atlanta, Birmingham, Jacksonville, and Tennessee. Financial Sector Total loan demand grew in many districts. In the Dallas district, however, loan volume is down due to an absolute decline in non-real estate loan volume. Mortgage loan demand is particularly strong in most regions, although the rate of growth is slowing in some areas. In most areas the rate of growth in installment loans is positive but falling, although Kansas City reports an absolute decline in demand for consumer credit. Commercial and industrial loan activity is relatively weak in most districts, showing little or no growth. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",968 -beige_book_pure_text_pre2000,1986,"All districts continue to report sluggish economic growth. Retail sales continued to improve over the summer with moat districts reporting strong consumer demand. Prices are stable and largely unaffected by the lower value of the dollar. Manufacturing, however, generally remains weak. Homebuilding continues strong, but high vacancy rates and the provisions of the new tax legislation have caused nonresidential construction to lag. Both commercial and consumer lending have slowed, while mortgage lending remains strong. Crop yields will set new records in many Midwestern states, but will strain grain storage capacity. Recent rains have improved prospects for some crops in the drought-affected Southeast, but have arrived too late to help the corn crop. Consumer Spending Most districts report strong retail sales. This general strength represents an improvement over the last Beige Book. Boston and New York indicated sales above retailers' expectations. New York reported that merchants feel that the lower value of the dollar is responsible for increased sales to foreign visitors. Dallas indicated that, although sales remain depressed, retailers anticipate improvements later in the year. Inventories were reported to be at desirable levels. All districts reporting on prices signaled continued price stability and little or no evidence of increasing import prices due to the lower value of the dollar. Most districts reported sluggish domestic auto sales. Philadelphia and Chicago, however, reported strong sales. Sales of imported cars were strong in all reporting districts despite recent price increases. Employment Cleveland and Minneapolis reported declines in unemployment rates, while weakening labor markets were noted by Atlanta and St. Louis. The steel industry showed little improvement, with the month-long shutdown of USX lingering and a layoff of 2,000 workers in the Midwest. Chicago indicated that work stoppages this year have held back production more than in recent years. Both New York and Chicago reported shortages of skilled labor for the homebuilding industry. Manufacturing Although Philadelphia and Richmond noted that shipments and new orders were up in August, widespread reports of flat or slightly decreased industrial activity suggest little improvement in the performance of the manufacturing sector in most parts of the country. San Francisco indicated that the dollar's depreciation has had little impact on most manufacturers, while Atlanta reported that it has helped the pulp and paper industry by allowing higher prices for some of their products. Boston reported downward pressure on the prices of manufactured goods due to competition from both importers and domestic producers. Philadelphia and Atlanta indicated manufacturers in their districts expect improvement in the next six months; those in the Fourth District anticipate little change. Chicago reported that demand for steel for appliances and construction has increased this year, but is down for autos and the oil and gas industries. Energy Kansas City, Dallas and San Francisco reported lower levels of oil rig activity. All three districts, however, indicated that the recent increases in the price of oil may signal a bottom to the decline of oil drilling activity. Minneapolis also indicated lower production of oil, gas and coal in North Dakota and Montana. Construction and Real Estate Most districts continue to report healthy homebuilding activity. Contacts in Cleveland expect a robust residential housing market for the remainder of 1986 and into 1987. The Southern Florida and Atlanta markets are softening, and contacts in Kansas City anticipate housing starts to flatten or decline for the rest of the year. Nonresidential construction is slowing in most areas. High vacancy rates reported by New York and Atlanta and concern over tax reform have affected commercial construction. Atlanta noted, however, that the national concern over the effects of tax reform on commercial real estate is not shared by local developers who feel that regional economic conditions will far outweigh any negative effects of tax reform. Financial Sector Total loans appear to be expanding at a slower rate than previously reported. The growth of commercial and industrial lending has slowed in most districts. San Francisco attributed this slackening to reduced loan demand for tax shelter and commercial real estate projects as a result of expected tax law changes. Philadelphia and St. Louis, however, reported strong commercial loan activity. Small- and mid-sized banks in the Second District indicated increased competition for commercial loans stemming primarily from the large regional banks and smaller bank holding companies. Most districts noted that the rate of consumer loan growth is slowing. Philadelphia reported that the growth of credit card lending in particular has slackened and Third District bankers expect a further slowing in consumer lending. Cleveland, on the other hand, noted strength in consumer installment lending, expanding at an annual rate of 15 percent thus far in the third quarter. Residential mortgage demand remains strong in most regions with Atlanta attributing their real estate loan growth to heavy refinancing activity. Agriculture Very favorable growing conditions will result in record-breaking yields of corn and soybeans in Midwestern states. The expected large harvests and low prices have caused a shortage of grain storage capacity. Livestock producers in most regions are benefiting from low feed costs and higher livestock prices. Recent rainfall in the Southeast has improved prospects for the area's soybeans, cotton and pastures, but has come too late to help the corn crop. Reports from San Francisco suggest the lower value of the dollar has reduced imports of foreign seafood and has aided the increase in exports of forest products to Far Eastern markets. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1121 -beige_book_pure_text_pre2000,1986,"Summary District Reserve Banks report overall economic growth ranging from relatively stable to slightly improved, with conditions varying considerably by region and economic sector. Strength in consumer spending is somewhat less evident than in last month's reports. While residential construction activity remains relatively strong, reports of some weakening come from several regions. Manufacturing activity continues to be weak, with some specific exceptions. Prices, both at retail and for materials inputs, are generally reported to be steady. The serious slump in the energy industry continues, though some hints of modest improvement are reported. The depressed farm economy has been put under additional stress in some areas by drought and by heavy rains and floods. Loan activity at commercial banks is reported to be generally weak, with business lending relatively weak and real estate and consumer lending relatively strong. Consumer Spending The general strength in retail sales reported in the last Beige Book is less evident in this month's reports. Improved retail sales, with gains in some instances greater than expected, were reported in half of the districts. The remaining six districts reported some recent weakening in sales (Boston, Cleveland, Atlanta, Chicago), continued slow sales (Dallas), or sales growth slower than expected (Philadelphia). Where specific goods lines were mentioned, hard goods (especially appliances and home furnishings) were generally selling better than soft goods, though apparel sales were strong in several districts. Retailers in the Boston, New York, Chicago, and Richmond districts are optimistic about sales through the rest of the year, including the Christmas season. Concern about Christmas season sales is expressed in the Philadelphia, Cleveland, and Dallas districts. Inventory levels are generally viewed as ranging from slightly low to satisfactory. Retail prices are described as steady to ""remarkably stable."" Domestic new car sales responded strongly in all districts to national incentives, and 1986 model inventories have been generally worked off. Concern is expressed in some districts about an expected sharp deluxe in auto sales and about the effect of large monthly car payments on discretionary income and other consumer purchases. Foreign and domestic tourists have bolstered consumer spending in the New York area. Tourism was up modestly in the Richmond district, but not as much as expected. In the Atlanta district, tourism remains strong but construction of many new lodging facilities has held down the benefits to individual hotels. Tourist traffic has been strong in the Pacific Northwest but disappointing in southern California. Construction and Real Estate Residential construction activity remains relatively strong, but reports of weakening come from several areas. The pace of homebuilding activity is reported to be vigorous by New York and Atlanta; New York reports no let-up in sight but Atlanta expects some slowing soon. Housing activity in the Boston district remains strong, but is moving back towards normal after the fast pace of recent years. Residential construction is likely to continue at a high level in Chicago into 1987. Minneapolis reports strength in housing in Upper Michigan and North Dakota as well as in Minnesota. Residential construction activity is reported to be generally good in the San Francisco district, except in Idaho and Alaska. Both Cleveland and Richmond see a slowdown in housing activity, while both Kansas City and Dallas report a recent slippage in residential construction. Nonresidential real estate activity is reported as mixed. Commercial vacancy rates are rising in New England's urban centers but suburban shopping mall space is still in demand. Contacts in New York report some pick-up in commercial and industrial leasing. Commercial construction is weaker in the Richmond district, and Atlanta reports sizable concessions on office leasing. The vigorous pace of office and retail building in Chicago is expected to continue into 1987. Moderate expansion in nonresidential construction activity in the St. Louis district has been spurred by vigorous growth in Arkansas, Kentucky, and Missouri. Manufacturing activity continues to be generally weak, but with some exceptions—such as defense-dependent businesses in New England, and aerospace and related electronics businesses in the San Francisco district. This generalization holds even though contacts report modest improvement in some areas and some industries, such as furniture and textiles and apparel in the Richmond and Atlanta districts. Capital spending continues to be weak, with productivity enhancement a much more important factor than expansion. Manufacturing employment continues to contract, and prices of materials inputs are generally reported to be steady. The USX strike benefited other steel producers in both the Cleveland and the Chicago districts. Steel demand is reported good for autos, appliances, and construction uses; weak for equipment, railroads and shipbuilding. Automobile output has been falling persistently short of plans in recent months, and fourth quarter output plans have been reduced from earlier projections. Although light truck sales are setting records, medium and heavy truck sales have been steady to down. Energy and Resources The serious slump in the energy industry continues despite somewhat firmer prices. Some slight stirrings are reported, however. While leading indicators of gas and oil drilling activity are still mixed, Atlanta, Dallas, and Kansas City report a very alight upturn in the drilling rig count. Chicago notes that while orders for steel for use in the oil and gas sector remain very low, they are up from zero earlier this year. Minneapolis reports a little activity in the oil and gas fields of North Dakota. Some improvement in the timber and forest products industry is reported by Atlanta, Minneapolis, and San Francisco. Agriculture The farm economy remains depressed, and additional stress has been put on parts of the industry by drought and by heavy rains and floods. Grain crops, hay, and tobacco suffered from drought in the southeastern states, reducing cash receipts. Heavy rains and flooding in parts of the Chicago, St. Louis, and Kansas City districts delayed fall crop harvests, reduced yields, and also delayed winter wheat planting. But overall reductions from projected record yields of corn and soybeans are believed to be only modest. Government payments are expected to be a substantial support to grain, cotton, and rice farmers. San Francisco notes increased cotton exports, along with good fruit, potato, and bean crops in the northern states of its district. Livestock producers generally face a positive income outlook, due to strong meat prices and low feed costs. Banking and Finance Total loan activity appears to be generally weak, with business lending typically reported as relatively weak and both real estate and consumer lending relatively strong. One exception is Philadelphia, which notes that demand for commercial and industrial loans remains strong. Philadelphia also says that banks are implementing more stringent credit qualifications for business borrowers. Atlanta notes a ""more cautious lending atmosphere"" for consumer loans, and St. Louis states that most district banks and thrift institutions have tightened lending policies for nonresidential real estate loans. Small and medium-sized banks in the New York district are coming under competitive pressure to lower lending rates. They are also lowering rates paid on variable rate accounts, and reluctantly beginning to look at ""fixed rate"" accounts. Some banks in the Richmond district have lowered passbook rates, but with a wary eye on the competition. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1505 -beige_book_pure_text_pre2000,1986,"District Reserve Banks report economic conditions ranging from sluggish to generally good with more than half indicating some recent improvement. Strength in consumer spending is somewhat more widespread than in the last report, and most retailers anticipate a moderate to good holiday season. Residential construction continues at a healthy pace, but nonresidential construction has slowed as a result of oversupply. Manufacturing is still relatively weak, and some increase in input prices has been noted. While the energy sector remains depressed, an increase in the number of operating oil rigs has occurred. Farmers experienced near-record corn and soybean yields in some areas despite heavy rainfall, and livestock producers are benefitting from higher prices. Commercial bank loan activity has improved because of some upturn in business lending and strength in real estate and consumer lending. Many commercial banks are actively promoting the use of home equity lines of credit for consumers to retain interest deductibility under the new tax law. Consumer Spending Most districts see an improvement in retail sales. Philadelphia states that sales were up strongly, and California and Richmond also had generally good gains. Sales were sluggish in Boston, Cleveland, Dallas and St. Louis, but the remaining districts report moderate increases. Items in strong demand were apparel, electronics, furniture, and other home furnishings. As a result of the recent improvement in sales, retailers for the most part anticipate a moderate to good holiday season. Inventories are at satisfactory or manageable levels. Prices (when mentioned) were generally reported as stable. However, Chicago attributed a jump in textile and apparel prices to recently imposed import restraints, and Dallas saw a significant increase in prices of imported electronics. All districts reporting on auto sales had strong gains in September and a sharp dropoff in October, mirroring the national pattern. Construction and Real Estate Most districts report healthy residential construction activity, though at a somewhat slower pace than earlier this year. The Richmond district notes that home sales have been weakening due to the high level of home prices there. Atlanta reports a shift away from construction of multi-family units because of a high level of condominium inventories and generally poor demand. In contrast to most other areas, residential building in the Dallas district is substantially below a year earlier. Nonresidential construction has slowed in Atlanta, Dallas and parts of New York where an oversupply of office space now exists. In Chicago and Minneapolis, however, work on new office buildings continues at a steady pace. Reflecting higher demand for space, vacancy rates in the Minneapolis district fell between June and September for both office and industrial buildings. Manufacturing Industrial activity remains relatively weak, and plans have recently been announced for additional plant closings and layoffs in several districts. The largest is the scheduled G.M. cutback, which will result in more than 20,000 job losses in the Chicago district and will affect other areas as well. Some industries and districts do report gains, however. The Philadelphia and Cleveland districts have seen an overall improvement in their manufacturing sectors in recent months. Both Boston and San Francisco state that the aerospace industry is doing well, and the USX strike continues to benefit competing steel producers in the Chicago and Cleveland areas. Many districts (Boston, Chicago, New York, Philadelphia. Cleveland, Kansas City and Dallas) mentioned an increase in input prices, which some attributed to the decline in the dollar. Most manufacturers are holding their own prices firm, however. Several districts reported no discernible benefit from the dollar's decline. San Francisco noted that increased exports of electronic products and higher capital goods orders have resulted from the weaker dollar. Energy and Resources The stabilization of oil prices at a somewhat higher level led to an increased number of operating oil and gas drilling rigs. However, the total is less than half the number in operation a year ago in the oil-producing states. Chicago found that the oil and gas industry's demand for steel pipe is up somewhat from a recent very low level. The wood and forest products industries of Minneapolis and San Francisco have improved further. These districts also report an upturn and brighter outlook in copper mining. Agriculture Despite heavy rainfall and flooding in many areas, farmers experienced record or near-record corn and soybean yields in the Cleveland, Kansas City, Minneapolis and St. Louis districts. Moreover, a feared storage crunch was alleviated by the rain-induced stretch-out of the harvest season. Attractive alternatives that encouraged farmers to redeem their PIK certificates and sell rather than store grain also helped avert excess stockpiling. Livestock producers and dairy farmers in several districts are benefitting from lower feed costs and from higher livestock and milk prices. The San Francisco district reports a record pistachio crop and higher potato and grape prices, while Florida expects an 8 percent increase in orange and grapefruit production over the year. Financial Sector Loan activity improved somewhat in recent weeks. Philadelphia reports continued strength in commercial and industrial loans and an upturn in consumer loans, and Atlanta also states that lending has remained strong. Cleveland notes that loan demand rose slightly in all major categories, with real estate and consumer loans registering the greatest growth. A marginal increase in Cleveland's C&I loans represents an improvement following no growth in the third quarter. St. Louis also reported strong real estate and consumer lending as well as some growth in commercial loans. Several districts noted that banks are promoting the use of home equity lines of credit as a means for consumers to retain some measure of interest deductibility under the new tax law. Atlanta reported that demand for home equity loans ""has surged across the region"", while Chicago, New York, Philadelphia, Richmond and St. Louis noted an expansion in banks' promotion of these credit lines. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1214 -beige_book_pure_text_pre2000,1987,"The pace of economic activity appears to have quickened slightly at year-end, according to this month's commentaries on regional economic conditions. Retailers in most Districts enjoyed moderate year-over-year sales increases, in line with expectations. Auto sales were very strong in December, although the loss of the sales tax deduction in 1987 is widely regarded as the reason for this strength. Manufacturing employment increased in several Districts. The improvement was spotty, however, with an industry expanding in one District but not in another. Residential construction activity remains strong in some Districts, but has slowed in others. The rate of nonresidential construction also varies considerably from one part of the country to another. Oil and gas drilling is gradually increasing from very depressed levels. The agricultural situation is improving. While agricultural prices remain weak, higher production levels and lower prices for petroleum-based inputs are positive factors. Banks in most Districts experienced very strong commercial and real estate loan demand in December. Some of this strength is attributed to efforts to complete transactions before the new tax laws are in effect. Consumer Spending Christmas sales in most Districts were described as moderately ahead of year-ago levels and consistent with retailers' expectations. The most notable exceptions were the Boston and New York Districts, where retail respondents reported strong sales increases ranging from 5 to 25 percent over year-ago levels, and the Dallas District, where sales were said to be below year-ago levels although still consistent with expectations. Sales were generally slow in the early part of December but strengthened as Christmas drew closer. January sales were reported as healthy in the Philadelphia District and weak in Richmond. Retail inventories at the end of the Christmas season were said to be at comfortable levels and, in two or three Districts, lower relative to sales than in past years. For the most part, changes in exchange rates have not had much effect on retail prices, although merchants in several Districts expect rising import prices to show up more in 1987. Retailers are generally optimistic about future sales, but there is some concern that the first quarter will be soft as consumers start paying for the cars and other large items purchased late in 1986. Reports of motor vehicle sales were all the same. Sales were very strong in December; dealers are generally satisfied with current inventory levels; sales are expected to be slow for at least the first several months of 1987. Most reports attribute the strength in December and the weakness projected for early 1987 to consumers' shifting purchases from 1987 to 1986 in order to take advantage of the deductibility of the sales tax. In this regard, San Francisco notes that in Oregon, where there is no sales tax, sales did not pick up appreciably. Construction and Real Estate Reports of residential construction were mixed across the Districts. Activity has been particularly strong in the New York, Chicago and St. Louis Districts. Mild weather was said to have contributed to the strength in New York. Where home building has slowed, overbuilding, overpricing and a shortage of suitable land were cited as the primary causes. In the San Francisco District, multifamily construction has slowed but single-family building is doing well; the new tax laws are thought to have made multifamily units less attractive for investment purposes, whereas they are expected to have little effect on the single-family unit. Home sales are strong, according to most reports, and are expected to remain so into 1987. Nonresidential construction levels vary from busy in Minneapolis and Chicago to slow in San Francisco. About half the Districts mentioned that some office markets face an oversupply of space; absorption rates are said to be strong in many areas, however. Similarly, in areas with newly constructed retail space, occupancy rates are improving. Construction for retail buildings has continued at a healthy rate in Atlanta, in part because of net in-migration. Substantial growth in nonresidential construction was reported in parts of the Chicago and St. Louis Districts. Manufacturing Manufacturing activity appears to have picked up slightly in the last months of 1986. Several Districts reported modest increases in employment, and in the Dallas District, where manufacturing activity had been declining, ""Manufacturers are noting more positive signs than at any time in the last two years."" The industries cited as responsible for this improvement varied from District to District: in the Dallas District orders are bottoming out for energy-related durable goods; San Francisco reported that commercial aerospace is gaining strength; employment increases occurred in glass and general industrial machinery in the Cleveland District, in textiles and electrical equipment in St. Louis and in printing and publishing and textiles in Atlanta. Several Districts mentioned increasing defense activity. For many industries, however, there appears to have been no improvement. San Francisco noted that the electronic, and semiconductor industries continue to suffer from fierce competition and low prices. Boston and Chicago both reported that reduced capital spending by domestic auto manufacturers is hurting the machinery and metalworking industries. Manufacturers in different Districts vary considerably in their views of the future. Those in the Philadelphia and Richmond Districts think that business will improve over the next six months, those in Boston foresee little change, and those in Cleveland expect the first quarter of 1987 to be very poor and are uncertain whether the national expansion will continue. The number of oil and gas drilling rigs in operation increased in December in the Kansas City and Dallas Districts, but remains far below the number a year ago. Drilling in Atlanta was at its highest level since last spring. Coal production increased over the year in the Richmond District but decreased in Atlanta. Gold mining in the Minneapolis District is reported to be doing fairly well and the San Francisco District's copper industry is hiring after an extended period of layoffs. Agriculture The situation in agriculture shows some signs of improvement. Agricultural prices remain generally weak, but low grain prices have helped livestock producers, especially those raising poultry. Lower prices for petroleum-based inputs such as fuel and fertilizer are also a positive factor. Prices rose slightly in December for wheat, corn and soybeans in the Minneapolis District and farm crops in Texas, but most prices remain below year-earlier levels. Farm incomes are not as weak as farm prices in all cases, since production levels are higher. Good weather contributed to a bountiful vegetable and citrus harvest in Florida, more calves were held over the winter in the Kansas City District, and crop production in the Richmond District should be higher than this year's drought-reduced levels. On the down side, a significant decline in Texas cotton production projected for 1986 means lower incomes in already distressed areas of the state. Banking In most Districts, commercial and real estate lending increased strongly in December, although in the Dallas District business loans were far below year-ago levels. Banks in the New York, Philadelphia and San Francisco Districts attributed some of December's strength to tax changes and the desire to complete transactions before year- end. In the Philadelphia and Atlanta Districts consumer loan growth has slowed and in San Francisco construction loans dropped off sharply in the last months of the year. Home equity lending is increasing, according to several reports. In the St. Louis District agricultural lending by banks continues to decline as a result of reductions in the costs of inputs and land, on the one hand, and more rigorous scrutiny by lenders, on the other. In the Kansas City District loan paydowns are reported to have improved over last year. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1619 -beige_book_pure_text_pre2000,1987,"Assessments of general economic conditions ranged from uneven or steady to improving. Expanding activity or optimism were reported by contacts in the Boston, New York, Richmond, and Atlanta Districts. Cleveland reported slow expansion. Kansas City indicated recent slight Improvement. Chicago noted the effects of the mild winter in that District in boosting activity. Business conditions were described as on an even keel in Philadelphia, steady in Minneapolis, and uneven in San Francisco. Dallas noted signs of recovery but said important segments of the District remain weak. Manufacturing Most reports noted rising orders and activity in manufacturing. Increases were described as gradual or small, overall, by Boston, Philadelphia, and Cleveland. Manufacturers in the Boston, Philadelphia, and Richmond Districts were optimistic about further expansion in manufacturing activity. Orders were described as still very sluggish by Dallas. More production cutbacks or plant closings were reported by New York, Cleveland, and Chicago. New foreign-owned auto assembly and parts plants are being built in the Midwest and Southeast. Capital spending was projected about flat by contacts in the Boston and Philadelphia Districts. San Francisco said many firms plan less capital investment in 1987 than in 1986. Chicago reports that demand for mechanical capital goods remains slow. Cost containment continues as a high priority. Several Districts noted upward pressures on prices. Higher orders were reported for appliances, products used in housing construction, some communications and computer equipment, medical equipment, plastics, chemicals, and paper, attributed in part to the lower dollar. Dallas reports that semiconductors have stabilized after 2 years of falling orders and frequent closings. Atlanta and Dallas report that demand remains weak from the construction and energy sectors. Consumer Spending Most Districts report further growth of non-auto retail sales. Boston and New York said some retailers saw ""astoundingly"" or ""unbelievably strong"" sales in February. At the other extreme, retail sales were weak in the Dallas and San Francisco Districts. Kansas City said sales were flat to only slightly higher than a year earlier. Inventories were described as being at generally satisfactory levels, though some respondents told New York that stocks are low. Strength on the East Coast was attributed to the healthy regional economy and, in New York, to buying by foreigners whose currencies have strengthened against the dollar. Retail price increases, resulting in part from the lower dollar, are likely to be moderate. Tourism was described as good, except resort business curtailed by lack of snow in the Minneapolis District. Motor Vehicles Most Districts report improvement in auto dealer sales in February or early March, from very low levels in January following tax- related December strength. Dallas, however, saw little Improvement from the January pace in February, which was attributed to local economic weakness. Dealers there expect continued slow sales. Chicago reported auto production cuts and layoffs at some District plants, in response to slower sales. Demand for heavy trucks has improved. Residential Construction Most Districts report strength in residential building. An exception is Dallas, burdened by a large stock of unsold homes and high rental vacancy rates. Housing markets in Alaska and parts of the Minneapolis District are also soft because of the weak energy sector. Home building permits have trended down recently in the Atlanta District, but builders there are optimistic. Chicago reported that residential building was boosted by mild winter weather, but Richmond said construction in that area was slowed by bad weather. Sizable home price increases were reported in some local markets on the East and West Coasts. Building material costs are expected to rise because of the Canadian duty on lumber exports. Nonresidential Construction Office construction is slowing in most major cities, and office vacancies are high or rising. Chicago, however, reported that work on new buildings continues at a high level in that city. New York said that office leasing has increased. Chicago indicated that industrial construction had slowed in that region. Industrial space is in short supply in parts of northern New Jersey. Extensive work on military bases in upstate New York will be adding to construction activity in that region. Energy and Mining Investment in the energy sector remains very weak, except for construction of natural gas pipelines noted by Atlanta. Dallas reports that the drilling rig count declined in February, seasonally adjusted, after rising since July. February's level was about half of a year earlier, and little or no increase is expected. Minneapolis reported a decline in coal production. Lack of demand for iron ore In that area has led to further layoffs. Agriculture and Forestry Conditions in the farm sector appear to be stabilizing. Chicago reported that the decline in land values has slowed, farm earnings have improved, and agricultural debt repayments are faster. Minneapolis noted improved profits for livestock producers, but crop farmers remain dependent on the government for much of their income. Favorable prices for potatoes and beans have helped stabilize land prices in that area. St. Louis reported that farm incomes have stabilized. Dallas indicated that higher cotton prices are expected to help farmers in that District. Florida citrus growers have benefited from the lower dollar. Frost damaged the southern California avocado and citrus crops, and higher prices are expected for some fruits, vegetables, and nuts. Adverse weather delayed expansion of lumber production in the Atlanta District following imposition of the Canadian tax on lumber exports to the U.S. Demand for southern pine has remained strong. Financial Several Districts reported continued strong growth of home equity loans. Philadelphia noted that a significant portion of usage of these lines was initially to pay down credit cards, but usage has shifted toward net increases in total debt. Some credit card issuers are tightening credit scrutiny in response to higher delinquency rates. New York attributes a slowdown in IRA deposits to confusion over the new tax law, low interest rates on IRA deposits, and restrictions on withdrawals. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1253 -beige_book_pure_text_pre2000,1987,"The economy appears to be continuing on a course of moderate expansion, according to reports gathered in April. The agricultural sector, while certainly not in the clear yet, is showing signs of improvement. Manufacturers continue to post modest gains, bolstered by growth in both domestic sales and exports. Residential construction remains strong, especially in the single-family market, and has been relatively unaffected by the recent climb in mortgage rates. Retailers are making slight gains over year-ago levels in sales of general merchandise, although auto sales are about the same as or lower than last year. Bankers say business and real estate loans are growing, but demand for consumer loans is subsiding. The only uniformly negative reports are those on the energy industry, which remains depressed despite the higher price of oil. As a result, the regional economies heavily dependent on energy remain in the doldrums. Agriculture and Forestry Conditions appear to be improving somewhat in the farm sector. Atlanta and Chicago indicate that farmland values are stabilizing; in the Dallas and Minneapolis Districts 1987 farm incomes are expected to increase; and St. Louis and Kansas City report improved agricultural credit conditions. It should he noted, however, that no reports predict a significant overall turnaround for agriculture. Livestock farmers are expected to benefit from a combination of lower production costs and stronger prices for cattle, hogs, and sheep. Severe weather in some parts of the mid-west had an adverse effect on livestock, but the outlook there remains positive as well. Crop farmers in the southeast and mid-west have had spring field work delayed by wet weather. When planting is completed, however, acreage devoted to corn and soybeans is expected to be significantly reduced from 1986 levels. Wheat acreage should stay about ever, with last year's level. Cotton prices have increased significantly this year, and production is expected to follow suit. A late frost in the southeast destroyed as much as 50 percent of the peaches in that area; reports from Richmond, however, indicate expectations of a good yield for fruit farmers in that District. Demand for lumber is growing. Atlanta reports increasing prices for southern pine; San Francisco indicates orders for lumber in the northwest have risen by over 20 percent from a year ago, in part because of substantial increases in exports to Europe. Energy The energy industry remains depressed despite the higher price of oil. The number of operating rigs, while up slightly from earlier in the year, is still as much as 50 percent below a year ago. Many wells remain shut down in the Atlanta District, and reports from Minneapolis say that drilling is ""almost nonexistent"" in that area. Dallas, however, indicates that the rig count may be bottoming out, and that the slight growth in recent months is expected to continue. Manufacturing Most Districts indicate stable or slightly improving manufacturing sectors. Philadelphia, Cleveland, Atlanta, Chicago, and Dallas all note at least moderate growth in new orders and production. Employment gains, however, are less uniform. Industries mentioned as leading the pack include defense contractors, chemicals, steel, and paper products. Steel and paper specifically seem to be experiencing broad-based expansion of demand, and firms in these industries in the Chicago District are reported to be operating near capacity. Lagging industries include transportation equipment (specifically domestic automobiles) and capital goods. Industrial prices are headed up at least slightly in most areas, with rising prices for steel and pulp specifically mentioned by Boston, Chicago, and Minneapolis. While domestic sales seem to be stronger, at least some of the improvement in the industrial sector has been related to the export market as well. Dallas reports that the falling value of the dollar on foreign exchange markets specifically has contributed to an uptick in the chemical industry. Manufacturers in the San Francisco District say the trade tension between the U.S. and Japan has helped to open markets not only in that country but in South Korea and Taiwan as well. Construction and Real Estate Residential construction and sales are reported to be strong in virtually all Districts except Dallas, where the market is adversely affected by the depressed regional economy. Elsewhere, sales are reported to be up as much as 35 percent from a year ago. Activity appears to be strongest in the single-family market; several Districts say multifamily construction is lagging. There is widespread concern that the recent jump of as much as 200 basis points in mortgage rates will choke off demand for housing. The only effect actually noted so far, however, has been a rush by buyers to close deals already in progress or to purchase property. Office-leasing activity is reported by Boston and New York to be good. There are some pockets of excess capacity in both Districts, however, with vacancy rates as high as 20 percent in some areas of suburban New York. Atlanta indicates that commercial construction is slow, and that some lenders are requiring pre-leasing before they approve financing for projects. Retail Most Districts report that retailers are posting ""slight"" or ""modest"" gains in March and/or April. Dallas, however, reports slow sales and San Francisco describes sales as mixed. Inventories remain generally in line with sales expectations, with neither shortages nor discounting prevalent. There have been some price increases in general merchandise as a result of the increasing cost of imports, and some retailers are trying to switch to domestic or non-Japanese Asian suppliers. Boston reports that merchants in that District are sometimes having difficulty finding domestic suppliers who can meet their volume needs. Auto sales are running at or below year-ago levels. Sales of domestic cars are uniformly sluggish. Japanese imports show more strength but are also slow in some areas: Atlanta indicates that demand for Japanese cars remains strong despite price hikes, while Cleveland reports that import dealers in that District are accumulating unwanted inventories and are considering sales incentives. Finance Total loan volume at banks continues to grow in most Districts, fueled mainly by real estate and business borrowing. Consumer borrowing is widely reported to be weakening, a phenomenon that New York and Philadelphia attribute to the relatively high level of consumer debt and to the availability of low-rate financing by auto manufacturers. Atlanta and Richmond note that several banks have cut interest rates on credit cards recently. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1339 -beige_book_pure_text_pre2000,1987,"Most Federal Reserve Districts report moderate economic growth. Manufacturing orders and shipments continue to grow, with few reports of price increases or inventory buildup. Lumber production is operating near capacity due in part to an expansion of exports. Housing construction continues at a steady pace despite the recent increase in mortgage rates. High vacancy rates and the new tax laws have reduced commercial construction. Most agricultural sectors remain depressed. Although recent increases in beef and hog prices have generated short-term earnings gains for cattle and hog producers, crop farmers still face problems of oversupply and low prices. The energy sector also remains depressed. Oil and coal producers report that drilling and mining operations are below last year's levels. However, oil drilling has increased in some areas as domestic oil prices rise. Growth in retail and automobile sales appears to be slowing. Higher prices, increased consumer indebtedness, and higher interest rates are the major reasons cited, Loan activity is also weak, Strong demand for commercial and real estate loans has not been enough to offset the reduction in the volume of consumer loans. Retail Growth in retail sales appears to be slowing in many districts. Dallas and San Francisco continue to report generally sluggish sales, while Boston and Cleveland indicate wide variations in sales activities among various retail chains. Most Districts report increases in apparel prices, especially among imported goods. Boston's inquiries about the reasons for price increases reveal two primary sources: import quotas and the decline in the dollar. Strong demand for apparel is leading to increases in the prices at which quotas are bought and sold among overseas manufacturers. Also, quotas provide the incentive for foreign producers to import more expensive lines of clothing. The decline in the value of the dollar has been felt most strongly on prices of imports from Japan and European countries, whose currencies have appreciated most against the dollar. Prices of domestically produced apparel have also risen but not as much as prices of imported apparel. Much of the domestic price increase is due to domestic textile mills running near capacity. Automobile sales are sluggish in most Districts. Dealers in the Minneapolis District report that automobile sales were 20 percent lower in May than a year ago. Weak auto sales raise the prospect for more aggressive sales incentives and further production cutbacks by domestic auto producers. As yet, domestic auto dealers have not discounted prices, and current production schedules have stabilized inventories. The declining value of the dollar has significantly reduced import auto sales by raising prices. Import dealers report declining profits, and inventories increased considerably in May. Manufacturing Manufacturing continues to show signs of growth. Many Districts report increases in orders and shipments and moderate reductions in inventories. Boston reports that both high-technology and traditional industries are experiencing increases. Philadelphia indicates improvement in the durable-goods sectors, and Richmond finds increased activity in nondurables. Employment, however, has shown little gain. In many areas, employment is limited to replacement hiring. Other areas, such as Minneapolis and St. Louis, report employment losses over the past month or two. The effect of the depreciation of the dollar on manufacturing is still mixed. Boston reports that none of its respondents attribute the gain in domestic orders to an easing of import competition. San Francisco, on the other hand, finds that manufacturers of some products that compete against low-cost imports report strengthening in sales and orders. In general, strong domestic demand appears to be the major force behind improvement in manufacturing. The increase in steel production, for example, appears to be attributable to increases in construction and in oil drilling operations, despite cutbacks in automobile production. Most districts report that input prices are stable. There is some upward price pressure as certain products, especially steel products, continue to be in short supply. Capital spending is reported to be moderately high by some Districts. Chicago reports sizable investments in upgrading facilities in the traditional, heavy-manufacturing industries. Energy The energy sector remains depressed, despite the increase in domestic crude oil prices. Atlanta and Kansas City report that exploration and development are below levels of a year ago. Dallas, however, reports that drilling continues to increase. In May, the rig count was only 4 percent below a year ago, and it was above the levels of earlier months in 1987. The recent increase in domestic oil prices is expected to sustain this trend. Coal production has increased slightly in recent weeks, but both Atlanta and Richmond report that output is below last year's level. Some coal producers anticipate that the increase in oil prices nay help to shore up demand. Agriculture and Forestry Although a few agricultural sectors have shown signs of improvement in recent months, conditions are still generally depressed. Increases in cattle and hog prices and lower feed costs have raised short-term earnings of cattle and hog producers. However, prospects for the future are mixed. Atlanta and Chicago report that hog and cattle herds are being rebuilt and that feedlots are presently full. Kansas City, on the other hand, indicates that while feedlots are near capacity, few feeders are expanding capacity and cow-calf and stocker-cattle operators do not appear to be adding to their herds. Most Districts report favorable crop conditions. A relatively dry spring has allowed crop planting to be finished ahead of schedule. Crop development appears good. although St. Louis reports that its dry spring may reduce wheat yields by as much as 20 percent. Crop prices, although slightly higher in the past few months, are anticipated to fall back to around the government subsidy levels. Lumber production in the Pacific Northwest is running near peak capacity, primarily due to strong demand from China, Japan, and Europe. Recent interest-rate hikes temporarily reduced the volume of orders in April, but orders have picked up as mortgage rates have stabilized. Construction and Real Estate Residential construction remains strong in all Districts except for Dallas and St. Louis. The jump in mortgage rates during April and May has had little effect on housing activity. Housing starts in many Districts continue to run ahead of last year's numbers. New York reports that anticipation of further rate increases generated additional demand. High vacancy rates, higher interest rates, and the new tax laws have caused a slowdown in commercial construction in many Districts. However, the New York City area continues to experience brisk commercial construction activity. Finance Growth in loans and deposits is generally weak. Commercial and real estate loans remain strong, but the volume of consumer loans has fallen off substantially. Some bank contacts attribute the decline in consumer loan demand to the attractiveness of home equity loans, high consumer indebtedness, and competition from auto finance companies. To attract additional borrowers, several banks have pursued aggressive marketing strategies, which include increased advertising and proposals to offer loans with variable rates, similar to financing arrangements available from home equity loans. Some banks have lowered (or plan to lower) rates on their fixed-rate loans in order to be more competitive. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1469 -beige_book_pure_text_pre2000,1987,"Regional reports filed in late July show little change from those filed in mid-June and indicate continued moderate economic growth. Manufacturing activity is rising in most of the country, and the energy sector shows some signs of revival. Retail sales are still increasing. Price increases are more common at producer and consumer levels. Construction activity appears somewhat weaker than reported six weeks ago, primarily because of declines in homebuilding. Bank loan and deposit activities are mixed to slightly weaker than reported in June. The financial outlook for farmers has brightened. Consumer Spending Most of the Reserve Banks report moderate growth in retail sales in their districts. Philadelphia and Chicago say that the hot weather has helped move summer goods. The New York district's retailers are selling more housewares, furniture, and rugs, but retailers in the Philadelphia, Cleveland, and Richmond districts say that demand for big-ticket items is low. Retail store executives across the country are generally optimistic about prospects for sales in the coming months. The prices of apparel and certain other goods such as imported electronics continue to rise, and retail inventories are higher. Large stocks of goods in department stores have retailers somewhat concerned in the Boston and Dallas districts. Dealer inventories of new cars are up in Cleveland, Atlanta, and Minneapolis, but they are lower in Richmond and tight in Kansas City. Three Reserve Banks see signs of a good summer tourist season. Atlanta notes increases in hotel occupancy rates, and both Minneapolis and San Francisco report heavy highway traffic. Manufacturing Districts generally report modest increases in shipments and new orders, although activity within particular manufacturing sectors varies by district. Atlanta indicates that oil price increases have encouraged drilling and stimulated the oil equipment industry. In the Kansas City and Dallas districts, however, the energy sector has responded only slightly to higher oil prices. Steel production fell in Cleveland, but steel mills in the Chicago district are producing sheet products at capacity. In the Boston area, sharp output gains are evident in specialty textiles and in computers and other nonelectrical machinery, while product lines dependent on the automobile, housing, and utility industries are slow. Chicago and Cleveland note declines in big-three automobile production, some of which is being offset by increases in truck production and by increases in domestic automobile production by foreign manufacturers. Input prices may be rising faster. Reports from Boston, New York, Philadelphia, Cleveland, Richmond, Chicago, and Kansas City all include references to price increases. Construction A slowing in residential activity is indicated by the Boston, New York, Richmond, Atlanta, Chicago, and St. Louis Reserve Banks, while Kansas City notes mixed activity. Cleveland, Minneapolis, and Dallas, however, report increases in housing activity. Nonresidential activity is mixed, St. Louis reports strong growth, but the San Francisco district is experiencing a severe downturn. Relatively stable activity is reported by New York, Atlanta, Chicago, and Dallas. Within these and other districts, however, are pockets of strength and weakness. New York indicates that commercial and industrial leasing activity is generally good but is threatened by overbuilding. Agriculture Farm income prospects have improved. Higher prices for hogs and cattle are helping, and crops are in generally good condition in most districts. On the negative side, Atlanta notes that poultry prices have fallen, San Francisco says that labor shortages are cutting harvests, and Atlanta Richmond, and Minneapolis report some weather-related crop damage. The financial position of agriculture is looking better in other ways. Richmond and Chicago observe upward pressure on farmland prices. The volume of farm operating loans is reported to be falling by St. Louis. Richmond reports lower interest rates for agricultural loans, and both Richmond and St. Louis are witnessing stronger loan repayment rates. Finance Loans and deposit activity at banks remains at the generally weak pace reported in mid-June. Cleveland reports a decline in total loans, Richmond and Kansas City report little change, and Philadelphia and Atlanta report slowing growth. St. Louis, however, indicates faster growth in total loans. Deposits are reported to be down by Dallas, unchanged by Kansas City, and growing slowly by Philadelphia. Continuing strength in the demand for home equity loans is mentioned by New York, Philadelphia, and Richmond. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",906 -beige_book_pure_text_pre2000,1987,"Business conditions improved in recent weeks for most regions of the country although weakness persists in some areas. Chicago, New York, Philadelphia, Minneapolis, and Boston report moderate economic expansion while Atlanta and San Francisco note brisk growth. Cleveland and St. Louis, in contrast, indicate weakening business activity. A resurgence in industrial activity has boosted many regional economies recently. Orders and production for electronic equipment, lumber, steel and textiles are increasing. Contracting domestic auto production, however, is blunting economic expansion in some areas. Construction activity is generally mixed; residential building has slowed in most regions, but commercial construction continues to grow, especially the non-building component. Consumer spending has been moderate, and retailers are cautious but positive about the outlook for fall sales. Several Districts report moderate merchandise price increases. Auto sales have been stimulated by manufacturers' incentives. Favorable crop conditions have led to greater-than-average yields in some regions, and farm credit problems are declining. Industry Most Districts report improvement in industrial activity and point to continued expansion, at least for the near term. Factory orders, production, and shipments are generally above June-July levels and are trending upward. Inventories are for the most part at desired levels. Although input costs are expected to rise modestly, most producers do not plan to increase prices at the present time. Chicago notes that demand for steel is strong. Cleveland reports that firm prices have helped specialty steels, and Atlanta sees increasing activity for small steel producers. Boston reports increased demand for computer equipment, and San Francisco notes that orders and shipments are strong for electronic equipment producers. Philadelphia, Richmond, and Atlanta report increasing tightness in certain labor markets. Philadelphia notes that housing construction has slowed because of a lack of skilled carpenters, while Atlanta reports that carpet shipments are being delayed because producers have not been able to hire enough workers to keep up with orders. Minneapolis bank directors are concerned that tight labor markets may deter firms from locating in parts of the region. Although total manufacturing employment continues to decline in St. Louis, textile plants are operating near capacity; apparel orders are growing, as they are in Atlanta and Dallas. Less positively, Chicago and Cleveland suggest that weak domestic auto sales could result in further production cuts and layoffs in assembly plants in their regions. Consumer Spending Retail activity in July and August was up moderately compared both to previous months' and year-ago levels in Boston, New York, Cleveland, Atlanta, and Kansas City; sales growth was somewhat lackluster in other Districts. Boston reported that fine summer weather boosted sales of seasonal items, and Cleveland, Atlanta, and San Francisco noted that soft goods sales were outperforming hard goods sales. A pick-up in appliance sales in Dallas, following a prolonged period of weakness, is attributed to a rise in first-time home purchases; sales of big-ticket items accelerated in mid-August in Richmond. Philadelphia and Chicago report that the late Labor Day this year is delaying back-to-school purchases, while sales of these items are strong in Atlanta, where school starts early. Hardly any Districts reported unusual imbalances in inventory levels. Retailers typically are reported to be ""cautious or moderately optimistic"" about the sales outlook for this fall compared to fall 1986. Boston, Cleveland, and Richmond noted moderately rising prices or expectations of moderate price hikes ahead. In Boston, prices are expected to rise significantly more by next spring because of imports; prices of electronics and apparel items are already rising across the nation because of import quotas and the failing dollar. The tight New England labor market is making it difficult for retailers to attract and retain employees. Manufacturers' financing and rebate incentives apparently have sparked auto sales and reduced inventory levels to more manageable levels although Chicago received reports that consumer response has been restrained. The outlook for sales apparently has generated dealer concern in much of the country. Construction Construction activity is mixed across the country. Residential construction is slowing in a majority of Districts although conditions vary within many areas. While single-family construction is generally increasing, Chicago, Kansas City, and San Francisco mention a continuing decline in multifamily construction. Sales of existing homes soared above last year's levels in Atlanta. Kansas City and upstate New York also report an active residential market. Commercial construction continues to show a mixed pattern of strength and weakness, but it remains relatively strong. Non- building construction is strengthening in Dallas, and Philadelphia notes that recent and prospective completions of major highway links in the suburbs will boost all types of commercial real estate in these areas. Financial Services Loan growth in the nation's larger commercial banks is slowing. Philadelphia, Cleveland, and Atlanta report a slackening in commercial and industrial lending, but Philadelphia expects business lending to Increase moderately over the next few months. This uptick may be enhanced by improving conditions for the region's manufacturers. Passbook savings account balances are rowing rapidly in several western locations. Dallas notes a further slowing of deposit growth at both banks and thrift institutions. An increasing rate of decline In large time deposits is being offset partially by increases in small time deposits. Agriculture, Forestry, and Mining Livestock producers are experiencing more favorable returns with St. Louis, Minneapolis, and Dallas reporting a profitable year as the result of lower feeding costs and higher product prices. Crop conditions have been favorable in most Districts this growing season; Atlanta, St. Louis, Minneapolis, and Kansas City expect above-average yields. Excessive heat and dry weather have damaged crops in the Richmond District. St. Louis notes that the volume of farm loans outstanding in their District is down over 15 percent from last year. Farm loan delinquencies and losses at agricultural banks have also dropped. Dallas notes that farm credit problems are diminishing in the Eleventh District as well. More volatile crude oil prices have characterized the petroleum industry in recent weeks, but drilling rates have continued to rise. Kansas City suggests that such volatility will likely prevent a strong rebound in the energy industry in the near future. San Francisco and Atlanta note an increase in lumber exports. In addition, imports of Canadian lumber have fallen slightly, while demand for southern pine remains strong. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1330 -beige_book_pure_text_pre2000,1987,"Business conditions continue to improve in most districts, with particular strength in the manufacturing sector. Reports from Boston, New York, Cleveland, and San Francisco are particularly upbeat, whereas growth in the Kansas City and Dallas districts has been less robust. St. Louis continues to report generally less satisfactory economic performance. Even the three relatively weaker districts have enjoyed recent strength in manufacturing, however. Retail sales are showing modest gains in many regions, with particular strength in the Boston and Atlanta areas, but sluggishness in the Cleveland, Kansas City, and Dallas areas. Auto sales are flat, or even down a bit, according to most district reports. Construction activity is mixed, as it was last month, with commercial building a bit better than residential in many parts of the country. Mining is strong, and all districts commenting on oil drilling report some increases in rig counts. Crops and harvest conditions have been favorable almost everywhere. Only the Richmond district reports reduced corn yields, due primarily to adverse weather. Two districts report improvement in the financial condition of farmers and ranchers. Reports indicate demand/supply imbalances in some markets. There is continued mention of tightness in certain labor markets, particularly in retail and service industries. And many districts report rising prices for some raw materials and imported inputs. Several note price hikes and even spot shortages for certain types of steel. Manufacturing Almost all districts report strength in manufacturing, continuing the trend noted last month. Even St. Louis, with weaker overall economic activity, reports a recent upturn in the manufacturing sector. Richmond's survey of manufacturers shows increases in shipments, new orders, unfilled orders, employment, and the workweek. Results of a Philadelphia survey are much the same. The San Francisco district emphasizes strength in manufactured exports, due to the dollar's decline and ""buy American"" campaigns in some Asian countries. As San Francisco says, ""Manufacturers of commodities such as chemicals and paper were affected first, but gains now are spreading to a whole range of light manufactured products, including medical equipment and industrial valves."" Of course, weakness in auto sales does not bode well for manufacturing activity in that important industry. Chicago reports an indefinite layoff of 2,000 workers at a truck assembly plant in September and planned closings of two more motor vehicle plants by year-end. Heavy truck sales have been quite good, reflecting in part the strength of manufacturing. Consumer Spending Retail sales are mixed. Boston, New York, and Atlanta report considerable strength, with sales generally above plan for the month of September. More modest results are noted in the Philadelphia, Chicago, and Minneapolis districts. But retail sales in the Cleveland, Kansas City, and Dallas districts are sluggish or flat. In general, retailers appear guardedly optimistic about the coming fall and Christmas seasons. Auto sales were weak in almost all districts in September and early October, and most industry representatives are pessimistic about a quick turnaround. Minneapolis seems to buck the trend, reporting fairly good auto sales in recent weeks. Construction Construction activity is mixed with some evidence that commercial building is stronger than residential. Richmond reports ""firm demand for new nonresidential construction but weakening demand for residential construction."" The situation is similar in the Atlanta district. St. Louis, Minneapolis, Kansas City, and Dallas note some weakness in construction generally. But there are numerous bright spots. The demand for New York City office space has been good in recent weeks, and upstate New York builders are busy. Homebuilders in the Philadelphia district have a backlog of sales commitments. And residential construction is still quite healthy in several western states, including California, Hawaii, Nevada, Oregon, and Washington. Also, southern California has an abundance of real estate buyers from foreign countries, especially Japan. Mining Strength is apparent in the mining sector. Mining operations in the Minneapolis district are generally active, particularly the four gold mines which are running at capacity. U. S. copper has become more competitive in world markets, stimulating output in Montana. Increases in rig counts are noted by all districts reporting on petroleum drilling, including Minneapolis, Kansas City, and Dallas. Analysts in Texas, however, believe that drilling activity has nearly completed its shift upward, as long as oil prices stay in their present range. Agriculture Reports from the agricultural sector are generally quite strong. Crops and harvest conditions have been good in most parts of the nation, with only the Richmond district reporting weakness. There ""corn yields are running 20 to 40 percent below normal and even less in areas severely affected by drought."" Nationally, livestock farms are generally profitable due to favorable price structures. Both Minneapolis and Kansas City note that farm financial problems have eased somewhat and that ranchers are using recent profits to pay down loans. Tightening Markets Demand is outstripping supply in some markets. There is continued and even increasing mention of tightness in specific labor markets, including reports from Boston, Richmond, Minneapolis, and San Francisco. Retail and service industries are generally the most affected, and several districts note recent wage increases in those sectors. Rising prices are noted for some raw materials and imported inputs, and several districts mention higher prices for imported apparel. Cleveland, Chicago, and Dallas note price hikes and even spot shortages for certain types of steel. Both the Boston and Philadelphia districts observe that most manufacturers are, so far, holding the line on their own prices. However, nearly half the manufacturers queried in a Philadelphia district survey indicate that they plan to raise prices during the next six months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1199 -beige_book_pure_text_pre2000,1987,"Most Districts report overall economic expansion with particular strength noted in Boston, Chicago, Minneapolis, and San Francisco. Despite general optimism among surveyed firms, there was also widespread evidence of increased uncertainty about future growth in demand. Furthermore, while the majority of survey respondents said that the stock market crash had not materially altered their capital spending plans, reports of at least some deferrals of plans appeared in a number of District discussions. The manufacturing sector has been a prime source of recent expansion in most Districts. Retail sales are either flat or only slowly growing in most Districts and auto sales are generally sluggish. Construction activity is mixed. Mining is strong across a broad spectrum of extractive industries, but reports of the possibility of future softening in oil and gas drilling expansion were common. The agriculture sector is in a generally favorable condition among the Districts. In the financial markets, some slowing in the growth of loan demand was often cited. Manufacturing Manufacturing activity continues to expand. No District reported that a majority of surveyed firms had revised capital spending plans as a result of the stock market crash. Survey respondents generally had positive expectations for the near future. There was clear evidence, however, that the stock market crash had led to increased uncertainty and to a declining degree of optimism about future demands for manufacturers' products. St. Louis, San Francisco, and Chicago all cited the declining value of the dollar as a significant factor in generating recent manufacturing growth. Cleveland and Dallas noted increased demands for steel and St. Louis and Dallas mentioned rising demands for electrical equipment and for apparel. Despite the generally positive reports for manufacturing, the Chicago and St. Louis banks both referred to layoffs at auto assembly plants in their Districts and Atlanta reported that appliance and furniture producers are concerned that the stock market plunge may lead to reduced sales. Consumer Spending Retail respondents in most Districts report flat or at best slowly growing retail sales. The stock market decline appears to have had little effect, even in areas where the drop was cited as a reason for slower sales growth. The major effect seems to have been on big- ticket items. New York, Cleveland, Richmond and San Francisco each reported weakness in such items, while Kansas City noted markedly lower sales among stores targeting upper income groups. Those Districts reporting on them cited reduced auto sales in October and November, although Philadelphia respondents said sales were above a year earlier. The withdrawal of manufacturers sales incentives was cited as the reason for auto sales declines more often than the stock market drop. Construction Construction activity varies considerably among Districts. Chicago reported overall growth, while weakening was noted in the Dallas, Atlanta, and St. Louis Districts and was expected in the Boston District. The drop in the stock market appears to have had a depressing effect on New York, Richmond, and Chicago home-buying. New York District office space demands remain high despite softening in the downtown Manhattan market, while high vacancy rates linked to past overbuilding have induced Atlanta District office and industrial developers to put projects on hold. Mining The strength in the mining sector continues across a broad spectrum of minerals, but several Districts report recent small declines in oil and gas drilling and the possibility of future sluggishness in energy extraction. Atlanta cites recovery in the coal industry. Minneapolis notes that the boom in gold mining continues and copper production is expanding. Dallas, Kansas City and Minneapolis all note that the recovery in drilling is slowing and report concerns that future expansion in drilling may cease. Agriculture and Forestry Most reporting Districts note improved prospects for their farm sectors, but several noted that recent dry weather has caused problems. Richmond, St. Louis, Minneapolis and Dallas all report an improved farm income outlook. Richmond and Chicago cite widespread increases in farmland prices, while farmland prices have bottomed out in the Minneapolis District and price movements are mixed in the St. Louis District. Agricultural credit conditions are improved in most reporting Districts. Some Districts cited problems with soybean yields, in part, because of dry weather conditions. Cotton production and livestock prices are generally cited as favorable in Districts that discussed them. In forestry, demand for wood used in paper and pulp is generally up. Lumber demand and prices are down, in part, because of seasonal factors. Financial Services Growth in overall loan demand appears to have slowed in a number of Districts. Consumer loans are either growing more slowly or have been unchanged at most reporting District banks, although New York cited strong demand since the stock market crash. Real estate loan expansion was fairly widely noted. Philadelphia and Kansas City reported essentially flat business loan activity, while Atlanta cited stable to increased loan demand and Cleveland noted recent expansions. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1013 -beige_book_pure_text_pre2000,1988,"Most Districts report modest economic growth, with particular strength in New England and weaker conditions in the Dallas and Kansas City Districts. Few District reports cite economic impacts from the stock market decline last October. The Christmas retail season appears to have been satisfactory nationwide, with modest dollar sales gains over last year's levels. In some areas, however, discounting reduced profit margins significantly. Agriculture and forest products industries have seen improved conditions in recent months, with higher prices and strong export demand for many products. Manufacturing orders and production have strengthened considerably in recent months, due in part to expanding exports. Inventories have accumulated for many raw materials and finished products. Construction and financial activity are mixed, both among different types of activity and among regions. Consumer Spending Most Districts report 5 to 10 percent gains in the value of Christmas sales over last year's level, with St. Louis and Dallas near the bottom of the range, and Boston and New York close to the top. Boston and Minneapolis report that surveyed retailers held profit margins steady, but reports from New York, Atlanta, St. Louis, and Dallas indicate that heavy discounting in those Districts cut into many stores' profit margins. Retailers in the Philadelphia area report that stores' profit margins on imported products are being squeezed between rapidly increasing costs and consumer resistance to higher prices, so these stores increasingly are turning to domestic suppliers. In contrast, Boston area retailers report that domestic suppliers are unable to meet their needs, so the falling dollar will cause them to switch to suppliers whose currencies have not appreciated with respect to the dollar. Reports on retail inventories are mixed, with about equal numbers of Banks reporting inventory accumulation and inventory depletion. December auto sales are reported to be weak in the Kansas City, Dallas, and San Francisco Districts, and auto inventories have accumulated in these areas as a result. In contrast, Cleveland and Atlanta report satisfactory December sales. Manufacturing activity is reported to be strong in all Districts, with increased orders and, in many cases, increased backlogs as well. Currently, a large western aerospace firm has more than two years' worth of orders for commercial aircraft on its books. Cleveland and San Francisco report that exports continue to be largely responsible for their regions' increases in manufacturing activity, and respondents noted changes in relative prices that should lead to further improvements. A Cleveland area business now is able to sell machine tools to various Asian countries for the first time, and respondents in the San Francisco District reported sharp increases in foreign equipment prices during early January. Reports from most Districts indicate increased inventories of raw materials and manufactured products. Several automobile plants in the Chicago and St. Louis Districts have been closed temporarily to control inventories. However, Richmond reports stable inventories of finished goods, and respondents to the Kansas City survey generally are satisfied with current inventory levels. Airplane inventories at western aerospace companies are very lean, due in part to strong export demand. Manufacturers in many Districts note increases in input and output prices, with steel prices up dramatically. Several Districts report problems obtaining sufficient supplies of some raw materials, particularly steel products, and some textile and apparel producers in western Tennessee are having difficulty finding sufficient workers for their rapidly expanding operations. Kansas City reports that, despite shortages of quality steel materials, most materials are readily available and few respondents noted bottlenecks in labor or plant capacity. Agriculture and Resource Related Industries The lower exchange value of the dollar continues to stimulate demand for many U.S. products. As a result, exports of several agricultural and forest products are up, depleting inventories in some cases. Prices for soybeans and some other major products have risen. Price increases for poultry in the Texas area are widely expected in the wake of extensive snow damage to poultry operations. The outlook for the energy sector remains weak, with a number of analysts increasingly ""bearish"" about energy prices. Construction and Real Estate Homebuilding and real estate activity were seasonally slack during late 1987 in most of the nation, but have resumed modest activity levels in New England, New York, and Minnesota since the new year began. The winter slowdown, coupled with continued economic uncertainty, has reduced housing sales and construction in the Atlanta District. Nonresidential construction activity continues mixed, with several Banks reporting continued high vacancy rates and slow building activity. The New York Bank reports that the turmoil in the financial markets apparently has had little or no effect on office leasing outside the New York Metropolitan area, but that activity has slowed in downtown and midtown Manhattan, and on Long Island. Atlanta reports that high absorption and a cutback in development in 1987 caused a significant drop in Orlando's office vacancy rate. Financial Sector In New York City, additional cutbacks are taking place in the brokerage and banking sectors as a result of both the stock market crash and basic restructuring. Application for consumer loans are weak overall, with significant declines in the rates of growth reported in the New York, Philadelphia, Atlanta, St. Louis, and Seattle areas. Some banks attribute the current weakness in part to declines in applications for car loans, and none attribute it to the stock market crash. Demand for mortgages is weaker than it was last year in most parts of the country, partly due to vigorous refinancing activity last year. Several western bankers report that demand for home equity loans was strong throughout 1987, and Atlanta reports that homeowners drew down home equity lines to finance Christmas purchases. In the suburbs surrounding New York City, demand for home equity loans generally is weak. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1200 -beige_book_pure_text_pre2000,1988,"Without exception, reports confirm a moderate expansion of the nation's economy. Strength in the manufacturing sector and continued moderate growth in employment are sustaining the current expansion. Consumer spending, which had provided much of the earlier stimulus to the economy, has continued to expand sluggishly. Auto sales, however, improved and have risen strongly in some districts. Construction activity remains mixed, while bank loan demand is generally flat. Consumer lending has declined sharply in keeping with the slower growth of consumer spending. The farm sector outlook remains positive. Manufacturing Most districts report a general expansion of manufacturing activity. The declining foreign exchange value of the dollar is credited with spurring manufacturing growth in many districts. Orders for steel or fabricated metals produced in the Boston, Chicago, St. Louis and Dallas districts are increasing rapidly. Many producers are using all available capacity causing higher prices in some areas. Paper production is growing rapidly according to Boston, Atlanta and San Francisco. Several districts also mention growth in electronic equipment orders. Atlanta, Dallas and St. Louis report strong gains in textile and apparel orders, with labor shortages reported by Atlanta. Tight labor markets are also mentioned by Boston and St. Louis. Despite manufacturing's general strength, Chicago and St. Louis note auto production declines. Dallas and San Francisco also report weakness in defense and construction-related manufacturing. Boston and Dallas find manufacturers' inventories generally at satisfactory levels, but Kansas City reports higher-than-desired inventories of material inputs. Of the six districts that mention manufacturers' input prices, most report price increases. Boston, Philadelphia and Richmond report generally stable prices for manufacturers' products. Prices of some products, such as paper and steel, however, are up sharply. Employment Most Districts indicate generally favorable employment growth. Declining unemployment rates are mentioned by New York, Cleveland and Minneapolis. Areas of weakness include layoffs in New York's financial sector and in the auto industry of the Chicago and St. Louis districts. Consumer Spending Retail sales for January and February are flat or weak in all districts. Despite the weakness, retail inventories are near or slightly below desired levels in all districts except Minneapolis. New York and San Francisco point out that many retailers are reserving their judgment on the outlook for the year pending the results of Easter sales. Boston and San Francisco report that prices of imported consumer goods have risen. Kansas City found only modest general price increases. Strong auto sales are reported by Cleveland, Atlanta, St. Louis and Minneapolis. Other districts indicate that auto sales are on target or slightly ahead of last year. A number of districts find that domestic autos are selling better than imports because of import price increases and domestic manufacturers' incentive programs. Construction The performance of the construction sector is mixed. Boston, Chicago, Kansas City and Philadelphia report an improved construction environment, whereas St. Louis, Dallas and San Francisco report a weakening in overall construction activity. Residential construction, while expanding in the Atlanta, Boston, Philadelphia and St. Louis districts, is declining in most other districts. Boston and Philadelphia report strong new home sales. Commercial construction continues to show mixed results. Construction activity in the Chicago district is likely to remain at a high level in 1988. The Minneapolis district reports that January nonresidential building contracts were three times higher than in January 1987. In Dallas, construction continues to decline and remains the weakest sector of the economy. Banking Loan demand at the nation's largest commercial banks remained generally flat. Most districts report that reductions in lending rates during February have not triggered a significant increase in loan applications. Richmond was the only district reporting an increase loan demand across all major loan categories. Two-thirds of the bankers surveyed by Richmond anticipate increased demand over the next six months for both consumer and real estate loans. Cleveland, Kansas City, Philadelphia and St. Louis report a slowing in consumer lending. Cleveland, Richmond, Philadelphia and Atlanta report strength in real estate and commercial lending. Atlanta cites rising exports as the primary reason for the increased commercial loan volume. New York reports that demand for commercial mortgages for office construction is particularly weak, and some bankers believe the suburban office space surrounding New York City is overbuilt. Dallas reports further declines in deposit and loan growth due to widespread concern about the stability of District financial institutions. Agriculture and Natural Resources Of the districts mentioning agriculture, all describe strength in the farm sector. Richmond and San Francisco report stronger farmland values, while Chicago and Kansas City report increased farm equipment sales. St. Louis and San Francisco find that farm loan demand has fallen, while Kansas City indicates flat loan demand. Three districts indicate increased oil drilling activity. The lumber and forest product industry and the West's mining industry are strong. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1015 -beige_book_pure_text_pre2000,1988,"Continued moderate growth of the nation's economy is again confirmed by reports from the Federal Reserve Districts. Manufacturing sector activity remains strong, with export growth a major contributor. Recent retail sales growth generally has been modest. Housing activity in most Districts has shown some recent improvement, but remains below that of a year earlier. Nonresidential construction activity is mixed. Conditions appear to be improving in resource industries, including energy where there is some pickup in oil drilling activity. Farm sector conditions are also continuing to improve. Generally stronger loan demand is reported at banks in a number of Districts. Consumer Spending Recent improvement in retail sales is best described as generally modest, with this year's early Easter affecting comparisons with a year earlier. Several individual District reports use words like sluggish, slow, and modest in describing recent sales growth (New York, Philadelphia, Cleveland, Atlanta, and Minneapolis). Somewhat greater strength is suggested by reports from Richmond, St. Louis, and Boston. Where specific lines of goods are mentioned, apparel sales are generally described as weak, while strength in sales of appliances and home furnishings varies from region to region. General merchandise and department store sales appear to be faring better than sales at specialty stores. Retail inventories are being closely monitored, with aggressive markdowns reported in several Districts in order to keep inventories under control. Several Districts note strong sales for domestically produced new cars, including light trucks and minivans. Inventories of new cars were generally described as satisfactory to tight. Manufacturing Manufacturing sector activity remains strong. The strength appears to be generally broad-based, with export growth often cited as a major contributor. Boston, Philadelphia, and Richmond note general strength in both shipments and orders. Chicago remarks on the reopening of export markets for heavy trucks. Atlanta reports apparel exports are growing and textile mills are running at or near capacity. St. Louis and Dallas, however, note some slowing in textile and apparel production. Chicago and Cleveland report continuing strength in heavy industries such as steel and machine tools. Chicago reports strength in steel mill orders into the third quarter. Steel fabricators have orders backlogged into the third quarter, and service center business is also strong. Prices are up for most types of steel, with some types in short supply. Manufacturers' purchasing agents in both the Chicago and Kansas City Districts are seeing a longer delay in deliveries of goods ordered. Respondents are also concerned about higher materials prices, especially for steel, paper, plastics, and aluminum. Construction Housing sector activity in most Districts has shown some recent improvement, but remains below levels of a year earlier. Nonresidential building activity is mixed. According to the Atlanta Bank, the decline in nonresidential construction activity in the southeast is slowing. Chicago reports modestly higher nonresidential building activity and expects a higher level of industrial construction this year. The pace of office leasing has improved in the New York District and considerable hotel construction is scheduled or underway in New York City. Overall construction activity in the Dallas District continues to decline with little evidence of recovery in the near future. Resource Industries Conditions appear to be improving in resource industries, including the energy sector. San Francisco, Minneapolis, and Kansas City all report some pickup in oil drilling activity, but Kansas City notes further improvement may be limited by uncertainty about oil supplies and prices. Dallas notes a sharp rebound in oil, drilling, concentrated in Texas where the rig count increased for the first time in six months; further gains are expected. Forest products companies and copper mining in the San Francisco District are benefiting from strong prices and improved cost structures. Minneapolis reports its important forest products industry is currently running at capacity. Agriculture Conditions in the farm sector generally continue to improve. Farm incomes. are expected to be relatively high again this year but not as high as in 1987, due primarily to smaller government payments and smaller returns to the livestock sector. Farmland values are generally rising in most areas and farm financial conditions appear to be strengthening. Dallas reports the number of farmers and ranchers leaving agriculture is slowing considerably. Cotton acreage planted is expected to increase substantially in the Atlanta and St. Louis Districts, Dry conditions are of some concern in several states, with water shortages of increasing concern in the San Francisco District where livestock producers are already suffering and crop irrigation may be reduced this summer. Banking A number of Districts report stronger loan demand. Relatively strong loan demand in the Cleveland District is concentrated in business lending, with smaller gains in consumer installment lending. Consumer lending growth is mentioned by several Districts, with Richmond and Philadelphia noting some strength in the demand for home equity loans. San Francisco, however, reports overall loan demand appears about unchanged. Also, Dallas says loans in that District are generally still in a slide, with business loans declining most. Dallas also notes, though, that the rates of decline in loans at large banks slowed markedly in the first quarter compared with the last half of 1987. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1086 -beige_book_pure_text_pre2000,1988,"Most Federal Reserve Districts report sustained economic growth, but some note a somewhat slower pace of growth than earlier in the year. Manufacturing remains strong in most Districts, and export demand continues to grow. Retail sales have generally been somewhat sluggish recently, and construction and real estate activity have been mixed. In the resource sector a further pickup in oil drilling has occurred, but conditions in the forest product industry vary and the lack of rainfall is a concern in crop-growing regions. Several Districts report a recent increase in loan demand. Consumer Spending Most Districts report that retail sales were sluggish during April and May due in part to the early Easter and unseasonable weather. Minneapolis and Richmond had favorable sales results, however, and Boston, Cleveland and San Francisco noted some improvement late in the period. Weakness in women's apparel was frequently mentioned and attributed to unpopular styles and resistance to higher prices. Despite the recent sluggishness of sales, retail inventories are generally at acceptable levels, primarily as a result of tight monitoring and generous markdowns on slow-moving items. Philadelphia described inventories as excessive, however, particularly at specialty stores. Views concerning the outlook are mixed. Those Districts with generally satisfactory sales anticipate more of the same, while those with weaker gains are less optimistic. For example, although some improvement occurred late in May, Cleveland department store executives believe the economy is in a consumer recession and expect no improvement before the fall. Atlanta reports that autos are selling well, while San Francisco has had strong sales of used cars but only moderate new car results. Cleveland and Kansas City found auto sales to be steady but not robust, while Dallas had mixed results. Manufacturing Manufacturing activity remains strong in most Districts though Dallas and Atlanta report a slowing of new orders in some industries. Boston, Chicago, and Cleveland cite export demand as a factor in their manufacturing strength and Philadelphia notes that a year-long uptrend in manufacturing employment has continued. Chicago and Cleveland report sustained strength in the steel industry with Cleveland noting that the Great Lakes shipping industry is reportedly getting close to its cargo-handling capacity. San Francisco states that a number of industries are experiencing capacity constraints but that plans to expand are cautious. Several Districts mentioned rising input prices, particularly for paper, petrochemicals and steel, and Philadelphia reports an increase in factory wages resulting from a shortage of basic production workers. While Boston and Kansas City find that materials are still generally available, San Francisco reports shortages of raw materials, farm equipment and heavy machinery. Boston and Richmond report that factory inventories are at satisfactory levels, and Kansas City states that firms plan no inventory changes in the next six months. However, Atlanta notes, with new orders falling, textile producers find that their inventories are building. Most other manufacturers in Atlanta, and especially producers of paper and chemicals, remain strong. Factory employment levels are satisfactory or rising in Boston, Cleveland, Philadelphia and Richmond, but St. Louis reports that, except for transportation equipment, all major manufacturing sectors have reduced employment recently. Construction and Real Estate Construction and real estate activity has varied among Districts. While residential construction is relatively strong in Chicago, Minneapolis, and Richmond, most other Districts report some weakening. Boston notes, however, that the prospect of rising interest rates may stimulate some activity in its currently slowing residential real estate market, and Kansas City states that most observers anticipate an increase in housing starts there. Commercial construction shows a more consistent pattern. Chicago and New York note a substantial amount of new office building underway and Atlanta and St. Louis report an expansion in nonresidential construction as well. Plans for several big projects have recently been announced in the Minneapolis District, and Dallas reports some recent stability in its nonresidential sector though at a low level of activity. Agriculture and Natural Resources Districts reporting on agriculture present a mixed picture. The lack of rainfall is a concern in all of the crop-growing regions, but only Dallas and St. Louis spoke of reduced yields as a major threat thus far. Atlanta and Richmond have good crop conditions and Chicago, though noting a surge in crop prices as a result of the drought, states that the extent of irreversible crop damage is believed small at this time. Cattlemen in the San Francisco and Atlanta Districts are getting sharply higher prices and enjoying substantial income gains. However, livestock producers in Dallas and Richmond expect lower profit margins due to falling demand and increased feed costs. Oil production has stabilized in Atlanta and Kansas City and drilling activity in both Dallas and Kansas City is above year- earlier levels. While Minneapolis describes a booming paper mill industry, Atlanta reports that prices for lumber and building products have declined, and San Francisco also notes some slowing in its forest products industry. Financial Developments More than half the Districts mention an increase in loan demand. Philadelphia notes an acceleration in business loans and strong growth in real estate lending. An increase in real estate loans was also reported in the Atlanta, Cleveland, Kansas City and St. Louis Districts and Richmond, Kansas City and St. Louis note stronger demand for business loans as well. Dallas states that the rates of decline in assets and liabilities at its large banks have moderated. New York and San Francisco note that higher interest rates are causing a shift to adjustable rate mortgages. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1145 -beige_book_pure_text_pre2000,1988,"Economic expansion continues at a pace varying from sluggish in two Districts to moderate or strong elsewhere. Employment levels are stable or rising, with tight labor market conditions noted in some areas. While retail sales are generally lackluster, auto sales have picked up. Manufacturers report moderate to healthy gains in sales and orders, although four Districts note signs of a possible slowing. Capacity constraints and shortages have developed in some Districts and materials price increases are widespread. Construction activity is mixed, with home construction reported to be weaker than nonresidential building. While the impact of this summer's drought varies, even within states, the corn and wheat crops have suffered extensive damage. The recent rains may save much of the soybean crop, however. Consumer Spending Most Reserve Banks find retail sales to be sluggish, with only Atlanta and Minneapolis reporting any real vigor. Respondents cited apparel and furniture sales as particularly weak; moreover, the rising cost of imported clothing has reduced margins as well as sales volumes. Inventories, however, are said to be in balance: only in the Cleveland and St. Louis Districts were buildups reported. Boston and San Francisco retailers attribute this healthy inventory situation to careful monitoring: retailers in New York, Philadelphia, Cleveland, and St. Louis, are reportedly resorting to heavy promotions to clear the shelves. Retailers expressed mild optimism about the next six months, with those in the Atlanta, Minneapolis, Richmond and Dallas Districts expressing greater confidence in the future than merchants in Philadelphia, Cleveland, Kansas City, and St. Louis. In marked contrast to general retail conditions, many Districts characterize auto sales as strong and above dealer expectations. Only Richmond finds car sales declining. Domestic makes, aided by manufacturer incentives, are said to be moving briskly. Foreign autos, by contrast, are reportedly rising in price and languishing in the showrooms. San Francisco finds inventories of unsold imports now standing at ""unsustainably high levels."" Manufacturing Manufacturing sales and orders continue to grow at a moderate to healthy pace in most Districts. Respondents credit manufacturers' investment and export activity for much of this growth. While contacts in Philadelphia and Dallas see some pick-up in demand from earlier months, Boston, New York, Richmond and San Francisco report recent signs of slowing. Strong sectors include steel and other primary metals, machinery—particularly machine tools—fabricated metals, commercial aircraft and railcars. Atlanta and Chicago also see strength in autos, tires and some other consumer goods. Among the weaker sectors were agricultural equipment and most defense goods, as well as energy-related and construction-related products. Increases in the prices of such materials as metals, paper and food were widely noted. While a few contacts expect these prices to stabilize, more think they will continue to rise. Kansas City, Cleveland, Richmond and San Francisco report that shortages of steel, valves, castings, motors and chemicals have developed. Cleveland, Dallas and San Francisco also mention capacity constraints, especially in petro-chemicals and pulp and paper. In this environment, manufacturers are reportedly choosing to hold higher inventories and are finding it easier to raise their own finished goods prices. Manufacturing employment is generally stable or increasing slightly. Cleveland and Philadelphia report healthy gains while Atlanta and Boston report recent layoffs. Most contacts foresee little or no acceleration in wage pressures. San Francisco respondents were evenly divided on this issue, however, and Dallas and Minneapolis noted some industry-specific pressures. Cleveland Residential construction is down from year-ago levels, although the Richmond District reports strong housing construction and sales. In the San Francisco District residential building is very healthy along the coast but weak in some of the inland states. Richmond, Atlanta, Minneapolis and Kansas City also observe substantial variations in the strength of housing sales and construction within their districts, with larger cities experiencing stronger activity than more rural areas. Reports on nonresidential construction and real estate activity were positive for the most part. Although nonresidential construction contracts were down from a year ago in the St. Louis District, office building construction has surged in some cities in the Atlanta District and leasing has picked up in New York. Office building construction has slowed somewhat in Chicago, but remains at a high level; industrial real estate and construction activity in the District has strengthened. Dallas reports that both nonresidential and residential construction contracts have stabilized, a development suggesting that a prolonged downturn in construction may be at an end. Agriculture and Natural Resources The impact of this simmer's drought varies considerably by crop-even within a given state. In the Kansas City District, winter wheat matured on time and the harvest was normal, but in the Chicago and Minneapolis Districts recent rains were too late for the spring wheat, barley, oats and hay. The July rains were also too late for much of the corn crop. In some parts of the Kansas City, St. Louis and Minneapolis Districts, corn yields are expected to be down 50 percent or more. However, if the recent improvement in the weather holds, Chicago, St. Louis, Atlanta and Minneapolis suggest that the soybean crop could recover to near normal levels. Cotton, rice, sugar cane, peaches and citrus fruits are also in good shape, but the state of vegetable crops varies. In the Chicago District (an important source of processing supplies), vegetables were severely damaged, but in Atlanta the crop is satisfactory. While ranchers have sold more animals than usual and cattle prices have fallen, no large-scale liquidation has occurred. Instead, according to reports from Dallas, Atlanta and Kansas City, record numbers of cattle have been put on supplemental feed; as a result, ranchers' profits will be squeezed. Nevertheless, the Kansas City and Minneapolis Districts point out that improvements in the financial positions of farm borrowers and lenders over the last two years will help most withstand the impact of the drought. Atlanta reports that demand for forest products has weakened recently with the slowdown in building activity, while San Francisco sees no such decline. Both are experiencing strong export activity. With the price of oil below $15 per barrel in mid-July, Atlanta finds oil production slipping and Dallas and Kansas City report or expect a fall in the rig count. Atlanta and Richmond see coal output rising with help from the weak dollar and strength in steel. Financial Activity Except in the Dallas District, loan demand is healthy. Business lending is reported to have accelerated in the Philadelphia and Atlanta Districts, while consumer lending has grown vigorously in Cleveland, Kansas City and San Francisco. In the Cleveland District consumer installment loans have recently increased at an annual rate greater than 50 percent. Consumer lending is said to be rather weak in the Philadelphia and New York Districts, but demand for home equity loans remains very strong. New York respondents also note that delinquency rates on consumer loans are equal to or lower than year-ago levels. Reports on commercial real estate lending are mixed, with Cleveland reporting relatively strong growth and Atlanta and Philadelphia seeing some tapering off. Richmond bank executives report substantial increases in deposits in July; Philadelphia bankers have also seen a pickup. In the Dallas District, however, deposits and assets—particularly business loans—both continue to decline. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1549 -beige_book_pure_text_pre2000,1988,"The pace of business activity reflected in most District reports ranges from healthy expansion to stable or mixed, with weakening noted only by St. Louis. However, contacts in several Districts were less optimistic than earlier about the outlook. A number of manufacturing industries are operating near capacity, and further upward pressures on prices were noted. Retail spending is generally lackluster though some segments are doing better. Several Districts report weakness in residential construction, but home sales are strong on the West Coast and in the Richmond District. Nonresidential construction has slowed in various areas of the country, though industrial building has strengthened in the Midwest. Rainfall in the second half of the summer relieved drought stress to agriculture in several Districts, though parts of the St. Louis District suffered further crop damage from hot, dry weather. Manufacturing Activity is expanding in numerous manufacturing industries and in most Districts. Rising exports and transfer of production from overseas as well as strength of domestic demand have contributed to manufacturing's rise. Some industries are at or near capacity including paper, chemicals, steel, and aluminum. Other sectors doing well include electronics; nondefense aerospace; and electrical equipment and instruments, particularly for installation in new plants and factory expansion projects. Demand for various types of nonelectrical machinery has strengthened, in some cases from low levels. Motor vehicle output plans have been revised upward in line with better-than-expected sales. San Francisco says that output of forest products is strong, though industry sources are concerned about weakening in housing. In contrast, Dallas and Boston report sluggishness in construction supplies. Other manufacturing sectors showing softness include personal care products and government purchases, including defense. Atlanta, however, notes an increase in shipbuilding to fulfill new Navy contracts. Apparel is mixed, with foreign competition still strong. Several Districts indicate that the overall manufacturing expansion is expected to continue, though Richmond noted somewhat less optimism among its contacts than earlier. Construction and Real Estate Housing market conditions vary widely around the country, from healthy to weak. Recent interest rate increases are thought to have prompted some potential buyers to act before rates rose further (New York) but discouraged other would-be buyers (Richmond). San Francisco reports strength in West Coast housing markets and rapid increases in home prices. Richmond indicates that new home sales stayed strong in August. Dallas reports that residential construction contracts and permits are rising but from low levels. Slowing in homebuilding is noted by New York, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City, though some parts of the New York District have shown recent improvement or less slowing than expected. Weak multifamily building was reported by Chicago and Atlanta, though the latter has seen an upturn in two District cities. Construction of factories has strengthened in the Chicago District, and industrial park construction has increased in south Florida with the boom in exports. The pace of office building construction varies considerably among major cities. Hotel building is booming in Orlando. Chicago contacts expressed concern about overbuilding of retail stores in some areas. Boston described capital spending by profitable stores as cautious; weak retailers are selling stores. Strong or increased highway construction was noted by Chicago and San Francisco. Consumer Spending Consumer spending was reported sluggish in most Districts. Cleveland and Minneapolis, however, noted an upturn in apparel sales in recent weeks. Other Districts were hopeful that an end to hot, humid weather would bring stronger sales of fall apparel and back-to- school items. Lines described as selling well include conservative clothing (Boston) and accessories, handbags, and women's at-home clothing (New York). Cleveland sees some strength in home furnishings, appliances, and electronics, but sales of furniture were reported lagging by Boston, New York, and Richmond. Sales of home improvement items were reported strong by Kansas City, but Boston said hot weather deterred sales of building materials. Retail sales have picked up in rural areas following recent rains, according to St. Louis. Motor vehicle sales have been mixed. Ordering by retailers is described as conservative and cautious. Inventories were viewed as generally satisfactory in the New York, Minneapolis, and Kansas City Districts, but Dallas noted stocks above desired levels, and Boston District stores with weak profits are cutting inventories. Extensive markdowns were reported by New York and Chicago. Dallas noted reports of continued high square footage per customer, holding down profits. Resource Industries Crop conditions vary widely. Timely rains in August helped crop conditions according to Richmond, Atlanta, Kansas City, and Dallas. However, hot dry weather in mid-August caused further crop deterioration in the St. Louis District. Minneapolis reports conditions largely unchanged there over the past month. This summer's drought caused a sharper loss of corn and soybean production in the Chicago District than for the nation as a whole. Higher feed costs have squeezed livestock producers' margins, as have higher water costs in the San Francisco District, but Kansas City indicates that drought-induced cattle liquidation has been limited. Richmond notes that higher livestock prices are expected to help offset the adverse effects on margins of the rise in feed costs. The past year's climb in agricultural land values in the Chicago District slowed in the second quarter. This has been a ""roller coaster"" year for forestry, according to Atlanta. Increased timber supply due partly to the drought, and reduced demand reflecting concerns about lagging housing starts, have cut lumber prices. Oil exploration and development is expected by Dallas contacts to remain sluggish. The number of active drilling rigs has fallen since May in the Dallas District but risen, contrary to expectations, in the Kansas City District. Atlanta reports new oil discoveries in Alabama and Mississippi, and moderately lower oil production in the District. Other Drought Effects Low Mississippi River levels this summer because of the drought caused diversion of freight from barges to higher-cost rail and Great Lakes shipping. However, recent rains in the upper Midwest have helped raise barge traffic above a year ago at Memphis, where delays had been lengthy. The drought cut into demand for farm equipment, which was recovering in the spring from low levels, but added to demand in some other industries including pump manufacturing and well drilling. Inflation Rising raw materials costs continue widespread, and higher prices for components are increasingly being noted. Further price increases are expected. Some firms, however, are experiencing little or no cost pressure, because of long-term contracts or because they have worked closely with suppliers on cost reduction, according to Boston. Richmond reports that materials and finished goods price increases in August were less widespread than in July. Various materials and components are in short supply, and lead times have lengthened further, prompting producers to try to raise their inventories of these items. Cleveland comments that concerns about rising costs and capacity limits are allayed by sizable profit and productivity gains, but Chicago notes that margins at some firms are being squeezed by increasing materials costs. Reports on wage gains are mixed. Cleveland sees signs of somewhat higher labor costs, partly reflecting increased overtime. Boston's contacts are evenly divided between those who see accelerating labor costs, especially for fringe benefits, and those who do not. San Francisco reports shortages of entry and low-skill workers, partly tied to the immigration law. Shortages of qualified retail salespeople are exerting upward pressures on wages. In contrast, St. Louis sees no substantial upward wage pressures even in industries running at capacity. Finance Trends in lending have been mixed. Business lending has been strong except in the Dallas District where business and real estate loans are leading the decline in total loans. Consumer lending ranges from soft to strong, with increases generally led by financing of car purchases. Real estate lending is weak in some areas and showing moderate gains in others. Business and consumer loan rates have risen as have funding costs. Boston area bankers expect further interest rate increases over the rest of 1988. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1691 -beige_book_pure_text_pre2000,1988,"Most districts report continuing growth in their regional economies. New York, Philadelphia, Cleveland, Richmond, Chicago, and San Francisco all report further expansion over the past six weeks. Four districts—Atlanta, St. Louis, Kansas City, and Dallas—report slow or sluggish growth. Boston represents general business sentiment as cautious, and Minneapolis says business conditions have held steady. Though conditions in agriculture vary across districts, it now appears that, in the aggregate, the drought will have a much smaller impact on farm income than was originally thought. The slump in oil prices has depressed the energy industry in the Dallas district, but the effect has been minimal elsewhere. Construction of residential dwellings, especially multifamily structures, is slow and homebuilders are preparing for further declines; nonresidential construction, though, remains healthy. The manufacturing sector continues to expand, bolstered by a growing demand for exports. The outlook calls for caution and some easing in activity, however. Retail trade remains sluggish in most parts of the country, and store operators are anticipating only modest gains in the fourth quarter. In the financial sector, demand for consumer loans remains strong, led by home equity borrowing. Business lending is holding up as well. Agriculture Agricultural conditions vary considerably by area. In the aggregate, however, it appears that the impact on farm income of any reduction in yield due to the drought will be largely offset by higher crop prices in general and federal aid to affected farmers in particular. And, while livestock producers' profits are being squeezed by rising feed costs, livestock prices are heading up as well, which will allow producers to pass on some of the increased costs. Kansas City reports that some cattle ranchers are maintaining herds through the winter in anticipation of higher prices in the spring. Feedlot operators, on the other hand, are seeing profits eaten away. Mining and Energy Dallas reports significant weakness in oil and gas drilling and indicates that the rig count in the Eleventh District has dropped by 14 percent since May. The slump has had little noticeable effect in other regions, however. While the rig count in the Atlanta District is down 7 percent from a year ago, operators of offshore installations say they would expand production if they could find qualified labor. In the San Francisco District, drillers are waiting to see if prices rebound before they change plans, and refiners and retailers are enjoying wider profit margins as a result of the drop in the wholesale price of oil. Minneapolis reports that gold-mining operations in Montana have expanded in the last year and that the stage may be set for expansion in copper mining as well. As a result, mine employment may be headed for its highest level in that district since 1983. Construction All districts except Kansas City and Dallas report a slowing or weakening in residential construction and real estate; St. Louis and Atlanta note softening house prices as well. Overall, multifamily residential construction is weaker than single-family construction. Several districts indicate that homebuilders expect mortgage rates to head upward and are therefore bracing for further slowing. Nonresidential construction, however, remains healthy in most areas. Chicago specifically mentions public works projects as being strong. Manufacturing Virtually every district indicates continuing strength or expansion in the industrial sector. Many cite rising exports as a primary source of demand for manufactured goods; Cleveland indicates that domestic production is displacing imports in some cases. The expansion in manufacturing spreads across a wide range of industries. Among the strongest are chemicals, paper and pulp, primary metals (specifically steel), fabricated metals, automobiles and trucks, electrical and electronic machinery, and nonelectrical machinery. Weaker industries include textiles and apparel, equipment related to oil and gas drilling, and defense-related operations. Despite the continued growth in manufacturing and the expansion of factory employment, wage pressures do not appear to be mounting at this time. Price movements vary by region and industry, but are generally moderate. Plans for increased capital spending by manufacturers are reported by several districts. In the New York District, major manufacturers of steel, automobiles, and electronic equipment have announced plans to establish new plants or enhance existing operations. Dallas indicates that chemical producers are straining capacity and are planning expansion. In the Philadelphia District, over 40 percent of the respondents to the monthly Business Outlook Survey say they plan to spend more on plant and equipment in the next six months. Despite the current boom in the sector, manufacturers are becoming less optimistic about coming months. Several districts say a slight slowdown became evident in late summer and that manufacturers, foreseeing a leveling off of activity through the first half of 1989, have become very cautious. For the second month in a row, manufacturers in the Richmond District are anticipating a drop in business activity from current levels over the next six months. Retail Trade Although several districts report a recent pickup in sales of general merchandise, retail business can accurately be described as weak or slow in most areas. Women's apparel is mentioned by several districts as a particularly weak line. Philadelphia says a slight pickup has occurred recently in higher priced merchandise. Despite continued sluggishness in sales, retail inventories at stores in most districts are at acceptable, lean levels thanks to strict monitoring and tight ordering policies. And, although sales remain low relative to plan, Boston, Philadelphia, and San Francisco all report difficulty in hiring qualified, in-store help and note some upward pressure on wages as a result. Retail prices are mixed. Boston reports that prices of lower-end merchandise are fairly stable, but that prices of higher-end items are rising fairly quickly. Minneapolis says price increases have been moderate and that some retailers in that region have switched to domestic suppliers as the prices of imported goods have gone up. Sales of cars and, especially, of trucks are reported to be strong in most districts. Cleveland reports slower sales stemming from a small inventory of 1988 leftovers and the reluctance of dealers to make price concessions to clear them out. In St. Louis, sales have leveled off after seven months of strong gains. The outlook for retail sales can be sunned up in one word: cautious. Store officials' forecasts for the fourth quarter range from ""moderate"" to ""slightly improved."" No one, however, is predicting a boom in holiday sales and most are likely to continue their policies of tight inventory management. Finance Business loan volume is growing or stable in most districts, while consumer loam demand is generally described as strong. Mortgage lending, however, has tapered off. Home equity loans, on the other hand, are reported to be strong by New York and Richmond. Philadelphia notes that some bankers are concerned about funding the growth in loans and expect to have to raise interest rates on deposits to attract funds. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1450 -beige_book_pure_text_pre2000,1988,"Most Districts report continued economic growth, but at an apparently slower pace than in previous months. Only Dallas, St. Louis, and Kansas City report generally sluggish business conditions and cite persistent weakness in many sectors. Much of the activity in the faster-growing Districts appears to be generated from strong exports and a steady demand for capital goods. The brisk production pace continues to be supported by growing new orders. Wage increases are moderate, although labor markets continue to be tight. Capacity pressures, and consequently price pressures, have reportedly eased slightly in several industries, including paper, chemical, steel, and textiles. Improvement is noted in the drought-stricken Districts, except Dallas, as damage estimates are revised downward and more favorable weather improves soil conditions. Residential construction is sluggish throughout most of the Districts, but nonresidential construction remains brisk in several Districts. Retail sales are slow, but some optimism is expressed about prospects for the holiday shopping season. The moderate increase in loan demand has been driven primarily by strong commercial loans. Retail Trade Retailers report flat to moderate sales as they enter the holiday shopping season. Several Districts in the eastern half of the nation, including Boston, New York, Philadelphia and Cleveland, express optimism about the apparent turnaround in women's apparel, which has been particularly weak for several months. However, department store managers in Cleveland and Philadelphia expect price increases to dampen to some extent the recent rebound in apparel sales. Inventories generally remain light, as retailers anticipated the recent sluggishness in sales and continue to be cautious in stocking shelves for the winter months. Merchants in Kansas City, Minneapolis, and Philadelphia report that inventories are at acceptable levels. Only Richmond reports that inventories, especially in large departments, were higher than desired. Despite the slim inventories, many retailers are pursuing widespread discounting. However, Philadelphia managers report that the price discounting is in line with their planned pricing strategies. Several Districts, including Kansas City and Cleveland, report some pressure on wholesale prices, which may squeeze even further the profit margins of these businesses. Retailers express guarded optimism about sales prospects for the holiday season. New York, Minneapolis, and Kansas City merchants anticipate good holiday sales, especially compared with the post- October consumer sentiment of last year. St. Louis and Philadelphia managers were less optimistic and expect only slight increases from a year ago. Automobile sales are sluggish in most Districts, except for reports of strong sales in Chicago and Minneapolis. Philadelphia, Richmond, and Kansas City report expanding inventories, which could prompt more dealer incentive and rebate programs. Manufacturing All Districts report expanding production, but many report a slower rate of growth than in previous months. Traditional durable-goods industries show considerable strength, even more so than many ""high- technology"" industries. Cleveland reports that strong capital-goods demand and rising exports have fueled rapid advances in nonelectrical machinery and primary metals. Chicago and Atlanta also note strength in durables and steel production. Boston, Dallas, and San Francisco, on the other hand, report sluggishness in defense and computer-related industries, especially electronic equipment manufacturing and semiconductors. The expansion in manufacturing continues to be supported in most Districts by rising new orders. However, some of the pressure on capacity has been eased, as evidenced by a reduction in the backlog of orders and shorter delivery times. Many industries, including paper, chemical, and aerospace, are still operating at or near capacity. San Francisco reports that capacity constraints are clearly evident in the commercial aircraft industry. Atlanta reports that the chemical industry is running close to capacity, bidding up wages for skilled labor and creating tight supplies of ethylene and propylene. However, these same Districts also report some retreat from the high levels of capacity seen earlier in the paper, textile, and apparel industries. Despite general tightness in many District labor markets and reports of shortages of skilled workers, only moderate wage increases have been observed. Cleveland reports that area compensation managers are budgeting about the same level of wage and salary hikes for the coming year (4.6 percent) as granted in 1988. Prices continue to increase in many sectors, but do not appear to be as large or as widespread as recorded in previous months. Chicago reports that upward pressures on steel prices have eased after sharp increases earlier. For the first time in several months, less than half the purchasing managers surveyed in Cleveland report general commodity price increases. Manufacturers in the Atlanta District say they have not increased their prices because domestic competition is strong. Only a few Districts mention plans to increase capital spending. Boston mentions plans for several new plants in their District, but notes that overall capital spending plans are mixed. Chemical, textile, and nonelectrical machinery manufacturers in the Philadelphia District have announced planned increases for both modernization and capacity expansion. Agriculture and Forestry Drought-ridden areas generally report improving conditions as fall rains begin to replenish soil moisture. Some Districts are revising downward earlier estimates of crop damage. Chicago reports that crop yields are slightly higher than earlier estimates. More current estimates show corn production to be 41 percent lower and soybeans 29 percent lower than last year in the District. St. Louis reports that conditions continue to improve as recent rains have benefited the winter wheat crop and have improved pastures. Kansas City also reports that the severity of the drought has been revised downward. Lenders in that District expect strong farm incomes from higher prices and anticipate little change in loan repayment rates. Dallas is the only District reporting worsening drought conditions. Many pastures and ranges are bare, and without significant rainfall this winter, the cost of supplemental feeding may threaten the profitability of cattle operations in some parts of the District. San Francisco reports that the demand for lumber and plywood has fallen in recent weeks, causing prices to erode slowly. However, log and timber prices remain firm due to continued exports. Atlanta notes that foreign demand for hardwoods by Japan and the United Kingdom has helped support prices of hardwood logs. Construction and Real Estate Housing construction remains slow in most Districts except for a few isolated pockets of strength. Richmond reports fairly strong demand for single-family homes, and San Francisco notes relatively brisk activity in California, Oregon, and Washington. New York attributes the weak demand for new homes and a slow resale market in much of their District to persistently high prices. Several Districts find relatively brisk activity in nonresidential construction. St. Louis notes that the expansion of nonresidential construction exceeds the national rate. Atlanta attributes the increase in warehouse and industrial construction in their District to strong exports. Chicago reports vigorous commercial building activity in downtown Chicago. Financial Loan activity among Districts ranges from flat to moderate. Philadelphia reports good loan growth, particularly for commercial lending, but notes some easing in recent months. St. Louis and Kansas City record weak loan demand, on the other hand. San Francisco reports continued competition for quality loans and cites some reports that credit requirements are being relaxed in order to attract additional business. However, despite the relatively low loan volume in the San Francisco District, many financial institutions show improved net income. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1539 -beige_book_pure_text_pre2000,1989,"Most District reports indicate somewhat stronger regional economic activity on balance in December and early January than at the time of the last reports in November, with much of the growth centered in the retail and industrial sectors. It would appear, on the basis of these reports, that the national economy gained momentum in recent weeks as consumer spending strengthened, manufacturing activity continued to rise, and producers scheduled more investment in plant and equipment. Reports on activity outside of the retail and industrial sectors were mixed and showed little change from the levels of recent months. In banking, loan demand was generally flat. In construction, commercial and residential activity evidently remained subdued in most of the country, although some areas of strength were reported. In agriculture, the continuing dry weather in some areas threatened the winter wheat crop. Although the overall tone of the District reports was upbeat, one District (Philadelphia) cited indications that the pace of activity may be slowing. Another (St. Louis) reported that growth was still sluggish even though conditions had improved in recent months. Consumer Spending Eleven of twelve Districts reported on consumer activity. All eleven indicated that retail sales in December met or exceeded retailers' expectations. Three Districts also observed that the moderate-to- strong pace of sales in December continued through early January. New cars sold well over this period, and truck sales were even stronger. Cleveland indicated that luxury goods such as electronic equipment and fine jewelry had sold especially well, which might indicate higher consumer confidence. Increases in retail prices were reported as moderate by Boston and Minneapolis, and Kansas City found prices to be generally steady to slightly higher. San Francisco observed that apparel prices were still rising faster than the prices of most other items. Boston reported that wages for retail clerks were still rising briskly. Manufacturing and Mining All Districts reported on manufacturing activity, and most of the reports suggested that production levels were currently at or above November levels. San Francisco indicated expansion in the aerospace and electronics industries, and Boston noted strong demand for manufactured items used by the commercial aircraft and automobile industries and most capital goods industries. Dallas and Chicago noted increased demand for steel products, but Cleveland indicated a sharp slowdown in steel production, and reports from a few Districts stated that activity was down in some construction-related industries such as lumber. Several industries were reported to be operating at high capacity utilization rates, but only a few, such as chemicals, claimed capacity limits had constrained production. A majority of Districts indicated that manufacturers plan to increase capital expenditures in 1989 over 1988 levels. Mast of this spending will be for new equipment rather than plant expansion. Labor market conditions in the manufacturing sector appear to be about the same as in November in most Districts. Factory labor was reported to be scarce in some areas. Boston indicated that producers expect wages to rise this year at about the same rate as last year. Cleveland noted moderate increases in wages. Cleveland and Atlanta mentioned significant increases in employee benefit costs. About 60 percent of the respondents to both the Philadelphia and Richmond surveys reported rising input prices. Boston indicated that the prices of some raw materials such as paper, wood, and most metals appeared to be stabilizing but that the prices of semi-finished goods such as petrochemicals were still rising. Reports on mining were mixed. Minneapolis and San Francisco indicated strong activity in silver and copper mining, and San Francisco also noted strength in gold and phosphate mining. But oil drilling activity in the Dallas, Kansas City, and San Francisco Districts was apparently restrained because of uncertainty about future prices. Construction Reports on current nonresidential building activity varied widely across Districts, ranging from strong in Chicago and San Francisco to weak in St. Louis. Construction of industrial facilities was reported to be robust in some areas. Chicago indicated work on industrial buildings was very strong in the Midwest, and San Francisco mentioned new plants and continued expansion of manufacturing facilities in the West. Philadelphia, however, stated that despite a high demand for industrial space, ""...construction of new industrial buildings may decline this year due to a pullback in lending to builders by financial institutions."" Prospects for nonresidential building overall in 1989 appear to be relatively weak as new contracts declined in Chicago, Dallas, and St. Louis. In the residential sector, housing contracts and starts declined in the Chicago and Kansas City Districts, which suggested a future slowing of homebuilding activity in those regions. Dallas, however, indicated some growth in permits for single-family homes, and San Francisco reported healthy homebuilding activity in some parts of its District. Agriculture and Forestry Six Districts commented on conditions in the agricultural sector and four of these—Richmond, St. Louis, Kansas City, and Dallas— reported concern about the impact of continued dry weather. Dallas noted that the winter wheat crop had already been damaged by drought, and Kansas City and St. Louis said that dry conditions threatened the wheat crop in their Districts. Several Districts noted higher grain and livestock prices. While crop farmers have benefited, livestock farmers have been adversely affected to some extent because of higher feed costs. Kansas City noted that cattle operators in its District had not expanded herds, despite strong beef prices, because low moisture had reduced the use of winter wheat pastures for grazing. Reports of a slowdown in lumber production were recorded by Atlanta, Dallas, and San Francisco, but Minneapolis characterized lumber output in its District as strong. The softening in domestic demand for lumber, which was attributed to sluggish homebuilding, was reportedly offset somewhat by increased foreign demand. Banking Loan demand varied among the Districts that reported or banking conditions. The demand for commercial and industrial loans was said to be weaker in the St. Louis District, largely unchanged in the Richmond and Kansas City Districts, and growing slowly in the Cleveland District. Philadelphia reported a strong increase in commercial and industrial loans so far in January, but a reduction in inquiries and applications. Both Philadelphia and Richmond indicated continued healthy demand for consumer credit, but Cleveland and St. Louis noted slower growth. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1309 -beige_book_pure_text_pre2000,1989,"Economic activity for most of the country is reported to be expanding at a moderately strong pace. Consumer spending, except for autos, has apparently gained momentum while manufacturing, especially for export, continues to show strength almost everywhere. Energy and, to a lesser extent construction, remain the weakest sectors. In this environment, there is evidence of pressures on costs and prices. Despite additions to productive capacity and improvements in efficiency that are forestalling widespread bottlenecks, materials and product prices are edging up, albeit sporadically and at an uneven pace. Labor markets continue to tighten, with labor shortages noted for both skilled and unskilled workers. Due largely to weather, there are also indications of present and possible future price pressures in agriculture. Aside from widespread evidence of cost and price pressures, several imbalances are reported. There are signs that excess construction inventories are being perpetuated in some areas. Also while reports of credit problems are isolated, deposit growth is generally weak. Consumer Spending Most Districts reported strong gains in consumer expenditures for January and February, with the exception of autos. Growing shortages of retail workers as well as other cost and price pressures were noted in a few Districts. Apparel sales, particularly women's clothing, contributed significantly to strength. Some Districts also pointed to brisk purchases of home furnishings and electronics. In contrast, new car sales have slowed and new incentive programs are said to be needed to reduce higher-than-usual inventories. General merchandise inventory levels are typically viewed as lean. General merchandisers are typically optimistic about spring sales, although Philadelphia expressed concern that an early Easter this year could lower overall sales n advance of the holiday. In a number of Districts, retailers expressed uncertainty about the long range outlook. Manufacturing Most Districts cited some tightness in manufacturing labor markets or the Districts that reported on costs and prices, most anticipate increasing pressures due either to current strong conditions or attempts to pass through last year's large increases for particular inputs. In other Districts such as Philadelphia and Boston, more moderate pressures were reported. Manufacturers generally are optimistic about near-term production prospects, frequently because exports are outpacing growth in domestic demand. Orders for producers durables are strong in the Districts where this industry is relatively important to the economy. Aside from machine tools and the like, transportation equipment sales are also strong. Factory orders for apparel are up strongly in Dallas, and apparel and textiles production is rebounding in Richmond and St. Louis. Production for defense is generally reported as weak except in the St. Louis District, where backlogs are supporting activity. The paper and chemical industries continue to turn in strong performances according to Dallas and Atlanta, although their growth rates have slowed recently. As far as capital spending is concerned, some of the largest and most broad-based increases are noted by Chicago. However, in the industries where reports were obtained on capital spending, it was generally not expected to exceed last year's strong pace. Often, investment was said to be improving efficiency and modernizing equipment rather than for expanding capacity. While industries in several Districts are said to be operating close to full capacity, there are few comments about serious bottlenecks. In this regard, Chicago and Richmond note capital spending directed towards reducing bottlenecks. San Francisco reports one of the exceptions—capacity constraints are binding and long delivery times typify production of commercial aircraft and aerospace supplies. Construction Comments characterize housing and real estate activity as ranging from stable growth to weakness. Several of the Districts that reported on this noted high vacancy rates in this area. In construction, multifamily appears weaker than single-family homebuilding almost everywhere. Nonresidential activity also reflects a heavy inventory condition in several of the Districts that reviewed this. At the same time, building is strong in the St. Louis and Chicago Districts, reflecting industrial expansion in the latter. Chicago also reports very heavy demand for construction steel, whereas in other Districts softening domestic demand for construction materials was seen. Resource-Related Industry Several Districts noted a cautious optimism in resource-related industries. Expectations of higher farm income are fairly widespread and export demand for several products, such as lumber, shows continued strength. Of the nine Districts that reported on agriculture, four observed concerns that soil moisture problems could threaten crops. The winter wheat crop is already threatened in a number of Districts with the exception of Richmond. The effect of herd reduction during last year's drought has pushed cattle prices higher. Descriptions of the energy industry suggest continued weakness. Financial Services The comments on loan demand suggest little growth, with the exception of Philadelphia. Two Districts reported no trend in delinquencies and San Francisco indicated credit standards for auto loans were tightening. Some others indicated that concerns were expressed about forthcoming upward adjustments in rates on outstanding ARMs. Atlanta noted that delinquencies, defaults and bankruptcies are on the rise in real estate, with developers in certain overbuilt areas under pressure. Deposit growth was described as weak by all of the Districts that reported on this. Two noted deposit outflows at thrift institutions in recent months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1107 -beige_book_pure_text_pre2000,1989,"The nation's economy grew at a moderate, sustainable pace in February, March, and early April. Business activity was relatively strong in the Midwest and South. Consumer spending in most of the country was moderately strong, but signs of slowing were apparent in the Northeast and West. Manufacturing activity expanded at a fairly strong pace throughout the country, and manufacturers are generally optimistic about sales prospects for the rest of the year. The backlog of new orders has been mixed, but no significant changes were found. No serious bottlenecks were reported. Despite the continued strength in manufacturing output, none of the districts report significant increases in input prices or labor costs. Residential construction was mixed, but nonresidential construction levels were described as moderately strong. Much of the winter wheat crop was lost due to dry weather early this spring. Recent rains, however, have improved the outlook for the spring wheat crop, as well as for agriculture in general. Favorable conditions were apparent in the mining and lumber industries. Consumer Spending Consumer spending slowed significantly in several districts but grew fairly strongly in others. Boston, New York, Philadelphia, Richmond, and San Francisco report sluggish retail sales. The sales slowdown was particularly marked in consumer durables. Lower-than-expected automobile sales were reported by Richmond, Minneapolis, Kansas City, and San Francisco. A large dealer in the Minneapolis-St. Paul area describes the slowdown in car sales as the worst in over twenty years. Boston reports that retailers are curtailing their capital spending programs due to disappointing sales growth, focusing spending instead on upgrading distribution systems rather than on new construction. Several districts point out that the early Easter this year made sales comparisons with last year difficult. Consumer spending on general merchandise is described as fairly strong by Cleveland, Chicago, St. Louis, Minneapolis, Kansas City, and Dallas. These reports suggest that the economic expansion has been stronger lately in the South and Midwest than elsewhere in the country. Several of these districts also report an early-April recovery in auto sales, partly attributable to enhanced incentives for buyers. Inventories were at acceptable levels in all districts. The rate of retail price increases is largely reported as being fairly moderate. Boston and Minneapolis point to an increase in wholesale prices of goods purchases by retailers. Retail prices, however, have not risen much, and Boston reports concern about eroding retail margins. Manufacturing Manufacturing activity continued to expand at a fairly strong pace. None of the districts report declines in shipments; most report significant increases. St. Louis reports that manufacturing employment rose by an impressive 10.8 percent from December to February. Cleveland reports that cold-rolled and galvanized steel operations were at full capacity. Chicago reports that shipments of major home appliances reached record levels. Manufacturers are generally optimistic about sales prospects for the year. San Francisco reports strong demand for commercial aircraft; Atlanta reports significant increases in capacity in the broiler- chicken producing and processing industry; and Chicago cites brisk demand for equipment installed in construction projects. Reports are mixed on the backlog of new orders. Boston and Atlanta report some weakness in new orders, but Philadelphia, Cleveland, Richmond, and Chicago note that new orders increased in many industries. Capacity utilization was generally at satisfactory levels: no serious bottlenecks were mentioned. Atlanta reports that capacity constraints are easing in several sectors. In contrast, reports on capital spending plans are somewhat mixed. Boston reports that half the manufacturers they surveyed plan to increase capital spending, but a third plan to invest practically nothing. New York reports plans for a $70 million business park in the Rochester area. Dallas reports that electronics manufacturers are planning significant increases in investment spending. Atlanta, however, reports that capital investment appeared to be slowing. None of the districts mention significant increases in input prices or labor costs. Boston reports that most of their survey respondents were not alarmed by steady to slightly higher input prices. Philadelphia reports that higher prices were not quite as widespread as they were over the winter. Chicago also reports that prices paid by manufacturers showed increases, but less so than earlier. Respondents to a survey by Kansas City indicate that input prices are expected to stabilize or decrease in the near future. Construction Housing construction reports are mixed. New York reports that a glut of houses in the metropolitan areas of New York City and New Jersey is deterring homebuilding in the area, but homebuilders in upstate New York are quite active. Residential construction was vigorous in the Chicago area, but first-quarter housing permits in St. Louis were down 31.8 percent from a year earlier. Minneapolis and Kansas City report declines in residential construction, but Dallas reports that single-family housing permits were above last year's levels. San Francisco reports that construction activity was strong, though limited by a lack of available land. Nonresidential construction is generally described as moderately strong. New York reports that office-leasing activity has been brisk. Chicago reports that district contracts for nonresidential buildings were at their peak last year, and Dallas reports that nonresidential building activity showed year-over-year gains in contract values. Employment Conditions in the labor market are described as largely satisfactory. Unemployment rates are generally low. Boston reports that the region's labor markets seemed less tight. New York reports that the unemployment rate there dropped sharply, primarily because of a decline in the number of job seekers. Atlanta reports that wage increases remained mostly in the 3 to 5 percent range, which is not regarded as too high. However, Atlanta also notes shortages of skilled workers in many sectors. St. Louis reports that payroll employment from December through February grew at a relatively high 6.3 percent annual rate. Agriculture and Resource-Related Industries Soil moisture conditions have improved somewhat in several regions after last year's drought. Rains in March and April eased the stresses of the drought in California, parts of Missouri, and North Dakota. Chicago reports that soil moisture conditions were adequate for the start of the growing season in most of the district except western Illinois and much of Iowa. However, the recent rains came too late for much of the winter wheat crop. Wheat yields are expected to be below normal in Kansas and parts of Oklahoma due to dry conditions throughout the early spring. According to Dallas, the winter wheat crop was damaged by insufficient moisture and by insects. Production of fresh vegetables is reported to be recovering from the effects of a February freeze in parts of the South and Southeast. Oil prices have risen sharply in the aftermath of the Alaskan oil spill. The spill is temporarily helping the Alaskan economy, though not the ecology: fishermen are being paid $2,500 per day for use of their boats for cleanup activities. Oil and gas drilling activity reports are mixed but show some recent signs of strength. Dallas reports that the rotary rig count in the district was up sharply in March. Kansas City reports a decline in drilling rigs from February to March but a rebound in April. The lumber industry appears to be doing very well. Minneapolis and San Francisco report that the main problem is a shortage of available logs. Minneapolis also reports that environmental concerns have delayed logging activity. Reports on capital expenditure plans in this sector are mixed, with Minneapolis reporting substantial expansion in capacity but San Francisco reporting that lumber shortages have caused mills to reduce expenditure plans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1566 -beige_book_pure_text_pre2000,1989,"Economic activity for most of the nation continues to advance, but a number of Federal Reserve districts note ebbing rates of expansion. Although auto sales have dipped, reports of retail sales are generally positive. Manufacturing growth is leveling off. Real estate markets are sluggish. In the resources sector, firming oil prices have helped the energy-producing districts, while environmentally-related legal issues are said to have restricted lumber supplies. Recent rains have alleviated drought problems in several districts. Loan growth varies considerably across regions. A number of districts mention undesirably high inventories, particularly in autos. With some exceptions, wage and price pressures are not accelerating. Some districts said their respondents had not been able to pass their input cost increases through to their customers. Consumer Spending Retail sales reports are mixed, but the tone is generally positive. Cleveland mentions that sales in Ohio rebounded in May, and that gains continued into June. Demand has picked up in the Kansas City district. Dallas and New York note year-over-year gains, and Minneapolis cites strong consumer spending. Boston, Chicago, and Philadelphia offer less positive comments, however. Strength in sales of women's apparel was noted by several districts, but consumers appear to be increasingly cautious about purchases of big- ticket items. Auto sales have weakened. Philadelphia, Cleveland, Richmond, Chicago, Kansas City, and San Francisco all note softening demand, while Atlanta mentions undesirably high inventories among dealers. Dallas cites moderate sales growth and Minneapolis also refers to recent expansion. San Francisco reports that demand is strong in some parts of its district, although not in most of them. Manufacturing Growth in manufacturing activity has slowed. Boston, Philadelphia, Richmond, and St. Louis all note evidence of reduced rates of expansion, although San Francisco reports robust activity. Boston, Dallas, and San Francisco mention negative impacts of reduced defense contracting. Several districts also refer to weak demand for construction-related products. Nevertheless, a number of sectors remain strong and have high rates of capacity utilization. San Francisco reports bottlenecks in the commercial aircraft industry and tight capacity at most paper mills. Chicago and Cleveland note strong capital goods orders and Atlanta cites upward revisions in capital spending plans by several manufacturers. Most plants in the St. Louis district are said to be operating near full capacity. Although Atlanta and Boston say export demand is strong, a number of other districts cite concerns over potential or actual softening of export markets for some industries. Some districts mention rising prices of basic inputs, particularly metals and certain plastics. Construction Construction is showing signs of sluggishness. Boston, New York, Minneapolis, Kansas City, and St. Louis mention evidence of slipping residential real estate markets. Nonresidential activity shows greater variance across regions, with high rates of industrial construction in the Chicago district and with strong commercial real estate markets in the coastal states of the San Francisco district. In Arizona, which is also in the San Francisco district, commercial and residential real estate markets are languishing. Although Manhattan is undergoing a spate of hotel-building activity, loan officers in the southern portion of the New York district say their commercial real estate markets are generally quite weak. Dallas mentions that nonresidential construction is unchanged at a low level, while Philadelphia reports that commercial real estate markets there are softening. Resource Industries Conditions in the resource sector vary among individual industries. The recent firming of oil prices is said to have helped the energy sectors in the Atlanta, Kansas City, and Dallas districts, while St. Louis reports some increases in coal output. Minneapolis, however, notes that the wood products industry's access to local raw materials has been severely limited as a result of environmental concerns. San Francisco mentions that legal issues have contributed to a reduction of lumber production there, but that exports of logs have also contributed to the slowdown. Agriculture In agriculture, the most significant news may be the recent rains, which have helped to alleviate drought problems in several districts. Subsoil moisture levels remain a cause of concern, but past difficulties have been reduced by precipitation in the St. Louis, Kansas City, and Dallas districts. The rains came too late to avert considerable damage to the winter wheat crops in the Dallas and Kansas City districts, where past dry weather has also motivated ranchers to reduce their herd sizes. Wheat yields in some other districts, including Richmond and Minneapolis are expected to be high. Banking Financial industry activity varies markedly among the districts that mention banking conditions. New York notes that loan demand at small and medium-size banks is the same or somewhat weaker than a year ago. Commercial loan demand in the Richmond district remains unchanged, compared with modest growth in the first half of April, while consumer credit demand there is up modestly. Loan volume in the Philadelphia district is growing, but at a slower rate than during the first quarter. In May, loan demand surged in the Cleveland land district. Loan demand in the Kansas City district is also increasing, while St. Louis notes improved bank profitability and asset quality. In the San Francisco district, commercial loan demand is increasing and most western banks are posting strong profits. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1106 -beige_book_pure_text_pre2000,1989,"Summary Comments received by Reserve Banks from business and other contacts suggest that the nation's economy continues to grow slowly. Most Districts report slow growth in general merchandise sales, with strength in women's apparel Auto sales are weak in a majority of Districts, although Dallas reports significantly stronger sales than a year ago. Overall manufacturing activity shows slow growth in several Districts and declining activity in some areas. Oil drilling activity has improved in recent months, although it remains at a low level. Demand for paper shows signs of weakening from high levels in some areas, while logging restrictions are limiting lumber production in several northern states. Farmers in many parts of the country expect good harvests, but weather problems are hurting production in some regions. Real estate markets and loan demand are strong or growing in some Districts, but weak in others. Trade and Services Most Districts report relatively slow growth in general merchandise sales. Several report that retailers are cautious and are reducing their orders for the remainder of 1989. Most report relatively weak sales of home furnishings, electronics, and appliances. Women's wear is a leading source of retail sales growth in many parts of the country. Texas retailers report ""moderate to strong"" growth in retail sales compared with year-earlier levels, but Philadelphia, Richmond, Chicago, and St. Louis report that sales for many retailers in their Districts were flat or down in real terms. Reports of inventories suggest that most stores have satisfactory stocks, although some unplanned increases were reported in the St. Louis District. Auto sales are reported to be below year-ago levels in most parts of the country. Dealer inventories are accumulating to higher-than- desired levels in most parts of the country, and several Districts report that dealers' profit margins have fallen. However, car sales in Texas have increased sharply with sales in Dallas up 13 percent from a year earlier. Manufacturing Reports on manufacturing industries vary considerably from one District to another. Boston, New York, and Cleveland report declining rates of growth in orders for some manufactured products, with no growth in some cases. Manufacturing conditions in the Atlanta District vary by product line, with chemical producers in Louisiana planning plant expansions. Nearly a third of manufacturers contacted by the Philadelphia bank reported declining activity, while half reported no change. Dallas and San Francisco report softening orders for electronic components. Chicago reports that orders for cutting machine tools, particularly from abroad, trail last year's levels. Richmond and St. Louis report declines in manufacturing activity. Some layoffs and plant closings associated with reduced auto production have occurred in the Chicago and St. Louis Districts, with further cutbacks anticipated. Reduced auto production, seasonal slowing, and reduced export demand have curtailed the demand for steel, according to manufacturers in the Cleveland, Chicago, and Kansas City Districts. Most Districts report that manufacturers' inventories are at satisfactory levels, although Kansas City notes efforts to trim inventories. Agriculture and Resource-Related Industries Conditions in the resource industries are mixed. Increased oil drilling activity has boosted demand for oil field equipment although activity remains below last year's levels. Strong foreign demand for lumber is buoying the lumber industries in the Richmond and Dallas Districts, but logging restrictions are hurting lumber producers in the Pacific Northwest and North Central regions. Accumulation of paper inventories were noted in Arkansas and in the Atlanta District. In contrast, orders to Dallas District paper manufacturers remain high and prices for paper products have been rising recently. Farmers in many parts of the country expect good harvests, but weather problems are hurting production in some regions. Harvest prospects are reported to be good in the Richmond. Chicago, and San Francisco Districts, and in most of the Kansas City District. Heavy rains have hurt production throughout much of the South. Much of North Dakota is suffering from a drought which is expected to hurt wheat yields. Kansas and Nebraska wheat production is suffering from a plethora of weather and pest problems. Apple and grape producers in the West report declining sales which they attribute to concerns about food safety. Construction and Real Estate Construction and real estate market conditions are mixed. Strong activity is occurring in upstate New York and in the Chicago and San Francisco Districts, with particular strength noted in Seattle. Exceptionally strong markets in California appear to have cooled off, although prices continue to rise. A slow rate of increase in activity is reported in Texas and in the Boston and New York City areas. Flat or declining activity is noted in the Richmond, Minneapolis, and Kansas City Districts. The recent decline in mortgage rates reportedly had a slight positive effect on markets in the Boston, New York, and Richmond Districts. Financial Sector The pace of lending activity varies considerably by region and by type of loan. Overall loan growth is reported to be strong in the St. Louis and San Francisco Districts. Demand for mortgage loans has softened in New York, while Chicago attributes its pronounced upturn in residential loan applications to lower rates and refinancing activity. Richmond reports mixed mortgage activity, with most reports of improvement attributed to refinancing. Demand for home equity credit and second mortgages is strong in the New York and Atlanta Districts and increasing in the Kansas City District. Commercial and industrial lending activity is reported to be up in Chicago and Kansas City growing at a slower rate in Philadelphia, and flat to down in Richmond. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1154 -beige_book_pure_text_pre2000,1989,"Summary Most Federal Reserve districts describe the growth of economic activity as modest or slow, although regional variation in activity is substantial. Consumer spending has been mixed, but most districts report strong sales of apparel and cars recently. Manufacturing conditions are generally satisfactory or improving in the nation's Southern and Western regions, but some weakening was noted in New England and much of the Midwest. Construction activity is mixed. Agricultural conditions continue to improve over much of the nation. Consumer Spending Merchandise sales have been mixed across the country. Retail sales have expanded at satisfactory rates or above in the New York. Philadelphia, St. Louis, Minneapolis, San Francisco and Kansas City districts. Boston, Richmond and Dallas all report that retail sales have softened in recent months, while Cleveland reports mixed sales patterns. In several districts, increased sales of women's apparel have spurred overall apparel growth. Inventories appear to be under control in the New York, Philadelphia, St. Louis, Minneapolis and Kansas City districts, while in Boston and Cleveland, inventories are a bit high. The sales outlook for the remainder of the year is optimistic in the Richmond, Minneapolis, Dallas, Cleveland and Kansas City districts. St. Louis retailers expect sales to be flat or slightly higher, while Philadelphia retailers believe a slackening in demand through next spring is more likely than an acceleration in spending. Boston notes that retailers are split half-and-half over sales potential for the rest of 1989, while Chicago reports that retailers expect further weakness in spending on durables. A surge in auto sales has helped reduce auto inventories over most of the nation. In several districts, dealers are worried that recent incentive-boosted sales may cut into 1990 model sales. Manufacturing The performance of manufacturing is mixed, varying significantly among districts and across industries. Increased activity was reported by New York, Richmond, Atlanta, Kansas City and Dallas. Weak or slowing activity was reported by Boston, Philadelphia, Chicago and Minneapolis and St. Louis. Although manufacturing conditions in the San Francisco District are generally satisfactory, some sectors, such as defense-related production, continue to decline. Cleveland also reports that manufacturing activity remains at a high level, but some softening is apparent in the production of steel and capital goods. Manufacturers' inventories are generally at satisfactory levels, but are being reduced from relatively high levels by producers in the Kansas City District. Five districts report that input pricing pressures have eased, while the Kansas City District reports an increase in such pressure. The outlook for manufacturing is mixed. Of the districts that mentioned an outlook, Philadelphia and Richmond contacts generally anticipate a weakening in conditions while Boston contacts expect activity to continue at its current pace through the end of the year. Several manufacturers in the Atlanta District, primarily in the chemical, textiles and primary metal industries, recently have revised their expectations for the near future upward. Construction and Real Estate District reports indicate substantial variation in the strength of construction and real estate activity. Recent strength in nonresidential construction was reported by the Richmond, Chicago, St. Louis, Dallas and San Francisco districts, while nonresidential activity reportedly weakened in the Minneapolis-St. Paul area. Residential construction activity, though generally weak compared with a year ago, picked up in the Richmond, St. Louis and Minneapolis districts and remained strong in the San Francisco District. New York reports that homebuilding in parts of its District has been deterred by an oversupply of existing homes. Home sales picked up in the Boston, Richmond, Chicago and Minneapolis districts and remained strong in the Far West, but are slow in the Kansas City District. Several districts report that declines in mortgage rates stimulated the construction and sales of existing homes. Labor Markets Three districts report labor shortages. Boston reports that, although manufacturing labor market conditions are generally unchanged or softer, some types of labor continue to be hard to find. St. Louis reports a reduction in the availability of skilled labor in several sectors, while San Francisco noted shortages of retail and construction workers in some areas. Financial Markets The demand for loans continues to vary considerably by region and type of loan. Overall loan volume is reported up in Philadelphia and San Francisco. Commercial and industrial loan growth has been good in Philadelphia, and Richmond and Kansas City report steady demand. Cleveland, however, notes a continued softening in commercial and industrial loans. Consumer loan demand has fallen off since last year in the New York District, but Philadelphia reports that consumer loan growth has strengthened. Auto loans appear to be a major factor in determining consumer loan growth rates. Real estate lending is growing at a strong pace in Philadelphia, with San Francisco also reporting expanded loan volume. Bank earnings are growing significantly in San Francisco, while in St. Louis earnings declined in the second quarter with particular problems in real estate loans. Agriculture and Natural Resources Agricultural conditions have improved over much of the country. Recent rains have helped crops and pastures in the Chicago, St. Louis, Kansas City, Minneapolis and Dallas districts. Despite the improved conditions, weather-related stress has damaged crops in the Plains States, Iowa, Oregon, Utah and Idaho. Dallas reports that central and southern Texas remains dry. In the Dallas and Richmond districts, agricultural prices for most commodities are relatively strong. The mining industry has showed increased activity in the Minneapolis, Dallas, Atlanta and Kansas City districts in recent months. Lumber industry contacts in the Minneapolis and San Francisco districts report difficulties in securing timber for mills. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1174 -beige_book_pure_text_pre2000,1989,"The pace of economic growth is reported as slow to moderate in most Federal Reserve districts. Consumer spending is mixed, with a number of districts describing retail sales as steady to growing slowly. Manufacturing activity is also mixed, with some districts reporting weakness in orders and shipments. Weakness of construction in some markets contrasts with evidence of some improvement elsewhere. Resource industries, including the energy sector, appear to be improving, as is agriculture generally. Loan demand at commercial banks continues to vary by region and type of loan. Consumer Spending District reports show that retail sales have been mixed across the country. Overall retail sales are described as steady to growing slowly in several districts (Philadelphia, Richmond, Atlanta, Chicago, Kansas City, and San Francisco). Dallas reports a recent acceleration in retail sales increases, Cleveland notes better-than-expected sales recently, and Minneapolis says general merchandise spending is strong. Boston and New York report mixed retail sales results. Where specific lines of goods are mentioned, sales of apparel, basic housewares, and other nondurables are described as relatively strong. Sales are weaker for discretionary, big-ticket items such as furniture, home appliances, and consumer electronics; auto sales have also been weakening recently. Retail sales expectations for the upcoming holiday season are modest in the Boston district, average in the Kansas City district, generally positive in the Philadelphia district, and optimistic in the Cleveland and Dallas districts. Most businesses in the San Francisco area have resumed operations since the earthquake, but road closures and property damage are delaying a complete return to business as usual. Manufacturing Manufacturing performance is mixed, both among districts and across industries. Philadelphia reports further declines in manufacturing activity, especially for durable goods, as orders and backlogs fall. Chicago reports slower growth, and some declines in orders and sales, for most manufacturers. Producers of both high-tech and traditional capital goods in the Cleveland district report slower growth or outright declines in orders and production in recent months. Boston reports sales and orders up modestly for most manufacturers, and Dallas notes a slight expansion overall in its manufacturing sector. San Francisco reports solid manufacturing activity in the West. Richmond and St. Louis report varied business conditions for their district manufacturers. Prices of materials inputs are reported as mostly stable by four districts, while Richmond reports a slower rise in input prices. Significant variations in manufacturing performance also exist across industries. Minneapolis says ""troubles have continued to mount in the computer and electronics industries,"" citing recent employment reductions by Minnesota computer manufacturers. But Cleveland notes that orders for office equipment may be leveling out, following a decline. And Chicago says the slowdown in communications equipment demand appears to have bottomed out. Producers of construction machinery and heavy duty trucks in the Cleveland district report further slowdowns in orders and sales. Chicago reports steel shipments are down as ""industrial procurement of steel has peaked,"" but that order backlogs will continue to support steel production. Auto industry contacts are optimistic about maintaining current assembly schedules, and shipments of large farm tractors and combines are well above those of a year ago. St. Louis reports declines in manufacturing employment in several sectors, with recent layoffs by makers of autos and home appliances. San Francisco reports capacity constraints in commercial aircraft manufacturing still exist but are no longer worsening. Construction and Real Estate Signs of weakness in housing markets in some districts contrast with some evidence of improvement elsewhere. Residential construction is showing signs of weakness in the St. Louis district, with considerable weakening in Louisville and St. Louis. Kansas City reports soft housing activity with starts down and sales stable to down slightly. Atlanta says residential construction continues to be slow across the Southeast. Dallas reports little change lately in residential building. Chicago is receiving mixed reports on residential sales, while Richmond reports stronger demand for mortgage loans in most parts of its district. Home sales have picked up somewhat in the Boston district, due partly to lower prices and creative financing. New York reports strong demand for new housing in Buffalo and Syracuse, but an abundance of resale homes weakens the market in the New York metropolitan area. Nonresidential construction activity also varies among districts. Signs of weakness in nonresidential building are present in the St. Louis district. Office construction continues to be slow in the Atlanta district, but some manufacturing plant expansions are underway. Construction is holding up well in much of the Chicago district, as evidenced by strength in shipments of construction materials. Commercial building in downtown Chicago remains at a high level. Dallas reports a mild improvement in nonresidential building. Office vacancy rates, though still high, are falling in most cities in the Dallas district, and industrial vacancy rates are also falling. Office leasing activity has picked up recently in the New York district, especially in midtown Manhattan. Construction and real estate activity have been strong in the San Francisco district, except in Arizona. Resource Industries and Tourism Conditions appear to be improving in some resource industries, including the energy sector. Minneapolis reports a good year for mining, especially copper mining, and continued expansion for the lumber industry. Both Dallas and Kansas City report further gradual expansion in oil and gas drilling activity. Exploration and development activity are significantly above the year-ago 1evel in the Kansas City district. Dallas reports a slow steady increase in its drilling rig count. All of the increase has been in Texas, with declines elsewhere in the district. A turnaround is expected in Louisiana and New Mexico along with further growth in Texas. Minneapolis reports moderately strong tourist activity. Yellowstone National Park received a large number of visitors this summer, but their spending was lower than expected. Tourist activity in the Richmond district is up from a year ago in spite of Charleston's lost business due to Hurricane Hugo. With about 85 percent of the city's hotels reopened, however, bookings for the fall are about the same as a year ago. Agriculture Conditions in the farm sector generally continue to improve. The fall harvest brought better than expected crop yields to the Chicago district, especially in Iowa. While cool, wet weather delayed the harvest of cotton and soybeans in the St. Louis district, other fall crops were harvested on schedule. Fall crop yields were average to above average in the Kansas City district, where good prices for wheat and feeder cattle are maintaining farm incomes. Minneapolis reports generally good agricultural conditions and notes that the Montana range recovered well from last year's drought. Soil, moisture conditions have improved for much of the Dallas district, but parts of southern and central Texas still have serious drought problems. In the Richmond district, yields were excellent for most fall crops, farm income prospects are bright, and land prices are steady to rising in most areas. Hurricane Hugo severely affected the agricultural sectors of North and South Carolina, bringing extensive damage to crops and structures as well as considerable destruction of livestock and poultry. Total damage to the farm sector in both states has been estimated at nearly $1.2 billion. Banking Loan demand at commercial banks continues to vary by region and type of loan. Demand for business and real estate loans has been slow to moderate at small and medium-sized banks in the New York district. Philadelphia reports strong growth in most types of lending at major banks, but growth in consumer loans and real estate loans is expected to slow soon. Slow-growing or steady loan demand is noted by Cleveland, Richmond, and Kansas City. Atlanta reports slightly higher—but still low—demand for most consumer and business loans; real estate and auto loans are weak. In the St. Louis district, total lending by large banks is growing. San Francisco reports strong growth in construction loan activity during recent weeks. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1632 -beige_book_pure_text_pre2000,1989,"Most Federal Reserve districts describe economic activity as stable to modestly expanding, though two note some recent softening. Consumer spending has varied among districts. Strength has been mostly confined to nondurable items, while sales of autos and other durables have generally been weak. The majority of districts report some softening in manufacturing activity but there are pockets of strength. Construction is strong or improving in the West and Midwest but somewhat sluggish in other areas. Agriculture has improved in much of the country and several resource industries have been expanding. Those districts that reported on price developments generally noted flat to modestly increased input prices, with several mentioning the continuing escalation of medical insurance costs. Loan demand at commercial banks varied by type and region. Consumer Spending Retail sales have been mixed among the districts. Sales were described as on target or healthy in the New York, St. Louis. Minneapolis and San Francisco districts. Boston, Cleveland and Philadelphia reported that sales were about even with year-earlier levels while Richmond and Dallas noted some slowing. Most districts that commented on Thanksgiving weekend sales reported virtually no change in the pace of sales relative to a year ago, but Atlanta experienced double-digit gains at that time. Among items mentioned as selling well in several districts were apparel, jewelry, cosmetics and toys. Unseasonably warm weather hampered sales of winter apparel in several areas, however, and most districts noted a weakness in sales of autos and other big-ticket items. Retail inventories were reported at satisfactory levels in Atlanta, Minneapolis, New York and Philadelphia, but are higher than desired in Boston and Chicago. Retailers in Boston, Minneapolis, Philadelphia and Richmond expect this holiday season to equal last year's while those in Kansas City and St. Louis appear to be somewhat more optimistic. Manufacturing Some slowing in manufacturing activity has occurred in most areas. While conditions in Chicago, Minneapolis and San Francisco were mixed, shipments and orders in Boston were flat or down compared with a year earlier. Philadelphia notes a continuation of the downtrend that began during the summer and Richmond and St. Louis also report a decline in manufacturing activity. In Cleveland, where the pace of industrial activity had been strong during the first nine months of the year, some easing has recently occurred and Kansas City notes a slowing of sales, though most plants are operating near full capacity. Weakness in the auto industry and among its suppliers was most commonly cited as a major factor in the manufacturing slowdown. Softness was also reported in the computer, electronics and defense industries in Minneapolis and in the furniture, textiles and apparel industries in Richmond. In the nonauto sectors of the transportation equipment industry some gains occurred. Cleveland noted an upturn in orders for heavy-duty trucks and several districts reported strength at aerospace-related firms. Cleveland and Chicago report expansion in the industrial machinery industry, while firms producing oilfield equipment and chemicals in Dallas increased their sales. Several food processing plants in the San Francisco district plan to expand and Atlanta reports that capital spending continues in the chemicals, metals, wood and pulp, and industrial equipment industries. Construction and Real Estate Construction is reported to be strong or improving in the West and Midwest but somewhat sluggish in most other areas. Housing starts in Kansas City have increased over last year and sales in Minneapolis were slightly higher. San Francisco reports that construction and real estate activity are strong or improving in most of the district, while in Chicago residential building is still good though the pace has slowed somewhat. Atlanta and Richmond note some weakness in residential construction activity, however, and Dallas reports that activity remains far below the levels of the mid-80's, though there are now tentative signs of expansion. Home sales in Boston were the same or slightly lower than in 1988 with homes remaining on the market longer and prices declining. Nonresidential construction and real estate activity also is mixed, Boston, Atlanta and Minneapolis report some weakness in the commercial market and New York and St. Louis note some recent increases in vacancy rates. However, office leasing has been relatively strong in New York, and Atlanta and Chicago both mention continuing strength in industrial construction. Agriculture and Natural Resources Agricultural conditions have improved in much of the nation. Minneapolis reports that both wheat and barley production were double last year's level and Kansas City report that corn and soybean yields were generally normal. Most of the winter wheat crop in Kansas City is in good condition though dry weather could present some problems. San Francisco, Chicago and St. Louis report an increase in agricultural exports, and farmland values continue to rise in Chicago and Minneapolis. Dallas reports that drought persists in south Texas and along the Gulf coast and that cattlemen have reduced herds. However, in the northern part of the Dallas district, winter wheat planting and the corn harvest are both on schedule. Among natural resources industries, exploration for natural gas is boosting drilling activity in Kansas City, and Dallas reports that the oil and gas industry is optimistic about expanding next year. Richmond notes that coal prices are strong and coal production in West Virginia has been at a record level. Minneapolis and Richmond report robust activity in the lumber industry, and the mining and metals industries are strong in San Francisco and Minneapolis. Financial Markets Demand for commercial bank loans remains varied by type and among regions. San Francisco reports strong loan demand in most areas though the rate of growth seems to have slowed from its earlier robust pace. Bankers in both Kansas City and Philadelphia note a recent increase in total loan demand, with business, consumer and mortgage loans up in Kansas City but only business loans up in Philadelphia. Some types of consumer lending are still strong in Atlanta but commercial lending is down. Richmond reports an overall softness in demand affecting both business and consumer loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1229 -beige_book_pure_text_pre2000,1990,"Economic activity is expanding slowly in most of the nation, with conditions somewhat stronger in the West than the East. Retail sales in the holiday season ranged from ""disappointing"" in Boston to modest in Philadelphia and Atlanta and relatively strong in Chicago, Minneapolis, and San Francisco; however, widespread discounting generally reduced store profits. Manufacturing activity is generally sluggish with production declines in some industries (autos, in particular) offsetting gains in others (such as commercial aircraft and oilfield equipment). Several Districts reported that the steel and computer industries, among others, may be ""bottoming out."" Unseasonably cold weather dampened construction activity in some areas, but real estate markets generally held steady. Cold or dry weather also adversely affected citrus, vegetable, and winter wheat crops. Other agricultural and resource-related sectors did moderately well. The outlook is for slow growth in all regions in 1990; some respondents expect improvement late in the year. Retail Retail results for the Christmas season were mixed. Most Districts in the eastern third of the nation - Philadelphia, Cleveland, Richmond, and Atlanta - found sales up about 5 percent. New York respondents reported stronger sales and Boston somewhat weaker sales. Retailers in Districts farther west -Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco - had a better holiday season. Consumer durables, such as furniture and housewares, moved less briskly than apparel and other nondurables. Inventories of certain items were high in Boston, Cleveland, and Chicago, as Christmas sales ran below expectations and promotions failed to bring stocks into line. Auto sales were reported to be weak nationwide, although Chicago cited national data indicating that sales picked up at the turn of the year. Most Districts reported widespread discounting. In some Districts, especially steep discounting by department stores adversely affected sales at discount and specialty stores. Retailers expect flat sales or modest increases through the first six months of 1990. Results in the first weeks of January were said to be encouraging. Manufacturing Manufacturing activity was reported to be slow in most of the Districts. In Boston, Cleveland, Chicago, Dallas, and San Francisco, however, some industries were said to be showing signs of ""bottoming out"" and were posting slight gains in orders from year-ago levels. Food, apparel, lumber, commercial aircraft, and farm, oilfield, and some electric equipment all made gains. Defense, construction, and automotive products continued to face weak demand; however, respondents from Chicago and Cleveland suggested that current cutbacks in auto production may prove adequate to eliminate the industry's inventory overhang. Orders for first-quarter delivery also suggest a gradual improvement for steel. Although a Minneapolis computer firm recently made a large layoff, Dallas and San Francisco reported signs of a pickup in that industry as well. Manufacturers in the Chicago, Dallas, and Boston Districts found that significant foreign sales are helping to offset weak domestic demand. Manufacturing employment was reportedly flat to down compared with earlier in 1989, with firms in the New York, Chicago, St. Louis, Minneapolis, and San Francisco Districts facing major layoffs in autos, aerospace, or computers. Except for fuel, input prices were said to be steady or falling. Scattered evidence suggests that selling prices were also steady or falling, with discounting occurring in some industries. Despite weakness in autos and parts of aerospace, New York and San Francisco reported major investment projects by firms in those industries. Boston, Cleveland, and Atlanta also indicated that several respondents plan capital spending above 1989 levels. Most manufacturers expected slow growth in 1990, with a weak first half followed by gradual improvement. Despite widespread public concern about possible defense cutbacks, defense contractors in the Boston and St. Louis Districts expected declines in defense spending to be gradual, with limited local impact. Agriculture and Natural Resources December's severe cold weather adversely affected some agricultural sectors and led to large increases in fruit and vegetable prices. Richmond, St. Louis, Minneapolis, and Kansas City also noted possible or confirmed damage to winter wheat crops due to cold, dry weather. Reports from other agricultural and resource-based sectors were more positive. Minneapolis, Kansas City, Dallas, and San Francisco all mentioned high cattle prices and strength in the beef or dairy industries. Atlanta and St. Louis referred to sharp energy price increases, believed to be temporary and weather-related, while Atlanta, Kansas City, and San Francisco described greater oil and gas exploration or drilling activity. Mining and lumber industries were reported to be doing well in the Minneapolis and San Francisco Districts. Banking Regional financial conditions varied by District and by type of loan. Bankers in Atlanta, St. Louis, Kansas City, the Pacific Northwest and central California reported increased demand for business or consumer loans. By contrast, New York District banks saw a decline in demand for most types of credit. While Philadelphia lenders experienced an increase from year-earlier levels in total loans outstanding, they noted a recent decline in loan demand. Mortgage lending is down, according to New York, Atlanta and St. Louis institutions, while San Francisco mentioned that some Arizona and Alaska banks face real-estate related problems. Several Districts noted that banks have initiated credit reviews and were tightening criteria for making loans—especially for real estate purposes. Real Estate Most Districts discussing real estate reported steady or modestly improved conditions. Atlanta, Kansas City, and Philadelphia noted some signs of weakness, however. Expected declines in mortgage interest rates provided some reason for optimism in the real estate outlook. Homebuilding activity was mixed. Richmond, Chicago, Minneapolis, and San Francisco showed strength in at least some parts of their Districts, but New York, Atlanta, and Kansas City experienced slow or declining activity. Reductions in home prices in Boston and the New York metropolitan area have boosted sales activity but have not eliminated the oversupply of homes available for resale in either region. Real estate prices were also said to be declining in St. Louis; by contrast, they were reported steady in Kansas City and up sharply in the state of Washington. Sales of expensive homes were said to be holding up well in parts of Miami, while lower-priced homes were the top performers in California and Boston. Nonresidential property markets were generally slow. Office vacancies rose in Manhattan and Florida, and Atlanta reported slower pre-leasing of new projects in its downtown. Dallas, in contrast, found increases in office building occupancy. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1405 -beige_book_pure_text_pre2000,1990,"Summary Most Federal Reserve Districts describe economic activity as expanding slowly. Consumer spending varies from moderate to strong, except for auto sales which have slowed after a January rebound. The manufacturing sector is soft, but is improving in some Districts. The weakness in autos and auto-related industries, however, is widespread. Construction activity continues to slow in most Districts, but Chicago and San Francisco still are reporting relatively strong activity. Agricultural conditions are generally good, although several Districts cite serious concern over the lack of soil moisture. Banks have become less aggressive in making new loans, and demand for most types of loans has softened. Consumer Spending Retail sales have continued to improve in recent months. Most Districts indicate that retail sales gains in February were above a year ago, led by women's apparel and electronics. Cleveland and San Francisco note that retailers are reporting better-than-expected sales gains. However, retail sales in New England are weak, partly due to consumers turning cautious. Sales of ""big ticket"" items in Richmond are flat and demand for durable goods in Atlanta is weak. Most Districts report that retailers have inventories under control, although Chicago and Cleveland report downward pressure on prices as retailers attempt to cut excess inventories. A slowdown in auto sales since January's rebound is widespread. However, dealers' inventories are in better shape with several Districts reporting stocks to be at or below year-ago levels. Philadelphia and Chicago note that dealers are cautious about new orders because of slow sales. Minneapolis notes that some dealers are having financial problems and some consolidation may take place in 1990. Kansas City, Cleveland, and Dallas report that weak sales are associated with tightening credit availability. Reasons cited for the credit tightening range from tighter credit standards to personal credit history problems left over from earlier depressed times. Manufacturing Manufacturing activity is mixed, with Boston, Philadelphia, and St. Louis reporting manufacturing declines and most other Districts reporting moderate improvement. New York indicates that purchasing agent surveys indicate rising new orders and production. Capital goods producers in Cleveland and Chicago report a slow upward trend in orders. San Francisco's commercial aircraft industry is showing no sign of slowing and aircraft-related equipment producers in Boston are facing rising demand. Both Chicago and San Francisco report strong sales of farm machinery. However, Boston cites weakness in computers, auto parts, and paper. St. Louis and Philadelphia report weakness in employment and orders, particularly among durable goods industries. Only the weakness in the auto industry appears to be widespread. Atlanta notes that plant closings and layoffs in the auto industry are hurting suppliers, but no further weakening is expected. Auto output has already begun to revive in the Cleveland District, however, and most plants are expected to be running in the Chicago District by March. Construction and Real Estate Construction activity is slowing in most Districts. New York reports that their ""boom"" in residential construction has subsided throughout the District, due to higher prices, lack of good land, and an easing of pent-up demand. Most observers are not anticipating a pickup in 1990. Commercial building has slowed in Atlanta because of overbuilding and slow employment growth. Construction activity is flat in Minneapolis and not expected to improve in the near future. Although San Francisco reports nonresidential construction around its District is mixed, overall construction activity is strongest in Chicago and San Francisco. Homebuilding in St. Louis has been rising, due partly to favorable weather conditions. Kansas City notes that mortgage loan demand is weak and is not expected to improve. Agriculture and Natural Resources Improved economic conditions in the agricultural sector continue to buoy farm incomes. Richmond, St. Louis, and Kansas City report that the yields on the winter wheat crop are expected to range from near normal to above normal. Freeze damage to fruits and vegetables caused some problems in the Atlanta and Dallas Districts, with prices of some produce rising to their highest levels since 1984. While most produce prices are expected to decline over the year, Atlanta notes that citrus prices are likely to remain high all year. Chicago and Minneapolis cite high livestock and dairy prices as bolstering farm income. Kansas City notes that farm income for livestock producers is doing better than for cash grain farmers. However, concerns were expressed throughout the farm belt that moisture levels in the soil are low, despite recent precipitation. Minneapolis notes some concern that below-normal precipitation could bring another drought to the Upper Midwest. Other resource-related industries are generally very strong. Minneapolis states that mining is one of the strongest sectors of the Upper Midwest economy, with iron and precious metal mines expanding capacity. Forest product industries are strong, with most plants running at capacity and many expanding capacity. However, forest product firms in San Francisco have been scaling back output as logging restrictions take effect. Oil and gas drilling in the Southwest is up sharply, although drilling activity is expected to moderate. Kansas City cites a seasonal decline in exploration and development of oil and gas in January, but that decline is coming off six consecutive months of increase. Financial Markets Most Districts report that financial institutions are either less willing to extend credit or actually tightening credit terms Atlanta particularly notes tightening of credit standards for real estate loans. Richmond cites a decline in the supply of real estate loans. Retailers in Boston and Philadelphia state that not only are sales being constrained, but retailers themselves are having difficulty ordering because of tighter credit availability. Loan demand also appears to be softening. Richmond and Kansas City report that demand for commercial and industrial loans has softened recently. Except for home equity loans, growth in consumer loan demand has weakened in Atlanta. New York notes that a widespread decline in interest rates has had no effect on loan demand, which is currently lower than a year ago. Loan volume in Philadelphia was up in early February from a year ago, but was slipping in mid-February. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1262 -beige_book_pure_text_pre2000,1990,"District reports indicate that overall economic activity continues to expand slowly in April. The agriculture sector reports some weather-related damage to specific crops, but drought fears have been alleviated by recent rains, and the farm outlook is generally optimistic. Natural resource industries are generally reported to be healthy, with exploration and drilling holding up well in the oil and gas industry. Residential real estate markets remain generally weak, but with some specific geographic areas doing well. Nonresidential construction is mixed, with public works projects supplying some strength. Manufacturing is also mixed, with some improvement noted in half of the districts. Plants are still apparently operating below capacity, however, and there has been little upward pressure on industrial prices. Retail spending has been growing slowly in general, and merchants are looking for small real gains throughout the rest of the year. Auto sales, however, remain weak. In the financial sector, demand for loans is varied but generally flat, with loans for commercial real estate down in most districts. There is little evidence that a general ""credit crunch"" is developing; the majority of businesses say they have not seen any change in credit terms and have had no trouble getting credit. Where credit tightening by banks and thrift institutions has been noted, however, it has mainly affected newer small businesses and the real estate industry. Agriculture The cold, wet weather that dominated much of the nation through spring took its toll on some crops. Richmond, Atlanta, and St. Louis say apple and peach crops were damaged, in some cases severely, and inclement weather has delayed field work and planting in the Atlanta, St. Louis, and Kansas City districts. However, soil moisture levels have now reached adequate, or even surplus, levels in most areas, with the exception of some parts of the Minneapolis district and California. Although winter wheat sustained some weather-related damage in the Richmond and St. Louis districts, Minneapolis says losses were small in that district, and farmers in contact with Kansas City and Dallas are optimistic about the wheat crop this year. Atlanta and St. Louis say farmers intend to plant more cotton, rice, and soybeans this year. Atlanta adds that higher cotton and grain prices may bring some previously idled land back into production. Natural Resources Although oil and gas prices have fallen from year-ago levels, they remain at a level high enough to encourage continued drilling and exploration, according to Kansas City and Dallas. Dallas says the industry is ""healthy""; Kansas City reports that the rig count, while down from the February level, is higher than a year ago; Atlanta says domestic drilling is holding steady and that no change is expected. Minneapolis says mining, especially for precious metals, remains strong. Atlanta and St. Louis both report increased coal exports. Forest product industries are also healthy, according to San Francisco and Minneapolis, although concern about environmental issues is causing uncertainty about expansion plans. Real Estate and Construction Housing remains weak in most parts of the nation, with multifamily activity relatively weaker than single-family activity. Although a recent weather-related increase in activity is noted by several districts, no signs of a sustained turnaround are evident. Housing prices remain generally sluggish and are reported by Boston and New York to be falling further; New York, however, indicates that price declines are confined to the New York metropolitan area. Real estate activity in Michigan has been weak also as a result of softness in the auto industry. Pockets of strength in real estate are reported in Minneapolis-St. Paul, in parts of California, and in upstate and western New York. Although industry representatives expect some improvement in 1990, most anticipate a slow year, with sales dampened in part by tighter credit standards imposed by banks. Nonresidential activity is mixed. In Atlanta, the office market remains ""subdued,"" New York says the pace of leasing is good (but that renters are getting significant concessions), and Dallas says the nonresidential market is weak. Atlanta and Philadelphia report strength in public construction projects. Manufacturing Manufacturing activity is mixed across the nation; a majority of the districts report some improvement, or expectations of improvement, in the coming quarters. Cleveland, Richmond, Atlanta, Chicago, Dallas, and San Francisco all indicate that industrial activity is increasing. St. Louis says the sector is weak, while Boston and Philadelphia report mixed conditions. New orders and shipments are up in most districts, although no general upward pressure on industrial prices is noted. Those areas that mention inventories indicate that they are in line with expectations; no district report indicates that stock levels are excessive. Chicago says auto production is leading the pickup, despite continued sluggishness in sales, and that all auto facilities are expected to be operating by the end of April. Cleveland agrees that the auto industry is rebounding, but says contacts in that region still expect second-quarter output to be lower than a year ago. Other strong industries include apparel (Atlanta), steel (Chicago), and various capital goods (Chicago). The commercial aerospace industry is also among the stronger industries in the Boston and San Francisco districts. Atlanta, however, says there is concern in the southeast that the industry may soon show weakness in that region as a result of possible Defense Department cutbacks. Several Districts say auto-related products are still in the doldrums. The outlook for the industrial sector is improving. Manufacturers in the Philadelphia region say they expect a pickup within six months and are planning to boost capital spending. Cleveland's report indicates that the ""worst of the production cutbacks are over."" Manufacturers in the Richmond area are also more optimistic; a recent survey indicates that developments in Eastern Europe are expected to give sales a push over the next two years, but that most businesses will benefit later rather than sooner. Consumer Spending Retail sales vary by district, but reports generally reflect slow, positive growth. Sales growth was strongest in the Cleveland, Richmond, Minneapolis, and San Francisco districts and weakest in St. Louis and Dallas. Kansas City says sales are above year-ago levels but have been mixed recently. Philadelphia and Chicago note that sales gains in their areas have been achieved without resorting to promotions or markdowns. Retailers generally say inventories are in line with projected sales. Apparel has been an especially strong seller in most districts. Hard goods, such as furniture, appliances, and other household items, while strong in some areas, are contributing less to overall growth. The outlook for consumer spending also varies by region, but retailers are generally looking for modest gains in 1990 as a whole, Boston merchants say 1990 will be ""difficult,"" and contacts in Philadelphia say they are looking for niches; they do not anticipate a broad-based surge in sales this year. Only in St. Louis are store managers overtly pessimistic, expecting the softness noted in that region to continue throughout the year. There is some concern in several districts that unseasonably warm weather led to sales that were borrowed, in part, from the second quarter, and that second- quarter sales will now suffer as a result. In addition, the uncertain outlook for the housing sector is blurring the outlook for sales of household goods and making many merchants cautious in developing projections. Auto sales are reported to be spotty but generally weak across the nation, and little improvement is expected in the near future. The profitability of auto dealers also varies. Atlanta reports that, while many dealers are increasing profits and some popular models are in short supply, some small dealers in rural areas have gone out of business. Financial Total loan demand varies by district but is generally flat. In Philadelphia and St. Louis, loan volume is higher, while San Francisco and Kansas City say volume is stable. Richmond reports a slight increase in problem loans. Activity in specific categories also varies by District. In Philadelphia, business loans, especially to manufacturers, are leading the growth noted there, while New York says business loans to retailers have been providing strength. In St. Louis, business loans in general have been growing, along with loans in other categories as well. However, most districts report that commercial real estate loans are down because of a number of factors: tightened lending requirements, more scrutiny by regulators, overbuilding in many markets, and locally sluggish economies. Credit Conditions Although virtually every District cites some specific cases of credit tightening by banks, with the most significant action taken by New England banks, there is little evidence of a general ""credit crunch."" Many banks have reviewed lending policies in recent months, cutting back on loans to the real estate industry and newer small businesses, or tightening up lending requirements by increasing collateral requirements or shortening loan terms. In addition, many builders are having a more difficult time securing financing because of the new lending limits in the thrift industry. Still, the majority of businesses say they have not seen any change in credit terms, and have not had trouble getting loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1910 -beige_book_pure_text_pre2000,1990,"The tone of District reports suggests continued slow growth in the economy with little change in the underlying inflation rate. Reports on the behavior of consumption are mixed, and construction is indicated to be softening further. Capital goods industries are, on balance, pointing toward growth, and manufacturing is expected to strengthen in several Districts. Recent behavior in retail sales and reports from retailers in several Districts indicate that sales have been slow in recent months, and are expected to remain so in the short term. It is unclear how much of the recent softness in retail sales represents temporary factors, such as unusual weather over the last several months. Both residential and nonresidential construction have been edging downward in recent months in most Districts, and indicators of future construction suggest further softening. Prospects for a good harvest this year should be improved as a result of ample rainfall in previously drought-stricken regions of the country, but cool, wet weather has delayed planting by as much as several weeks. The slow-growth economy is accompanied by an easing in demand for credit. Real estate loans, consumer loans, and business loans are still growing, but at reduced rates in recent months. Lenders are reported to have tightened standards especially for real estate loans, but there is still little information that suggests credit restraint is spreading into other markets. Consumer Spending District reports suggest very little growth, if not a decline, in real consumer spending for durable and nondurable goods this quarter from last. Retail sales have been marked by sluggish behavior in several Districts that has apparently continued into May and early June (Boston, New York, Philadelphia, Cleveland, Chicago, Richmond and St. Louis). Unseasonably cold and wet weather has reduced demand for summer goods and for apparel. Weakness in home furnishings is attributed to softened conditions in housing. Retail sales in Atlanta, Dallas, and Minneapolis apparently continued to increase in May, but at a reduced pace from earlier this year. Kansas City described retail sales as having increased moderately over the past three months, and San Francisco described sales as ""continuing healthy."" Several Districts reported that retail inventories are either high, or larger than desired (Boston, Philadelphia, Cleveland, St. Louis, and Kansas City). Retailers in several Districts are cautious about the short-term outlook for retail sales. In Boston and Cleveland, respondents apparently expect little improvement at least through the summer months, and Philadelphia reports that some retailers are lowering their sales forecasts. Manufacturing Manufacturing production has been relatively flat over the last few months, but several Districts expect strengthening in output despite softness in some industries. Defense, building construction machinery, and apparel industries are experiencing some softening. In contrast, the aerospace industry is a source of strength in several regions of the country, (Boston, Minneapolis, and San Francisco), and the energy sector is expanding (Dallas and Kansas City). Capital goods industries still point toward growth, despite mixed performance. Construction machinery, excluding building, is ""doing well,"" agricultural machinery is strong, and orders for communications equipment are rising, according to Chicago. Demand for heating and air conditioning and industrial pumps is strong in Atlanta, and capital goods is ""surprisingly strong"" in Minneapolis. Cleveland reports that capital spending plans are stronger than reported in the latest Commerce Department survey, which should be an important support to manufacturing output. Output in the auto and auto-related industries, such as glass and rubber, has been a drag on manufacturing in Atlanta, but Chicago and Cleveland note some strengthening in auto production that should add to total output this quarter and perhaps next. Steel production has rebounded, and some analysts have upgraded their steel outlook for 1990 (Chicago). Construction and Real Estate In most Districts, except San Francisco and Minneapolis, residential and nonresidential construction has been flat to declining in recent months, with prospects for further easing. Housing sales were either flat or fell in recent months in Philadelphia, Richmond, and Kansas City, but were generally stronger in Minneapolis, and rebounded in California. Housing sales have been increasing at double-digit rates in Oregon, Idaho, and Utah. Contract awards for future starts fell in April in Chicago and Dallas, and permits in Minnesota were off 20 percent in March from a year earlier. Atlanta notes that contracts for both residential and commercial construction continue to slow, in part because of overbuilt markets. An underlying problem in commercial construction is an apparent excess supply of new office space in many parts of the country. Commercial construction in downtown Manhattan is marked by the highest office vacancy in two decades. Dallas notes that office occupancy rates in major metropolitan centers in that District have been increasing, but are still low. Agriculture Recent rains in the Southeast, the North Central states, and California generally relieved drought conditions and appear to have improved farm crop yields. Richmond reports that grain yields are expected to be normal to above normal. Recent rains in the North Central states ""substantially brightened prospects for agriculture,"" especially in Minnesota and North Dakota, and ranchers in Montana expect a record year this year (Minneapolis). Kansas reports heavy spring rains ended the drought of the pest two years and boosted prospects for winter wheat output. Expected yields range from average to well above average, with record crop yields likely in much of that state. Recent rains in California have relieved some of the drought conditions, but storms have caused significant damage to some fruit crops. Heavy rainfalls in the Chicago, St. Louis, Kansas City, and Dallas Districts however, have damaged crops and delayed other crop planting by several weeks. Below-normal temperatures and above- normal rainfall since mid-May have delayed planting of an estimated 13% of corn acreage and 47% of soybean acreage as of June 2, according to Chicago. St. Louis reports that poor weather and disease and insect problems suggest that 1990 crop yields may fall below normal in some parts of that District. Moreover, an estimated one-fourth to one-half of the wheat and cotton crop is rated as in poor to very poor condition in several states. Credit Market Conditions Loan demand continues to expand, although the pace has eased for most types of loans. Philadelphia reports easing in growth for most loans, and Atlanta comments that weak loan growth has led lenders to encourage borrowing. Home equity loans continue to rise in New York and Richmond, although growth in Philadelphia has slowed along with other kinds of consumer loans. Constraints on credit seem to be primarily in real estate, although limited information suggests small business firms in some areas may also be affected. New York notes that home builders report a shortage of credit for acquisition and construction loans is becoming a major problem, especially in downstate New York and northern New Jersey. Cleveland points out that credit restraint is largely confined to multi-family construction and commercial buildings, but that there appears to be ample funds for single- family housing. San Francisco reports that ""lending standards have become more stringent in recent months,"" and both Richmond and St. Louis reported about credit constraints for the first time this month. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1521 -beige_book_pure_text_pre2000,1990,"Business and banking contacts in the Reserve Districts generally report continued economic growth, though most noted that the pace was slow or had slackened recently. Among those Districts whose respondents commented on costs or prices, wages were reported as rising in a range of 3 to 5 percent, in most cases excluding benefits. Reports on prices did not display as much consensus, with some reporting widespread increases and others noting difficulty in passing on cost increases and attendant pressures on margins. Retail sales were generally described as a little better than a year ago or soft, with weaker-than-expected demand for big ticket items cited most often. In some Districts retailers indicated they had become less optimistic about the outlook for the rest of the year, though in others they were anticipating a slight pickup in sales. Manufacturing activity is said to be flat, on balance, though healthy growth in tradable goods is seen in a number of regions. Reports on real estate construction and sales suggest, for the most part, that activity is remaining below levels seen in 1989, largely because of continuing high inventories. Credit is said to be tight in some areas. However, little uniformity of opinion about the reasons for this was evident in the reports. Contacts in the agriculture and natural resource sectors indicate a pretty good outlook at this point, reflecting better weather conditions in major crop and livestock producing areas and an improved energy sector. Consumer Spending Retail sales activity is described as soft to a little higher than a year ago, though contacts in Cleveland, Minneapolis, and Dallas noted strength in some areas. Retailers in New York City are less optimistic about the outlook given the continuing layoffs at banks and brokerage firms, while those in St. Louis expressed similar views in light of anticipated defense cutbacks. Several Districts reported that demand for women's apparel in recent months was described as strong, while that for men's was weak. A few noted that sales activity in July had fallen off, though retailers in the Philadelphia District indicated that this was seasonal. Those in New York and Minneapolis remarked that an influx of Canadian shoppers was adding to sales in their Districts, while Dallas reported that retail activity in Houston and areas near the Mexican border was doing well. Reports on sales of home furnishings and appliances more frequently cited weakness, though there were exceptions to this. Vehicular sales were generally said to be flat or below year-ago levels, though contacts in Atlanta and San Francisco reported strong demand for used models. Of Districts that inquired about inventories, five cited indications that they were higher than retail respondents desired, while four noted that they were at levels acceptable to them. Kansas City added that financing for inventories is adequate. Manufacturing Contacts at manufacturing firms suggest that overall activity is flat, though responses varied considerably from industry to industry. Strength was reported in demand for products that are exported, and Richmond added that producers are looking to these markets for sales gains. Demand for domestic steel was also said to be stronger, and respondents in Dallas and Cleveland said that this reflected the reduced availability of imports given healthy demand in Europe. Current levels of auto production were also cited as a reason for the better demand for steel. Chicago noted that orders for liner board were stronger than contacts had expected. With the exception of steel and commercial aircraft, backlogs and lead times were said to be working down. St. Louis, Minneapolis, and San Francisco noted that weakness was described as pronounced in defense-related activities. Dallas, Richmond, and Atlanta contacts saw weakness in textiles and furniture production. Of Districts reporting on employment and price trends, most respondents indicated that labor utilization was either flat or likely to weaken based on announced layoffs. Wage increases appeared clustered in a 3-5 percent range, though two Districts noted that the benefit costs were rising faster, and two mentioned shortages of entry-level workers. Reports on materials prices were mixed, with stability to slight increases noted by some contacts and flat to slight declines mentioned by others. Cleveland, Richmond, and St. Louis said costs and prices were generally rising, and contacts in the latter put the cost increases in a 3-5 percent range. Construction and Real Estate Reports on residential real estate construction and sales generally suggest that activity was below the pace of a year ago. High inventories of housing were said to be causing weakness in construction and in many cases causing downward pressure on prices. Cleveland, however, noted a mixed picture for sales, adding that prices were up in some cities by 6-8 percent over the last six months. St. Louis reported good demand for starter homes in the Memphis area. New York and Chicago realtors suggested that high- priced hones were the most difficult to sell. Respondents in San Francisco noted that a cooling of activity in coastal California dominated statistics for that District. Those in Boston indicated that the widespread media attention given to weakness in the District may be hurting real estate sales. Five Districts reported asking about nonresidential construction, and most respondents saw weak or slackening activity in their regions due to large inventories of space. Some in New York added that, while rent concessions had increased leasing activity in Manhattan, corporate relocations had led to a rise in vacancy rates anyway, in contrast to stable or declining ones elsewhere in the District. Firms polled by Dallas indicated that construction of petrochemical plants remains at a high level, and Atlanta respondents viewed public infrastructure as a bright spot. Finance and Credit Several Districts report that the pace of commercial loan growth has recently slowed, and some indicate that its levels are below those of a year ago. Lending to consumers appears to have decelerated by a smaller margin in most Districts that reported on this, with current growth attributable largely to credit card and home equity lending. Respondents in several Districts indicate that new credit is more difficult to obtain for construction projects, though their remarks suggest some divergence of view as to the causes of this. In New York, the glut of homes for sale is said to be the major deterrent to building, even though the shortage of finance for acquisition and construction loans appears to be spreading. Regulatory restrictions on S&Ls are said to be affecting small builders in Chicago, though Cleveland notes that a shift from thrifts has caused real estate lending to rise at banks. They also add that while increased borrower scrutiny is reported, there are few known outright cancellations. About half the respondents in Boston saw the availability of bank credit as problematical for their own or other businesses. San Francisco notes similar views by a few respondents, though businesses and bankers in the District disagree about the extent of tighter standards and its impact on lending activity. Businesses in the Atlanta and Philadelphia Districts report problems with collecting on receivables. Agriculture and Natural Resources District reports suggest that the outlook for agricultural production generally appears good at this point, though poor weather conditions are hurting crops in some areas. Kansas City indicates that wheat production in Kansas, the largest producing state, is the highest on record and more than twice last year's output. Prices are down sharply. St. Louis reports that wheat yields are lower by 12 to 26 percent due to disease. Chicago said that heavy rains earlier in the year had delayed planting. While Richmond said that rain brought relief to earlier drought conditions, Atlanta reported that hot and dry weather is reducing corn, soybean, and forage production by as much as 25 percent. Dallas also said that District crops, including cotton, corn and grains, were adversely affected by the heat and that prices in June averaged 6 percent above those a year earlier. Minneapolis noted that production costs for corn and soybeans were up 6-10 percent from last year. The Districts reporting on meat production said output and prices were both strong, and Atlanta described robust conditions for poultry with export sales especially healthy. Minneapolis indicated that forest products were doing well. San Francisco, in contrast, said that a widely expected deterioration in logging and lumber had emerged due to weaker housing construction and environmental concerns. Kansas City and Dallas noted that oil production was up from a year ago. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1747 -beige_book_pure_text_pre2000,1990,"Economic activity is expanding more slowly or declining in most Federal Reserve districts, but several districts report continued, modest growth. Weakness is most apparent in the northeastern and mid-Atlantic districts. Although patterns of consumer spending vary widely among districts, rates of increase are generally slowing. The districts' assessments of manufacturing activity range from moderate expansion to absolute declines. On average, however, there seems to be little movement in orders or production. Signs of a construction downturn are widespread, but not universal. While drought persists in some agricultural areas, soil moisture conditions are good or at least improved in most reporting districts. So far, the recent increase in oil prices has not affected domestic oil and gas drilling. Several district reports of credit markets focus on soft loan demand and some district banks offer examples of tighter credit conditions. Consumer Spending Retail sales patterns vary widely among districts, but growth appears to be ebbing. While Minneapolis cites ""good"" sales increases, Atlanta and Boston note flat to modest expansion. New York and Philadelphia report absolute declines in dollar volumes from a year earlier. Sales of big ticket items are said to be particularly soft, but clothing sales continue to show strength in some districts. Several districts mention the negative impacts of higher oil prices. Despite demand weakness in some districts, most retailers say their inventories are at desired levels. Auto sales are up in Minneapolis and Cleveland but are weak or slowing in Atlanta, St. Louis, Kansas City, and San Francisco. One district says that credit tightening has caused some potential auto buyers difficulty in finding financing. Manufacturing Demand for manufactured products shows little overall change in either direction. Minneapolis and San Francisco characterize their manufacturing sectors' performances as mixed, while growth in Atlanta is moderate except for construction and auto-related products. Orders to Boston, Richmond and Philadelphia firms are down, and sales have not changed lately in the Dallas District. Sales patterns differ greatly among industries. Atlanta, Chicago, Cleveland, Dallas, and San Francisco mention strength in demand for primary metals, while Boston and Dallas note weakness in orders for computer, and some construction-related products. Some districts report increased producer uncertainty about future demand. In some cases, export demand appears to be stronger than domestic sales. Richmond notes exports of manufactures as among the few district manufacturing indicators that are not negative. Minneapolis says that strong foreign demand for producers' equipment has more than compensated for declines in domestic orders. In the Boston district, however, export sales are below a year earlier. With respect to changing costs of operation, a number of districts cite rising freight costs in the wake of energy price hikes. Several districts, including Philadelphia, Richmond, and Chicago report increasing prices of inputs, but Atlanta reports prices of industrial commodities as steady. Construction and Real Estate References to declining construction activity and weakening real estate markets are common. Increases in homebuilding in the Dallas and Minneapolis markets are exceptions, but Minneapolis also notes marked declines in overall construction contract values in the Minneapolis-St. Paul area. While Kansas City mentions recent upturns in housing starts, homebuilding there remains below a year earlier. According to the San Francisco report, construction activity is slowing in many parts of the west. Moreover, Boston, Chicago, St. Louis and New York all refer to weakening residential construction or weak housing sales and Cleveland notes high office and retail vacancy rates. Several reports say that respondents expect continued construction weakness in the near future. Agriculture Reports on agricultural production are generally positive, in part, because the soil moisture problems mentioned in the last beige book have ameliorated. In the Richmond District, rainfall in August was mostly above normal and soil moisture levels are now said to be adequate, but the dry weather in June has lowered corn yields. The Dallas District reports that rainfall has improved soil conditions there. Crop conditions are also good in the Chicago, Kansas City and Minneapolis districts. Inadequate soil moisture continues to impede crop development in portions of the St. Louis district. The St. Louis and Dallas districts discuss the negative effects upon rice prices of the embargo on sales to Iraq. St. Louis also notes that recent increases in freight and insurance costs have discouraged exports to other Middle Eastern countries. Several district reports mention generally falling grain prices. Energy Despite marked increases in oil prices in the wake of Iraq's invasion of Kuwait, reporting districts say they have seen few effects on drilling so far. Dallas and Kansas City note recent declines in drilling activity, although the rig count remains above a year earlier in both districts. Moreover, industry observers in both districts say they do not expect the recent price shock to have much of an effect until oil prices remain high for an extended period and natural gas prices rise as well. Finance and Credit Most reporting districts say that lending activity is soft. Atlanta, Cleveland, and Philadelphia all mention recent slowdowns in lending, while New York notes signs of weaker demand for business loans. St. Louis cites slow loan growth at the large banks, but Kansas City district bankers report moderate increases in loan demand - including demand for commercial and industrial, consumer, and home mortgage loans. Financial organizations in several districts note tightening credit policies for at least some borrower groups. Banks' and thrifts' concerns over the viability of economic growth is said to have discouraged some lending. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1142 -beige_book_pure_text_pre2000,1990,"Economic activity appears to have grown slowly in most Federal Reserve districts since early August, but seems to have declined somewhat in others. Many districts reported a weakening in business and consumer confidence. Retail sales, including new car sales, were sluggish or down in most of the country. Indicators of manufacturing activity were mixed to weaker. Commercial and residential construction declined, although sales of homes rose in some areas. Total loan demand at commercial banks was lackluster, and business lending decreased across the nation. In agriculture, crop yields and livestock prices were generally strong, although various factors detracted from farm sector conditions in some areas. With respect to energy, higher oil prices appeared to be stimulating oil drilling, although some shortages of skilled workers were reported. Retail Trade Retail activity apparently weakened in most of the nation. All districts except Chicago reported that sales grew more slowly or declined. Many noted slower sales of durable goods, particularly autos, and some indicated that retailers had laid off workers. Retailers generally believed their inventories were at satisfactory levels, although some had begun to trim their stocks. Most districts reported that retailers were generally pessimistic about their sales prospects in coming months. The retailers blamed lower consumer confidence brought on by greater uncertainty and higher fuel prices for the current and expected weakness in their sales. Some worried that they would have to discount prices significantly to move merchandise. Industrial Activity Conditions in the manufacturing sector apparently weakened somewhat. Chicago reported relatively strong activity, but most other districts gave mixed reports or indicated declines. Weakness was evident across most industries, although several districts reported boosts in energy- or defense-related production. Reports received from six districts indicated that, on balance, manufacturing employment declined. No district indicated serious manufacturer concern over inventory levels, although Philadelphia and Kansas City noted that producers were reducing inventories. Exports from the Richmond and Cleveland Districts rose but those from the Chicago and Boston Districts fell. Scattered reports on producer prices suggested that prices of raw materials rose while finished goods prices were relatively stable. Manufacturers in several districts were concerned about their business prospects in the coming months. Some planned further reductions in employment and were cautious about their capital spending plans. Construction and Real Estate Most districts reported slower construction activity. Scarce financing and earlier overbuilding were associated with abrupt declines in starts of commercial buildings and residential developments in several metropolitan areas. New York observed that reduced commercial construction was expected to help ease the vacancy rate in midtown Manhattan. Housing starts were reported to be down in most districts, but home sales registered increases in several. Six districts noted general weakness in residential construction, although multi-family activity was higher in the Dallas district. Home sales rose in at least parts of five districts, but Atlanta and San Francisco reported general declines. Some districts commented on home prices. Atlanta and San Francisco indicated that the median home price had declined from a year ago. New York attributed unsold homes to unrealistic pricing. Financial Activity in the financial sector was generally softer. Several districts reported that sane financial institutions had tightened their lending standards, especially for real estate loans, because of uncertain economic prospects or higher capital requirements. Total loan demand was unchanged to lower in most districts. The demand for commercial and industrial loans was weak across the nation, while the demand for consumer loans was mixed. Many districts indicated that loans to commercial real estate developers were down. Agriculture The agricultural sector was generally strong across the country. Several districts noted that yields of most crops are expected to be good, and Minneapolis and Kansas City indicated that higher livestock prices and low feed costs would help support farm income. In the St. Louis and Richmond Districts, recent rains and cold weather caused some delays in harvest activity and damaged soybeans somewhat. Also, several districts reported that low crop prices or higher production costs might limit the incomes of some farmers in their areas. Three districts reported on farm lending activity. Kansas City reported that the demand for agricultural loans rose, and Chicago and Richmond reported a good pace of repayments on agricultural loans. Energy Several districts reported on energy-related developments. Kansas City noted increased oil drilling activity, and Dallas and San Francisco expected an increase soon. Atlanta and San Francisco indicated shortages of skilled labor in their oil-producing regions. St. Louis observed that higher fuel prices were being blamed for cutbacks in the transportation sector, and Boston and Chicago noted transportation surcharges resulting from these higher prices. Richmond and St. Louis indicated that coal production was up, although coal prices were mostly unchanged. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",979 -beige_book_pure_text_pre2000,1990,"Business conditions are somewhat mixed in different parts of the country but on balance display a weaker pattern. In many of the Federal Reserve districts, economic activity appears to have declined recently while it has remained sluggish or grown slowly in the rest. Several districts report a decline in consumer and business confidence and many refer to expectations of continued diminution in economic activity. Retail sales, adjusted for inflation, appear to have declined below their year-ago levels in almost all districts. Manufacturing conditions have weakened in most districts. However, soft domestic demand has been partially offset by strong export orders. Most districts report continued weakness in construction. Several districts report a decline in business loan demand as well as some tightening of loan standards by banks. In contrast, agriculture is reported to have been doing very well. Crop yields have been good and livestock prices have been high. Consumer Spending Retail sales apparently have weakened in almost all the Districts. The dollar volume of retail sales in October was lower than a year ago in most of the districts. At best, only slight increases are reported in the rest of the districts. Thus, real retail sales appear to have fallen from their year-ago levels. The Chicago, Atlanta, and St. Louis districts cite sharply lower consumer confidence as s key factor in the retail sales slowdown. Several districts report that sales of durable goods were particularly hard hit. Automobile sales in particular are reported to have weakened, except in Dallas. Inventories are generally reported to have been at satisfactory levels. Most districts report that retailers were pessimistic about sales prospects for the Christmas season as well as for 1991. However, the Richmond district reports unexpectedly strong sales in metropolitan areas immediately following Thanksgiving, and the Kansas City district reports that retailers expect sales to be steady to moderately improved throughout the Christmas season. Manufacturing The Cleveland, Chicago, and St. Louis districts note particular weakness in the automobile industry. Weak domestic demand for manufactured goods was partially offset by strong export orders. An aircraft manufacturer reports that 90 percent of orders were from overseas compared to an average of 60 percent of orders during the previous two years. The Richmond and Atlanta districts also report strong export shipments. Manufacturing inventories have been described as under control. Manufacturers have expressed concern about business prospects for the coming months, The majority of manufacturers contacted in the Boston district expect a national recession lasting two to four quarters. Business leaders contacted in the San Francisco district expect continued deterioration in the national economy. Manufacturers in the Philadelphia district, however, expect modest increases in orders and shipments over the next six months, and manufacturers in the Richmond district were less pessimistic about prospects than they had been a month ago. Construction and Real Estate Most districts report continued sluggishness in construction activity. Residential construction continued to be weak, with several districts citing a glut of houses for resale. Atlanta, St. Louis, and Minneapolis report a decline in sales of existing homes. Nonresidential construction is also reported to be generally weak. New York and San Francisco point to an abundant supply of office and commercial space as big factors in the slowdown. However, there are a few bright spots. New York reports a recent pickup in office leasing activity in downtown Manhattan. Chicago reports that construction slowdowns are not universal and that development continues in communities outside major metropolitan areas in the district. Minneapolis reports a recent rebound in construction activity. Wages and Prices None of the districts report significant wage pressures. Minneapolis reports that medical insurance costs have continued to rise sharply. Atlanta reports some easing of medical worker shortages. Dallas reports strong demand for service workers. Reports of price increases for goods are mixed. San Francisco reports price increases in the 3 to 5 percent range, but Boston reports that materials prices for oil-based products have increased as much as 8 percent. Richmond reports steady finished good prices, even for products using oil-based inputs. Several districts report expectations of discounting by retailers this Christmas season in the face of weak demand. Finance and Credit Activity in the financial sector has been generally softer. Several districts report a decline in consumer and business loan demand. Almost all districts also report some tightening by banks of business loan terms, particularly for construction and land development. Reports of banks' willingness to lend are mixed, with New York reporting that banks are somewhat less willing to lend but with St. Louis reporting no change. Agriculture and Resource Related Industries The agricultural sector is reported to have been strong across the country. Crop yields are generally reported to have been fairly good. Partly as a result of these high yields, crop prices have fallen recently and reports are mixed on farmers' incomes. However, Minneapolis reports that farmers' balance sheets are in excellent shape. Several districts note that livestock producers have had an outstanding year. Oil and gas extraction reports show little change in Dallas or San Francisco and a modest pickup in Kansas City and Minneapolis. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1058 -beige_book_pure_text_pre2000,1991,"The level of economic activity appears to be declining in most districts. The Persian Gulf situation is frequently cited as a key determinant of both current and future economic activity. Nominal retail sales during the holiday season differed little from a year earlier. Inventories are near their desired levels. Despite continued export growth, manufacturing orders, employment and shipments have weakened. Construction activity continues to slow in most districts, and interest rate declines have done little to stimulate residential housing demand Inflation does not appear to be accelerating. Widespread weakness exists in home sales and consumer and business loan demand. Some state and local governments are experiencing revenue shortfalls. Farm income prospects have weakened somewhat, while the mining sector shows strength. Consumer Spending Nominal retail sales during the holiday season were near year- earlier levels, implying declines in real terms. Sales of big-ticket items were particularly weak. Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis and Dallas mention that price discounting was used to move goods. Despite the reported dampening effect of the Persian Gulf conflict throughout the holiday season, some Districts noted improved sales toward the end of December. Most districts that mention inventories report they are generally near desired levels. The outlook for retail sales in most districts is for continued sluggishness, with retailers in Philadelphia and Cleveland not expecting any upturn before the third quarter of this year. Four districts indicate that car sales are weakening or lower than a year earlier while Dallas indicates increasing sales, especially in the Houston area. Auto inventories are moderate to high in the Minneapolis district, while Kansas City reports that dealers are trimming their inventories. Cleveland indicates that domestic car dealers are not adding to their inventories, in contrast to their Japanese counterparts who are increasing inventories in anticipation of higher spring sales. Manufacturing Nearly all districts report weak or declining manufacturing activity. While domestic demand is generally weakening, Boston, Atlanta, Chicago, Minneapolis, Kansas City, Dallas and San Francisco indicate that export growth continues to be strong, or at least stronger than domestic growth. Cleveland, Chicago and St. Louis note a downturn in auto production that had spread to related sectors. Cleveland and Chicago, for example, note sharp declines in steel production. Boston and St. Louis report that layoffs are expected among defense contractors, and San Francisco reports that defense- related aerospace activity remains weak. The outlook for the manufacturing sector is clouded by the Persian Gulf situation, with some districts indicating that the timing of an upturn is dependent on a resolution of that conflict. Contacts in the Boston, Philadelphia, Richmond and Dallas districts, however, do not expect a turnaround before the third quarter. Construction and Real Estate Despite pockets of strength, most districts describe residential and nonresidential construction activity as down more than usual for this time of year. Housing starts are below year-ago levels in most districts, and high and climbing vacancy rates in many large urban areas have discouraged commercial office space development. Contacts in the Dallas district, however, report a modest increase in construction activity, especially in Houston and South Texas. Recent declines in interest rates and home prices have done little to buoy demand for new or existing homes in most districts. Contacts cite uncertainty about the future course of economic activity and the Persian Gulf crisis as the major factors dampening residential housing demand. New York reports that some district lenders and developers have held auctions to pare housing inventories. Prices Several districts report little evidence of increasing inflation. San Francisco reports that wage and price increases continue to slow, and Minneapolis notes that they have remained moderate. Cleveland contacts expect the inflation rate to decline from recent levels. Manufacturing input and output prices are generally stable, although Richmond reports increased raw materials prices. Districts report declining oil and natural gas prices, but mixed movements in motor fuel prices. Grain prices are generally falling, while beef, citrus and log prices are showing strength. Banking and Finance The majority of districts report weakness in business and consumer loan demand, largely due to the slowdown in the economy and the Persian Gulf. Real estate lending is edging downward in many districts, despite declines in mortgage interest rates. Commercial real estate and construction lending are especially weak. Atlanta reports that many businesses have reduced or delayed planned capital expenditures. Cleveland notes that signs of consumer financial difficulties are emerging, as evidenced by increases in auto repossessions and home foreclosures in some parts of the district. State and Local Government Finance State and local governments in the New York, Richmond, St. Louis and Dallas districts are either expecting or experiencing revenue shortfalls because of weakening economic conditions. In some cases, increased government spending was also cited as contributing to the governments' financial strain. A variety of measures, including reduced spending and layoffs, are being taken or are anticipated to avoid budget deficits. Agriculture and Natural-Resource-Related Industries Kansas City and Richmond indicate that farm income prospects for 1991 have dimmed because of an expected cost-price squeeze. Chicago notes that agricultural exports have fallen sharply in recent months. A recent freeze and a continuing drought are causing major problems for California's agricultural sector. Winter grain crops are reported to be in good condition, although Minneapolis notes potential problems later this year because of below-normal precipitation this winter. Energy extraction has increased in the Dallas and St. Louis districts, while Kansas City indicates that growth in the number of operating drilling rigs has leveled off. Minneapolis reports that conditions in the mining industry have been fairly good. San Francisco, St. Louis and Atlanta report weak or declining activity in the forest products industries. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1199 -beige_book_pure_text_pre2000,1991,"Economic activity remained soft in much of the nation but there were some indications that the decline may be slowing. The pattern of retail sales varied among districts with the majority reporting either sluggishness or results below planned levels. Retail inventories appear to be at satisfactory levels, except for some excess auto stocks. Manufacturing was sluggish in most of the country though several districts noted either a slight improvement or an easing of the downward trend. While construction activity continued weak, realtors and homebuilders reported an increase in buyer interest and, in some areas, purchases in recent weeks. The pickup was attributed to lower mortgage interest rates and more attractive home prices. Loan demand remained soft although mortgage refinancings have increased. Farm income prospects and mining output were mixed. Consumer Spending The pattern of retail sales varied among districts with the majority reporting either sluggishness or results below planned levels. In several areas such as Atlanta, Cleveland and San Francisco, sales fell sharply after the Persian Gulf war began and then recovered to varying degrees. In some other areas such as Richmond and New York, sales remained slow. Some districts with generally sluggish sales noted pockets of strength. Thus, in Dallas and Atlanta discount stores exhibited strength as did specialty stores in Philadelphia. Most districts reported that auto sales declined though Dallas and Atlanta noted some recent improvement. With the exception of some excess auto stocks, retail inventories generally appear to be at satisfactory levels. Retailers in most districts were hopeful that sales would improve with the cessation of hostilities in the Gulf but most did not anticipate strong gains until the economy rebounds and consumer confidence returns. Manufacturing Manufacturing activity was sluggish in most of the nation though several districts noted either a slight improvement or an easing of the downward trend. Boston, Chicago, Kansas City, Philadelphia and St. Louis stated that strength in the export sector was offsetting a part of the weak domestic demand and Atlanta and San Francisco noted that some manufacturers' orders had increased as a result of the Gulf war. Of the six districts reporting on manufacturing inventories, four mentioned excess levels and the need for further trimming while in the remaining two, stocks were generally satisfactory. Atlanta, Boston, Chicago, Cleveland and St. Louis described a slowdown in motor vehicle production, and, related to this, Chicago and Cleveland noted a decline in steel production as well. Other industries in which activity slowed were textiles, furniture and construction-related products. On the other hand, Cleveland noted that capital goods output was holding up fairly well, though in Chicago the picture was mixed, and Atlanta and St. Louis noted strength among food processors. Dallas described the production of oil field equipment as growing strongly. With regard to the outlook, contacts in Boston and Philadelphia anticipate an improvement in three to six months and manufacturers in the Richmond district are optimistic about the future for the first time in several months. Construction and Real Estate While construction activity continued weak in most of the nation, eight districts noted that realtors and homebuilders have reported an increase in buyer interest and, in some areas, purchases in recent weeks. The pickup is attributed to lower mortgage interest rates and more attractive home prices. Despite the pickup, however, most districts report that homebuilding activity remains slow and participants are only cautiously optimistic that some improvement over last year's slow pace will occur. Nonresidential construction also remained weak and with vacancy rates continuing to rise on office and retail space, contacts in most districts do not anticipate a turnaround. However, Dallas noted that several large commercial projects have begun and that petrochemical plant construction is robust. Banking and Finance Loan demand continued soft in the nine districts reporting on financial developments although mortgage refinancing has increased with the decline in mortgage interest rates. Both consumer and business loan demand are weak and lenders do not anticipate a rebound until overall economic conditions improve. Consumers are reportedly reluctant to add new debt given the uncertainties about the employment situation, and firms are maintaining low inventories and reducing capital spending. However, St. Louis noted that some companies that normally obtain funding in the commercial paper market have been inquiring about bank financing. Meanwhile, lenders in some districts have tightened terms for borrowers particularly in the construction and real estate sectors. Agriculture and Natural Resources Dallas reported that agricultural income prospects improved due to good cotton, rice and peanut harvests and continuing strong beef prices. Kansas City noted that weak grain prices limited the income of crop producers but that the income of livestock producers was bolstered by low feed prices and continued strength in cattle and hog prices. The Minnesota index of prices received by farmers fell for the ninth consecutive month to the lowest level since 1988. San Francisco noted that the fifth year of drought in California will result in reduced production of field crops and increased production costs. Moreover, higher feed prices and a lack of adequate grazing land will force cattle into feedlots early, thereby lowering livestock prices. Lower oil prices and uncertainty about the future have caused drilling activity in Kansas City to subside though the rig count is still about 3 percent above a year ago. Energy sector activity remained strong in Dallas where oil companies expect demand for their services to increase as Kuwait rebuilds its oil fields. Oil production in the Atlanta district was stable. San Francisco and St. Louis report that the wood products industry has weakened in response to slow overall economic activity. Mining industry conditions have been fairly good in Minneapolis with 1990 iron ore production up 5 percent, but coal production in St. Louis has declined. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1184 -beige_book_pure_text_pre2000,1991,"Economic activity remained weak in much of the nation, but there were some indications that the decline may be bottoming out. Retail sales were sluggish in most districts, with no sustained pickup following the end of the Persian Gulf war. Manufacturing showed indications of stabilizing, with some districts reporting slightly improved conditions and increased optimism about future activity. Other districts, however, report continued weakness in manufacturing. Wage increases appear modest and input prices in manufacturing are reported to be flat or down. Larger price increases continue, however, in certain service industries such as health care. Residential real estate activity improved across the nation, while non-residential construction remained weak. Loan demand was reported flat or slightly improving by most districts. Agricultural conditions outside of California are reported to be generally good. Stable oil prices and low natural gas prices are reducing exploration. Consumer Spending Retail sales remained sluggish in most districts, with the majority reporting no sustained pickup following the end of the Persian Gulf war. Districts report that renewed consumer confidence has yet to be translated into solid sales. Shoppers are remaining cautious and traffic is slow. Some softening of sales was reported by Philadelphia, Chicago, and Dallas. Cleveland reported a pickup in activity in areas not affected by auto layoffs, spurred in part by aggressive promotion. Increases also were noted in St. Louis for heavily promoted and discounted goods. Increased auto sales are noted by Kansas City, Cleveland, and Atlanta, but most districts reported little improvement and Dallas reported sharply reduced auto sales. Low expectations for a significant improvement in sales are reported in Philadelphia and New York. Boston reports that the prevailing expectation among retailers is that 1991 will continue to he a tough year. Atlanta notes that some retailers fear that increased activity in their district may be ""catch up"" spending and not permanent. San Francisco, however, reports that expectations for improved consumer spending rose substantially. Richmond also reports increased optimism among retailers. Retail inventories are reported to be lean in most districts. Manufacturing Manufacturing activity showed signs of bottoming out in much of the nation. Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and Kansas City all report stable or slightly improving conditions. Weaker conditions were reported by Dallas and St. Louis. Most districts report manufacturing input prices to be flat or down. Cleveland noted some slow recovery in auto production, while Chicago reported an increase in orders received by suppliers to the auto industry. St. Louis, however, reported continued layoffs in the auto sector and a plant shutdown expected in May. Cleveland reports that steel production is expected to remain at 70 to 75 percent of capacity. Specialty steel and machine tool producers appear to be doing better than in previous recessions. Optimism among manufacturers for improvement was reported by Philadelphia, Richmond, and Cleveland. Cleveland, Kansas City, and San Francisco reported strength in export activity. Richmond indicated that exports at District ports were higher than in the previous year and are expected to increase further. Boston, however, indicated disappointing export activity. Contacts in Kansas City, Dallas, and San Francisco expect orders related to the rebuilding of Kuwait. Construction and Real Estate Residential real estate activity improved across the nation, with most districts noting increased sales of new and existing single- family homes and modest improvements in residential construction. Increased buyer interest was attributed to renewed confidence following the end of the Persian Gulf war, and to the decline in mortgage interest rates. Atlanta, however, reported that some builders are skeptical whether the increased housing demand is sustainable. Nonresidential construction activity remains weak. Boston reported that construction of new commercial space has nearly ground to a halt, but that vacancy rates continue to increase due to further contraction in the financial services industry. New York reported that office leasing activity in midtown Manhattan declined to its lowest level in three years. Vacancy rates rose in downtown Manhattan with the addition of new space. High vacancy rates also were reported in Los Angeles and in Minneapolis/St. Paul. Dallas reported that construction activity remains sluggish, with respondents attributing weakness to credit conditions and uncertainty over the actions of the Resolution Trust Corporation. Banking and Finance Loan demand was reported to be flat or improving slightly in the eight districts reporting on financial developments. Increases were reported in mortgage lending and refinancings. Commercial and industrial loan demand was reported weak by Philadelphia, but slightly increasing by Richmond. In general, loan demand was expected to improve with the economy. Reports on credit availability are mixed. New York reports that a majority of their surveyed banks have not changed their credit standards over the last three months, but a few are more cautious with respect to lend development loans. Atlanta reports that most contacts feel that tight lending conditions continue to restrict loan growth. Boston indicates that half of their contacts report that a lack of credit is hampering capital spending, while the other half report ample credit for projects such as renovations and computer upgrades. Agriculture and Natural Resources Dallas reported that prices for cotton, grain sorghum and soybeans have increased, and producers are indicating they will plant more acreage for these crops. According to Kansas City, warm weather has resulted in rapid development of the winter wheat crop, which is in generally good condition. Kansas City reports dry soil conditions in the western part of their district, and Minneapolis reports below normal precipitation in South Dakota. Favorable planting weather is reported by St. Louis and Richmond. In California, the freeze in late December cut citrus fruit production and exports in half and destroyed many fruit and nut trees. Continued drought conditions have caused farmers to cut back on acreage planted for many crops, including a 15 to 20 percent drop in cotton acreage planted in the San Joaquin valley. Kansas City reports that stable oil prices since the end of the Persian Gulf conflict have resulted in continued development of existing reserves, but current prices are not stimulating much exploration. Drilling activity fell in March but remained about 13 percent above its year-ago level. Dallas reports dampened oil and gas production and drilling efforts. While oil prices are little changed from a year earlier, natural gas prices are the lowest in several years. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1327 -beige_book_pure_text_pre2000,1991,"Economic conditions appear to be improving modestly in much of the nation. Retail sales are up moderately in some districts. Manufacturing is gaining strength in some regions and industries, although several districts report weaker foreign demand for some manufactured goods. Prices are generally steady to up slightly at both the wholesale and retail levels. Home purchases continue to strengthen, but homebuilding has picked up in only a few regions. Mortgage lending continues to be the only source of strength in loan demand. Delayed planting could reduce production of some crops. Stable oil prices and low natural gas prices are keeping oil drilling in check. Consumer Spending Retail sales vary across districts. While there are no reports of substantial improvement, the overall situation is somewhat brighter than that described in the last Beige Book. A few districts describe gains as slight or moderate, while others report lackluster sales. Richmond reports a slight decline in sales, and Atlanta notes that spending increases of recent months have stalled. Sales are uneven in several districts, with soft goods selling better than consumer durables. But sales advances in the Chicago district were led by housing-related durable goods. Unseasonably warm weather has brought improved sales of summer goods in the Northeast, but skepticism remains about future gains. Retailers in several districts are also concerned about future sales gains in light of shaky consumer confidence and uncertainty about the course of the economy. A few districts, however, report optimism about future sales, particularly for items related to purchases of both new and existing houses. While retailers in some districts are comfortable with current inventory levels, others continue to emphasize keeping stocks lean and under tight control. Only modest increases in retail prices are reported. Most reporting districts say that new car sales remain weak. Manufacturing Manufacturing activity seems to be improving overall, but several districts report slower export growth. Prices of inputs are generally stable. Philadelphia reports activity picking up in most major industries, and Boston notes a recent pickup in both sales and orders. Cleveland says that manufacturing output appears to have bottomed as capital goods industries near a trough, but New York and San Francisco report continued slow activity. Steel industry respondents see little change in production, with gradual improvement in domestic markets offset by softer export markets. St. Louis reports mixed activity with some firms expanding but many still contracting due to defense cuts spreading to smaller firms. In the Chicago district, consumer durables producers are doing better than heavy equipment producers. Automobile production is improving, as is production of goods going into new homes. Weakness continues in the production and sales of capital goods. Dallas reports that oil field machinery production has declined slightly due to decreased domestic drilling. Views of the outlook vary among respondents, with stagnation expected in the Boston district until early 1992 but healthy gains expected in the Philadelphia district for the rest of this year. New York respondents see no significant turnaround before late summer, while Cleveland and Richmond respondents are optimistic for the second half of the year. Construction and Real Estate The improvement in home sales reported in the last Beige Book continues and is being translated into increased construction activity in some areas. While buyer interest and purchases still are found mainly in the market for existing homes, reduced inventories of new houses are leading to increases in starts in several parts of the Midwest. In the Atlanta district, tight lending conditions are restricting the rebound in residential sales and construction. And in the St. Louis district, new construction remains mixed in spite of lower inventories of unsold homes. Nonresidential construction remains weak. Little commercial construction appears to be under way, as vacancy rates are high and leasing activity sluggish. Construction activity is being supported by public projects in the Atlanta and Richmond districts, but Dallas reports a significant slowdown in most types of public construction. Banking and Finance Bank lending continues to be weak in the eight districts reporting on financial developments, despite a pickup in demand for home mortgage loans. Much of the strength in mortgage lending stems from refinancing rather than new purchases. Demand for business and consumer loans is weak, except for some modest strength in consumer lending in the Cleveland and Kansas City districts. While sluggish growth in business loans in the Richmond district is attributed mainly to week loan demand, some supply restraints were also noted. Small and mid-sized banks in the New York district report slower repayment for all types of consumer loans. Some respondents expect continued sluggish growth in lending even after the recession ends. Agriculture and Natural Resources Extreme weather conditions in several districts have hampered spring planting. Production estimates are being lowered for several crops. Heavy rains have delayed spring planting in parts of the Atlanta, St. Louis, Minneapolis, and Kansas City districts. Crops affected include cotton, soybeans, peanuts, rice, corn, and grain sorghum. Dry conditions in west Texas and the Texas panhandle have reduced production estimates for the areas wheat and cotton crops. Richmond reports generally favorable agricultural prospects, and Minneapolis notes that conditions are good in the Dakotas. Kansas City reports a high level of farm income, with strong cattle prices continuing to reduce the impact of weak crop prices. Oil drilling in the Dallas and Kansas City districts has declined despite stable oil prices. The decline stems partly from low natural gas prices, which are down 20 percent from a year ago. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1138 -beige_book_pure_text_pre2000,1991,"According to contacts across the country, national economic conditions continue to improve, but at a slow, uneven pace. Retail sales are said to be flat or edging up on average. Nevertheless, respondents from all areas expect a modest recovery in retail sales during the second half of 1991. Manufacturers report some increase in activity, on balance, but recovery is not uniform; demand for consumer goods is said to be stronger than demand for capital equipment; demand for manufacturing labor shows signs of stabilizing. By contrast, several districts report that state and local governments and some service industries are cutting employment. The pickup in home sales in the spring has lost some momentum, and commercial real estate markets and nonresidential construction remain weak. In most districts, business loan demand shows little strength. Hot, dry weather threatens crops in several regions. Retail Retail sales during June and early July are described as flat or edging up in one-half of the Federal Reserve districts. In the remaining districts, New York, Cleveland, and Richmond respondents report declines, while those in Atlanta, Minneapolis, and Dallas report moderate increases. Retailers east of the Mississippi note month-to-month variability. Unseasonably warm weather in May caused an acceleration in purchases of summer items, thereby weakening June results. Hot weather in July boosted demand for some seasonal products, but discouraged other purchases, especially automobiles. In recent weeks, apparel sales were strong in the New York, Philadelphia, Atlanta, Kansas City, and Dallas regions. Major home furnishings were more often a source of weakness than of strength. Sales figures at automobile dealerships differed widely both across and within districts as a result of economic and credit conditions, weather, consumer preferences, and the timing of fleet purchases. Retail inventories are generally described as satisfactory, and many retailers remain conservative in placing new orders. The consensus outlook calls for a modest recovery in retail sales during the latter half of 1991. However, some contacts believe that a noticeable pickup will not occur until the fourth quarter. Manufacturing In a majority of Federal Reserve districts, manufacturing contacts report that, on balance, demand is strengthening very gradually. However, respondents in the Cleveland, Atlanta, and San Francisco regions describe conditions as mixed, while those in Dallas and Boston note a recent softening in incoming orders. Although manufacturing inventories generally appear satisfactory, contacts in the Atlanta, Boston and Dallas districts note cases of unwelcome buildups. Producers of consumer goods and auto supplies are said to enjoy the greatest improvement in demand. Contacts in a number of districts report stronger orders for appliances, furniture, carpets, textiles and apparel, and for plastics, steel and parts for the auto makers. By contrast, the capital equipment industries remain relatively weak, according to the Boston, Atlanta, Chicago, Dallas, and Philadelphia regions. Demand for oil field and agricultural machinery and products for aerospace was also described as soft. Exports are a source of strength in several coastal districts, but contacts in Dallas and Chicago mentioned slowdowns in exports of steel and agricultural equipment. The demand for labor in the manufacturing sector is stabilizing. Contacts in the Minneapolis and Atlanta districts report longer hours, while respondents in Chicago and St. Louis speak of smaller cutbacks and shutdowns averted (in steel and heavy-duty trucks). Input prices are generally said to be flat to down. According to Dallas district contacts, metals prices are down, chemicals prices are falling but at a slower rate, and lumber prices have stabilized after surging earlier in the year. Competition is forcing most manufacturers to maintain or reduce their selling prices. Retail respondents report few wage or wholesale cost pressures. Most manufacturers expect to see a gradual improvement in orders and production over the next three to six months. Producers of consumer durables generally believe the trough is behind them, while producers of capital goods and construction machinery say they are close to the bottom and expect a revival in the second half. Respondents from the steel and auto industries and the Boston district remain very cautious, however. Services and Related Industries Respondents in several districts report cost cutting efforts by service industries and state and local governments. In the New York district, mergers in the banking and airline industries are expected to cause sizable employment losses. In St. Louis, the trucking industry is retrenching, while weak economic growth in both Europe and North America is hurting express shipping. Contacts in the San Francisco region note employment losses in the professional services sector. In Dallas, however, engineering firms, business services, and temporary employment agencies report weak growth. The tourist business is improving in many parts of the nation. Real Estate and Construction The spring pickup in home sales appears to have moderated, with respondents in half the districts reporting a loss of momentum. In Minneapolis the slowing was attributed to increases in the cost of FHA mortgages; in contrast, the prospect of higher FHA costs was seen as a spur to sales in the Dallas district. Residential construction was said to be edging up in the Atlanta, St. Louis, and Minneapolis districts, steady in Richmond and mixed in Kansas City. Although contacts in the New York and Philadelphia districts have seen recent increases in commercial leasing activity, commercial real estate markets are weak across the country. Nonresidential construction is depressed by high vacancy rates and, according to contacts in New York and San Francisco, difficulties securing construction financing. Banking Loan demand from creditworthy businesses is generally said to be weak. In New York, banking contacts say they remain willing to lend to qualified business borrowers, but credit standards have tightened in recent months and borrowers' credit quality has declined. Philadelphia district banks are actively promoting business loans but are meeting slack demand from creditworthy borrowers. Moreover, Chicago respondents say that businesses are issuing long-term debt and are using improved cash flow to reduce their bank debt. However, Atlanta banking contacts report that improvements in customers' financial condition are resulting in slightly higher loan approval rates; in the Cleveland district lenders' interest in development loans has revived a bit. Agriculture and Natural Resources Although Dallas and San Francisco report good conditions for most crops, hot, dry weather has reduced expected yields of corn, soybeans, and cotton in parts of the Richmond, Chicago, St. Louis and Kansas City districts. Contacts note that increased expenses, weak demand, and declining production prospects are clouding the outlook for farm incomes in some areas. Nevertheless, the cattle industry remains strong in all reporting regions, despite a recent drop in prices. Kansas City and Dallas contacts describe oil and gas activity as fairly stable. Rig counts remain low, and natural gas prices are at their lowest level in 12 years. In the San Francisco region, lumber industry conditions are said to have weakened in recent weeks. By contrast, St. Louis and Minneapolis lumber producers see better prospects. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1460 -beige_book_pure_text_pre2000,1991,"The economic recovery continues to be uneven across the country. Although some Districts apparently are not sharing in recovery, others, such as Chicago and Cleveland, continue to revive largely because of the upswing in manufacturing. Industrial production has provided considerable impetus to recovery, reflecting in part export demand and a reduced pace of inventory liquidation. As yet, there is little sign of a sizable rebound in consumer spending that will contribute to a strengthening business recovery. Retail sales in recent months show only scattered improvement, and most retailers are cautious about sales prospects. Retail inventories are indicated to be close to desired levels. Residential investment seems to have lost some upward momentum in recent months, with fewer than half of the Districts reporting further increases in housing sales and housing starts. Hot, dry weather in much of the country has hampered farm output, especially corn. Bumper crops of rice in some parts of the St. Louis District and record crops of cotton are anticipated in St. Louis and Dallas. Farm commodity prices and livestock prices have declined recently (San Francisco, Minneapolis, Kansas City, and Dallas). Loan activity remains soft in most Districts. Chicago, Cleveland, Philadelphia, and St. Louis report a continued reduction in business loans, while mortgage loans in general remained flat. Manufacturing The strongest sector of the economy is manufacturing. Most Districts note a continuing upturn in activity in recent months, but manufacturing apparently is still languishing in a few Districts (especially Boston and San Francisco). Export growth has been a source of strength in manufacturing, and more recently, a reduced pace of inventory liquidation in some industries reportedly is adding to the recovery. Developments are not uniform through all Districts, however. Some inventory liquidation apparently continues in Chicago, Philadelphia, and Richmond, while Boston reports satisfactory inventory levels and Cleveland comments that the correction phase in inventories is nearing an end. Both Chicago and Cleveland note strengthening among consumer durable producers, led by rising automotive and appliance output, which has supported a gradual rise in steel production. Further increases in auto output are expected for next quarter (Cleveland). Capital goods industries are beginning to show signs of recovery. Chicago points out that electronics, heavy machinery, and food processing machinery have all shown some recent turnaround in orders, and Cleveland cites an uneven revival in heavy-duty trucks and industrial equipment. Dallas also reports that sales have increased in the electronics and electrical machinery industries because of some rebuilding of depleted inventories. Retarding a comeback in production in some Districts is the cutback in defense contracts, resulting in declining orders in Philadelphia and Atlanta and in San Francisco's aerospace industry. Manufacturers in most Districts appear to be more optimistic about near-term prospects, and those in Philadelphia and Richmond plan to increase their capital spending over the next six months. Consumption There is still little indication of a stepped-up pace in consumer spending for durable and nondurable goods. Retail sales between July and early September were relatively flat or slightly higher than their levels earlier in the summer. Sales of back-to-school merchandise were described as ""weak,"" ""slower-than-expected,"" or ""disappointing"" (Boston, New York, Philadelphia, Atlanta, and Dallas). New car sales in August were off in some Districts (Chicago, Cleveland, Atlanta), although a limited inventory of 1991 model cars is partly blamed for the reduced sales pace. Cleveland, however, expects a somewhat higher level of new car sales this quarter than last. In general, retail inventories appear to be close to desired levels. Retailers generally are cautious about near-term sales prospects, and only a few of the Districts report optimism about the outlook. Real Estate and Construction District reports suggest that recovery in housing sales and starts has slowed recently, although a few Districts comment that sales or starts were still rising in July and August. Both San Francisco and Chicago report that home sales softened in recent months after a spring rebound. Still, housing apparently has become more affordable because of recent easing in mortgage rates and because of lower home prices in some areas. Commercial construction appears to be at a virtual standstill in many Districts. High vacancy rates for commercial buildings and declines in rental prices have been blamed (New York, Chicago, Minneapolis, Dallas, and San Francisco), but tight credit standards for acquisition and development loans have also apparently restricted commercial construction (New York, Chicago, Atlanta). Agriculture Dry weather is expected to reduce the corn yield in Kansas City, and early reports on this crop in the St Louis District are mixed. Richmond expects that corn and soybean yields will be normal to above normal in some areas, because of recent timely rain. A bumper rice crop is expected in Arkansas, but yields in Mississippi may not be as good (St. Louis). A record harvest for cotton is expected (St. Louis and Dallas). Crop yields in Minneapolis are predicted to be ""generally good."" Adverse weather has also affected pasture conditions in Kansas City, but the livestock industry is nevertheless ""mostly good"" in St. Louis. Fruit growers in California report large harvests, but dry August weather reduced the harvest of apples and grapes in Washington (San Francisco). Several Districts report declines in farm commodity prices. Potato, hay, and beef prices are off substantially from a year ago in San Francisco, and the Minnesota index of farm products fell sharply again for a variety of crops and livestock. Banking Nearly all of the Districts state that loan activity is relatively flat, or has eased further in recent months. The New York District's comment that banks are willing to expand loans but are facing reduced demand, seems to capture a theme common to several Districts. Demand for business loans continues to be weak, and has softened further in some Districts (Philadelphia, Cleveland, Chicago, St. Louis). In some Districts, consumer installment loans either fell or held steady, except in Atlanta, where some pickup occurred. Most Districts report either little demand for new mortgage loans or slight declines from previous months, and even some easing in mortgage refinancing (Cleveland). Some Districts find that credit standards have not changed in recent months (New York and Chicago), but Richmond notes a tightening for commercial loans and Atlanta cites a tightening for both auto dealer and commercial development loans. In several Districts, mortgage rates have eased recently. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1364 -beige_book_pure_text_pre2000,1991,"Sources contacted by the Federal Reserve banks generally described the economy in September and early October as weak or growing slowly. In most districts there has been little improvement in retail sales, and a few reported some slowing. Auto sales have generally been weak. Expected crop yields vary, but agricultural prices remain low. Manufacturing output is still improving although at a slower pace in some areas. Several districts reported some increase in home sales, but residential construction is still at low levels. Loan demand has been weak for commercial, industrial, and consumer loans. Some districts noted a pickup in real estate loans, especially refinancings. Consumer Spending Retail sales were reported to be slow or sluggish in most districts. Dallas and San Francisco cited weakness in the retail sector, and in Boston and Philadelphia sales have been flat to slightly below last year's levels. In Atlanta they have been flat to slightly above year-ago levels but have improved little since August. Cleveland and Richmond reported that sales have slowed in the last month. Two districts indicated improvement in retail sales. Kansas City reported sales increased somewhat, and Minneapolis reported ""fairly strong"" sales. New York, Philadelphia, and Dallas indicated that retail inventories were under control, but some contacts in Cleveland and most in Kansas City considered inventories too high. In general the outlook for the holiday sales season is cautious. In Kansas City, however, some retailers are expecting relatively strong sales for the holiday season, and in Richmond they are optimistic about their business over the next six months. Auto sales were reported to be flat or down from last year in many districts although the Cleveland District indicated that sales rose in late September and early October, and Minneapolis noted a recent surge in truck sales. Several contacts in the Cleveland District said dealers' orders for new models are slightly above year-ago levels: but Atlanta indicated that orders have been mixed and dealers there do not expect an acceleration of demand. Dealers in the Philadelphia District are also pessimistic about prospects for the 1992 model year. Manufacturing In most districts output and shipments in the industrial sector have been stable to slightly higher. Philadelphia noted that the pace of advance had slowed recently. There was also some indication of slower growth in the immediate Chicago area. San Francisco mentioned that conditions were still worsening in California and in the Pacific Northwest while the industrial sector in Idaho and Utah remained stable. Cleveland and Chicago reported that autos and steel have been most responsible for the recent increases in manufacturing. Boston and St. Louis noted weakness in the defense industry. Boston and Cleveland mentioned that manufacturing inventories are at satisfactory levels while Kansas City noted that firms are still trying to trim inventories. Reports about new orders were mixed. Richmond noted an increase in new orders, and some manufacturers in the New York District have seen an improvement, but new orders were weak or declining in Boston and Philadelphia. Orders for defense goods in St. Louis and for oil field machinery in Dallas were reported to be down. Philadelphia and Richmond said that, on balance, manufacturers expect improvement over the next six months. Boston, however, noted concern about renewed softness. Real Estate and Construction Reports on housing were also mixed. New York, St. Louis, and Kansas City reported some increase in home sales, and Atlanta and Minneapolis reported mixed conditions with increases in some parts of their districts and declines in other parts. Richmond said that housing markets in the district are sluggish. Likewise, San Francisco reported that home sales in California and the Pacific Northwest, which had rebounded earlier in the year, were now sluggish. New home construction is still slow in those districts that mentioned it. In the commercial leasing market, the New York District said rents were still falling, and San Francisco reported plummeting commercial rental rates in the Los Angeles market. Agriculture and Natural Resources In the agricultural sector, expected yields compared to last year vary by crop, but prices generally remain low. Drier than normal weather has reduced yields for corn according to several district reports. The Chicago District added that corn yields, although lower than last year, are turning out to be much better than earlier estimates. In the Dallas District and in parts of the Minneapolis District, excessive precipitation hurt crop production although yields are still good. In North Dakota, corn and dry bean yields are sharply higher than last year; in the Richmond District they are slightly lower. The wheat crop forecast for Montana is the highest in many years. Prices for many crops, livestock, and dairy products are weak. San Francisco reported that high production of fruits and vegetables in California's Central Valley has lowered prices for those products. Low natural gas prices have reduced drilling activity in the Kansas City and Dallas districts. Dallas also reported that some energy firms have announced layoffs. Finance In general, loan demand has been weak. Overall demand has decreased in the New York District, and total loan volume continued to decline in Philadelphia. In Kansas City demand for commercial and industrial loans is down, and demand remains soft in Chicago. New York and San Francisco specifically mentioned that consumer loan demand was sluggish. Atlanta, on the other hand, reported moderate improvement in loan demand in September. And in the last two months, total loans outstanding have increased in the St. Louis District. A number of districts have experienced increased demand for mortgage loans, especially refinancings spurred by lower interest rates. Several districts reported that the majority of banks have not raised credit standards in the past few months. Cleveland noted that some banks appear to be less aggressive in seeking loans. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1187 -beige_book_pure_text_pre2000,1991,"Reports compiled by the Federal Reserve Banks generally suggested flagging momentum in the economic recovery in October and early November with most Districts in the middle of the country indicating continued but slower growth and most other Districts reporting stable to slightly weaker conditions. Retail sales generally remained sluggish, with several Districts noting that gains were concentrated in nondurable goods. After improving in September, manufacturing activity leveled out in most Districts in October and early November. Housing activity expanded, albeit slowly, in most regions, while commercial construction remained weak. Demand for commercial and industrial loans remained soft, according to most bankers, while credit standards were generally unchanged. Most agricultural sources reported higher crop yields and lower prices for both crops and livestock. Reports on price trends suggested steady to diminished inflation, and discounting was widely reported in the retail sector. Several Districts stated that contacts remain optimistic about business conditions in 1992. Consumer Spending Retail sales generally remained sluggish in October and early November. Sources in Atlanta and Cleveland noted that sales gains were concentrated in nondurable goods, while Dallas, Boston and Kansas City each reported weakness in sales of big-ticket items. Minneapolis indicated that retail sales have generally been stagnant except for areas close to the Canadian border, which have benefited from a surge in cross-border shopping. Minneapolis also reported a strong tourism season. Richmond noted continued softening in sales. Inventories were said to be above plan by sources in Chicago. Cleveland, and San Francisco, while contacts in New York, Atlanta, and Kansas City expressed satisfaction with recent levels. Active discounting was widely noted, and several reports indicated that discounting was necessary to achieve sales gains. Reports on new car sales were uniformly weak, with several sources indicating slower showroom traffic and lower buying interest expressed by customers who do enter the showroom. Manufacturing Manufacturing activity was mixed, with some loss of momentum noted in regions that reported strengthening in the summer and early fall. After rising modestly in the past several months, manufacturing activity in Philadelphia edged down slightly in recent weeks. About half of the manufacturing contacts in Boston reported that orders have softened recently, after some improvement in the summer or early fall. Conditions in the auto industry contributed to some slowing in the growth expected in the Cleveland and Chicago Districts. Reports received in Atlanta, Kansas City, and San Francisco generally indicated continued sluggishness. Manufacturing activity continued to slip in Richmond, according to the bank's survey of local firms, and excess capacity was most frequently cited as the most important current problem. Reports on conditions in capital goods industries were mixed in Cleveland and Chicago. Recent layoffs and plant closings in the defense, computer and consumer electronics industries were noted in St. Louis, although solid demand was reported for motor vehicles produced in that region (which include minivans). New orders received by a commercial aircraft producer have softened, according to San Francisco. Continued sluggishness was noted in industries linked to construction activity by Boston, Philadelphia, Atlanta, Chicago, and St. Louis, while firms producing goods for housing construction in Dallas reported some improvement. Purchasing managers' surveys in Buffalo and Rochester revealed mixed but generally stable conditions in October. Real Estate/Construction Housing activity continued to expand at a slow pace. Demand for existing homes picked up in the New York metropolitan area, particularly among first time home buyers attracted by lower mortgage interest rates and lower home prices. Reports received by Kansas City indicate that home sales remain well above year-earlier levels. Several banks noted that improved sales activity is concentrated in the lower end of the market. Modest improvement in residential construction was noted in St Louis and Kansas City, although St. Louis also noted that weak demand from the housing sector has depressed prices received by a metals producer. Housing starts remained weak in several markets covered by San Francisco and New York, while Atlanta noted small increases in activity among homebuilders. Sales of existing homes softened in parts of the Chicago District and home remodeling in the Chicago metropolitan area reported sluggish demand. Sources generally noted little change in commercial construction among Districts. Banking Reports from bankers generally indicated that lending standards for approving commercial and industrial loan applications remained unchanged in recent months. Demand for commercial and industrial loans was generally reported to be stable but weak in Richmond, Philadelphia, Cleveland, Chicago, St. Louis, and Dallas. Bankers contacted by Kansas City stated that lending demand was steady to slightly higher, improved demand was concentrated in construction, agriculture, and home mortgage loans, while demand for commercial and industrial loans decreased. A small pickup in demand for commercial and industrial loans was reported in Atlanta, although demand still remained well below year-earlier levels. Bankers in Atlanta, New York, and Dallas stated that high quality loan applications remain difficult to obtain. Chicago noted that when good loan prospects do appear, competition between lenders has been intense, with the borrower benefiting from lower rates. Some reports cited instances of borrower difficulty in obtaining credit. Kansas City stated that some car buyers are finding it difficult to qualify for loans. Several of San Francisco's respondents cited tight credit as one reason for slow construction activity. Atlanta noted that auto dealers and construction contractors report continued difficulty obtaining credit. St. Louis noted that first-time home buyers in one market have found it difficult to qualify for mortgage loans, in part because of a lack of savings for a downpayment. Agriculture Most reports indicated larger-than-expected harvests and high levels of livestock production, coincident with weaker commodity prices. Chicago reported upward revisions in estimates for corn and soybean production, and noted that the improved harvest and weakness in exports have weighed on crop prices. Both Chicago and Kansas City noted weaker livestock prices and farm bankers in the Kansas City District expect an increase in the number of problem loans over the coming year. Weaker livestock and cotton prices led sources in Dallas to revise farm income projections downward. San Francisco reported that agricultural conditions were generally satisfactory, although an infestation by the poinsettia whitefly has harmed the winter vegetable crop. Heavy snowstorms hurt the corn harvest in Minnesota. Above-average yields were reported by St. Louis and Richmond, although Richmond stated that dry weather has affected recent plantings. Outlook Several District reports on business expectations revealed continued optimism for economic conditions in 1992. Most manufacturing sources in Philadelphia continue to anticipate growth over the urn ax moats, despite some recent softening. Philadelphia also reported that bankers' forecasts of commercial and industrial lending growth have increased since earlier in the fall. Richmond noted that retailers anticipate sales and their own capital expenditures to rise over the next six months, although some softening was indicated in expectations for holiday season sales. Most manufacturers contacted by Dallas expect stronger growth in orders next year. However, weaker sales expectations were indicated by auto industry suppliers in both Cleveland and Chicago, and a survey conducted by San Francisco showed a moderate increase in the percentage of business leaders expecting a renewed recession. Sources in Boston expect some pickup in economic activity around mid-year, but still anticipate a ""long, slow haul."" A large group of economists who attended a recent roundtable in Cleveland uniformly expected the recovery to continue through 1992. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1550 -beige_book_pure_text_pre2000,1992,"Reports by business and banking sources contacted by Federal Reserve districts suggest that activity was lackluster as the year drew to a close. Retailers in most districts report that holiday sales were at or modestly above year-ago levels before adjustment for price changes. Manufacturing sources generally note steady or declining production and employment. Except for export goods, orders and backlogs generally softened into 1992. According to realtors, lower mortgage rates have aided home sales, particularly of lower-priced properties. Single-family construction expanded modestly, while new commercial activity remained dormant. Aside from a surge in mortgage refinancing, banking sources suggest that consumer and business loan demand has not revived. Bankers report no change in credit standards. While some bank contacts report ongoing loan quality problems, others are optimistic about prospects for improvement as borrowers work down debt service burdens. Energy industry contacts confirm that lower oil and natural gas prices are leading to cuts in expenditures for drilling and energy-related products. District reports indicate that commodity and materials prices were generally unchanged or declining; pressures on wages and retail prices have been minimal. Despite softness as the new year began, business and banking contacts generally anticipate that economic conditions will improve by mid-year. Consumer Spending Retailers generally confirmed that holiday sales were flat to slightly higher than year-ago 1evels before adjustment for inflation. Discounters and some specialty stores posted better performance at the expense of traditional department stores. Sources in Atlanta, Cleveland, Kansas City, Minneapolis, and Dallas report modest sales gains led by nondurable goods, particularly basic apparel and other small-ticket items. Sales in several districts were below expectations, and retailers in the Philadelphia district have continued to cut prices through early January. Inventories held by retailers in Chicago, Cleveland, Dallas, and Philadelphia were above target levels in early January, while retailers in Atlanta, New York, and Kansas City were content with current inventories. Retail contacts generally do not plan to expand stocks aggressively in the first quarter. According to auto dealers, new car sales were generally weak in Atlanta, Chicago, Dallas, Kansas City, and San Francisco districts. However, Minneapolis and Cleveland report some improvement in auto and truck sales. Retailers and auto dealers generally expect sales to recover in 1992, but not until the second half of the year. Strict inventory control, competitive pricing, and continued cost-cutting were cited by several districts as the general strategy for the near future. Manufacturing Factory activity faltered in most districts through early 1992 according to those surveyed. Renewed weakness in production and orders was cited by most contacts. Dallas contacts report that chemical production is flat and demand for oil field machinery is declining with oil prices. Weak auto output has hurt auto suppliers, according to Cleveland and Atlanta. Chicago also cites continued weakness in auto production and few signs of a turnaround in orders for appliances, heavy equipment, or primary metals. St. Louis and Atlanta report stable or increasing demand for packaging materials, where some price increases are sticking. Export demand continues to rise for some firms, according to sources in Kansas City, Boston, Richmond, and St. Louis. Manufacturers in Philadelphia report steady industrial output. Boston contacts indicate that capital spending is restrained by adequate or excess capacity and concerns about debt. Cleveland sources confirm that capital goods orders recently declined. Plants are generally operating below capacity, according to industry contacts in Kansas City, and Dallas chemical producers are concerned about overcapacity. Several districts report that, despite recent reductions in interest rates, capital expenditures will remain at 1991 levels until economic conditions improve, although there were several reports of productivity-enhancing capital projects. Kansas City, Philadelphia, Atlanta, and Richmond report generally stable prices for material inputs and products. Factory product prices are flat in the Boston district; the weakest lines are being discounted. Inventories in the Kansas City and Philadelphia districts continue to drift downward, though no district reports excessive inventories as a major problem. Plans to expand stocks are conspicuously absent. Manufacturers' general expectations for the first quarter are for continued weak sales and flat prices, but sources are relatively uniform in expecting significant improvement in sales and production in the second half of 1992. Real Estate and Construction Realtors in most regions report that lower mortgage rates have prompted modest gains in home sales. In Atlanta and New York, real estate contacts note that a significant portion of the home sales originated with first-time buyers and lower-priced properties. Sales in the Boston and Richmond districts remained mostly flat over the past six weeks. Except in the San Francisco district, which reports some continued decline, sources in most areas find home prices to be relatively stable. Reports from St. Louis, Kansas City, Dallas, and Atlanta note some improvement in single-family starts, but starts in the New York district remain slow due to generally sluggish demand. Multifamily activity remains stalled in Atlanta but is accelerating in Dallas. Realtors, mortgage lenders and home builders are generally optimistic for the spring. Bankers in Philadelphia, Cleveland, and Kansas City believe residential mortgage activity could post healthy gains. Atlanta realtors expect strengthening sales and St. Louis builders believe that conditions will improve significantly by mid- 1992. In the Dallas district, industrial and office real estate demand is flat. Office leasing declined in the New York area since the last report. Commercial activity in the Minneapolis district as mixed. Dallas and St. Louis report moderate increases in public construction. Banking and Finance Aside from a surge in mortgage refinancing, most districts report consumer and business loan demand has not expanded significantly. Contacts in several districts say that households are refinancing from adjustable-rate to fixed-rate mortgages. San Francisco also suggested that savings from lower monthly payments are being used for household debt reduction. Gains in new mortgage activity are much spottier. Demand for other consumer and business loans was generally reported flat or down. Reports on loan quality were mixed. New York contacts report increased delinquency rates on all types of loans, forcing some restructuring. San Francisco found that bank profits are still restrained by deteriorating real estate loans. Philadelphia bankers expect improving portfolio quality as lower interest rates reduce debt service costs. Bankers in Atlanta noted either stabilization or improvement in the quality of their portfolios during the fourth quarter. Credit standards, on balance, remain unchanged. The consensus among banking contacts is that aggregate loan demand will remain flat until the second or third quarter of 1992. Agriculture and Natural Resources Winter crops are generally said to be in good condition across the nation with the exception of the Dallas district, which reported severe weather damage to agricultural production. Livestock producers in several districts are struggling with lower prices. Declining oil and gas prices have resulted in reduced drilling activity in the Kansas City and Dallas districts. Dallas reported that lower prices are creating a somber energy outlook for 1992 and added that some producers are shifting exploration overseas, while many energy and related companies have announced layoffs. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1496 -beige_book_pure_text_pre2000,1992,"Most Federal Reserve Districts report some improvement in economic conditions. Business sentiment is described as modestly more optimistic in many parts of the country, though it remains cautious. Representative of many Federal Reserve Districts, Chicago notes ""a slow but increasingly widespread advance in the economy since the end of January."" Or as St. Louis puts it, ""Most sectors ... are reporting growth."" Most-often mentioned as improving are residential construction and home sales, auto sales, and other retail sales. There are few indications of significant upward pressures on retail and wholesale prices of goods. Most-often mentioned as flat or weak are manufacturing and nonresidential construction; bank loan demand is described as little changed. The manufacturing sector remains generally flat, with layoffs and rising unemployment often noted. Yet several districts report glimmerings of recovery in manufacturing, with improving expectations for future activity. Commercial construction remains moribund. Bank loan demand is best described as flat, although residential mortgage lending is often mentioned as a bright spot. Mortgage refinancing activity appears to be tapering off somewhat. Wages and Prices Continuing the trend of recent reports, wage and price pressures appear generally quite moderate, An exception is a survey of Buffalo (New York) purchasing managers: the percentage reporting higher input prices jumped markedly in February. In addition, several districts mention lumber prices. These are up sharply in some areas, due to increased construction activity and restricted supply. San Francisco observes that some grades of lumber are selling at historically high price levels. As reported in the last Beige Book, oil and gas prices remain low. Consumer Spending Most Federal Reserve Districts report some improvement in retail sales so far in 1992 and guarded optimism on the part of merchandisers. An exception is San Francisco, which notes that retail sales remain soft in that district. Perhaps more representative is Boston, which reports improvement for retailers of all types. Richmond notes that consumer spending improved in late January and February after a flat December and early January. And Cleveland observes that consumer spending exceeded expectations in both January and February. Automobile sales have exhibited widespread (if often modest) improvement. Districts reporting at least some increase in car sales include Boston, Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, Kansas City, and San Francisco. Only Dallas notes declining auto sales. Several districts also mention strength in light truck sales. Manufacturing The manufacturing sector is probably best described as ""mixed."" A number of districts report continuing layoffs and rising unemployment in manufacturing (for example, New York, Minneapolis, and San Francisco). But other districts describe modest gains in manufacturing shipments or output (Philadelphia, Richmond, and Dallas). St. Louis notes that several outside manufacturers are relocating in that district. Those areas reporting some strength in manufacturing often attribute it to Improved demand from the retail sector and residential construction. Several districts, including Richmond and Kansas City, report declining inventories, but Cleveland notes that inventory liquidation may have ended. Real Estate Sales and Construction Continuing the trend noted in the last Beige Book, all Federal Reserve Districts report at least modest improvement in real estate sales or residential construction or both. In a few areas, gains have been quite substantial. In Chicago, building material sales to homebuilders were quite strong, and Dallas reports that the inventory of houses has fallen to a low level. In many parts of the country, demand is apparently strongest for moderately priced homes. Richmond, San Francisco, and Chicago report that home prices are generally flat, but Minneapolis and Dallas note some increases. As has been true for some time, nonresidential construction is moribund in most parts of the country. San Francisco notes a decline in commercial building sales prices, and New York mentions rising vacancy rates for commercial office space. Banking and Finance Loan demand is generally flat, with most districts reporting little change in demand for consumer or commercial loans and commercial real estate lending remaining in the doldrums. Credit standards are described as largely unchanged. Although most districts note that the wave of mortgage refinancing has continued, it appears to have slackened in response to the recent rise in mortgage rates. New residential mortgage lending is mentioned as a bright spot by a number of districts. Agriculture and Resource-Related Industries Conditions in agriculture are varied, depending on the product and the weather. Richmond reports that weather and crop conditions were excellent in January and February. However, Kansas City cites a recent downturn in farm incomes and a slight rise in problem agricultural loans. Dallas and Minneapolis comment that declines in livestock prices have hurt some ranchers. Recently, much-needed rains fell in the Kansas City and San Francisco districts. Dallas, San Francisco, and St. Louis note continued low oil and gas prices. Minneapolis and Dallas report that as a result of these low prices energy exploration and development expenditures are down. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1042 -beige_book_pure_text_pre2000,1992,"According to contacts across the country, economic activity has increased further since the last survey although conditions remain uneven across regions and sectors. The Chicago, Atlanta, Richmond, and Cleveland districts report noticeable improvement, while the Dallas, St. Louis, Kansas City, and Minneapolis districts report continued moderate rates of economic expansion. The San Francisco, New York, Boston and Philadelphia districts report continued sluggish economic activity. These districts, however, report either slightly improved conditions or increased optimism about the near- term outlook. Manufacturing activity has picked up in most regions of the country. Continued growth in residential construction has been widespread. Many districts report gains in retail sales. Several regions, however, report continued declines in commercial construction, energy extraction and defense manufacturing. While the demand for non-mortgage loans generally is reported as weak, there has been some pickup in demand for these loans in several regions. Producer and consumer prices are reported as generally stable. Retail Retail sales have increased in most regions and many districts report improved optimism about future sales. Sales of most product lines have improved. The Chicago and Richmond districts note particular strength in consumer durables such as home furnishings and appliances. Several other districts note gains in nondurables. Retail respondents in the Chicago area note that much of the lost sales due to recent flooding downtown was made up by increased sales in the surrounding areas. Auto sales have increased in many areas. The most notable exception to improved retail sales is found in the Philadelphia district which reported a recent decline in sales. The San Francisco, New York and Boston districts report mixed retail performance. Manufacturing The most significant change since the last Beige Book survey appears to have occurred in the manufacturing sector. While respondents in the last survey generally described the manufacturing sector as weak, respondents have been significantly more upbeat recently. The Chicago and Cleveland districts report some improvement in motor vehicle and steel production and pronounced gains in orders for capital goods such as machinery and electrical equipment. Respondents in the Richmond district note strong increases in shipments and orders across many industries. Respondents in the Atlanta and Dallas districts report strong gains in manufacturing industries tied to residential construction and moderate gains in industries such as apparel, paper and electronics. However, the manufacturing gains in the Dallas district have been offset somewhat by continued declines in energy-related industries such as oil field equipment. The San Francisco and Boston districts note continued weakness in defense-related manufacturing. Construction Residential construction has continued to increase in most districts although the rate of growth appears to have slowed. The San Francisco district reports widespread gains in residential construction; the New York district reports increased optimism from home builders; and the Philadelphia district reports an overall slight increase in home construction. Several districts report increased pressure on home prices partly due to sharp increases in the cost of lumber. Respondents report that lumber prices have increased because of a sharp rise in lumber demand, harvesting restrictions and a recent trade levy on Canadian lumber. Commercial construction remains weak in most markets. Services Tourism and convention activity is increasing in the Atlanta, Dallas, Minneapolis and Richmond districts. Respondents in the San Francisco district report continued weakness in newspaper advertising revenue, due partly to low levels of real estate advertising. Residential real estate brokerage activity is reported to have increased in most markets across the country. The Dallas district reports that the demand for legal and litigation services remains strong and that accounting and consulting firms are seeing an increase in demand from companies seeking to increase productivity. Agriculture and Energy Extraction Several districts report favorable agricultural conditions although extreme weather has slowed planting in some areas of the county. Kansas City and St. Louis report that the winter wheat crop is in mostly good condition. Agricultural prices have generally declined. Although cattle prices remain at very high levels, Kansas City reports that cattle feeders remain wary that sluggish consumer demand for beef could trigger another drop in prices later this summer. Several districts report ample liquidity for agricultural lending. The energy sector continues to decline. Oil and natural gas prices remain at low levels, and the drilling rig count continues to fall. Oil and gas industry respondents in the Atlanta district report that business activity continues to decline and that further layoffs are likely over the next few months. St. Louis reports that year-to-date coal production has declined about 6 percent from a year earlier. Bank Lending Bankers in several regions report that loan demand has begun to increase, although demand remains uneven. Most banks across the country report an increase in mortgage originations and a slowdown in mortgage refinancings. Most regions continue to report soft demand for non-mortgage loans. The Richmond, Dallas and St. Louis districts report increases in non-mortgage loans. Boston reports that some small businesses continue to have difficulty obtaining bank credit, but contacts have found satisfactory alternatives, particularly trade credit from suppliers. Prices Producer and consumer prices are generally reported as stable. Boston reports that manufacturing prices are flat to down and that retailers are feeling pressure to lower prices. The San Francisco district reports little upward pressure on prices, with the exception of lumber and health care. Atlanta reports that while most contacts report relatively stable input prices, a growing minority of factory contacts are reporting increasing material prices. Respondents in the Kansas City district also note stable material prices, but prices are expected to rise slightly over the next few months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1149 -beige_book_pure_text_pre2000,1992,"Economic activity continues to improve. The manufacturing sector appears to be strengthening in all districts. The Chicago, Dallas and St. Louis districts report gains in nonmanufacturing sectors as well. All districts except Boston, New York and San Francisco report moderate increases in consumer spending. Residential construction activity remains well above year-ago levels in most districts, and new home prices have risen in several regions. Loan demand appears to be increasing in most districts. Price stability in the retailing and manufacturing sectors seems to be the rule across districts. Adverse weather has affected agricultural prospects in many districts. Manufacturing All districts report improving manufacturing conditions, except for the defense and aerospace industries. The Boston, Cleveland, Dallas, Philadelphia, St. Louis and San Francisco districts report that orders are increasing modestly, while Atlanta and Chicago note much sharper gains. Most of the increases come from durables-producing industries within each district. Employment at manufacturing firms continues to rise in the Chicago, Philadelphia and Richmond districts. The Atlanta district reports that some firms have increased hours in response to increased demand. The Boston, New York, Philadelphia and Richmond districts also report that at least one-fourth of the surveyed firms will hire new employees during the next six months. The Chicago district adds that an increase in orders for new cars is expected to require additional shifts and/or overtime. The St. Louis district reports employment declines because of plant closures and relocations, while the San Francisco district reports significant declines because of defense industry cutbacks. Reported inventory levels are mixed. San Francisco district firms report no inventory concerns, while firms in the Kansas City district find their inventories either satisfactory or slightly high. Richmond district firms experienced no changes in inventories or backlogs and foresee no changes in the next six months. Demand for exports of manufactured goods seems to be waning because of weakening foreign economies. For example, the Boston, Minneapolis, Richmond and San Francisco districts report a drop-off in the volume of durables exports, especially electronics to Japan and appliances to Canada. The San Francisco district, however, reports that exports of electronic components to other Pacific-Rim nations remain strong. Nonmanufacturing The St. Louis district reports strengthening in the growth of nonmanufacturing employment. Southern California, on the other hand, has experienced a large loss of retail and service-related jobs in the aftermath of the Los Angeles riots, and the New York district will post significant retail job losses by this fall when 15 major department stores in the New York metropolitan area are closed. Outside of retailing, the Chicago and Dallas districts report increased activity in business-related services. The San Francisco district indicates growth in advertising but declines in telecommunications. Consumer Spending Most districts report increases in non-auto merchandise sales. All districts except Boston, Cleveland, New York and San Francisco report modest gains in April and May, while the Minneapolis, Philadelphia and St. Louis districts note year-over-year gains as well. Much of this growth is attributed to the late Easter season. The Dallas, Philadelphia and Richmond districts identify big-ticket items as slow movers, and Atlanta concurs by stating that nondurables are selling better than durables. The Dallas district notes greater improvement at mid- to upper-scale stores than at discounters, while San Francisco indicates increases at both department and discount stores. Contacts in the Boston and New York districts blame unseasonably cool weather and the news of potential additional layoffs for their poor sales. Auto dealership traffic and sales are increasing steadily in most districts; the Dallas and San Francisco districts, however, report slower or ""spotty"" growth. Construction and Real Estate Residential construction activity continues to be a source of strength in most districts. While construction has stabilized or dropped off slightly in some districts since its first-quarter surge, contacts in the Atlanta, Kansas City, Minneapolis, Richmond and St. Louis districts describe the pace of residential building activity as strong. New home prices are reportedly higher in the Dallas, Kansas City and Richmond districts because of increased lumber costs and low inventories. New and existing home sales are mixed, with the Atlanta and Minneapolis districts reporting a slight downward trend in sales and the Kansas City and Richmond districts reporting a continued increase in sales. No appreciable improvement in commercial real estate markets is reported. Banking and Finance Loan demand appears to have increased slightly in most districts. Contacts in the Atlanta, Dallas, Kansas City, New York, Richmond and San Francisco districts report stable-to-stronger loan demand. The Philadelphia district describes loan demand as soft, and the St. Louis district reports that loan demand appears to have weakened in recent weeks. The source of increased demand varies by district; some report increases in consumer loan demand, while others note improvements in business loan demand. The Kansas City and San Francisco districts report increases in both categories. Prices Inflationary expectations in retailing and manufacturing remain relatively subdued. Contacts in the Boston, Dallas and Philadelphia districts report retail prices as stable, while contacts in the Chicago, Kansas City, Minneapolis, Richmond and San Francisco districts report slight-to-moderate price increases. Manufacturing and retailing wage pressures remain moderate-to-low across most districts. Manufacturing materials prices remain relatively stable across districts, although steel producers in the Chicago district report higher input prices. Agriculture, Energy and Natural-Resources-Related Industries Many districts report that unseasonably cool weather and inadequate soil moisture have hampered the planting and development of many crops. In the Chicago, Kansas City and St. Louis districts, adverse weather has affected the corn, cotton, soybean and winter wheat crops. Declining livestock prices have recently led cattle and pork producers in the Kansas City district to curtail production. The San Francisco district reports that, except for grains, agricultural exports to Mexico and the Pacific Rim (excluding Japan) have been strong lately. Despite the recent firming of oil and gas prices, the Dallas, Kansas City, Minneapolis and San Francisco districts indicate that the energy sector remains weak. Lumber production is up significantly in the St. Louis district, but down in the San Francisco district. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1312 -beige_book_pure_text_pre2000,1992,"Economic activity has been uneven in recent weeks across the nation. Manufacturing increased moderately in most districts and showed no discernable direction in others, with considerable variation by industry. Retail sales also varied widely, but apparently rose modestly overall. Lower interest rates sparked another round of mortgage refinancing, but evidently provided little impetus to residential and commercial real estate activity. Consumer and business loan demand strengthened in only a few regions while remaining weak in most of the country. Agricultural conditions improved slightly as recent rains helped crops in many areas. Consumer Spending District reports suggested that retail activity improved somewhat in recent weeks. Sales activity varied by product and region. Apparel sales were reported to be strong by New York and Kansas City, but weak by Philadelphia. New York and Kansas City also noted increased sales of home furnishings; Minneapolis and Atlanta indicated depressed appliance sales. Automobile sales evidently were weak in most districts except Atlanta and Dallas, where they were strong. Tourist activity was flat in the Richmond district but showed some strength in the Minneapolis district. The expectations of retailers varied from district to district. Philadelphia, Richmond, Chicago, Kansas City, and Dallas indicated that their contacts were optimistic about prospects for sales in the months ahead, while San Francisco said retailers were less optimistic than earlier this year. Survey respondents from the New York district were cautious but hopeful in their outlooks, and Cleveland reported retailer uncertainty about sales prospects. Retailers in the Boston district anticipated no substantial change in activity in the months immediately ahead. Manufacturing Manufacturing continued to improve moderately in most districts, while the direction of activity was unclear in the Boston and St. Louis districts. Cleveland and Chicago noted that manufacturing continued to lead their regions' economic recoveries. Philadelphia, Richmond, Atlanta, and Chicago indicated that new orders had risen. Philadelphia and Richmond added that shipments had risen as well and that manufacturers expected activity to increase further in the next six months. Cleveland and Chicago anticipated increased automobile production in the current quarter. Manufacturing employment apparently changed little in the Boston, Philadelphia, Richmond, and St. Louis districts, but Atlanta reported some increases in production workers. Some industries performed better than others. Atlanta and Dallas noted strong gains in activity among apparel manufacturers and among producers of goods for residential construction. Boston and San Francisco reported weakness in defense-related and aerospace industries, but Boston found strength in demand among suppliers to the automobile industry. Residential Real Estate Home sales and home building activity in recent weeks varied by region but appeared on balance unchanged for the nation as a whole. Cleveland and St. Louis reported decreased sales, and Richmond indicated that sales were flat. Atlanta, Chicago, and Minneapolis, however, reported increased sales, as did San Francisco for all states except California, where sales were weak. Residential construction activity rose in the Chicago and Dallas districts, and in the San Francisco district outside of California. Homebuilding activity decreased in the St. Louis district and was generally unchanged in the Atlanta and Kansas City districts and in California. New York and Minneapolis indicated mixed activity in their districts. Cleveland, Richmond, Kansas City, and Dallas said that lower interest rates were not spurring home buying, although Chicago indicated that lower rates were helping. In the New York and Richmond districts, real estate agents mentioned that the job security concerns of potential home buyers were continuing to dampen sales. Nonresidential Construction Nonresidential construction activity generally remained sluggish. Atlanta noted that most activity stemmed from either private custom- built or government projects. New York and Richmond, however, indicated that some new commercial projects were underway. Minneapolis, Dallas, and San Francisco reported continued depressed commercial real estate prices. Office building vacancy rates in the New York district, while still high, evidently fell in recent weeks as rents became more competitive. Dallas and San Francisco indicated that commercial property was selling far below construction costs. Lower interest rates apparently had had little effect on commercial real estate loan activity. The demand for these leans was reported to be flat or down by Richmond, Kansas City, and San Francisco, and steady to somewhat higher by New York. Financial On balance, financial conditions improved slightly across the nation over the past six weeks. Loan demand was characterized as stronger by Richmond, Chicago, and Kansas City and described as stable by New York, Philadelphia, Cleveland, Atlanta, St. Louis, Dallas, and San Francisco. Commercial loan demand continued to exhibit weakness, although Richmond and Kansas City cited some improvement. Among districts consenting on consumer loan demand, Philadelphia, Atlanta, and Kansas City registered increases, while New York, Richmond, and St. Louis reported no change. Among loan categories, home mortgages exhibited the greatest strength in most districts, but the bulk of the activity was attributed to refinancing, which picked up somewhat in early July. Atlanta and Chicago noted that some banks were more aggressive in seeking new loans, but Boston found that small businesses were still choosing to obtain credit from nonbank sources. Lenders in the Philadelphia and Dallas districts expected loan demand to be flat over the next few months. Boston, Philadelphia, and Chicago cited the continuing reluctance of bank customers, particularly businesses, to take on new debt. Inventories Inventory conditions varied across the country. Reports of retail inventories were especially disparate. Philadelphia and Chicago reported levels below and in line with plans, respectively. Atlanta reported retail inventories to be at historically low levels. Inventories in manufacturing edged up in the Philadelphia district, and were unchanged in the Richmond district. Dallas district manufacturers described their inventories as high. Both Kansas City and Dallas respondents expected inventory levels to fall in the weeks ahead. Prices and Costs Richmond and Kansas City indicated small increases in the prices charged by retailers and manufacturers in recent weeks, while other districts reported little change. Manufacturers' input prices were stable, although Richmond, St. Louis, and Dallas noted increases in business and production costs. Construction costs rose in the Kansas City and Minneapolis districts. St. Louis, Dallas, and San Francisco reported recent declines in lumber prices, while Kansas City reported increases. Dallas indicated increases in the prices of chemicals, petroleum, and steel. Minneapolis and San Francisco reported greater-than-average increases in health care costs. Agriculture and Natural Resources Conditions in agriculture were slightly improved. In the Richmond, Chicago, and St. Louis districts, and in areas of the Kansas City district, recent rains have brought relief to heat- and drought- stressed crops. Dallas reported that crops in the district had benefited from a return to more normal weather. Damage to wheat was reported in the San Francisco district, however, where dry conditions in the Pacific Northwest reduced yields, and in the Chicago district, where too much rain harmed the crop. Minneapolis and Kansas City reported that hail had harmed some crops and that crop development had been slowed by unseasonably cool weather. In the livestock sector, Chicago indicated increased hog production, and Kansas City reported that cattle herds were expanding slowly. Movements in farm prices varied. Crop prices were reported to be above last year's levels by Minneapolis but declining in the Dallas district. Livestock prices were lower in the Chicago, Minneapolis, and Kansas City districts but stable in the Dallas district. Chicago indicated that milk prices were up. Energy activity in the nation evidently continued to contract in recent weeks. The drilling rig count declined substantially in the Kansas City district, where activity was near historically low levels, but rose somewhat in the Dallas district. Oil industry respondents in the Dallas district indicated that they were cutting domestic exploration spending. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1616 -beige_book_pure_text_pre2000,1992,"Economic activity has been improving slowly in most of the nation, but the pace of recovery has been uneven across regions and sectors. Cleveland, Dallas, Kansas City, Philadelphia, and Richmond report modestly improved conditions in their Districts since our last report. Some weakening of economic conditions is reported by Chicago, and in California by San Francisco. The remaining Districts generally report a continuation of slowly expanding activity. Retail sales are reported steady or slightly higher by most Districts, but auto sales are lackluster. Manufacturing activity has weakened in autos, aerospace, and defense-related industries. In manufacturing outside of these sectors, however, improvement is noted in orders, production, and sales. Residential construction activity appears to be improving slowly in most of the nation, particularly in low to mid-priced housing, but nonresidential construction remains weak. Agricultural conditions are good in most Districts. The clean-up and reconstruction from Hurricane Andrew is expected to stimulate economic activity in southern Florida and Louisiana. Little upward pressure on prices has been evident, except for products such as lumber and natural gas associated with storm-related damage. Consumer Spending Retail activity is mixed across the nation, with some Districts reporting steady or slightly improving sales, and others reporting sluggish conditions. Contacts in the Minneapolis, Philadelphia, and Richmond Districts indicate that sales picked up in recent weeks. Chicago and New York also report that, after accounting for the late Labor Day holiday, underlying sales growth rose in both August and early September. Chicago reports increased demand for appliances and home improvement items, while New York reports increased demand for fall clothes due to cool weather. Back-to-school sales in early September are reported strong by Cleveland, New York, and St. Louis. Dallas, however, reports sluggish conditions in most of its major markets, and Boston reports that two-thirds of its retail contacts experienced sales declines in the summer from year-earlier levels. Retailers in the San Francisco District also report weak demand for soft goods in most markets. In particular, retail activity in southern California is said to have declined. Outside of California, however, retail sales are reported to have improved. Inventories are at or below projections in most Districts. Auto sales are reported as steady to rising by Dallas, Kansas City, Minneapolis, and St. Louis. Generally sluggish conditions, however, were observed by other Districts. Chicago and Cleveland report that major automakers are disappointed by these recent sales trends, and that dealers have cut orders below sales in order to prevent an unwanted buildup of new car inventories. While sales of light trucks outperformed those for cars during August, dealer orders for light trucks also began to lag sales in recent weeks. According to Chicago, one domestic automaker attributes the weak car sales to an erosion in consumer willingness to purchase, rather than to income trends. Showroom traffic has improved, but sales closures have weakened. Several Districts said this has been a good summer for tourism. Atlanta reports good convention activity and moderate increases in tourism boosted by discounted air fares and an influx of European visitors responding to the weak dollar. Boston-area tourism also has benefited from an increase in foreign visitors, and Minneapolis reports a good summer tourist season at national parks in its District. Tourism in Hawaii, however, was reported down due to a large drop in California visitors, and contacts report that tourist-related retail and service sector jobs are down in Los Angeles. Manufacturing Auto production has fallen in recent weeks, and job losses continued to be reported in aerospace and defense-related industries. Outside of these sectors, however, several Districts report general increases in manufacturing activity. Chicago and Cleveland report that due to disappointing sales and a recent labor dispute, auto production has failed to meet earlier expectations. Auto production in the fourth quarter is expected to remain near the relatively low third-quarter rate, even if the production losses due to the recent labor dispute are fully made up. Inventories remain lean, however, and production would respond quickly to any sales pickup. Cleveland reports that steel producers anticipate little change in production over the next few months, as the pace of new orders for October and November is slower than expected. San Francisco reports that aviation production rates are dropping, and that layoffs among defense and aerospace manufacturers were announced in southern California and Utah. St. Louis reports that consolidation in the aircraft industry has preserved jobs in its District, at the expense of other regions. Boston and Cleveland also report cutbacks in orders and production among suppliers to the aerospace industry. Outside of these sectors, most Districts report general improvement. According to Cleveland, manufacturing output appears to be picking up due to increased demand for high-tech products and a slowly reviving industrial equipment market. Increased production of non-military electronic equipment is noted by several Districts. Chicago, Cleveland, and San Francisco note increased production of heavy trucks to meet both domestic freight needs and export demand. Several Districts report increased demand for building products due to Hurricane Andrew, and Chicago and Dallas note that industries tied to single-family home construction are experiencing strong sales. Farm equipment demand and production, however, are reported to have fallen by Chicago, Minneapolis, and San Francisco. Construction and Real Estate Several Districts note some improvement in residential real estate and construction activity. Boston reports that real estate sales have been fairly strong over the past few months, with first-time home buyers taking advantage of low interest rates and relatively low prices. Dallas, Kansas City, and Minneapolis report strong increases in housing starts and demand, and note increases in both building material costs and home prices. An increase in home sales and prices is noted in the St. Louis District, although construction activity is mixed. Atlanta, New York, Philadelphia, and Richmond also note increased sales activity. Ample existing home inventories, however, have kept prices stable in these Districts. San Francisco reports that while residential sales and construction activity is increasing in several states, residential markets in California are sluggish, with price decreases reported for higher priced properties. In general, Districts are observing that activity is strongest for homes in the low to mid-price range. Weakness persists in nonresidential construction activity, according to most Districts. Demand for office space remains weak in Philadelphia, in part due to ongoing consolidation by local companies. Older buildings are said to be especially vulnerable to decreasing demand. New York reports that vacancy rates remain at high levels, so plans to construct four new office towers in Times Square have been put on indefinite hold. Office demand also remains weak in the Dallas District, where a turnaround in office construction is not likely to occur for at least three years. San Francisco reports that nonresidential construction activity in California continues to weaken. In addition, contacts in Oregon report that several major nonresidential projects are on hold until next year. Minneapolis, however, notes that contract awards for public school buildings are more than offsetting declines in commercial and industrial construction. Financial Institutions Financial institutions report that loan demand is generally flat, with some increase in mortgage lending, in part due to refinancings, offset by weakness in demand for consumer and commercial credit. Bankers in the St. Louis District describe loan demand as soft. Weak demand for auto loans is noted by New York, which cites competition from automobile financing companies as a reason. Dallas reports that the largest constraint on loan demand is the lack of qualified borrowers. San Francisco reports that low interest rates are improving the profitability of District financial institutions, but demand remains soft for commercial, industrial, and consumer loans in most markets. The weakest loan demand in the San Francisco District was found in California, where delinquency rates for commercial real estate also continue to rise. Several Districts note that currently low interest rates have increased the level of mortgage refinancings. While some Districts observe that the rate of refinancings is below that seen in early 1992, contacts in Atlanta expect that the volume may eclipse the record posted earlier this year. Agriculture and Resource-Related Industries Cool and damp weather has affected agricultural conditions across much of the nation. Slower maturing crops are delaying the fall harvest in the Midwest. In the absence of an early, crop-damaging frost, however, Minneapolis and Chicago expect bumper harvests of corn and soybeans in their Districts. Kansas City also expects above average yields of these crops in Kansas and Missouri, but reports crop damage in parts of Oklahoma and Nebraska due to heavy rains and hail. Dallas notes that cotton yields are likely to decline because of the cool weather. Hurricane Andrew damaged the lime, avocado, mango, and foliage plant crops in Florida, and the sugarcane crop in Louisiana. Except for limes, however, fruit and vegetable prices have remained relatively stable as lost supplies have been replaced by imports. Drought conditions are expected to lower farm income in Idaho and eastern Oregon. The unusually sunny weather, however, has produced sharp increases in tree fruit crops in Oregon and Washington. Several Districts report that lumber prices, which decreased in July, have rebounded to high levels as result of Hurricane Andrew. Dallas reports that hurricane damage to platforms and pipelines in the Gulf of Mexico has reduced the supply of natural gas and has boosted natural gas prices. Prices are likely to rise above their normal seasonal increase for the next three to four months as repairs take place. Elsewhere, electricity prices are up in the Pacific Northwest due to drought-related reductions in hydroelectric power. A 20 percent increase in wholesale electricity rates has been proposed in Oregon; this would increase average retail bills by 5 to 10 percent. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1916 -beige_book_pure_text_pre2000,1992,"Economic activity has continued to increase in most of the districts, but at a slow and uneven pace. Boston, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and Dallas all reported some improvement, ranging from a slightly more positive tone in Boston to a modest expansion in St. Louis. Developments in New York, Philadelphia and San Francisco were described as mixed, with improvement in some sectors and sluggishness in others. Retail sales grew in most districts though the extent of the gain varied. Activity in the manufacturing sector apparently lost some momentum in much of the nation as several districts noted a slower pace of expansion or declining demand. An improvement in residential construction and sales was noted in several districts, with gains generally concentrated in the low-to- middle-income range of single-family housing. Several districts have reported a slight increase in overall loan demand. Cool and damp weather continued to delay harvests in much of the nation although yields on many crops were very good. The few reports received this time on wage and price developments referred to generally stable conditions, though with scattered price increases reported on a few individual items. Consumer Spending District reports indicate that retail sales improved in most areas in recent weeks, though the extent of the gain varied. Moreover, some retailers stated that the selling climate remained difficult and that discounting and other promotional efforts were needed in order to achieve the latest increases. Sales gains varied from slightly improved in Boston and Philadelphia to markedly improved in Cleveland. Sales of nondurables were strong in New York, Atlanta, and Kansas City while Philadelphia and Cleveland registered gains in most items. Retail activity remained sluggish in California, however, as defense-related employment cutbacks continue. Districts reporting on automotive sales were evenly divided between those experiencing some softness and those with a pickup in demand. With the exception of some excess auto stocks, retail inventories remain at generally satisfactory levels in most districts at this time. Respondents in four of the districts expect at least somewhat higher holiday sales this year than last. Tourist activity has slowed in the Richmond District, primarily because of fewer convention bookings, but remains a bright spot in Atlanta and Minneapolis. Manufacturing Activity in the manufacturing sector apparently lost some momentum in much of the nation as several districts, including Atlanta, Chicago, Cleveland, New York and Philadelphia, noted a slower pace of expansion or declines. Richmond, St. Louis, Dallas and the San Francisco District outside of California noted some improvement, however. Aircraft and defense goods, nonelectrical machinery, rubber and plastic products and primary metals were cited as products for which demand has slowed. Respondents pointed to the weakness in foreign economies and dampened consumer confidence in this country as sources of concern. On the other hand, manufacturers of building supplies, carpeting and other home furnishings have seen an increase in demand as a result of the post-hurricane rebuilding in the South and an uptick in housing demand in some other areas. Dallas reports strong demand for fabricated metals and electrical and electronic machinery and San Francisco notes that demand from Latin America and Pacific Basin countries is supporting manufacturing activity in that district. St. Louis reports that manufacturing employment gains continue to outnumber reports of losses. With regard to the outlook, Boston states that manufacturers are cautiously optimistic, and those in Philadelphia believe that the upturn which began last spring is still on track. Manufacturers in Cleveland are optimistic about the next six months. Construction and Real Estate An improvement in residential construction and sales was noted in several districts with gains generally concentrated in the low-to- middle-income range of single-family housing. Boston reported that the real estate market has stopped declining in most New England states and that the volume of sales is up substantially from a year earlier. Cleveland and St. Louis noted that residential contracts and permits were well above the year-earlier pace and Richmond reported strong sales to first-time homebuyers. Single-family homebuilding is providing the only source of strength in the Dallas construction industry as was also the case in Kansas City. In Florida, a good deal of hurricane-related residential rebuilding is now taking place. San Francisco reported sluggish sales and declining prices, particularly on more expensive homes, in California and a big jump in foreclosures in the southern part of the state where defense-related job cutbacks are still occurring. However, stronger residential markets exist in other district states such as Oregon, Utah and Idaho. A majority of districts noted that multi-family housing starts have been flat. Most banks report relatively slow nonresidential construction activity, a major exception being Minnesota where there has been a substantial increase in awards for infrastructure such as roads, bridges, and water/sewer construction and where the building of casinos and new motel space is underway. Financial Institutions Several districts have reported a slight increase in overall loan demand in recent weeks. Mortgage refinancing activity, however, seems to have peaked in a number of areas. Philadelphia noted that some banks saw a recent pickup in commercial and industrial loans and that consumer lending was level or increasing. Atlanta banks reported loan demand as flat or slightly higher with some increase in consumer loan activity. A few large banks in Cleveland saw a step-up in business loans in recent weeks though, as in several other districts, the most active part of the market continued to be residential mortgages. St. Louis and Kansas City also reported a recent increase in loans outstanding with business, real estate and consumer loans up in St. Louis and most categories stronger in Kansas City. Overall loan demand remained sluggish in New York where demand for business loans declined, and Dallas noted a softening of loan demand that some bankers attributed to business borrower caution about the near-term economic outlook. Financial conditions were mixed in the San Francisco District. There was weakness in California, where consumer loan demand continues to drop and commercial loan demand is weak, but brisk demand for mortgage loans in Utah from consumers upgrading their housing and from continued migration into the state. With regard to the outlook, bankers in Dallas expect business loan demand to rise slowly and Miami anticipates some increase in loan demand from the process of hurricane rebuilding. Philadelphia bankers say the outlook is uncertain and none predicted accelerated growth. Agriculture and Resource-Related Industries Cool and damp weather continued to delay harvests in much of the nation. In Richmond the harvesting of summer crops and the planting of small grains were slower than normal as unseasonably cool weather delayed the maturing of corn and soybeans. Minneapolis notes that an unusually cool and wet growing season delayed crop maturity and continues to retard harvest operations, but that yields for all major crops except soybeans are generally excellent. Cool weather also impaired the growth of late-planted crops in Dallas and production estimates have been reduced slightly as a result. In Kansas City, however, corn, soybean and milo yields are generally larger than normal while cotton and peanut yields are near normal. In addition, the planting of winter wheat is nearly complete in that district and the crop is generally in good condition. The soybean harvest was at a near-normal pace in the Chicago district except in Michigan where rain slowed harvesting. Progress with the corn harvest has been considerably slower than normal due to the high moisture content of this year's crop. The cotton harvest in St. Louis was hampered by adverse weather conditions, but good to excellent yields are reported for corn, soybeans and rice. California reports that while parts of the district are experiencing drought, sunny weather has helped tree crops such as apples and cherries whose production is well above last year's levels. Mining has been lackluster in Minneapolis with low prices for gold and copper and slack demand for iron ore. Aluminum production remains high in California despite sharply falling prices but the output of forest products continues low. The surge in domestic demand for plywood resulting from recent hurricane damage has apparently subsided and shipments to Japan and other Pacific Basin countries remain down. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1698 -beige_book_pure_text_pre2000,1992,"Reports on economic conditions point to modest improvement in most Federal Reserve districts, but the rate of gain is uneven. Ten of the 12 districts note a slight to moderate pickup in some or all sectors of the economy. By contrast, San Francisco indicates that weakness in California is offsetting moderate growth elsewhere in the district. Retail activity is reportedly increasing across most of the nation, and retailers are optimistic about the current holiday season. Manufacturing is improving in about half of the districts--generally, quite modestly. Ongoing cutbacks in defense remain a notable drag on the recovery in some regions. Residential real estate markets continue to pick up in most of the nation, but commercial real estate, where mentioned, remains weak. Loan demand reportedly increased in several districts, but credit conditions remain unchanged in others. The fall harvest is almost complete-- with record yields and output recorded in most crops. Retail Retail sales in October and early November reportedly gained strength in all districts but San Francisco; results in that district were mixed, with California performing poorly relative to the other states. In five districts, sales in recent weeks were better than expected. Respondents in most districts noted greater consumer confidence. The Boston and Chicago reports link the change in consumer attitudes to the end of the Presidential campaign. New York retailers attribute modest increases to promotional efforts rather than to improvements in general economic conditions. Consumer confidence remains poor in southern California. Recent sales increases seem focused in nondurables. Apparel sales, in particular, were strong in New York, Cleveland, and Kansas City. Most districts reporting on auto sales found modest increases or slight declines, while sales of light trucks were strong in Chicago and Cleveland. In the three districts commenting on tourism, business was mixed. Despite increased sales, retailers across districts are satisfied with current inventory levels. While costs and prices are generally perceived as flat, reports from Boston, Cleveland, and Atlanta note less consumer insistence on discounts. Only Richmond sees increases in wholesale and retail prices. Except in California, retailers reportedly expect 1992 holiday sales gains to be better than last year's. However, the degree of optimism ranges from ""the best performance in eight years"" (in Chicago) to ""nothing spectacular"" (in New York). Manufacturing Recent manufacturing activity has been flat to slightly improved across much of the nation. Indicators from Dallas are generally strong, and Boston, Philadelphia, Cleveland, and Chicago report small gains, on average. Overall activity in the Richmond, Atlanta, St. Louis, and Minneapolis districts is described as ""steady"" or ""unchanged,"" while many manufacturers in the New York district and California continue to experience weak demand. Demand for home building and furnishing products has strengthened among manufacturers located in the Boston, Richmond, Atlanta, Chicago, Minneapolis, and Dallas districts. But demand for autos, auto components, and other transportation equipment varies considerably across districts. For example, while Chicago district automakers report recent growth after a third-quarter sag, transportation equipment did not participate in the widespread rise in production reported for the Philadelphia district. Sales have improved for computer software and some hardware (Boston, Dallas, San Francisco), as well as for various nondurables (Atlanta, St. Louis, Dallas). The defense sector is an area of declining demand in the Boston, New York, Atlanta, St. Louis, and San Francisco districts. Although Kansas City notes positive export results, foreign sales are identified as an item of concern in the Boston, St. Louis, and Dallas districts. Little to no general inflationary pressure is reported. However, high capacity utilization rates have led or are expected to lead to firming prices for some construction materials and steel. Many districts continue to report employment reductions in manufacturing, although in some cases the rate of decline has abated and scattered hiring has occurred. Two-thirds of the Federal Reserve Banks note signs of positive or improved expectations about future business. Employment is not expected to increase in proportion to demand, however, as manufacturers across the nation are intent on cutting costs and improving labor productivity. Construction and Real Estate Construction and real estate tell a tale of two markets, with improvements in the residential sector but continued stagnation on the commercial side. All districts report improved sales for existing and new single family homes, although Boston, New York and Richmond note doubts as to whether this improvement will be sustained. Home sales in the Dallas-Fort Worth area are at the highest level in five years. San Francisco reports that sales of existing homes in California rose in October, the first monthly increase since February. New York, St. Louis, Minneapolis, Kansas City and Dallas all cite increases in single-family starts or permits in their districts. The commercial market, however, remains weak. Boston and Dallas report very sluggish conditions in commercial offices, while Richmond and New York have areas showing limited net absorption. Minneapolis finds a large excess supply of commercial property. In southern California, some rents have fallen 25 to 40 percent. San Francisco also cites forecasts that show California rents falling another 10 to 15 percent in 1993 and increased foreclosures. No district reports any growth in commercial construction, although Boston and Minneapolis report some public sector building. Financial Services Financial institutions report a slight increase in overall loan demand despite a falloff in mortgage refinancings. A rising interest in business loans was noted by Philadelphia, Kansas City and St. Louis. Dallas and Atlanta report an increase in consumer loans. New York indicates that although residential mortgage activity continued strong, consumer loan demand weakened and demand for nonresidential mortgages remained soft. Demand for business loans is also weak in the San Francisco district. Boston reports that contacts among investment management companies experienced increases in assets under management. Agriculture and Resource-Related Industries The fall harvest is over except for corn, which has been delayed by rain or snow in the Richmond and Midwest agricultural districts. Despite the wet weather, growers report record yields for corn as well as for the soybean, cotton, rice, and sugar beet crops harvested earlier. Abundant supplies have reduced feed prices and improved profits for dairy farmers, feedlot operators, and ranchers in the Minneapolis, Kansas City, and Dallas districts. Thus, farmers in these areas continue to pay down debt. Nevertheless, according to contacts in Dallas, net farm income is likely to fall in 1992 because of declines in prices and government subsidies and increases in production costs. As for lumber and wood products, strong demand from U.S. and foreign furniture makers has raised prices for hardwood from the Richmond district. Demand for western newsprint also remains strong, but restricted access to public timber supplies is noted as a problem in the Northwest. Several mills have closed recently because of a shortage of logs. Mining in the Minneapolis district continues slow; workers from the iron mines are on furlough, and oil and gas production and refining are generally unchanged. By contrast, contacts in the Kansas City and Dallas districts note a possibly temporary pickup in drilling, especially for natural gas. While oil and gas prices have drifted down, natural gas inventories are described as tight, and below-average temperatures could spur price increases. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1543 -beige_book_pure_text_pre2000,1993,"Reports from the twelve Federal Reserve districts indicate continued improvement in economic conditions across much of the nation. Conditions are mixed, however, in the San Francisco district where weakness in California continues to offset moderate growth in other district states. Retail sales during the holiday season were significantly better than a year earlier in most districts, generally fulfilling or exceeding retailers' expectations. Manufacturing activity is steady to increasing moderately in nearly all districts, but this improvement may not be reflected proportionately in labor markets. District reports contain little evidence of significant upward pressure on prices. While the residential sector continues to improve in most districts, commercial real estate markets generally remain weak. Overall loan demand at financial institutions is rising slightly in most districts. In agriculture, record yields of fall crops have pushed prices down, but gains in the livestock sector are expected to help boost overall farm income slightly. Retail Sales in the holiday season posted significant year-over-year gains in most districts, with mixed results in the San Francisco district and in the Northeast. Sales gains were smaller in California than in other states in the San Francisco district, and a minority of retailers in the Boston district reported flat sales. Retailers in several districts reported sales better than expected. In a number of districts, merchants noted that sales gains were achieved without the heavy promotions and aggressive price cutting of recent years. A wide range of merchandise apparently sold well, with some regional variations. In the St. Louis district, sales mainstays included jewelry and smaller appliances and electronics items. Atlanta reports significant increases in sales of goods ranging from apparel to big-ticket durables. In the New York district furniture and rugs sold well. Merchants in the Chicago district noted that sales held up well in the post-holiday period, especially sales of big ticket durables, including major electronics, appliances, and furniture. Retailers in the Richmond, Atlanta, St. Louis, and Kansas City districts expressed optimism for further sales growth in early 1993. Manufacturing Manufacturing activity is reported to be steady to increasing moderately in nearly all districts. Activity appears to be flat to expanding modestly in the Boston, Philadelphia, and Richmond districts. Stronger but less than robust activity is reported by Cleveland, Atlanta, Chicago, St. Louis, and Dallas. San Francisco reports that Twelfth District manufacturing activity continues to contract, due to further weakening in aerospace and defense-related industries in southern California and Washington; manufacturing shows an improvement, however, elsewhere in the district. Manufacturing activity in the Cleveland and Chicago districts has been boosted by increased motor vehicle production and related increases in the output of steel and tires. As a result, Cleveland reports rising capacity use ratios for some steel producers, while strong demand has pushed production close to capacity for some tire producers. Boston, Atlanta, and Dallas report some increases in the production of housing-related products, such as furniture and construction materials. Capital goods producers reported an uneven but rising trend in their business, with uncertainty about a possible investment tax credit leading to some postponements of orders.> The moderate improvement in manufacturing activity may not be reflected proportionately in labor markets. Boston reports that half of its respondents expect their work forces to remain at the current level, while the remaining respondents expect to implement reductions. Most of the manufacturers contacted in the Philadelphia district were holding employment steady. In the Cleveland district, most manufacturers believe they can increase production with their existing work forces. Some firms in the St. Louis district expect to add jobs, however, and a major home appliance manufacturer has recalled a large number of laid-off workers and expects to add substantial new hires. In the Minneapolis district, layoffs by two computer equipment firms and an airline have been partly offset by new hiring elsewhere in the district. Construction and Real Estate The residential sector continues to improve in most districts. Home sales, as well as housing starts and permits, were generally better in 1992 than in 1991. Lower mortgage rates, increased consumer confidence, and pent-up demand were cited as responsible for the improvement. Boston reports slow but steady improvement in its residential real estate market. While Kansas City notes a recent slowing in housing activity, Minneapolis reports its busiest winter construction season in six years. Some glimmers of hope for multifamily construction also appear, as both Atlanta and Dallas report rising occupancy rates and firming rents. San Francisco reports mixed conditions in its residential sector. House prices have weakened further in southern California and softened in parts of Washington, but have risen in Oregon and Utah. Commercial real estate markets remain generally weak, but there are some positive signs here and there. The office vacancy rate in downtown Buffalo, while still high, fell in 1992 for the first time in four years. Activity in the Richmond district's nonresidential sector has increased in recent months, with vacancy rates falling in some areas and more inquiries from businesses in strong financial condition. Nonresidential construction has been expanding in the St. Louis area, primarily in public works and new factories. Minneapolis also reports a sharp rise in public works contracts, as well as in construction of some new shopping malls across the district. One of the new malls was built in a border town to cater to strong demand by Canadian shoppers. Nonresidential real estate markets remain weak in much of the Dallas and San Francisco districts. Vacancy rates are still high in Dallas, but prices there have fallen enough to bring a pick-up in property sales. Several markets are weak in the San Francisco district, where commercial rents and property values are depressed by high vacancy rates and continued employment losses. Financial Services Financial institutions report a further slight increase in overall loan demand in most districts. Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Kansas City report slow growth in business loans. New York reports slow growth in business loans by small and midsized banks. Most districts note a drop-off in mortgage lending, reflecting reduced demand for refinancing. Dallas reports little change in loan demand, and San Francisco notes mixed conditions in the Twelfth District. In California, loan demand is weak and the volume of outstanding loans continues to fall. Son growth in loan demand is evident, however, in Arizona, Utah, and Washington. Agriculture and Resource-Related Industries Despite some unseasonably wet weather in parts of the Richmond, St. Louis, and Kansas City districts, fall crop yields have been near record levels. Large supplies of corn and soybeans have pushed prices down, thus restricting income gains for crop producers. But lower crop prices also mean lower feed prices and likely income gains for livestock producers. Overall, farm income is expected to be up slightly in 1993 and farm operators are seen as likely to maintain their solid financial condition. >Metal mining continues to be weak in the Minneapolis district, where slack orders have led to two iron mine shutdowns and substantial layoffs. Dallas reports a slowing in energy industry activity, although Kansas City cites a recent rise in the number of operating drilling rigs in its district. Both districts agree that drilling is likely to drop sharply in the near term, however, because certain tax incentives for drilling expired at the end of 1992. Dallas also notes that low margins have led many refiners to reduce their capacity. Conditions in the lumber and wood products industry vary somewhat across the nation. St. Louis notes that orders at southern pine lumber mills are down slightly, although production remains well above last year's level. San Francisco reports that orders for wood products are firm and inventories are low, while Minneapolis reports strong demand for lumber and for plywood substitutes. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1631 -beige_book_pure_text_pre2000,1993,"Reports from the twelve Federal Reserve districts indicated that economic growth continued in early 1993. Trends in economic activity seemed increasingly uniform by region, and although New England and California remained relatively weak, signs of growth were apparent in several sectors in each of these regions. Nationally, retail sales growth generally held up well in early 1993 after a strong holiday season, although inclement weather may have constrained sales in several districts during February. Reports from manufacturers generally indicated continued moderate expansion in activity, with production gains led by consumer durable goods and household items. Commercial and industrial loan demand remained flat or increased only modestly, however, with most districts reporting that loan growth was concentrated in consumer and home mortgage lending. Reports on employment gains were mixed, but still suggestive of some overall improvement in labor markets. Scattered price increases for basic materials were noted, and lumber price increases were widespread, but district reports continued to show little evidence of generalized upward pressure on prices. Consumer Spending Retail sales growth held up well in most districts in January and early February, with contacts in several regions reporting better- than-expected sales following a strong holiday season, although some contacts noted that adverse weather held back sales during February. Relative strength was reported in sales of durable goods, household items, or big-ticket items by retailers contacted in Cleveland, Richmond, Chicago, Minneapolis, and Dallas. Some department store contacts reported double-digit sales increases in St. Louis. In the Northeast, Boston noted some strengthening in sales after mixed results for the holiday season, and retailers in the New York district reported better-than-expected sales gains during January. Relative weakness was noted in parts of the Dallas and San Francisco districts, although one large retailer stated that conditions in California had improved somewhat. Atlanta reported some slowing in the pace of growth after a strong fourth quarter, and some retail contacts in Boston stated that sales gains slowed in late February. Bad weather reportedly impacted sales in February for retailers contacted by Philadelphia, Chicago, and Kansas City. At the same time, Richmond and Minneapolis both reported strong winter tourism seasons, and tourism was also a bright spot for contacts in Atlanta and Dallas. Several districts noted relatively low levels of discounting for this time of year, citing lean inventories in winter goods, and a good start for sales of spring merchandise was reported by retailers in the Philadelphia and Cleveland districts. Surveys conducted by several district banks found that retailers' expectations were generally optimistic, and planned inventory accumulation was underway in several cases, although ordering and inventory stances generally remained somewhat cautious. Manufacturing Reports generally indicated continued moderate expansion in industrial activity, with signs of slowing in some markets balanced by accelerating momentum in others. Production growth was led by output of consumer durable goods, principally goods related to housing activity as well as motor vehicles and parts. Above-average gains in production of appliances, furniture and residential construction materials were reported by contacts in Boston, Cleveland, Atlanta, Chicago, and St. Louis. Robust sales gains in construction-related manufacturing industries were noted in Dallas. Production gains among auto parts manufacturers were cited by Boston, Atlanta, and Chicago. Several large domestic automakers contacted by Cleveland expected to meet March production schedules calling for output to rise 20 percent from a year ago. Contacts in several districts expressed concern about sales in Europe, but St. Louis stated that strong exports continued to bolster production for a number of manufacturers in the region, and each of the ports contacted in the Richmond district expected exports to pick up over the next six months. Relatively weak results were noted for firms producing energy exploration and production equipment, firms in the paper industry in the Minneapolis district, and aerospace and defense companies reporting in Boston, Cleveland, Atlanta, and San Francisco. At the same time, however. San Francisco noted that conditions were generally improving for other manufacturers in the region, with relative strength noted for manufacturers of computer equipment and software, capital goods, and biotechnology products. A broad majority of manufacturers surveyed in New York and Philadelphia expected stable or increasing activity, and Philadelphia also noted a pickup in the demand for industrial space. Broadening strength in output was indicated by the expectations of a group of capital goods producers surveyed in Cleveland, although Cleveland also noted a modest slowdown in growth in the relatively robust heavy-duty truck market. Sales gains reportedly rose among a wide majority of manufacturing contacts in the St. Louis district, with orders exceeding expectations for many firms. Banking District reports indicated sluggish to modest growth in bank lending activity, with growth concentrated primarily in consumer and home mortgage lending. Surveys of bankers generally indicated flat to modestly stronger commercial and industrial loan demand. Banks surveyed by Kansas City and San Francisco reported that commercial and industrial loan demand was largely unchanged, while reports in Richmond, Atlanta, and Chicago indicated somewhat stronger increases in demand. However, Atlanta noted some disappointment among bankers in the pace of improvement. The Philadelphia, Cleveland, and Dallas districts reported some of the strongest gains in manufacturing activity in the nation, but reports from bankers surveyed by each of these districts indicated that commercial and industrial loan demand was only flat to slightly increasing. Cleveland noted that potential borrowers were relying on strong internal cash flow or alternative sources of financing. Still, where surveyed, bankers' expectations for future growth in business lending were generally favorable. New York reported a sharp increase in the willingness of small and medium-sized banks to make some forms of business loans, although San Francisco observed that financing for small businesses remained tight. Consumer and mortgage lending was stronger than business lending across most regions, and most districts also noted renewed strengthening in home mortgage refinancing activity as well as new residential mortgage lending. Real Estate/Construction District bank reports on new and existing home sales and residential construction were almost universally positive Underlying trends in housing activity remained relatively robust during a seasonally slow period for many areas, although inclement weather adversely impacted results in several regions. Declines in mortgage interest rates, increased buyer confidence, increased new home sales activity and/or lean inventories reportedly led to improved appraisals of market conditions by homebuilders in New York, Philadelphia, Atlanta, Kansas City and Dallas. San Francisco noted that sales activity increased in California, although prices remained soft. Residential construction activity was one of the strongest aspects of the report from the Minneapolis district. Weather difficulties were reported to have constrained activity in parts of the districts covered by Atlanta, Richmond, Kansas City, and San Francisco, although San Francisco also reported that housing starts an Arizona rose to their highest level in ten years. Most reports indicated little sign of improvement in commercial real estate markets, but reports of new deterioration were also thin, and Richmond noted an increase in activity and declining vacancy rates in both industrial and office markets. Agriculture Reports on agricultural conditions were mixed but generally favorable. Increased rains and snowpack accumulation were aiding crop production in several regions, although St. Louis noted some concerns that substantial rainfall may have damaged the winter wheat crop, and flooding threatened the winter lettuce crop in Arizona. Crop prices were reported weak or below year-earlier levels in Richmond, St. Louis, and Minneapolis, with Richmond noting some concern about the potential impact on 1993 cash receipts. San Francisco reported favorable conditions for livestock producers, with good spring grazing expected. Higher beef prices were reported to have improved returns for ranchers and feeders in the Minneapolis district, although Kansas City noted that harsh winter weather slowed weight gains, increased death losses, and raised production costs for cattle feeders in that region. Still, bankers in the Kansas City region reported that farm borrowers generally remained in strong financial condition, with timely payments reported on agricultural loans. Employment District batik reports on employment gains were mixed, but suggestive of some strengthening overall. Stable or increasing employment was more consistently noted in trade and service sectors than in manufacturing. A survey of retailers in the Boston district indicated little change in employment at existing locations, but about one-quarter of these firms reported plans to open new stores and hire new workers. Similarly, Cleveland reported that retail employment was following the normal layoff pattern after the holiday season, but expansion by several chains was expected to prompt hiring gains. Reports in the Richmond district indicated that retail employment was expected to improve over the next six mouths. Increased hiring by industrial firms was reported in some regions, helping to offset other reports of continued pressure on manufacturing employment. Significant layoffs in aerospace and defense-related industries were noted by San Francisco and Atlanta. Employment reportedly showed little sign of strengthening in Minneapolis, and layoffs proceeded at paper mills in that region. Producers were largely comfortable with current employment levels in the St. Louis area, but many of these contacts reported improved prospects for hiring Most of the manufacturing firms contacted by Philadelphia expected employment to remain flat, although roughly one-quarter of these firms expected hiring gains. Some manufacturing firms in the Cleveland, Chicago and St. Louis districts have been rehiring previously laid-off workers. Temporary help firms in Chicago and Dallas reported increased demand from manufacturing firms, and Dallas also stated that many manufacturers reported permanent employment gains. Several personnel supply companies contacted in the Chicago district reported increased permanent hiring of individuals previously working on a temporary basis. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1983 -beige_book_pure_text_pre2000,1993,"Reports from the twelve Federal Reserve districts indicate generally modest improvement in economic conditions across much of the nation. Shopper traffic and retail sales were reported to have rebounded modestly in April, following general declines in March resulting in part from severe weather. Manufacturers in most districts report increases in shipments and orders, with near-capacity production at some automotive and steel facilities. Higher production schedules are being met through productivity gains and overtime, although some districts have reported new hires. Residential real estate activity in most districts is strong or on the rise, and pockets of improvement in commercial office markets are noted by some districts. The general increase in lending continues to be concentrated in consumer loans and mortgage refinancing, with some reports of pickup in small business borrowing. District reports show generally stable prices, except for increases in steel and energy. Consumer Spending Most districts report modest increases in retail sales during April, after widespread declines in March. Many contacts are encouraged by recent signs of improvement, but the net performance for March and April clearly will be much lower than for the first two months of the year. Respondents in the eastern third of the nation blame the mid-March blizzard for the net softening in sales. Retailers in the Boston district remark that without the storm, sales would have been above the levels a year ago. Relative weakness in March merchandise sales is also noted in parts of the country not affected by the storm. Retailers in Chicago cite renewed consumer uncertainty and contacts in San Francisco point to concern about job security as reasons for lower-than-expected sales in parts of their regions. However, retailers in most districts report a rise in shopper traffic and sales in April, apparently led by big-ticket items, such as furniture and home appliances. A general pickup in the sale of autos and light trucks in the first half of April is also reported in most districts. Dealers in the Cleveland, Dallas, and Philadelphia districts note that domestically produced models are selling at a faster pace than foreign-produced ones. Also, most dealers remain optimistic that the improved trend will continue in the near term, and they are satisfied that inventories are at manageable levels. Retailers generally report stable prices on most items, citing stiff competition, consumer sensitivity to price hikes, and slower sales growth. Merchants contacted by Dallas and Kansas City indicate that prices are stable or slightly lower compared to a year ago, and that they expect prices to remain stable over the near term. Richmond contacts, on the other hand, cite an upward trend in retail prices. Several districts, including Richmond and San Francisco, note a decline in tourism compared to a year ago. Resorts and hotels surveyed by Richmond indicate that the number of visitors is down from last year and that tourists are spending less. Hotel and convention industry representatives contacted by San Francisco characterize the Southern California visitor industry as depressed. At the same time, Atlanta reports a strong spring tourism season, with air passenger traffic, convention attendance, and the number of spring-break visitors to Florida higher than a year ago. Manufacturing Most districts, except Dallas, Kansas City, and San Francisco, report general increases in shipments and orders, which have pushed some facilities to operate at near capacity. Cleveland notes tight conditions in some segments of the steel industry, where capacity- level production and full order books have sustained general price increases. Higher production levels in the steel industry are reportedly linked to increased activity in the motor vehicle and consumer appliance industries. One motor vehicle producer in the Chicago district indicates that production of light trucks has been bumping up against capacity limits. Increased demand has also created bottlenecks at a few domestic motor vehicle parts and assembly plants surveyed by Cleveland. Boston and Chicago cite strong increases in automotive parts production, and Cleveland reports near-capacity production of heavy-duty trucks. Electronics manufacturers surveyed in the Boston and Chicago districts indicate strong demand, with some respondents citing the highest level of orders in the past five years. Contacts in Boston attribute part of the higher production levels to expanding Latin American and Far Eastern markets, which have partially offset weak demand in European markets. Factory officials in Atlanta and Minneapolis note some growth, primarily in the consumer durables, food processing, and industrial machinery industries. With the exception of steel price increases noted by Cleveland and Kansas City, most districts report constant or only slightly higher input prices compared to a year ago. Manufacturers surveyed by Atlanta comment that competition continues to hold prices of intermediate materials and final goods stable. Dallas respondents indicate flat to slightly failing prices in chemicals, plastics, petrochemicals, and electrical and electronic machinery, and San Francisco contacts add that aluminum prices are also soft. However, purchasing managers surveyed by Chicago note a somewhat faster rate of price increases as demand improves in that region. Atlanta and San Francisco report that cutbacks in the aerospace and defense industries continue to dampen manufacturing activity. San Francisco respondents indicate that Boeing continues to lay off workers, although they anticipate that increased orders from foreign carriers may partially offset the weak demand from domestic airlines. Dallas notes that low levels of nonresidential construction and oil and gas drilling have contributed to lower production among the firms they contacted. Firms contacted by Kansas City report operating below capacity, in part because of decreased foreign sales. Employment Job conditions are mixed in most regions. Boston, Cleveland, Minneapolis, Philadelphia, and St. Louis report that some firms are hiring modestly, particularly in automotive products and capital goods industries. However, no district anticipates a flurry of new hiring in the near term, even though several industries are reportedly producing near capacity. Employers surveyed in the Atlanta, Cleveland, Dallas, and Kansas City districts report that they are avoiding new hires by extending hours, using temporary workers, or increasing productivity. Atlanta adds that wage pressures are generally absent among their contacts. Job losses continue for defense-related and computer companies in the Minneapolis district, for apparel makers and food processors in the St. Louis district, and for a few insurance and pension firms in the Boston district. Real Estate/Construction Most district reports indicate strong or improving residential real estate markets. Contacts in Boston and New York note recent improvement in low-priced and mid-priced home sales. A respondent in Boston expresses encouragement that condominium sales volume is up significantly, which he believes may mark an end to the slump in this market. Prolonged wet weather has reportedly dampened homebuilding in the Kansas City and St. Louis districts, but builders in both areas expect starts to pick up as the weather improves. San Francisco notes that homebuilding is strong only in areas outside of Southern California. Homebuilders surveyed by most districts indicate that the sharp increase in lumber prices in recent months has added to the cost of new homes. However, lumber industry representatives contacted by the San Francisco bank report a 20 percent decline in lumber and plywood prices from the March peak. The commercial real estate market remains weak in most districts, except for isolated pockets of increased activity. Contacts in Minneapolis report that commercial contract awards are up significantly from a year ago. Realtors in New York note brisk leasing of commercial office space in midtown Manhattan but subdued activity in downtown Manhattan and in a few immediate suburbs. Richmond's survey finds strong commercial activity in the Carolinas and in Richmond, but weak conditions in Maryland and in the District of Columbia. Financial Institutions District reports of lending activity range from little change to moderate growth. Surveys of bankers generally reveal that most of the increase is concentrated in consumer loans and residential mortgage refinancing. Several lenders in Cleveland report that the volume of mortgage refinancing is virtually at capacity, and respondents in Atlanta note that mortgage refinancing accounts for nearly two-thirds of the brisk pace in current originations. Philadelphia, on the other hand, indicates flat consumer and mortgage lending, as households reportedly continue to consolidate and reduce debt. A few districts, including Atlanta, Kansas City, and St. Louis, note a pickup in commercial loans, particularly to small businesses. Some bankers surveyed by Cleveland cite a strong demand by businesses to refinance existing loans. Many respondents across the country report that deposit growth is steady, attributable in part to aggressive pricing and marketing programs. Bankers from several districts describe loan markets as very competitive and state that more aggressive pricing has decreased net interest margins A few bankers contacted by St Louis have expressed concern that narrow margins have contributed to slow deposit growth in their region. Agriculture/Resources An unseasonably cool and wet spring has delayed fieldwork and planting for a wide variety of crops in the Chicago, Kansas City, Minneapolis, Richmond, and St Louis districts. This damage is reportedly not irreparable, provided the weather improves in the coming months. Winter wheat crops are said to be in good shape in the Kansas City and St. Louis districts. Richmond and St. Louis report recent improvements in the condition of their peach and apple crops. Livestock prices are high, benefiting producers in the Chicago, Kansas City, and Minneapolis districts. San Francisco indicates strong prices for several other agricultural products. Minneapolis reports increased shipments of iron ore and stable conditions in copper mining despite low copper prices. Dallas and Kansas City report seasonally low domestic oil drilling. OPEC production cutbacks and blizzard-related consumption hikes are expected to keep oil and natural gas storage levels low and prices on the high side for several months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2004 -beige_book_pure_text_pre2000,1993,"Business activity was increasing at a slow to moderate pace in most Federal Reserve Districts in May and early June. Manufacturing was steady or improving in most Districts, with only scattered reports or upward pressure on prices in this sector. Retail sales were generally higher. Energy industries reported slight gains. Residential real estate sales and construction were on upward trends, mainly in the South and West (except California). There were also some reports or declines, albeit slight, in office vacancy rates in some markets. Reports on bank lending were about evenly divided among increases, decreases, and no change. Crop planting was hampered earlier by wet weather, but has been completed recently or is nearing completion. Expectations generally are for continued slow growth. Manufacturers anticipate moderate expansion. Energy markets are forecast to improve slightly. Retailers expect improved sales for the balance of the year, and home builders anticipate a good summer. The agricultural outlook depends on a summer sufficiently warm to boost crop growth, which has been lagging due to poor weather. Businesses commented that investment and hiring were being delayed because or uncertainties about federal tax increases and national health care reform. Retailers also said that such concerns might be preventing a more vigorous increase in consumer spending. Possible changes in U.S. international trade policy were also prompting caution among importers. Manufacturing Manufacturers in Chicago, Cleveland, Dallas, and Minneapolis generally reported improving business, while activity was generally steady in Atlanta, Boston, Philadelphia, and Richmond. In the San Francisco District, manufacturing in California was reported to be slipping further. Sales gains were reported by makers of electrical and electronic equipment, building materials, transportation equipment, and textiles. Demand for construction equipment was good in Chicago and Dallas, but weakening in Atlanta. Demand for aircraft engines and parts was also softening. Manufacturing employment was reported up in the Minneapolis District but down in Boston and Philadelphia. In addition, the outlook for employment was negative in Boston, Philadelphia, and Richmond. Manufacturers in Boston, New York, Philadelphia, Richmond, and St. Louis look for continued improvement, but are not forecasting significant increases in capital spending plans. In fact, Boston and New York reported that some manufacturers were trimming planned outlays. Manufacturing contacts in Atlanta, Boston, Kansas City, and New York reported little or no upward movement in sales or input prices. Information from industrial firms in Chicago's region indicated that price pressures have moderated in recent months. Some Districts, however, reported that firms have been able to sustain increases in their prices recently. Firms in the Richmond region reported increases in finished goods prices. In the Cleveland and Dallas Districts, higher prices were noted for some industrial materials, including steel, several chemicals, glass, and truck parts, although Dallas noted that prices of some other products were declining. Mining and Agriculture Dallas and Kansas City reported slightly higher oil-drilling activity, compared with the beginning of the year, and also reported expectations of an increase from current low levels for gas drilling. Minneapolis reported that coal shipments on the Great Lakes were off to a good start for the year. Most of the Districts filing agricultural reports indicated that planting had been delayed by wet weather. Where seeding had been done, plant growth was said to be behind the normal schedule in the Chicago, Minneapolis, St. Louis, and San Francisco Districts. The outlook for grains, fruits, and vegetables now depends on whether the summer is sufficiently warm to boost plant growth. Soil moisture levels were generally termed adequate. Kansas City and St. Louis said the winter wheat harvest was getting under way and there were indications that it would be a good harvest. St. Louis said concern was growing that cotton crops are at risk from serious boll weevil infestation. Livestock conditions were reported to be good by Kansas City, Minneapolis, Richmond, and San Francisco. Feedlots were at capacity, according to contacts in the Kansas City District, and some softening of fed cattle prices was expected. Retail Trade and Tourism Nearly all Districts reported increased retail sales for May and early June. The exceptions were Boston and New York, where retailers had mixed results, and California, where sales were flat. Atlanta and Chicago said appliances, home furnishings, and consumer durables were selling well. Auto sales were up year-over-year in Atlanta, Cleveland, Dallas, Minneapolis, and the San Francisco District outside California. Domestic car sales were up in St. Louis, but foreign car sales were down. Philadelphia District dealers said truck sales were strong, but car sales, while still showing year- over-year gains, had eased recently. Retailers expect moderate gains for the balance of the year in Cleveland, Kansas City, Philadelphia, Richmond, and St. Louis, but some Atlanta merchants believe the upward momentum may be waning. Tourist officials and contacts in the lodging and transportation industries reported modest year-over-year improvement in the Atlanta, Minneapolis, and Richmond Districts. They expect further gains during the summer. Finance Reports on bank lending were mixed. Overall loan volumes were increasing at slow to moderate rates in St. Louis, Dallas, Cleveland. Kansas City, and some parts of the San Francisco District. Loan volumes were described as flat by bankers in the New York and Philadelphia Districts and down in California and Richmond. Cleveland and Kansas City reported recent gains in commercial and industrial loans. Atlanta said business loans were flat, while Richmond and St. Louis reported declines. Consumer borrowing was up in Atlanta, Kansas City, Philadelphia, Richmond, and St. Louis. Residential mortgage refinancing was generally said to be waning, except in Cleveland, where it was rebounding. Atlanta, Richmond, and St. Louis indicated that purchase mortgage activity was up. Real Estate and Construction Sales and construction of single-family homes were reported to be on an upswing in southern and western parts of the nation, except for California. Kansas City and St. Louis noted that improvements in housing activity in some areas were still delayed by wet weather. Nonresidential real estate activity was mixed, although Minneapolis and parts of the San Francisco District outside of California have experienced some improvements. In addition, slight improvements in office vacancy rates were noted in Boston, Minneapolis, New York, and Richmond. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1341 -beige_book_pure_text_pre2000,1993,"Most Federal Reserve Districts reported that economic activity continued to expand slowly to moderately in June and the first half of July. Flooding inflicted considerable damage in parts of the Chicago, St. Louis, Kansas City and Minneapolis Districts, but the effects of flooding were said to be highly concentrated and were not seen to threaten overall economic expansion in any District. Single- family home construction continued as a source of strength for many areas of the country. Retail sales grew across most Districts although the rate of increase varied widely. Auto sales rose in many areas of the country. Price pressures in the markets for materials and finished products were reported to be mixed. Manufacturing Manufacturing output growth was described as generally sluggish in most Districts although conditions varied. Most Districts said that manufacturers have not increased employment and do not plan to for the remainder of the year. Several Districts noted weak sales to Europe, but strong exports to developing countries. The Cleveland District reported strong demand for steel and heavy truck components, but softening orders in several other industries. Respondents in the Chicago District cited a modest slowdown in industrial expansion, although auto and heavy truck production remained high. The Atlanta and Dallas Districts noted modest growth in overall output, but found strong growth among sectors tied to residential construction. Rates of expansion for manufacturing output in the Philadelphia and Richmond Districts were unchanged. Growth in Boston and Minneapolis was generally considered sluggish. The San Francisco District reported weakness in aerospace and defense-related industries, and strength in textiles and apparel and in computer-related industries located outside of Silicon Valley. Agriculture Agricultural conditions were said to be generally favorable, although flooding and drought have destroyed crops in several Districts. Overall, agricultural conditions were seen as favorable in the Dallas and San Francisco Districts. Kansas City and St. Louis reported that, in areas not affected by wet weather and flooding, crops were mostly in good condition and farmers were benefiting from higher grain prices. Kansas City also noted that a large wheat crop was expected and many farmers anticipated strong earnings. In the Minneapolis District, above-normal precipitation has been a boon to cattle raisers, and pasture and range conditions in the Dakotas and Montana were said to be the best in many years. Several Districts reported too much rain, too little rain, or both. Crop prospects are uncertain in many of these areas and will be determined by conditions between now and the frost. Atlanta, St. Louis and Richmond reported that hot dry weather has damaged crops in their Districts. High temperatures and drought have weakened rangeland and pastures in the Dallas District. Heavy rains and flooding ruined crops in portions of the Chicago, St. Louis, Minneapolis and Kansas City Districts. The Minneapolis and Kansas City Districts noted that corn and soybean crops were particularly hard hit by heavy rains and flooding. Minneapolis reported that unseasonably cool weather slowed crop development across the District. Chicago also reported that crops have been slow to develop. The Richmond and San Francisco Districts said seafood production has declined. Retail Trade and Services Retail sales were reported to have increased somewhat in most Districts, although Atlanta, Cleveland, New York, and Philadelphia reported that sales weakened slightly in July. Overall sales strengthened in the last month in Kansas City and Minneapolis, but both the Minneapolis and Chicago Districts noted slow sales in flooded areas. Apparel demand was reported to be higher in the Atlanta, Chicago, New York, and Philadelphia Districts and weak or sluggish in the Cleveland, Dallas and Kansas City Districts. Atlanta, Cleveland, Dallas and Kansas City all reported increased auto sales. Philadelphia reported that, while growth of auto sales slowed somewhat in July, sales were expected to be above last summer's rate. Retail and auto sales were said to be mixed in the San Francisco District. In Atlanta, Richmond, San Francisco, and portions of the Minneapolis District, tourism was strong and the New York District reported minor gains in tourism. Real Estate and Construction Residential construction and real estate activity remained strong in most Districts. Minneapolis reported that residential and commercial construction was perhaps the strongest component in the region's economy. Housing activity continued to increase in the Chicago District, but growth was thought to have slowed somewhat. San Francisco reported strong housing markets for most of the District, although southern California and western Washington were exceptions. Commercial real estate activity remained sluggish or weak in most areas of the Atlanta, Dallas and Richmond Districts. Natural Resources The Dallas, Kansas City and Atlanta Districts reported that higher natural gas prices have led to increased drilling, and a rise in activity for related service companies. Although drilling is generally expected to continue its upturn, Dallas respondents said that lower oil prices have clouded the drilling outlook for the second half of the year. In the San Francisco District, recent Alaskan oil discoveries were said to have improved the prospects for economic activity. Mineral mining activity was mixed. The San Francisco District noted weaker mining activity in Utah, Idaho and Alaska, while iron output increased slightly in Minneapolis. Timber and logging activity was also cited as weakening in the San Francisco District. Banking Many Districts reported that business loan demand was unchanged, and that demand for mortgage refinancing was strong. According to respondents in the New York District, commercial and industrial loan demand continued to rise. Bankers in the Philadelphia District indicated that lending was generally unchanged although borrowing increased slightly among middle market companies. The Atlanta and St. Louis Districts noted recent strength in auto loans. The Cleveland District reported that business loans had softened and that consumer loans had leveled off, after a surge last spring. In the Kansas City District, consumer loans have increased, while business loans were flat to slightly up. Dallas said that overall loan demand had declined. Respondents in the San Francisco District said that banking conditions in California continued to improve. Prices District reports suggested that price pressures were mixed. The San Francisco and Richmond Districts saw some increased prices for building materials and other raw materials. New York and Minneapolis Districts reported that lumber prices have declined. Manufacturing input prices were stable to slightly higher in Kansas City. Chicago mentioned higher prices for auto parts. Boston reported that auto parts suppliers are under much pressure to freeze or reduce prices, and that they will try to offset higher material prices with productivity gains. Retail prices were reported to be very competitive in New York. Chicago, Cleveland, and Dallas mentioned that several retailers have lowered their prices. Kansas City District retailers said they were holding prices steady. The Richmond District reported that retail prices were rising. Atlanta and Minneapolis noted stable price levels. Higher prices were reported for natural gas, but lower prices for oil. Several Districts reported higher agricultural prices, particularly in areas affected by flooding. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1453 -beige_book_pure_text_pre2000,1993,"Slow to moderate growth characterized economic conditions in most Federal Reserve districts in late July and in August. Geographically, economic growth appears weaker on the East and West coasts while central areas such as Cleveland, Dallas, Kansas City and Minneapolis report stronger than average growth. Employment continues to grow slowly in spite of large companies' continued efforts to restructure and cut labor costs. Manufacturing reportedly is improving in several districts. Home construction is strong in many districts compared to a year ago, and a few see some improvement in commercial real estate markets. In agriculture, several districts describe weather-related damage to cops but note generally favorable conditions for livestock producers. Mining shows little overall change, but there is some increase in oil and gas exploration. Small increases in loans are noted in some districts, and some business lending rates reportedly have fallen. General retail sales show a mixed pattern, with strength in several districts but weakness in the remainder. Auto sales are strong in most districts. Tourism is a bright spot for some districts. With the exception of lumber, prices are generally stable and there is little evidence of inflationary cost pressures. Labor Markets Continued corporate restructuring is taking the bloom off employment growth. Cleveland indicates that several manufacturers emphasize near-term revival in employment growth is unlikely, since curbing labor costs appears to be the favored option for improving profits in view of uncertainty over sales. Several large firms in the Minneapolis and New York districts recently have announced sizable layoffs. Boston and Philadelphia look for no change in manufacturing employment, and Richmond foresees a decline. In the St Louis district flooding is still keeping some people from working. But some districts also state that labor markets may be reviving. Several manufacturers, according to Dallas, have boosted employment, and in the Cleveland district retailers report cautious hiring. Some Minneapolis district firms have recently added workers. Moreover, even though employment has continued to decline in the New York district, the recent pace of decline has been modest. Manufacturing Manufacturing production and sales are increasing in many districts. Several districts report strong sales for firms making building materials or construction-related items. Boston notes double-digit sales increases for automotive and electronics products compared to year-earlier levels. Cleveland reports a surge in appliance production and indicates that sheet steel and heavy truck manufacturers are operating at capacity. Chicago also notes very strong heavy truck sales along with strong light vehicle assembly. St. Louis lists improved business for petroleum equipment and apparel. Dallas also notes improvements in oil field equipment, in addition to strong orders for semiconductors and telecommunication devices. San Francisco describes improvements in semiconductors and electronics. Respondents to a Richmond survey of manufacturers are optimistic about prospects for the next six months. The situation for some products varies by location. Dallas, Minneapolis and San Francisco have positive comments about food processors, but Boston reports food manufacturing output as flat. Similarly, Atlanta, St. Louis and San Francisco see strength in the furniture industry, which is described as flat for Boston. Textile sales are reportedly declining for Atlanta and Boston, but higher in California. In the Atlanta, Boston and San Francisco districts the aerospace and defense industries are still weak, as are chemicals and petroleum for Dallas. Construction and Real Estate Home construction is improving in many regions. For Dallas and Minneapolis, residential construction is strong. Home building reportedly is picking up momentum for St. Louis, and sales and permits rose for Richmond, particularly in the Carolinas. While housing starts for Kansas City were slightly below year-ago levels, they are rising and expected to continue to increase. San Francisco describes regionally mixed conditions, with strong construction in Arizona, Idaho, Oregon and Utah, but relative weakness in California, Hawaii and Washington. New York notes no change in home- building activity, and Philadelphia describes the pace of construction and sales as about even with last year. In non- residential construction, Minneapolis reports strong commercial and public building across its district. Boston and New York see some improvement in commercial real estate markets. New York describes the sale of a new, large office building as eliciting greater than expected interest and selling for a higher price than expected. According to Richmond, commercial real estate markets have improved in Virginia and the Carolinas but are slow elsewhere. For Philadelphia, commercial real estate is stagnant. Agriculture, Mining and Energy It is either too wet or too dry for normal crop development, according to reports from several districts. Continued drought has damaged corn, sorghum, tobacco and other crops as well as pastures in the Dallas and Richmond districts and in southern portions of the St. Louis district. On the other hand, flooding and excess moisture are the principal problems for Chicago, Kansas City and Minneapolis. These districts report substantial damage to corn, soybean and spring wheat crops. Slow crop development caused by unseasonably cool, wet weather has left many crops in the Midwest vulnerable to damage from early frosts. But some positive crop developments are also noted. Scattered rains brought relief for some crops in Richmond's area, while Dallas reports good cotton crops in west and northwest Texas and estimates that overall crop output will be up from last year, in spite of dry conditions. Winter wheat production is good for Kansas City and excellent for the Minneapolis district. Cotton and peanuts in Oklahoma are reportedly in good condition. And San Francisco reports generally favorable agricultural output. The livestock sector is generally better than crops, with favorable range conditions in most areas and strong prices. Kansas City notes that cattle feeders reduced inventories somewhat in response to higher feed costs. According to San Francisco, new mines are opening in Nevada in response to higher gold prices. An existing gold operation in South Dakota is contemplating expansion. Mining is stable for Minneapolis, though a strike at four iron mines in August cast a cloud over increased production in that sector. Dallas reports rising oil and gas drilling rig counts compared to earlier in the year and describes activity in the Gulf of Mexico as very strong. Kansas City also notes that drilling rig numbers continue to rise and are substantially above 1992 levels. St. Louis reports that lumber producers are rebuilding inventories. Financial Institutions and Credit Most districts report slight increases in loan volumes. Consumer borrowing and mortgage financing are up modestly in Atlanta, Chicago, Cleveland, Dallas, Kansas City, Philadelphia, Richmond and parts of the San Francisco district. Mortgage refinancing is especially strong in Atlanta, Philadelphia and Richmond. Commercial and industrial loans, however, are generally flat across the country, though there are signs of improvement. Philadelphia reports that business loans may increase as previously postponed projects are reviewed. Loan volumes in California continue to decrease, though at a slower pace than in recent months. Chicago and Dallas observe that increased competition among banks in their districts is bringing down rates for prospective borrowers, and New York notes that about half of surveyed loan officers report moderately lower rates. Consumer Spending and Tourism General retail sales are strong in several districts, but weak in the remainder. For Cleveland, durable goods are moving well. Several retailers in the Kansas City and St. Louis districts report moderate increases in sales over last year. In California and New York sales are flat and mixed respectively. However, sales are unseasonably slow for Atlanta and Boston, and Minneapolis indicates that strength earlier in the year has ebbed somewhat. Boston, Chicago, Cleveland, Dallas and Richmond report that retail inventories have returned to satisfactory levels. Auto sales are strong in most districts. Cleveland notes that dealers of domestic new cars and light trucks enjoyed the best summer sales in more than five years. St. Louis car dealers report that sales of new and used domestic cars are up, in many cases by 10 percent. In the Philadelphia district, auto sales are running above year-earlier levels, while Minneapolis characterizes them as stable. While domestic auto sales have climbed, import sales, especially of Japanese cars, have dropped according to Cleveland and St. Louis. Tourism is cited as a bright spot for several districts. Chicago, Minneapolis and Richmond report strong summer seasons. According to San Francisco, Idaho and Utah are enjoying record years, but Hawaii's visitor industry has slumped. Prices Atlanta, Boston, Dallas and Kansas City report little or no change in prices. Food prices, according to Minneapolis, are stable, and gasoline prices continue below year-earlier levels Boston and Kansas City say retail prices are holding steady, and Dallas states strong competition has been restraining retail price increases. While Kansas City area manufacturers indicate input prices are modestly higher than a year ago, Atlanta's factory contacts report stable prices for both raw materials and finished goods. Prices are even flat for manufacturers in strong markets, Boston observes. Lumber is an exception to this pattern of stable prices. In the Atlanta district, home builders note lumber prices are beginning to rise again in anticipation of increased demand from rebuilding in Midwestern flood areas. Lumber prices, San Francisco says, are up about 30 percent from a year ago. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1919 -beige_book_pure_text_pre2000,1993,"Business activity has been increasing at a slow to moderate pace recently according to reports received in most Federal Reserve districts. More mixed reports on economic conditions were received in the New York and San Francisco districts, however. Consumer spending rose in a majority of districts, with particular strength noted in sales of autos and other durables. Tourism also displayed signs of strength in some districts. Manufacturing showed some improvement, with reports of inventory shortages in the auto sector. Residential real estate markets were generally stronger, and some pickup in commercial real estate markets was noted as well. Several districts continued to report weather-related crop damage, but conditions among livestock producers were generally favorable. Mining showed little overall change, but oil and gas exploration increased. Overall loan demand was steady to slightly improved in most reporting districts. On the price side, retail prices were described as flat or competitive, while price increases were noted for some building materials and manufacturing inputs. Consumer Spending Retail sales registered gains in Cleveland, Dallas, Kansas City, Philadelphia and San Francisco, but were mixed or unchanged in other districts. Philadelphia noted that discount merchants made greater gains than others, and Boston retailers commented on the increase in competition resulting from the arrival of large discounters. Sales of appliances and furniture were strong in a number of districts, reflecting increases in home sales and remodeling. Response to the new fall apparel was mixed, however, with some areas reporting strong demand and others, sluggishness because of unseasonably warm weather. Auto sales were good in most of the districts. Some dealers reported that inventory shortages developed prior to the arrival of the 1994 models. The five districts reporting on the outlook for the holiday season stated that over-the-year retail sales growth is not expected to be as rapid as last year's strong Christmas season. For the tourist industry, results were generally favorable. In the Richmond district, hotels, motels and resorts indicated an improvement due to good weather and an increase in convention bookings, while Minneapolis reported that casino visitors and campers boosted spending in northern Michigan to a three-year high. Activity was mixed in the Atlanta district, however, stronger on the Gulf in response to new casinos, but down in southern Florida. Manufacturing Manufacturing activity showed gains in most districts. In the Boston area, some contacts achieved double-digit year-to-year sales increases by introducing new products or expanding their customer base, and Philadelphia reported gains in new orders and shipments as well as increased hiring. Cleveland noted that domestic orders for capital goods appeared to be holding up well, with orders for some producers running store than 10 percent above a year ago. Manufacturing activity rose in Richmond and Chicago after a relatively flat period in preceding months, and Dallas reported a slow increase in demand and hiring. However, manufacturing activity was more mixed in St. Louis, New York and San Francisco. The overall improvement in the manufacturing sector reflected increased demand in several industries, but some industries continued to have problems. A pickup in auto sales spurred output at auto producers and suppliers in several parts of the country, and construction-related products such as lumber, cement, brick and glass were also cited as in widespread demand. Electronics and paper producers added to payrolls in Dallas, and some gains in the semiconductor industry were noted in the Boston and Chicago districts. St. Louis stated that small businesses in particular showed strong growth recently, but that some larger firms were reorganizing and laying off. Aerospace and defense-related cutbacks continued in Arizona, California, Utah and Washington, and apparel plants in Mississippi and Georgia also were still paring back employment in response to sluggish retail sales and foreign competition. Construction and Real Estate Most districts reported gains in the residential real estate market, with several citing sales of new and existing homes as a major source of strength in their economies. Among those districts where this sector was particularly strong (with home sales well above last year in most cases) were Atlanta, Boston, Chicago, Dallas, Minneapolis and St. Louis. Atlanta noted that demand for new starter and mid-priced homes remained strong and that luxury home sales have improved as well, while Boston said sales were strongest in the areas previously hurt the most by the downturn. Falling inventories and rising home prices were noted in Kansas City and St. Louis. Dallas reported strong housing construction in its major cities with the exception of Houston, while Richmond said that starts in the district trended up. The residential real estate market was mixed in the San Francisco district, however, with strength in several states but softness in much of California. Starts showed little change in the New York district. Commercial real estate activity picked up and vacancy rates declined in New York and Richmond, while Atlanta saw signs of a revival in commercial construction. The market continued weak in downtown Minneapolis-St. Paul, but was strong in surrounding suburban areas. Prices Minneapolis reported virtually no sign of inflationary pressures, and Atlanta found that wages and prices generally were stable. Boston and Cleveland noted that pricing remained competitive and in Kansas City, while manufacturers' input prices were rising somewhat, retail prices were generally holding steady. Lumber prices have been edging up in the Atlanta district, and Dallas reported that some other construction-related industries have also raised their selling prices. Financial Institutions Overall loan demand at banks was reported as steady to slightly improved in most of the districts providing this information. Consumer borrowing has shown some signs of revival, while overall business borrowing remained slow. Mortgage financing and refinancing continued strong, and auto loans picked up in some areas. Kansas City and Philadelphia reported steady to somewhat stronger demand for other types of consumer loans as well. While business borrowing has remained soft in general, Philadelphia noted some improvement in demand from small and middle-sized business borrowers, and Cleveland also reported that commercial loan demand was up a bit. Bankers in Dallas noted that lending was slow, however. Loan volume in California was flat, although other states in the San Francisco district reported somewhat stronger demand. Agriculture and Resource-Related Industries Large parts of the agriculture sector continued to suffer front weather-related problems, but not all the news from this sector was downbeat. Richmond reported that yields on most crops were far below average, despite some recent improvement in temperature and rainfall, and in the St. Louis district, Delta cotton farmers said yields were significantly reduced due to heat and insects. Severe drought conditions persisted in parts of the Atlanta area where crop yields were down substantially. It was estimated that corn, soybean and wheat production will be down 20-50 percent from normal in most of the Minnesota district, and grain quality was reportedly generally poor. Kansas City noted that corn and soybean crops were destroyed by flooding in low-lying areas and Chicago stated that flood-related losses appear greater than earlier estimates, especially for corn. On the positive side, cotton and peanut yields in Oklahoma and New Mexico were generally above normal, and the next winter wheat crop in the Kansas City district is reportedly off to a good start. The soybean harvest was progressing well in the Chicago area and Montana's wheat crop was 9 percent above the previous record. Due to the end of a prolonged drought, acreage was up on California farmlands, while Dallas reported that crop production was good in some parts (but suffering from too much moisture in others). Livestock production was reported to be stable or improved in several districts. Minneapolis stated that metal mining output was generally stable, with no change in copper output in recent months. Gold production there continued above year-earlier levels and mine expansions were reportedly under consideration. Drilling rig counts were higher in both the Minneapolis and Kansas City districts, while Dallas noted that offshore drilling in the Gulf of Mexico remained near capacity levels. Volume was down in the Pacific forestry industry, however, due to restrictions on public harvesting. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1674 -beige_book_pure_text_pre2000,1993,"Most Federal Reserve Districts suggest that economic activity continued to expand at a moderate pace through the end of November and reports were generally more optimistic than those of this summer. Consumer spending improved in a majority of Districts, with sales of autos and other durable goods said to again show relative strength. Retailers in several Districts reported that the holiday shopping season got off to a good start over the long Thanksgiving weekend with sales at or exceeding expectations. Manufacturing activity also was seen as improving in most Districts, but few businesses reported new hiring. Residential real estate markets were once again noted as a source of strength in most District economies, while commercial real estate markets have begun to show a few signs of improvement. Wage increases and prices for final goods generally were said to be stable, although several Districts reported that prices for lumber and other building materials have risen since October. Commentary on conditions in three Districts--Boston, New York, and San Francisco--was more mixed, with particular weakness indicated in reports from California. Consumer Spending While retailers in a few Districts saw unseasonably slow retail sales in the early fall, most were reporting gains by late October. Stores in the Atlanta, Cleveland, and New York Districts noted that consumer spending momentum began to pick up in late October, and that it has continued into the holiday shopping season. Holiday sales through the Thanksgiving weekend were better than they had anticipated in the Atlanta, Chicago, Kansas City, Minneapolis, and St. Louis Districts, despite severe weather in some areas. Reports from Richmond and San Francisco indicate that retailers in those Districts also expect relatively strong fourth quarter sales. The Boston, Cleveland and Philadelphia Districts said that retailers were relying upon special promotions to bring shoppers into the stores. Dealers in most Districts noted moderate year-over-year increases in auto and truck sales in October and November. Those in the Dallas and St. Louis Districts reported that trucks and minivans were selling the fastest, while leasing activity picked up in Cleveland. At the same time, low inventories of new model year vehicles were said to be constraining sales in parts of the Chicago, San Francisco, and St. Louis Districts, although in Chicago most shortages had been alleviated by November. Manufacturing Manufacturers in most Districts reported some strengthening in current manufacturing activity, as well as improvements in expectations of future business conditions. Firms in the Atlanta, Dallas, and St. Louis Districts noted that production of lumber and other building materials continues to benefit from increased construction activity, while factory reports from the Cleveland and Minneapolis Districts noted increased demand for construction- related heavy equipment. Strong demand for consumer durables is said to have provided a boost to manufacturers in the Boston, Chicago, and Minneapolis Districts, while improved demand for autos and trucks increased production at plants in the Atlanta, Boston, Chicago, Cleveland, and St. Louis Districts. Capital goods producers in the Cleveland District indicated that automobile-related orders are a source of strength for the region into 1994. Looking forward, manufacturers' expectations of future business activity in a majority of Districts have improved recently, while many firms in the New York and Philadelphia Districts have revised their capital spending plans upward for the next six months. Although business conditions are seen as improved in many industries, employment gains remain muted, with continued reports of defense and aerospace cutbacks. Manufacturers in the Atlanta District said that employment has been flat, while those in the Cleveland District noted that small firms also were not adding new employees. Reports from manufacturers in California indicate continued sluggishness. Businesses in the Atlanta, San Francisco, and St. Louis Districts cited new layoffs prompted by cutbacks in defense and NASA programs, while manufacturers of aircraft parts and defense-related equipment in the Boston District have continued to experience sales declines. Employers in the apparel industry in the Atlanta and Boston Districts also reported decreases in employment. Weak demand from foreign customers was said to be a source of concern to producers in the Boston and Cleveland Districts. Real Estate and Construction Contacts in most Districts reported continued strength in housing markets, although those in the New York and San Francisco Districts were not as positive. Atlanta, Kansas City, and St. Louis District contacts said that year-to-date home sales remain well ahead of last year. Builders in the Minneapolis District reported that residential construction remains one of the District's strongest sectors. Builders and realtors in the Atlanta, Dallas, and Kansas City Districts said that inventories of homes for sale were tight, while those in the Richmond District noted that strong demand and rising lumber prices have pushed new home contract prices higher. Shortages of available subcontractors and developed lots were said to be starting to constrain home construction in some areas of the Atlanta District. Builders in some part of the Dallas District are concerned about a shortage of qualified construction laborers and sales people, while those in St. Louis said they are struggling to keep up with the backlog of orders caused by rainy summer weather. In contrast, the reports from Philadelphia note that home inventories remain elevated, while those from New York saw few signs of increased interest from home-buyers. Reports from commercial real estate markets were more mixed. Contacts in the Boston, New York, Philadelphia, and San Francisco Districts said that office and commercial vacancy rates remain at relatively high levels, although those in New York noted some improvement in downtown Manhattan. For Richmond, some improvement was seen in commercial leasing activity, as well as in office vacancy rates, but not enough to stimulate new building. In the Atlanta, Dallas, and Minneapolis Districts, however, construction of new retail space is said to reflect an improvement in commercial real estate markets. Banking and Finance Banks in most Districts said that overall loan demand improved modestly, with all reporting stronger demand in at least one sector. Those in the Atlanta, Chicago, Richmond, and St. Louis Districts noted that commercial loan demand had risen modestly, while banks in Cleveland, Dallas, and Philadelphia said it was still flat. Commercial lending was reported to be weak in the New York District and California. Atlanta, Kansas City, New York, and parts of the San Francisco District saw generally stronger consumer loan demand, while Cleveland, Philadelphia, and St. Louis noted specific improvement in auto lending. Wages and Prices With the exception of some construction-related occupations, businesses generally commented that wage increases were modest and stable, while they said that prices of raw and intermediate materials as well as final goods were rising slightly in some areas. Higher agricultural prices stemming from weather-related crop damage were noted in several Districts. Contacts in the Atlanta, Richmond, and Kansas City Districts said that higher lumber prices were driving up new home prices. Firms in the Chicago District noted that signs of increased raw materials prices were becoming more common, while those in Boston and Richmond said that some manufacturers have been able to raise their prices. However, reports from contacts in the New York, Kansas City, Minneapolis, and Atlanta Districts said that prices for finished goods have remained stable. Agriculture and Resource-Related Industries Poor summer and fall weather were seen as having had a negative impact upon crop yields in several Districts. The Kansas City and Minneapolis Districts reported that corn and soy bean yields and quality have been disappointing. Cotton yields were described as substandard by contacts in the Dallas District and in much of the St. Louis District. Dry weather combined with a poor hay crop has some farmers in Richmond worried about the adequacy of their winter feed stocks. Ranchers in the Kansas City District also report concerns over possibly rising feed prices. Conditions in the seafood industry in the San Francisco District were said to be poor. On a brighter note, record levels were seen for soy yields in Illinois and Indiana, corn production in Texas, and the wheat harvest in the northern plains. Recent weather conditions are said to have been favorable for agriculture in much of the country. In the Richmond District, the warm, dry weather has allowed fall planting activity to progress ahead of schedule. The recently planted winter wheat crop in the Kansas City District was reported to be in good condition. Reports on mining activity were mixed. Kansas City reported that drilling activity was seen as steady to improved in all Tenth District states except New Mexico. Dallas, however, reported that rig counts had been falling in response to weak oil prices and a recent dip in natural gas prices. Miners in the Minneapolis District reported that strong gold prices were encouraging activity in South Dakota and Montana, but that low aluminum prices and higher electricity costs might begin to curb aluminum mining in Montana. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1866 -beige_book_pure_text_pre2000,1994,"Economic activity continued to expand with signs of acceleration in some sectors, according to most Federal Reserve District reports. Consumer spending, especially on household-related items, was strong during the holidays in most districts. Manufacturing activity strengthened, and the manufacturing employment picture improved somewhat. Residential real estate sales and construction grew robustly in almost all districts. Commercial real estate leasing and construction improved in some districts but remained generally sluggish. Loan demand increased somewhat in many districts. Several districts reported weather-related stress to agricultural crops, but crop prices rose and crop income prospects improved. Little upward pressure on wages and prices was indicated by almost all districts; however, reports of lumber price increases were widespread, and scattered labor shortages were reported. Weak economic conditions continued in southern California. Consumer Spending Retailers in most districts enjoyed strong sales that met or exceeded expectations during the holiday season, although the Boston District's retailers were disappointed with their modest gains. In the Atlanta, Dallas, and New York Districts, stores offered earlier- than-normal holiday price discounts and in the Chicago, St. Louis, and New York Districts, retailers indicated they advertised more than normal. Retailers in the Boston, Kansas City, Philadelphia, Richmond, and St. Louis Districts expected continued economic growth to boost retail sales moderately this spring. Most districts reported robust sales of electronics and other home- related durables during December. Retailers in the Dallas, Minneapolis, St. Louis, and San Francisco Districts indicated that automobile sales were strong, and those in the Kansas City and St. Louis Districts expressed optimism about prospects for sales of new cars and trucks in 1994. In contrast, the Atlanta, Chicago, Cleveland, Dallas, New York, and San Francisco Districts reported that apparel sales were weak; Kansas City, however, reported generally strong apparel sales. Manufacturing Most districts reported that manufacturing activity strengthened. Reports from Cleveland and Minneapolis indicated that some factories were operating near capacity, and several districts reported signs of stronger demand for manufactured products. The Atlanta, Boston, Dallas, and Minneapolis Districts noted increased demand for construction-related products, while stronger demand for automotive products was cited in the Boston, Chicago, and Cleveland reports. Personal computer orders strengthened in the Boston and San Francisco Districts, while capital equipment orders rose in the Cleveland District. The Atlanta District reported continued strength in textile orders arising from residential home sales and refurbishing. Defense-related manufacturing, however, continued to be sluggish in the Boston, Atlanta, and San Francisco Districts, and apparel manufacturing apparently was lackluster in the Atlanta and Dallas Districts. Looking forward, manufacturers in several districts expected continued economic expansion in early 1994 and looked for continued improvement in business conditions. Most reports of manufacturing employment indicated improvement. Producers in several districts increased employment a little and those in some districts planned to add workers if economic growth continues. Manufacturers in the Boston and Richmond Districts expected stable employment levels in 1994. Defense-related cutbacks in employment, however, were reported in the Atlanta, Cleveland, St. Louis, and San Francisco Districts, and apparel manufacturers in the Atlanta District reported further cutbacks in employment and a shortening of the factory workweek. In the New York District, several major manufacturers announced layoffs. Real Estate Reports from most districts indicated substantial improvement in residential real estate sales and construction. Home sales increased in the Boston, Richmond, Atlanta, St. Louis, and Kansas City Districts. Homebuilding also increased in these districts and in the New York, Minneapolis, and Dallas Districts, where residential construction activity exhibited unusually strong growth. San Francisco contrasted continued weakness in residential sales and construction in southern California with robust housing activity in Idaho. Commercial real estate activity was mixed. Office vacancy rates fell in the Richmond and Atlanta Districts. New York reported some reduction in Manhattan vacancy rates, but that market was still considered weak. Commercial construction increased in the Richmond, Dallas, and Minneapolis Districts. Commercial real estate in California remained weak according to the San Francisco report. The New York, Richmond, Atlanta, Kansas City, Dallas, and San Francisco Districts reported tight markets for building materials and/or construction labor. In several districts, short supplies of these inputs delayed some construction projects; in some districts, the tightness in supplies of inputs led to higher construction costs, which placed upward pressure on housing prices. Finance Commercial banks in most districts reported that loan demand strengthened somewhat. Bankers in the Atlanta, Cleveland, Dallas, Kansas City, Philadelphia, Richmond, and St. Louis Districts reported moderately higher commercial loan demand. Sluggish commercial lending was reported by banks in the New York District, however, and some lenders in the San Francisco District noted that commercial loan demand had weakened slightly. Consumer loan demand was reported to be moderately higher in the Atlanta, Cleveland, Dallas, Kansas City, New York, Philadelphia, and St. Louis Districts but was unchanged in Richmond. Atlanta and Cleveland noted especially high levels of automobile lending, and Kansas City and Dallas indicated increases in residential real estate lending. Atlanta and Cleveland noted slight declines in mortgage refinancings, although activity remained high in both districts. Bankers in the New York, Philadelphia, and Richmond Districts reported sharp declines in refinancing activity. Wages and Prices Most districts noted little general upward pressure on prices or wages, although several reported increases in the prices of lumber and building materials and scattered labor shortages. The Boston, Cleveland, Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts reported that virtually all retail and manufacturing prices were little changed, and Chicago reported that the prices paid by manufacturers declined. Energy prices declined in the Minneapolis, Kansas City, and Dallas Districts. Prices of aircraft-quality aluminum were soft in the San Francisco District, but steel prices rose in the Cleveland and Chicago Districts, and copper prices were somewhat higher in the Minneapolis District. Increases in the cost of lumber were indicated by the New York, Richmond, Kansas City, and Dallas reports. The Richmond, Dallas, and Atlanta reports also indicated higher building materials prices. In the Atlanta and Dallas Districts, housing prices were moving up somewhat, and the New York report indicated that higher materials prices could soon lead to upward pressure on housing prices. Some districts reported tight labor markets for specific workers. Atlanta, Kansas City, and San Francisco indicated a shortage of skilled construction workers, and Chicago observed that finding skilled production workers and tradespeople was increasingly difficult. Dallas reported a short supply of temporary workers and a rise in their wages, but indicated that competition was keeping wages stable in other business services. Agriculture Several districts indicated that worse-than-normal December weather and the lingering effects of abnormal summer and fall weather disrupted agricultural activity, but farm income levels remained steady. Snow and cold weather delayed winter small grain planting in the western part of the Richmond District, and cold weather delayed tillage in parts of Minnesota and North Dakota. Dry weather in the Dallas District damaged pastures, winter wheat, and the hay crop. Richmond and Dallas contacts expressed concern over the adequacy of hay stocks. San Francisco reported that potato production was down in Idaho but up strongly in Washington and Oregon. The Chicago, St. Louis, Minneapolis, Kansas City, and Dallas Districts noted higher crop prices. Several districts indicated that higher grain prices would support crop receipts, but Chicago and Kansas City also noted that higher grain prices would also push up feed costs and reduce profit margins for livestock producers. Chicago and St. Louis indicated declines in livestock production. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1638 -beige_book_pure_text_pre2000,1994,"Federal Reserve district reports indicate that the economy expanded moderately in January and February despite unusually severe weather in the East and the Midwest. The weather adversely affected consumer spending and construction, delayed shipments, interrupted some production, and boosted selected tourism and energy markets, but these effects were largely temporary. Manufacturing activity increased in most regions and sectors, with the auto industry and its suppliers and building products showing the most strength. Weather-related retail sales losses were sizable in some areas, but elsewhere consumer spending rose steadily; almost all district reports suggest that merchants expect solid sales growth in coming months. Real estate markets are mostly improving compared with a year ago, with exceptions noted in southern California and Connecticut. Several districts indicate that rising interest rates have slowed mortgage refinancings. In agricultural regions, financial distress stemming from last summer's floods is generally abating. Overall, only limited price pressures are reported; prices of building materials, selected metals, and some chemicals are said to be rising, but prices of manufactured products and consumer goods generally are not experiencing upward pressure. Retail Although unseasonably cold and snowy weather hampered retail sales in two-thirds of the country, districts report that merchants are optimistic, expecting sales to increase during the first half of 1994. The effect of winter weather on retail sales varied considerably. Eastern retailers were disappointed, citing substantial declines in sales (up to 20 percent) and minimal rebounds after storms. Midwest reports of sales performance were mixed, but retailers affected by storms expected to recoup sales losses, unlike their eastern counterparts. Several districts (particularly Chicago, Minneapolis, and Cleveland) indicated moderate to strong sales. In the West, retail conditions are generally good; California's consumer spending showed modest signs of improvement, except in the Los Angeles region. Durable goods are selling well in all districts. Over half reported solid growth in car sales and expectations of continued strength throughout the spring. In contrast, several eastern districts noted sluggish sales of nondurables, particularly apparel. Retailers in only one district, Richmond, expect retail prices to rise slightly; others anticipate stable prices because of competitive pressures. Services Scattered comments on services industries, including temporary employment firms, freight forwarders, and utilities, generally suggest improvements in economic activity. A few services industries in the Chicago district reportedly face shortages of items such as cable supplies and broadcast equipment. In several districts, the cold weather affected tourism, in some cases for better, in others for worse. Richmond reports that both ski resorts and beaches in the district are enjoying an unusually good season. By contrast, in the Minneapolis district, tourism is just starting to pick up, now that the weather has moderated. Hawaiian tourism has been sluggish, but advance bookings suggest improvement. Despite the earthquake, tourism in southern California is also gaining strength. Manufacturing The manufacturing sector generally remains on a positive course, although severe weather substantially weakened early 1994 growth in the Philadelphia, Chicago, and St. Louis districts. Winter storms also produced minor setbacks in production, shipments, and/or orders for manufacturers located in the Boston, Atlanta, Kansas City, and Dallas districts. Durable goods and construction account for most of the advance throughout the nation. Boston, Cleveland, Atlanta, and Chicago indicate very strong auto-related sales demand, although Chicago notes temporary slowdowns as a result of weather and truck-part shortages. Some areas also are experiencing growing sales of home furnishings, electronics products, or other durables. Even though cold weather is delaying some construction, Boston, Atlanta, Chicago, Minneapolis, and Dallas note strong demand for building materials and equipment. Cleveland and San Francisco report that defense and aerospace markets are damping economic progress; Boston, New York, and Atlanta also mention cutbacks. Clothing and shoe business has been slow in the Philadelphia, Atlanta, and St. Louis districts, while energy- related manufacturing is weak in the Atlanta and Dallas districts. Food processing is reported to be sluggish by Philadelphia and Dallas, but St. Louis and Minneapolis cite increased demand for poultry. Most districts indicate that prices for finished goods have remained relatively stable, despite increases for selected materials. Strong demand and scattered capacity constraints are contributing to rising prices for building products, according to Atlanta, Chicago, Minneapolis, Dallas, and San Francisco. Prices also are increasing for some types of paper, chemicals, and metals. Almost all districts report hiring and capital expansion plans on the part of some contacts, especially those supplying automotive and construction markets. However, streamlining and caution continue to temper general gains in manufacturing employment. Real Estate and Construction Real estate markets continue to improve, despite severe winter weather in many districts. Construction activity has borne the brunt of weather problems, with five districts reporting delays, although builders in the Minneapolis and Kansas City districts reported little effect on their activity. Philadelphia and Chicago indicated that weather temporarily slowed residential sales activity. The Los Angeles earthquake will increase demand for residential repair services over the next 6 to 12 months and freeway repair will push into 1995. Residential sales activity is strong or growing in over half the districts and three-quarters observed positive developments in construction. Sales are reportedly flat only in the Kansas City district and California. Price increases for existing homes were noted in two districts. Low interest rates were cited as contributors to current and expected increases in residential sales in several districts. However, contacts from Cleveland and Chicago expressed concern that recent sales bursts induced by low interest rates might be short-lived. On the commercial side, news is less positive, although construction is starting to increase. Boston, Philadelphia, Dallas, and San Francisco reported new construction of industrial and distribution facilities, while New York, Atlanta, Minneapolis, and Dallas indicated building activity in the apartment market. Demand for office space is flat or slowly increasing in the Boston, New York, Philadelphia, Atlanta, and Dallas districts. Richmond and Atlanta report modest rent increases. Office construction has begun in those districts, and in Minneapolis and parts of the San Francisco district. Financial Services Financial institutions report that higher interest rates slowed mortgage refinancings, but in a few districts this slowdown was partly offset by stronger demand for home-purchase mortgages. Overall loan demand is characterized as stronger by the Kansas City, Atlanta, and Dallas districts and described as weaker by New York, Philadelphia, and St. Louis. Among loan categories, business loans exhibited the greatest strength, with New York, Richmond, Cleveland, and Kansas City all registering increases. Increases in auto financing were cited by Cleveland and Philadelphia. San Francisco reports stronger business loan activity in Washington and very strong overall loan demand in Oregon, especially for real estate loans. Agriculture and Resource-Related Industries Dry weather in the Kansas City and Dallas districts has stunted the winter wheat crop and reduced the pasturage available for grazing. With cold weather also increasing the need for supplemental feeding, several districts--Richmond, Kansas City, Dallas, and San Francisco- note rising hay and feed grain prices. Accordingly, producers are reducing their livestock inventories, and cattle prices are expected to soften, with adverse consequences for farm incomes in cattle- raising regions. Calving and lambing survival rates are close to normal despite the severe weather, according to contacts in the Richmond and Minneapolis districts. The financial stress caused by last summer's floods generally appears to be easing, although Chicago district bankers suggest that land values and credit conditions still vary with the flood damage suffered. The frigid weather caused a flurry of activity in the energy industry. Dallas and Kansas City report that natural gas prices rose, and drilling for natural gas increased in the Dallas region. Oil exploration fell, by contrast, in the Kansas City and Dallas districts, with glutted oil markets keeping a lid on the price of crude. While drilling in the Minneapolis district remained unchanged, refinery output was significantly above year-earlier levels. Minneapolis district contacts expect 1994 to be the best year thus far in the 1990s for iron ore production. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1725 -beige_book_pure_text_pre2000,1994,"Solid economic growth is reported in most parts of the country. In California, conditions remain weak, although some positive signs are starting to emerge. Reports from all Districts indicate that retail sales were strong in March, due in part to improved weather in many parts of the country. Retail pricing remains competitive, as few price increases and some price cuts are noted. Apparel sales improved, and auto sales are very strong. Service sector activity is reported to be good, with strength in business services and tourism. Manufacturing activity is expanding overall, although aerospace activity continues weak. Production of autos, vehicle parts, steel, and building materials is near capacity. Price increases are reported for some raw materials, but competitive pressures appear to be restraining prices for most manufactured products. Agricultural conditions are good in most parts of the country. Oil drilling activity is down, but drilling for natural gas remains strong. Home sales activity is reported brisk in most parts of the country, and improving in the Northeast and California. Several Districts note that recent interest rate hikes have contributed to a temporary surge in home sales. Contacts indicate that lending activity is picking up, with greater strength in consumer lending than in business lending. Retail Trade Several Districts report double-digit year-over-year increases in retail sales, as long-awaited spring weather in much of the country, combined with an early Easter, boosted March results. Philadelphia reports that healthy sales continued into early April. Improved apparel sales are noted in the New York, Cleveland, Atlanta, Chicago, and Kansas City Districts. Pricing remains very competitive in most areas, with few price increases and some price cuts for retail products. Dallas reports slow sales growth, with the strongest gains reported by retailers who have reduced their prices during the past year. No inventory surpluses or shortages are noted. Reports suggest that auto sales were very strong through early April. Inventories of some models are quite tight. Most Districts indicate that higher interest rates did not reduce auto sales through mid-April, although one Chicago District auto dealer saw a sharp decline in activity as interest rates rose and customers worried about their losses in the financial markets. Services The service sector is generally healthy. Dallas reports growing demand in a wide range of business services, and San Francisco notes growing demand for telephone services in California and Washington. Contacts indicate that employers' health costs are rising more slowly, and health care providers are cutting their costs. Boston reports that hospitals are sharply reducing orders for large equipment. Hotel activity is strong in many tourist destinations throughout the West and Southeast, including Myrtle Beach, New Orleans, Las Vegas, and Salt Lake City, while activity is improving in many California markets and in Hawaii. In Florida, observers hope that very weak visitor activity from Europe will be offset by more tourism from the improving economies of Latin America and the Caribbean. In the northern Midwest, cold weather restrained winter resort activity, but industry officials are optimistic about the summer season, especially in Montana. Manufacturing Manufacturing activity is expanding in most Districts, although the pace of activity is uneven across industries and regions. Many manufacturers in the Cleveland District report that demand from foreign buyers has improved. In the Richmond District, shipments, new orders, and backlogs grew, but employment changed little. In the Atlanta District, demand for apparel fabric appears to have improved. Electronic equipment manufacturers in Chicago and San Francisco Districts report healthy sales growth, but at rates somewhat slower than last year. The Chicago and Cleveland Districts note that vehicle manufacturing activity is at or near capacity. Several Districts report strong demand for building materials. Aerospace and defense-related manufacturing continues weak. San Francisco reports strong investment in computer and communications equipment, as companies replace outdated equipment in order to increase productivity and improve their competitive positions. Manufacturers note that competitive pressures are restraining prices for most products. However, significant price increases are reported for certain raw materials, including building materials. Chicago indicates that capacity constraints have led to price increases for special-order steel products, since extra production time must be set aside to fill these orders. Several manufacturers in the Boston, Richmond, Chicago, and St. Louis Districts have successfully resisted suppliers' price increases, but some have been forced to absorb the increased cost of materials. Agriculture and Resource-Related Industries Favorable spring weather through the third week of April created good conditions for field preparation and planting in much of the country. In the Richmond and Minneapolis Districts, field preparation and planting were on schedule or ahead of schedule. In the Kansas City District, however, farmers were waiting for warmer and drier weather before planting corn and soybeans. Kansas City District cattle feedlots are operating near capacity, and cattle prices are up. The Dallas and San Francisco Districts report good agricultural activity, but dry weather and water supply restrictions are creating concerns. St. Louis notes that fertilizer prices have increased substantially during the past year. Low oil prices have led to reduced oil production and oil drilling activity in the Kansas City District. Natural gas prices declined slightly, but Dallas reports that drilling activity is very strong in the Gulf of Mexico, where more than 70 percent of drilling is for natural gas. Major commercial construction projects are under way for the first time in several years in Manhattan. Office leasing activity in New York is reported to be ""fairly brisk."" Vacancy rates and leasing activity have improved in the Atlanta District as well. Strong commercial building activity also is noted in North Dakota, Wisconsin, South Dakota, and Montana. Financial Institutions Several Districts report improved lending activity, with consumer lending generally characterized as stronger than business lending. In the Philadelphia District, consumer installment and credit card lending is reported up, while business lending is flat or increasing marginally. Mortgage lending for home purchases is up in many Districts, but refinancing activity has fallen sharply throughout the country. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1268 -beige_book_pure_text_pre2000,1994,"Districts report continued economic expansion, although in some areas growth has moderated recently. Contacts in a number of districts report slower-than-expected growth in May retail sales but some signs of increasing sales in early June. Manufacturing continued to show strength in most districts, with many contacts reporting increases in new orders and shipments. Defense-related industries, however, continue to be the weak spots. Home sales in most areas continued at a strong pace, and residential construction remains generally brisk, but some slowdowns in response to rising mortgage rates were noted. Industrial materials prices continue to rise; however, competitive pressures are mitigating price increases for finished goods. Some districts report tightening labor markets, but wage pressures appear moderate at this point. Loan demand is generally increasing, although rising interest rates have precipitated declines in some areas. Crop conditions are generally favorable in most agricultural areas; nevertheless, some districts are expressing rising concern over warm, dry weather. Consumer Spending Most districts report moderate gains in retail sales, although contacts in the Atlanta, Cleveland, Dallas, New York and Philadelphia districts report slower-than-expected sales. In particular, they cite declines in apparel sales and attribute this to unseasonably cool weather. Sales activity in the Boston district varied from slight declines to increases of almost 20 percent over last year, with strong demand for outdoor-related items since Memorial Day. The Kansas City, Minneapolis and St. Louis districts report moderate-to-strong sales in general merchandise, particularly in apparel. The Chicago, New York, Philadelphia, Richmond and San Francisco districts report strong sales in household goods and furniture, and strength in consumer durables and other big-ticket items. The Atlanta, Cleveland and New York districts found that discounting was needed to move merchandise; the Chicago, Dallas and Kansas City districts note that strong competition is keeping prices in line. The Kansas City, Minneapolis, Philadelphia, St. Louis and San Francisco districts report strong auto sales; the Chicago, Cleveland and Dallas districts report some recent slowing in auto sales. A number of districts report that a shortage of popular models is constraining sales. Business Activity Most districts report continued growth, particularly at manufacturing firms, although the San Francisco district has mixed reports from its contacts. The Chicago and St. Louis districts report strong growth, while the Boston, Cleveland, Minneapolis, New York and Richmond districts report accelerating activity. The Atlanta district reports a rebound of industrial production in May after a modest slowing in April. Machinery and heavy equipment orders and production are up in the Boston, Chicago, Dallas, Philadelphia and St. Louis districts. The San Francisco district says the aerospace industry, especially commercial jets, has stabilized, but this industry is weak in the Boston district. Business contacts in the St. Louis district report sales increases of between 10 percent and 20 percent in some instances. The Atlanta district reports that the demand for building materials in the Southeast is up recently, and that auto suppliers are receiving a steady stream of new orders. The New York district says that its manufacturing contacts are more optimistic than a year ago. A survey of contacts in the Philadelphia and Richmond districts revealed increases in new orders and shipments. The Dallas and Richmond districts also report a steady-to-moderate increase in demand in the service sector, particularly at law firms, hotels and cargo carriers. Contacts in parts of the Kansas City, Minneapolis and St. Louis districts are having difficulty finding qualified employees. The St. Louis and San Francisco districts both repast a shortage of skilled construction workers. Contacts in the New York district anticipate few employment cuts and see wage increases of between 2 percent and 4 percent. Contacts in the Richmond district plan no employment changes, but do expect to increase the average length of the workweek. Foreign demand for products from most districts remains somewhat sluggish. The Dallas and St. Louis districts, however, report some strengthening demand from Latin America and the Pacific Rim countries, respectively. In addition, the Dallas district reports strong chemical sales to Europe. The Kansas City district reports that exports are stable overall. Both the Atlanta and St. Louis districts report defense-related layoffs; the San Francisco district reports its defense-related industries remain weak. The Boston district says its durables producers are concerned that rising interest rates will reduce demand for their products, and Philadelphia district contacts are less optimistic now than they were at the beginning of the year. Construction and Real Estate Most districts report generally strong or improving home sales, although many also cite increased mortgage rates as a source of emerging or potential weakness. Residential construction remains brisk in many districts, with the majority of the construction occurring in single-family houses. The Minneapolis district stressed multifamily housing as its construction strength. The Philadelphia district, though, reports some recent slippage in residential construction. The Atlanta and St. Louis districts observed rising house prices, while the Dallas and Richmond districts report stable or slightly falling house prices. Contacts in the Atlanta district say mid-priced homes have replaced starter homes as the big sellers, but low and mid-priced homes are still the big sellers in the Philadelphia district. The shortage of construction workers in the St. Louis district is adding to the already large backlogs previously built up because of weather delays and strong demand. The Minneapolis district reports that the commercial construction market is strong, and the Richmond district reports recent improvements in this market. The Philadelphia district, however, reports a soft commercial market with slightly increasing vacancy rates. The Boston district reports declining vacancy rates in Boston, although Hartford's have increased. The New York district reports falling vacancy rates in Manhattan, and the Richmond district says that vacancy rates arc falling throughout the district except in northern Maryland and West Virginia. Price and Wages Most districts report that competitive pressures continue to temper price increases on the output side. Contacts in many districts report cost pressures on the input side-albeit modest in many instances. Increases in manufacturers' raw materials prices were noted in more than half of the districts. The Boston, Dallas and Philadelphia districts report increases in chemicals prices and certain metals prices, while the Atlanta, Kansas City, and Richmond districts report increases in construction materials prices. Tightening labor markets were noted in the Atlanta, Chicago, Minneapolis and Richmond districts. Nevertheless, upward pressure on wages, while noted by some districts, appears to be modest. In addition, Philadelphia reports continued increases in employment costs, mainly in benefits. Banking and Finance Despite weakness in some areas, loan demand has generally picked up in most districts. Dallas reports that loan demand is up strongly, and San Francisco indicates similar sentiment about loan demand in Idaho and Utah. Business loans have reportedly increased in the Cleveland, Kansas City, New York, Philadelphia and St. Louis districts, while demand for consumer loans has risen in the Kansas City, Richmond and St. Louis districts. The New York district reports that total loan demand has subsided because of increases in short-term interest rates; loan demand is reported to be flat in the Atlanta and Philadelphia districts. Loan demand also remains weak in California, although the San Francisco district reports that an uptick in business lending has occurred in southern California and Hawaii. Demand for auto loans has weakened in the Atlanta and Cleveland districts. The Dallas, Philadelphia and San Francisco districts noted increased competition among lenders, leading some banks to offer more attractive terms to borrowers. Most other districts report little or no change in lending standards, although some report higher lending rates. For instance, the New York district reports that all of its surveyed banks have increased their rates charged on commercial and industrial loans. Despite recent increases in long-term rates, mortgage lending is mixed. New mortgage lending remains relatively strong in the Dallas, Kansas City and St. Louis districts, but has ebbed in the Atlanta, New York, Philadelphia and Richmond districts. Most districts report a pronounced decline in mortgage refinancing activity. After a strong first quarter, the Boston district reports that mutual fund sales in the second quarter have slowed considerably. Agriculture and Natural Resources Crop conditions were generally favorable in most areas, with crop development and planting ahead of schedule. Richmond reports that some recently planted crops may have suffered from unseasonably warm, dry weather. Likewise, St. Louis reports increasingly drier conditions, and some insect problems were noted in the wheat and corn crops. Dallas reports that the winter wheat crop is expected to be off 25 percent from last year because of adverse weather. Minneapolis and Kansas City report adequate soil moisture with most crops in good-to-excellent condition. Kansas City reports that the recent drop in cattle prices produced feedlot losses in excess of $100 per head. As a result, the Kansas City district expects lower farm income in the livestock sector, although prospects are substantially more favorable for crop producers. Recent increases in crude oil prices have spurred slightly higher drilling activity in the Kansas City district, but little noticeable increase in the Dallas district. Minneapolis, on the other hand, reports a decrease in petroleum drilling activity in North Dakota and Montana. The Minneapolis and San Francisco districts report that lumber prices have increased, while Minneapolis indicates that recent increases in copper and steel prices have benefited district producers. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1971 -beige_book_pure_text_pre2000,1994,"Business activity in most areas is continuing to expand at a solid pace, although a number of Districts report scattered indications of some slowing or slight declines. Retail activity, which had moderated during the spring, appears to have picked up recently. Most Districts report sales of autos, building materials, and apparel are improved since their June report. Several Districts are reporting a tightening in labor markets that, in some cases at least, has resulted in faster wage growth. However, labor shortages appear to be concentrated only in a few skilled occupations. The range of commodities for which prices are rising appears to have broadened somewhat. However, a majority of Districts report that retailers are holding the line on price increases, and profit margins are narrowing in a retail environment that continues to be characterized as intensely competitive. Loan demand appears to be fairly strong in most Districts. Commercial and industrial borrowing has improved in many regions and consumer lending is particularly active. Even in California, where the business trend remains flat, a moderate expansion in lending activity is reported to be underway. Business Activity Virtually all Districts are seeing an expansion of industrial activity, with only scattered observations of weakness. Industries such as motor vehicles, capital goods including industrial machinery, heavy trucks, microelectronics, computers, mining and construction equipment, and nondurable goods producers like chemicals and textiles, are all reported to be expanding their production. Construction activity appears to be holding steady, although a drop- off in residential construction was prominently noted in many District reports. Higher mortgage interest rates are commonly blamed for a slowdown in home sales and new construction, although the Dallas District also notes a very low inventory of new homes. At least a share of the slower residential construction activity appears to have been offset by moderately stronger commercial building. Retail markets are, in most regions, stronger than in the spring, particularly in the areas of autos, building materials, and appliances. Even apparel sales are noted as having improved since the June report, although not in all Districts. Several regions also report a reasonably busy tourist season. Although activity has improved in retailing, competitive pressures have kept profit margins lean-discounts and promotions are frequently noted. Retailers are guardedly optimistic about prospects over the remainder of year, with continued strength anticipated in the new car market. There also appears to be a growing enthusiasm over the coming back-to-school season. Prices Price increases are noted among a broad range of business materials including finished steel and steel scrap, copper, wood, paper and paperboard, building materials including brick and glass, and wool and other textile products. Energy costs have also moved up a bit in the past month or so. In construction and some manufacturing industries, higher materials costs are thought to be exerting upward pressure on finished goods prices. The Philadelphia District survey of manufacturers taken in July indicates that nearly 25 percent of firms were implementing price increases, up from 15 percent in their June survey. In the Boston District, about half of the manufacturing contacts have raised or plan to raise prices, by up to 5 percent. However, virtually all Districts report that competitive pressures are holding prices down at the retail level and, presumably, retail margins are being squeezed. Employment and Wages Several Districts indicate a general tightening in labor markets and an increase in help-wanted advertising is cited. However, few Districts see any broad-based wage pressures as a result. Actual labor shortages are mostly limited to occupations such as machinists, technicians, clerical workers, construction workers, and truck drivers, although shortages of some entry-level positions are also noted. Jobs expansion in the industrial sector is uneven by District and industry. The use of temporary workers and high levels of overtime are continuing, and some Districts report a continuing resistance by firms to permanently expand their payrolls. Manufacturing jobs are reported to be holding steady in the Boston and Richmond Districts. In Philadelphia, where manufacturing employment is also steady, an increasing proportion of firms report plans to add to their payrolls during the next six months. In other Districts, such as St. Louis, recalls and new hires are on the rise, and in Atlanta, jobs growth is seen in the chemicals, steel, and auto industries. Reports of jobs cutbacks are more rare, although several Districts report continued layoffs of aerospace workers, and the New York District notes some jobs losses as a result of restructuring in the financial and retail industries. Agriculture and Natural Resources The agricultural regions of the country are generally reporting favorable growing conditions, and some crop prices are falling in anticipation of high yields. Earlier concerns about a potential drought in the Richmond and Chicago Districts seem to have lessened with late spring rains. And, although rainfall has been excessive in some areas, such as in parts of the St. Louis and Minneapolis Districts, crop yields there are still expected to be normal, or better. Agricultural exports are also strong, helped in part by the falling dollar. The energy producing Districts note only a small increase in drilling and exploration activity as a result of the rise in oil prices. The Dallas District indicates that drilling activity has been focused on natural gas, although oil drilling is expected to improve through the end of the year. Other mining operations are reported to be running strong; iron-ore production for the year is exceeding industry expectations. Lending Activity Commercial bank lending remains active with high levels of' consumer borrowing noted in virtually all Districts. Commercial and industrial borrowing is noted as having strengthened in the Philadelphia, Cleveland, Atlanta, Kansas City, and San Francisco Districts. The only major lending category that may have diminished is residential mortgages. Higher mortgage interest rates are widely cited, although interest rates are marginally higher on most types of credit. Credit standards are apparently changed very little and a farther decline in credit delinquency rates is reported. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1273 -beige_book_pure_text_pre2000,1994,"Economic activity continued to expand through the summer, according to reports from businesses in most Federal Reserve Districts. Regions that have been lagging are generally said to be doing better while most of the stronger areas saw growth plateau. The expansion in consumer spending is seen as healthy, albeit decelerating, and retailers' expectations for holiday sales are generally favorable. Summer tourism activity has generally been strong, outpacing last year's levels. Most manufacturers around the country continued to report at least moderate strength. Single-family home sales were seen as slowing modestly in most Districts, with home construction easing in some areas. At the same time, commercial real estate conditions were generally described as improved. Overall bank loan demand appears to be modestly increasing, but higher interest rates are reported to be slowing real estate lending in most areas. There are more reports of tightening labor markets than before, though wage pressures are still described as modest. Industrial materials prices edged up further, but businesses say that competitive pressures continue to restrain price increases on finished goods. Farm contacts report that crop conditions in most agricultural areas are favorable and point toward an excellent fall harvest. Consumer Spending Retail sales reports are mixed but generally positive. The majority of retailers report that sales continue to grow, while some characterize conditions as slow. St. Louis retailers saw year-over- year sales growth of 4 to 5 percent, but these figures fell short of their expectations. Stores in both the Atlanta and Philadelphia Districts reported that back-to-school sales were mixed. Contacts in the majority of Districts suggested that retail prices were remaining stable because of intense competition. Expectations for the holiday season are generally good. Retailers in the Atlanta, Chicago, Kansas City, and St. Louis Districts expect modest increases over last year's sales figures, while both Boston and Philadelphia contacts were hesitant to predict results for the remainder of the year. Retailers in the Atlanta, Chicago, and Kansas City Districts say that they are expanding inventories for the upcoming holiday season, while those in New York believe that inventories are about right. Automobile dealers in most Districts report that demand is strong, but those in Chicago, Kansas City, Philadelphia, and St. Louis say that a limited supply of autos on the lot is restricting sales. Dallas dealers report that although sales have slowed they are still above year-ago levels. The Kansas City, Philadelphia, and St. Louis Districts expect sales to remain healthy as long as inventories hold out. Tourism Tourist activity over the summer has been generally good. In the Minneapolis District, hotel/motel occupancies, campground, and attraction traffic were above last year's levels. Tourism was especially strong in Boston, boosted by large conventions and international visitors. Traffic on Mississippi's Gulf Coast was reportedly heavy because of casino gambling attractions, but Florida tourism officials remain concerned about a sustained slowdown in visitor arrivals. Most of the San Francisco District saw an influx of foreign tourists taking advantage of the level of the dollar. Manufacturing and Services Steady to improving factory activity characterized most Districts' reports and comments on the near-term industrial outlook remained upbeat. Most firms are operating at high levels of capacity in the Kansas City District, and manufacturing activity remains vigorous in Chicago amid reports that capacity restraints are limiting production in some cases. Auto-related activity has rebounded from the summer slowdown in the Cleveland District, and suppliers to that industry note solid production gains in August. Forecasts by plant managers are generally positive in Philadelphia, where producers of durable goods report improving conditions. Firms in the St. Louis District note moderate growth, and those in Minneapolis say that producers of industrial machinery, farm implements, and construction-related products are posting strong sales. The San Francisco and Boston Districts commented on strong orders for computers, while electronic and telecommunications equipment demand is growing in Dallas. Although factory activity is mixed in Atlanta, most industrial contacts there expect to see increasing orders over the next few months; activity is currently rising at paper and some textile mills. Boston, Dallas, and Atlanta report that suppliers to the auto and light truck industry increased production in August, and in some cases expanded operations. A number of manufacturers of heavy equipment and building materials have announced capacity expansion projects in the Chicago District. In the Kansas City region, manufacturers purchasing construction materials, such as cement and lumber, are facing longer delivery times. Dallas reports that the demand for chemicals is outstripping available capacity. Although overall manufacturers' shipments and new orders have evidently slowed in the Richmond District, exports have increased. Less positively, some industrial sectors have shown little improvement. One aerospace supplier in the San Francisco District reports that its backlogs have increased in the past year, but they remain well below levels seen two years ago. Atlanta says that regional military contractors see orders declining and are concerned about future prospects. Manufacturing increased at a sluggish pace in Richmond and factory orders decelerated slightly in the Dallas region. Boston and Atlanta manufacturers indicate that orders for some types of apparel and textiles remain weak. On the whole, service firms saw increased demand in most Districts. Dallas reports that demand for business services accelerated there, with temporary staffing and trucking firms noting the strongest gains. Real Estate and Construction Contacts in most Districts note a slowdown in single-family home sales. At the same time, the New York and Richmond Districts continue to report little change. Home prices are reported to be on the rise in the Atlanta, Kansas City, and San Francisco Districts, while contacts in the Dallas and Richmond Districts report prices remain unchanged. However, in Dallas, although home prices are steady, builders were said to be offering more discounts and incentives, such as free pools. Home builders in the Chicago, Kansas City, and San Francisco regions said that residential construction slowed, while those in the Atlanta, Dallas, Minneapolis, New York, and St. Louis Districts said the pace of such construction had increased. Nationally, commercial real estate agents report improving conditions. However, realtors in the downtown areas of Dallas and Boston note that markets in those cities remain particularly weak while the surrounding suburbs are improving. Construction of retail stores is dominating the markets in the Atlanta, Dallas, and Richmond Districts. Multifamily occupancy rates and rental rates have been on the rise throughout the Atlanta and Dallas Districts. Banking and Finance Banks around the country reported that overall loan demand was steady or up modestly. Business lending was the strongest, with only banks in the St. Louis District reporting softer loan demand. Several contacts noted, however, that competition for commercial loan customers was intense. Consumer lending was said to be stronger in the Cleveland, Kansas City, Philadelphia, San Francisco, and St. Louis Districts, while bankers noted decreases in the Atlanta, New York, and Richmond Districts. Real estate and mortgage lending activity is down in most areas. Wages and Prices Labor markets seem to be steady or tightening in all areas. San Francisco reports that, outside of California, labor demand appears to be accelerating a bit in the District. Worker shortages are said to be growing increasingly frequent in the Chicago District and some contacts in the St. Louis and Atlanta Districts were also having trouble finding qualified workers. Temporary placement firms reported rising wages in the Chicago District and shortages of skilled construction and clerical workers in several Districts are putting upward pressure on area wages. Price increases have been reported for inputs of raw and intermediate materials. Prices of industrial commodities and building materials continue to trend upward in the Chicago and New York Districts. Atlanta contacts note that price increases for raw materials are becoming more wide spread, especially for paper, metals, and building products. Respondents in Philadelphia and San Francisco also report an upward movement in industrial prices. Boston and Dallas firms say that prices are increasing for fiber and paper, respectively. Minneapolis respondents see little pressure on prices except for petroleum products and newsprint. The competitive environment is holding finished goods prices down, according to contacts in Atlanta and Chicago. Agriculture and Resource-Related Industries Farm sources say crops for the upcoming fall harvest are generally in good-to-excellent condition. Yields are expected in the good-to- record range for most plantings. Reports from Chicago indicate that a bumper fall harvest appears to be in store for District farmers. In the Kansas City region, corn and soybean yields are expected to approach record levels. Farmers in the Dallas District expect production of corn, sorghum, rice, peanuts, and soybeans to be higher than last year. However, sentiment across the country is that farm incomes will not rise with the favorable harvest because of lower commodity prices. The forest products industry in the Minneapolis District is reportedly being buoyed by continued strength in nationwide construction. Dallas reports that the decline in oil prices was expected, but contacts were surprised at the fall in natural gas prices. Energy-related activity there, as well as the Kansas City District, was seasonally slow and below last year's levels. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1938 -beige_book_pure_text_pre2000,1994,"Economic activity continues to expand in all Federal Reserve districts, according to business contacts; there are signs of acceleration in the Chicago, Dallas, Minneapolis, and Philadelphia districts, while growth has slowed somewhat in the New York district. Consumer spending generally remains strong. Many districts report increased spending, but several districts report flat or slackening retail sales. Auto sales remain very strong. Manufacturing activity increased in nearly all districts, and demand for business services where reported, has accelerated. Single-family construction has declined from fairly high levels across much of the country. Most districts report gains in commercial real estate activity. Loan demand is advancing at a healthy pace in most districts. Better-than-expected crop yields have added to record-breaking crop and livestock production nationwide, and large supplies have pushed down agricultural prices. Energy activity has improved, despite relatively weak oil and natural gas prices. Labor markets are tight or tightening in most districts, although tightness is limited to specific sectors. There are a few reports of rising wages. Prices of raw and intermediate materials continue to rise, and there are increasing reports that manufacturers are passing along these costs by raising selling prices. Most districts report no change in retail prices, although pressure is building in some districts. Consumer Spending Consumer spending (which includes automobiles) has picked up in many districts and is strong in most. Auto sales continue to be very strong across the country, and many dealers still complain that inventory shortages are curtailing sales of popular models. Generally, however, retailers are comfortable with inventory levels. Retail sales were unchanged or below expectations in the Atlanta, Cleveland, New York, and Richmond districts. Demand continues to be strongest for durable goods, such as furniture, appliances, and electronics. Several districts report weak apparel sales, particularly women's clothing. Contacts in the Atlanta, Boston, Cleveland, and New York districts suggest that unseasonably warm weather in September contributed to slow apparel sales. Retailers are optimistic about holiday retail sales growth in the Atlanta, Boston, Cleveland, Kansas City, Philadelphia, and San Francisco districts. Manufacturing Manufacturing activity has increased in all districts, and only Atlanta and Richmond note a slowing rate of growth since the last Beige Book. Demand remains particularly strong for heavy-duty trucks, automotive inputs and parts, steel, home appliances, electronics, furniture, chemicals, paper, and packaging. Several districts report that pulp, paper, and newsprint inventories are low, and food producers in the Dallas and San Francisco districts note higher packaging costs. In most districts, manufacturers have indicated that input prices are rising, and there are increasing reports that manufacturers are passing these costs along to consumers through higher selling prices. The San Francisco district reports continued weakness in the commercial aerospace industry, and in the Boston district, demand for aircraft parts has dropped at double-digit rates. In Central Florida, defense manufacturers' ongoing downsizing and the space industry's cutbacks are slowing economic activity. The apparel sector continues to shrink in the Atlanta district. Apparel demand is steady in Dallas, and producers are optimistic in the St. Louis district. Services In those districts reporting on the service sector, activity appears to be accelerating. Demand for business services has increased in the Atlanta, Boston, Dallas, Richmond, and San Francisco districts. Temporary service firms continue to report the strongest growth. Tourist activity is reported to be very high in the Atlanta, Minneapolis, Richmond, and San Francisco districts. Construction and Real Estate Single-family construction continues to decline in most districts, but activity remains at fairly high levels in the Atlanta, Chicago, Minneapolis, and San Francisco districts and parts of the St. Louis district. Sales of existing homes also have slipped in several districts, but sales were reported as brisk in the St. Louis district and strong in the city of Philadelphia. Home prices are reported as stable or lower in the Atlanta, Boston, Kansas City, Philadelphia, and Richmond districts. Commercial real estate markets have strengthened in the Atlanta, Chicago, Dallas, New York, and Richmond districts, and construction is reported as increasing in many of these markets. Lower vacancy rates are reported for office markets in the Atlanta, Chicago, Dallas, New York, and Richmond districts, and markets for multifamily real estate have tightened in the Atlanta and Dallas districts. Banking and Finance Loan demand is advancing at a healthy pace across the country. Most districts report solid gains in commercial and industrial lending, but residential mortgage and refinancing activity continued to slow or decline in many districts. Consumer lending is increasing modestly in many parts of the country but has declined moderately in the Richmond district. Competition among banks for loan customers is squeezing margins in several districts, but most bankers report no change in credit standards. The San Francisco district reports weak bank employment as part of consolidations and other cost-cutting efforts. The Philadelphia and Cleveland districts report that increased competition for deposits is placing upward pressure on funding costs. Agriculture and Natural Resources Better-than-expected crop yields in several districts are adding to record-breaking crop and livestock production nationwide. High crop yields are straining grain storage and handling facilities and pushing prices to very low levels. Record levels of production also have pushed down livestock prices, and the Chicago district reports that hog prices have reached the lowest level in fourteen years. The Chicago and Minneapolis districts expect low prices to limit farm household income and capital spending. The Dallas, Kansas City, and Minneapolis districts report that energy activity has improved, despite relatively weak oil and natural gas prices. On-shore drilling in the Dallas and Kansas City districts is reported to be below year-ago levels, although drilling activity was strong in the Gulf of Mexico, where the number of working rigs is the highest since 1990. Mines in the Minneapolis district are reported to be running at capacity. Prices and Wages Reports of labor market tightness have increased in most districts, but they are limited to specific sectors. There are a few reports of rising wages. The Atlanta, Chicago, Cleveland, Dallas, Kansas City, and St. Louis districts report tighter labor markets, although wages are not reported to be rising. In a few parts of the Atlanta district, labor market tightness is making it difficult for firms in the retail, service, and light industrial sectors to attract and retain employees. Cleveland reports labor shortages in the industrial sector, while Dallas reports hiring difficulties at temporary and trucking firms and in large metropolitan areas. A few manufacturers in the Kansas City district report shortages of skilled labor, and many contacts in the St. Louis district report a shortage of qualified workers for both permanent and seasonal work. Labor market tightness has led to rising wages only in the Boston, Minneapolis, and San Francisco districts. San Francisco reports tight labor markets, especially for the retail and service sectors, and wages are rising at food stores and for experienced computer programmers. The San Francisco district also reports a shortage of skilled construction workers in Idaho, Oregon, and Utah, where wages are increasing rapidly. Most districts continue to report that prices of raw and intermediate materials are rising, particularly prices of chemicals, plastic, paper, steel, and cotton. Prices of medical and computer equipment continue to decline, however. The Dallas, Philadelphia, and Richmond districts report that higher costs are being passed along through manufacturers' selling prices. A growing number of factory contacts in the Atlanta and Cleveland districts expect cost pressures to be reflected in finished goods prices soon. Most districts report that retail prices have not risen. In the Atlanta district, however, pressures are growing, and in the Dallas district, retail prices are continuing to fall but at a slower pace. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1636 -beige_book_pure_text_pre2000,1994,"Reports from the twelve Federal Reserve Districts suggest economic activity generally is continuing to expand at about the same pace as in recent months. Retail sales in most districts have improved, with nearly all districts reporting strong sales early in the holiday season. Manufacturing activity is increasing further in most districts, especially in durable goods industries, and the service sector is continuing to show strength. While single-family homebuilding continues to slow across most districts, commercial real estate markets and nonresidential construction have picked up in many districts. Loan demand is up in most districts, led by consumer loans and commercial and industrial lending. Farmers have harvested large crops in most parts of the nation but face generally low prices, as do cattle and hog producers. Energy activity in regions producing oil and natural gas has picked up somewhat. Prices of raw and intermediate materials continue to advance, with reports of some increases being passed through to final product prices. Labor markets in most districts have tightened further and more districts are reporting increasing wages in selected occupations. Retail Retail sales have strengthened in most districts. While sales reports for October and early November were mixed due to unseasonably warm weather in some regions, Thanksgiving weekend sales were robust and year-over-year sales during the holiday season generally are expected to be strong. Retailers in the Boston district are the least optimistic, expecting moderate holiday sales growth. Retailers in the Chicago, St. Louis, and Kansas City districts report strong activity recently and high expectations for holiday sales. A wide range of merchandise apparently has been selling well, with some regional variation. Retailers in the New York, Philadelphia, Richmond, Atlanta, Chicago, and Kansas City districts report either recently improving sales of apparel or expectations of improving sales during the holidays. In some of these districts the improvement is a rebound from soft sales of seasonal apparel during warm-weather spells in October. Furniture in the Atlanta, Cleveland, and Kansas City districts has been selling well. Seasonal items such as snowblowers and car batteries have been selling well in the Chicago district. Retailers in the Philadelphia and Richmond districts expect strong sales of consumer electronic goods during the holidays. Auto sales have held up well in most regions, except where dealers continue to have difficulties obtaining popular models. Manufacturing Manufacturing activity continues to increase in almost all regions. Many districts report growing shipments and high levels of capacity use. One exception is the Richmond district, where indicators of factory activity remained unchanged in October from September. Nonetheless, manufacturers there expect shipments and employment levels to increase in the months ahead. Durable goods industries over the past month have been the strongest performers. The strongest industries in the Boston district were consumer durables and new types of computer equipment. The electronic components industry has been strong in the Dallas and San Francisco districts. Factory activity in the Philadelphia and Cleveland districts has been boosted by increased production of durable goods such as steel, other metal products, and machinery. The Cleveland, Atlanta, Chicago, St. Louis, and Minneapolis districts report strength in the production of automobiles and related products. While the Atlanta and Dallas districts note some slowing of orders for building materials, this industry remains robust in the San Francisco, Boston, Chicago, St. Louis, and Minneapolis districts. Examples of weak industries are much less common. The aerospace industry continues to damp manufacturing gains in the Boston and San Francisco districts. And, the apparel industry remains weak in the Boston, Philadelphia, and Atlanta districts. Services Service activity continues to expand in all districts that report on this sector. Business services such as accounting, legal, computer, and temporary-help firms have seen their business grow in the Chicago, Dallas, and San Francisco districts. Temporary-help firms in the Chicago district report labor shortages across a wide range of service businesses. Tourism is generally operating at high levels of capacity and expanding in the Atlanta and San Francisco districts. Even the sluggish Florida tourism market appears to be improving. The San Francisco district, however, reports that the health care industry has been restrained by uncertainty about industry restructuring. Construction and Real Estate Single-family homebuilding continues to cool across most districts. The Richmond, Atlanta, Kansas City, and San Francisco districts report decreases in homebuilding or sales activity. Homebuilding is mixed across parts of the St. Louis district and appears to be leveling off in the New York and Minneapolis districts. Homebuilding in the Dallas district remains strong, although builders expressed concern about higher interest rates. Multifamily housing markets have tightened in the Atlanta and St. Louis districts. Commercial real estate markets have picked up in many districts. The Boston, New York, Atlanta, St. Louis, Minneapolis, and Dallas districts all report robust commercial real estate activity with a surge in sales and construction in most markets. In the Richmond district, activity was steady but commercial vacancy rates declined. In the New York, Atlanta, and Dallas districts, commercial real estate activity has been boosted by tightening markets for office space. Retail and industrial leasing was cited as an additional factor contributing to the strength in the Atlanta and Dallas districts. Banking and Finance Loan demand is up across most districts. Commercial and industrial loan demand has been rising in most districts, although the New York and Richmond districts are notable exceptions. Consumer lending continues to grow in many regions, led by new automobile loans. However, the Atlanta district reports steady overall consumer lending with a decline in auto loans, and the Richmond district reports a sharp drop in consumer lending. Residential mortgage lending and refinancing activity remained flat or declined in many districts. Lenders in several districts report intensifying competition, which has reduced interest rate margins. The Boston district notes an outflow from bond funds, although employment levels at asset management rums in the region remain stable. Agriculture and Resource-related Industries The fall harvest of most crops is complete except in parts of the Richmond and Dallas districts where wet weather slowed the harvest. Grain crops are reported to be large across most regions and are pushing prices to low levels. The Minneapolis and Kansas City districts report less favorable conditions for livestock producers due to low prices for cattle and hogs. The San Francisco district reports some improvement in agricultural conditions due to relatively strong prices for wheat and cotton and an uptick in prices of fresh fruit. The Dallas, Kansas City, and Minneapolis districts report stronger energy activity, despite weak oil and natural gas prices. In the Minneapolis district, mining and forestry industries continue to boost output in response to strong demand. Prices and Wages Most districts continue to report rising prices of raw and intermediate materials, especially paper products, plastics, chemicals, steel, and building materials. Evidence of increasing prices of finished goods remains much less widespread. The Boston, Philadelphia, and Richmond districts report rising prices of finished goods. In the San Francisco district, one large grocery chain reports pressures on prices from higher food-packaging costs. In the Cleveland district, furniture and petrochemical manufacturers have been pressing for price increases, but competition at the retail level continues to keep those prices in check. A recent survey of business people in the Minneapolis district shows heightened expectations that rising business costs will be passed along to consumers. In the Dallas district, retail prices continue to fall. Most districts report further tightening of labor markets, but the tightening remains confined to certain sectors. In the Cleveland district, labor shortages are limited to specific technical occupations. Markets for construction workers have been tighter in the Chicago, St. Louis, and Kansas City districts. In the Atlanta, Minneapolis and St. Louis districts, retail and food service firms report difficulty in hiring temporary workers for the holiday season due to tight labor markets. In the Dallas district, labor market tightness has surfaced in technical and professional fields. Labor market tightness has led to rising wages in more districts than reported in the last Beigebook. Districts reporting evidence of rising wages include Boston, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and Dallas. Wage increases have generally been confined to skilled construction and industrial occupations and entry-level service and retail occupations. In the Kansas City district, only a few contacts report increased wages, and those increases were limited to skilled construction workers such as carpenters. The Dallas district reports only scattered evidence of wage increases, mostly in temporary-help services, trucking, accounting, and communications. In the Richmond district, wages increased at service-producing firms. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1803 -beige_book_pure_text_pre2000,1995,"Summary Economic expansion remained vibrant around much of the nation in recent months, and conditions seem to have grown more uniform among the Districts. The underlying momentum in consumer spending growth remained quite strong. Manufacturers continued to offer some of the brightest reports within the Districts, although the overall pace of expansion in industrial output may have eased somewhat. Assessments of auto industry conditions remained upbeat. Higher mortgage interest rates appear to have slowed single-family housing activity, but multifamily residential and commercial construction remained relatively strong. Expansion in bank loans slowed, led by weaker demand for home mortgage, home equity, and residential construction loans. Production responses to livestock price declines are anticipated to bolster farm income in the current year. Labor markets continued to strengthen, with most reports indicating unchanged to somewhat higher wage increases. Price increases seemed somewhat more widespread than were reported in early December, while higher inflationary expectations were apparent in business surveys. Retail Sales Retail sales increased at a moderate pace in the holiday season. Sales gains may have fallen mostly below expectations formed just after the Thanksgiving weekend, but weather effects and other factors point to stronger underlying momentum in spending growth. Nearly every District reported continued strength in sales gains for hard goods and/or big-ticket items, including personal computers, other consumer electronics items, home furnishings and appliances. Assessments of auto sales remained quite positive in most of the nation. Apparel sales were weaker in normally cold Districts that experienced relatively warm winter weather, and many apparel retailers reported heavier-than-anticipated discounting. However, there were signs of underlying strength even in the apparel category. Several Districts in the northern part of the country noted that apparel sales weakness was concentrated in outerwear, while retailers in the Atlanta District noted that warmer-than-usual weather held back overall holiday sales gains, except for apparel, which showed relatively strong gains. Manufacturing Manufacturers continued to provide some of the strongest reports within the Districts, although the overall growth rate may have slowed modestly. Philadelphia's survey of manufacturers showed output continuing to grow in the fourth quarter, although somewhat more slowly than a strong year-earlier period; looking ahead, about twice as many respondents expected order increases than decreases during the first half of 1995. Richmond's mail survey also suggested that most manufacturers expect further gains in output, with little change in the pace of current growth reported since the last survey. Purchasing managers' surveys in the Chicago region pointed to vigorous gains in industrial output as 1994 came to a close, although expansion was not quite so strong as earlier in the year. Production and orders trends in durable goods industries continued to lead growth within the overall manufacturing sector. Cleveland's industrial contacts indicated that orders growth remains solid, with particular strength in capital goods industries. Automotive contacts reported some of the strongest sales gains within Boston's manufacturing sector. Cleveland and Chicago reported strength in demand for steel, with Chicago noting that steel output plans for the first quarter were recently increased in response to stronger automotive orders. Auto parts suppliers continued to announce construction of new production facilities in the Atlanta region. Increased exports to Europe boosted recent results among Cleveland's manufacturing contacts. Uncertainty over Mexican developments clouded expectations in several regions, however. Construction and Real Estate Higher mortgage interest rates appear to have slowed homebuilding and residential real estate activity around much of the nation. Seasonal patterns account for some of the recent weakness, but home sales weakened in normally cold regions that enjoyed relatively warm and favorable weather. Multifamily and commercial construction were stronger than single-family homebuilding in nearly every District. For example, Dallas reported that overall demand for construction- related products edged up; lumber producers reported lower sales for residential building but increased orders for commercial construction, and glass producers reported record sales partly for the same reason. Declining commercial vacancy rates were widely reported, and continued growth in commercial and multifamily development was generally anticipated in 1995. However, a wider group of contacts expressed concern about the future impact of higher interest rates on real estate and commercial construction activity. Banking Expansion in bank loans slowed, led by weaker demand for home mortgage, home equity, and residential construction loans. Most Districts indicated that commercial and industrial loan demand remains relatively strong. ""Outside of housing,"" San Francisco noted, ""bank lending activity is reported to be brisk."" A number of Districts reported slower growth or declines in business loan demand, however. After a relatively strong group of reports in December, assessments of trends in consumer loan demand were mixed, with some new slowing apparent even in Districts with relatively strong retail sales gains. Wherever noted, delinquency rates continued to decline. Philadelphia characterized loan officers' outlooks as ""positive but cautious,"" with overall loan growth expected to ease as the year progresses. Reports of tighter lending margins were noted in several Districts, and Philadelphia stated that officers may review future lending plans as a result. Agricultural banks in the Kansas City District reported that crop loans were in better condition than a year ago, while a slump in hog and cattle prices weighed on livestock loan quality. Agriculture Production responses to livestock price declines are anticipated to help bring some recovery in farm income in the current year. Kansas City reported that bankers generally expect farm income to improve slightly in its region during 1995, assuming normal crop yields, as livestock prices are anticipated to return to break-even levels. Chicago noted that hog production was up only marginally from last year and well short of expectations. Producers in the Chicago region account for a substantial share of national output, and they have made sizable cuts in planned production. Minneapolis noted that modest recent improvement in livestock prices have improved producer outlooks for 1995, and there are signs of increased farmer willingness to invest in new machinery. Labor Markets Continued strengthening and/or increasingly tight labor markets were widely noted, although a minority of Districts suggested that wage pressures may have eased in some occupations. Minneapolis stated that ""evidence of tight labor markets abounds."" Retailers in the St. Louis and Chicago Districts reported difficulty meeting holiday seasonal labor needs, and St. Louis found that retailers were actively recruiting personnel from other stores. Strong demand for temporary workers was reported in the Boston, Atlanta, and Dallas Districts, with Dallas also noting increasing wage pressures for temporary labor. Chicago reported that shortages of machine tool operators caused some production bottlenecks, and prompted some capital spending delays because workers were not available to operate new machinery. Reports on permanent manufacturing employment trends were mixed; growth was noted by contacts in Cleveland, Chicago and Richmond, while employment seemed to remain relatively flat among manufacturers contacted by Boston and Philadelphia. At the same time, Boston reported a tighter market for clerical workers, with increased opportunities for permanent employment. New York reported significant job cut announcements in the financial services sector. Increasing wage pressures were reported more frequently in the Atlanta, St. Louis, Minneapolis, Dallas, and San Francisco Districts, while Kansas City stated that tightness in markets for skilled manufacturing and construction labor had eased. Surveys by compensation consulting companies in the Chicago region suggest that salary increases for exempt salaried employees of large firms will remain in line with 1994, while pay varying with sales growth, profitability, customer service, or other organizational goals will continue to take an increased share of total compensation. Prices The pace of price increases seemed steady to somewhat higher since reports in early December, while higher inflationary expectations were apparent in business surveys conducted in San Francisco and Chicago. District reports continued to emphasize shortages and increasing input prices in manufacturing and construction, coupled with stability in most retail prices. Price discounting during the holiday season ran heavier than many retailers had anticipated, particularly in apparel. Manufacturers continued to report strong (but perhaps diminishing) pressure against output price increases. Boston stated that long- term agreements with suppliers, low labor cost increases, pressure from customers and greater operating efficiency continue to limit many manufacturers' needs for output price increases. Reports from a minority of Districts included a growing set of exceptions to this rule, however. Retailers in Dallas and San Francisco noted higher price pressures from rising packaging costs. Labor shortages and strong demand increased price pressures among service firms in the Dallas region. Agricultural businesses in the San Francisco region expressed concern about rising labor, transportation, packaging, and raw materials costs. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1802 -beige_book_pure_text_pre2000,1995,"Reports from the twelve Federal Reserve districts suggest that the pace of the economic expansion has moderated over the past two months. Half the districts note that growth has slowed, while the remaining districts generally report that conditions are mixed. Retail sales and residential construction weakened across much of the country. In contrast, manufacturing continued to grow in all but one of the regions and labor markets remained strong. Although commodity prices continued to rise, several districts note that the rate of increase has decelerated. There is little evidence that strength in labor markets or increases in commodity prices have spilled over into wages or prices of finished goods. Retail Recent reports suggest that retail sales growth, measured on a year- over-year basis, slowed in over two-thirds of the districts. Retailers in Boston report sales were flat or declining for a broad range of merchandise, including winter apparel, housewares, and sports equipment. Minneapolis cites news reports of a ""retail slump,"" while retailers in both the Dallas and San Francisco regions report that sales declined along the Mexican border because of the weak peso. While two districts report noticeably stronger retail sales growth, they note that much of the strength is attributable to special factors--weather in New York and clearance promotions in Kansas City. Retail inventories have increased beyond planned levels in the Cleveland, Richmond, Chicago, and Dallas districts. Auto sales have generally weakened; dealers in the San Francisco region are using rebates and other incentives to bolster sales. Manufacturing Growth in the manufacturing sector has generally remained strong since the beginning of the year. Manufacturing strengthened in Philadelphia, Minneapolis, and Dallas, while remaining robust in Cleveland, Chicago, and Kansas City. Sources in Minneapolis describe the strongest manufacturing performance in recent years. Boston, New York, Atlanta, and San Francisco report that conditions were mixed, with weakness in some segments of manufacturing offsetting strength in others. The sector continued to grow but at a slower pace in St. Louis. Preliminary results of Richmond's survey of manufacturers show that new orders, backlogs, and employment indexes were down slightly in February from their January levels. Contacts in three of the districts expect the pace of manufacturing growth to moderate in coming months. Capital goods industries have been particularly robust. Cleveland reports that orders of capital goods, led by strength in export markets, have continued to grow strongly. In St. Louis, exports of capital goods included construction equipment shipped to Japan in the wake of the Kobe earthquake. Computer equipment, pulp and paper products, and electronics are also repeatedly cited as sources of manufacturing strength. Examples of manufacturing weakness include the aerospace industry (Boston and San Francisco), automobiles and auto supplies (Boston and Chicago), and apparel (Atlanta and Dallas). Construction and Real Estate Construction of single-family homes continued to slow from 1994 levels across much of the country. Atlanta, St. Louis, Kansas City, Dallas, and San Francisco report that homebuilding declined, while Philadelphia and Minneapolis report that activity leveled off. Looking forward, however, contacts in a third of the districts expect demand to strengthen later this spring. In contrast to the weakness in single-family homes, the construction of multifamily housing increased in both the Atlanta and Kansas City regions. Reports on commercial construction are more upbeat. Cleveland, Richmond, Atlanta, Chicago, Minneapolis, and Dallas note an increase in commercial construction, driven by such diverse factors as a scarcity of large blocks of contiguous office space (Atlanta), expansion of manufacturing capacity (Chicago), and increased demand for warehouse space (Minneapolis). Reports on commercial real estate markets are mixed, however. The market softened for office space in midtown Manhattan. Philadelphia notes that its office market remains weak, although demand for industrial space has firmed. Within the San Francisco region, commercial real estate markets are weak in California but strong elsewhere. Banking and Finance Loan demand was steady or higher in nearly all of the districts. The strength in lending was primarily attributable to commercial and industrial loans. In contrast, New York, Atlanta, St. Louis, and Kansas City report that residential mortgage lending slowed as the housing sector cooled; Cleveland notes that mortgage refinancing is at a standstill. Consumer lending--especially automobile loans-- weakened in Philadelphia, Cleveland, Atlanta, and St. Louis while remaining flat in Richmond and Dallas. Agriculture Favorable weather conditions coupled with increases in crop and livestock prices brightened the outlook for farm incomes. Chicago reports that market conditions in the agricultural sector held up better than expected. Mild winter weather benefited livestock production in the Richmond and Minneapolis districts. St. Louis, Dallas, and San Francisco note that strong domestic demand coupled with reduced foreign supply boosted cotton prices. Prices and Wages Although commodity prices have continued to rise, several districts report that the rate of increase seems to have eased. Boston notes that some suppliers of steel and chemicals are now offering customer rebates to soften the impact of price increases. Contacts in Cleveland report a moderation in the rate of increase of industrial commodity prices. Fewer manufacturers in Minneapolis report delivery delays, while manufacturers in Dallas expect price pressures to ease in coming months. In contrast, Chicago sees little evidence that manufacturers' input prices have ebbed and notes that recovery abroad may put upward pressure on commodity prices by tightening import supplies. In general, the districts report that increases in commodity prices have not spilled over into prices of finished goods. Boston notes that finished goods prices have generally remained stable, with increases for some products offset by decreases for others. Chicago, Kansas City, and Dallas report that intense competition among retailers kept prices flat despite increased input costs. Labor market conditions are generally strong. Cleveland, Chicago, and Minneapolis report that labor markets have remained tight. A survey by a large temporary help firm in Chicago showed further strengthening in employers' hiring plans after record high levels late last year. Similarly, Minneapolis notes shortages of skilled workers, particularly in manufacturing. New York, Atlanta, St. Louis, and Kansas City report spot shortages in labor. In contrast, manufacturers hiring for replacement purposes in the Boston region had little difficulty finding qualified workers. Despite the strength in labor markets, the districts report little evidence of upward pressure on wages. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1330 -beige_book_pure_text_pre2000,1995,"Most Federal Reserve District Banks reported continuing gains in economic activity from March through April, but at a somewhat slower pace. Overall business conditions were described as improving solidly in the Cleveland, Chicago, Kansas City, and Minneapolis Districts. Growth was reported to be continuing at a somewhat slower pace by Boston, Richmond, Atlanta, St. Louis, Dallas, and San Francisco. Business activity was described as mixed in New York and less strong in Philadelphia. Most Districts reported sluggish growth in retail sales and declines in automobile sales, while manufacturing was up by varying degrees in most Districts. Although reports of rising commodity and industrial prices remain widespread, except for construction materials, reports from many Districts described these increases as moderate or not accelerating or indicated that they were not being passed through to finished goods prices. In addition, despite tight labor markets in some sectors or regions, wage pressures were described as moderate in most areas. Retail Most Districts reported sluggish growth in general merchandise sales, although Chicago and Minneapolis reported improved sales and a few Districts (New York, Cleveland, and Atlanta) noted some improvement in April compared to March. Richmond indicated that sales growth was slowing. In the Boston and Philadelphia Districts sales were mixed and generally below expectations. Store inventories were on the rise, according to Philadelphia, Atlanta, Dallas, and San Francisco. Auto sales softened in all Districts except Dallas. Some weakening in sales of home furnishings and consumer durables was also reported. Manufacturing Manufacturing activity remained strong in Cleveland, Kansas City, Minneapolis, and Dallas. Continuing, but smaller, gains were reported by Boston, Richmond, Atlanta, Chicago, and St. Louis. Demand was strong for capital goods, electronics, and petrochemicals. However, even in Districts with increases in overall manufacturing, demand for construction materials was easing. San Francisco District manufacturers reported mixed results. Aerospace and lumber companies experienced declining demand, while producers of electronic goods, machinery, and aluminum increased output. Overall manufacturing activity declined in the Philadelphia District. Real Estate and Construction Commercial real estate activity was improving in most Districts. Office leasing and construction were reported on the rise by Richmond, St. Louis, and Minneapolis. Dallas and Minneapolis noted increased construction of warehouses. Nonresidential construction was mixed in the San Francisco District, moving up outside of California, particularly in Nevada and Alaska, but easing in the Los Angeles area. Boston and New York gave mixed reports; gains in some parts of those Districts were offset by declines in others. Residential construction or sales were up somewhat in the Chicago and Kansas City Districts, but were slipping in the Atlanta, St. Louis, Minneapolis, and Dallas Districts. San Francisco reported slower growth in residential construction. Multifamily construction was increasing, according to Atlanta and Dallas, but real estate contacts in those Districts expressed concern that apartments were approaching an overbuilt situation. Banking Overall bank lending was increasing moderately in most Districts, with gains most often noted in commercial and industrial lending. All five District Banks that reported on consumer lending (Philadelphia, Richmond, Cleveland, St. Louis, and San Francisco) noted drops in the demand for consumer loans. New York, Richmond, and St. Louis reported increased real estate lending. Lending terms in April were reported to be substantially the same as earlier in the year, but competition for business loans remains strong. Agriculture Several Districts noted some concern in agricultural areas about the outlook for summer crops because planting has been delayed. Cold and wet weather has caused postponements in planting in the Cleveland, St. Louis, Minneapolis, and San Francisco Districts, while dry weather has affected parts of the Richmond and Dallas Districts. According to agricultural contacts in Minneapolis, the delay could curtail crop yields later this year regardless of weather conditions during the summer. But the winter wheat crop is in good condition, according to reports received by St. Louis and Kansas City. Floods in California have damaged vegetable, fruit, and nut crops, according to information obtained by San Francisco, and some crop prices are expected to remain high through mid-summer. Both Kansas City and Dallas report falling livestock prices. Tourism Spring tourism business has picked up in the Boston, Richmond, Minneapolis, and San Francisco Districts, and part of the Atlanta District. Tour agencies and hoteliers in these regions expect a good summer. Boston and Atlanta both noted an increase in international visitors to some tourist regions. Atlanta also noted, however, that a weakening of tourism in southern Florida has been attributed to the drop in the value of the peso. Boston also was told that spending by domestic tourists appears to be off from prior years. Energy and Mining Recent increases in oil prices have boosted drilling activity a bit, according to the Kansas City, Dallas, and Minneapolis Districts. But a relatively mild winter depressed demand for natural gas, and natural gas prices and production remain weak. Minneapolis reported that rising demand for gold and copper was prompting output and employment increases in the District. San Francisco also reported increased production from gold and silver mines. Prices Except for prices of materials used in residential construction, reports of rising commodity and industrial prices remain widespread, although many Districts described these increases as moderate or not accelerating (including Philadelphia, Chicago, Atlanta, and Richmond) or indicated that they were not being passed through to finished goods prices (including Philadelphia, Cleveland, Atlanta, and Dallas). Chicago was the only District that reported that input price increases were more frequently being passed through to final goods prices. While some business contacts told District Banks that the rise in commodity prices appeared to be slowing, Boston, Chicago, and Cleveland reported the range of commodities affected by the increases was expanding. Cleveland and Kansas City contacts said retail prices were steady, while Richmond contacts reported higher retail prices. Wages Tight labor markets in some sectors or regions were reported by Cleveland, Atlanta, Chicago, Richmond, Minneapolis, and Dallas, but wage increases were described as moderate in most of these areas, and Kansas City noted few reports of wage increases. Demand in some Districts for both skilled and semi-skilled workers, as well as technical and managerial workers, was strong. Labor markets appeared to be less tight in the Philadelphia District, where manufacturers reduced work forces in April, and in the Boston District, where business contacts gave no reports of labor shortages or growing wage pressures. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1380 -beige_book_pure_text_pre2000,1995,"Economic activity remains at a high level across much of the nation, although there are indications of some softening in many reports from the 12 Federal Reserve districts. Activity in interest-sensitive sectors generally remains well below year-earlier levels and continues to decline in some areas. There are regional variations, with strongest growth reported in the center of the county, but generally less favorable conditions on the East and West coasts. Manufacturers of capital goods and electronics continue to report good sales. But producers of some consumer items, automobiles and their components, and building materials report slowing demand. Residential building remains slower than last year, but strength in commercial and other non-residential construction is taking up the slack in some areas. Developments in energy and mining are favorable, but agriculture has been hurt by unfavorable weather and livestock prices. Loan demand is largely flat, with some declines reported in lending rates. Most districts report that non-auto retail sales improved in May from earlier in the year. Auto sales remain depressed, with a few indications of an upturn. Tourism is mixed, with some districts reporting slow business due to unfavorable weather. Labor markets generally remain tight, but little wage pressure is evident. Similarly, price increases for products such as paper and semiconductors have been partially offset by price declines for building materials. Manufacturing Conditions for manufacturers vary across the country. At the extremes, Philadelphia and Richmond report notable declines, while Boston, Minneapolis and Kansas City describe continued strength. Other districts fall somewhere in between. There are some common threads running through several district reports. Orders for high- tech items appear stronger than for traditional products such as apparel or home furnishings. Chicago notes that a manufacturer of industrial automation equipment has an order ""backlog of Biblical proportions,"" while Dallas and Atlanta describe rising orders for electronic products, semiconductors and telecommunications equipment. San Francisco reports increased capacity utilization and lengthening lead times for makers of electronics components. Demand for capital items seems more sustained than for durable consumer goods, particularly for Chicago and Cleveland. Several districts report slowing output of vehicles and their components and a decrease in orders for building materials. Reports on consumer items are mixed; several districts, especially Boston, see weakness in this area. Atlanta notes specific declines in carpet, furniture and some apparel categories. Apparel is also don for St. Louis, but footwear is stable and furniture strong. Within this overall pattern for the manufacturing sector, several districts cite export orders as one source of strength. Construction and Real Estate Residential construction remains below year-earlier levels in all districts and a few report continuing declines in single-family home activity. But a few others, including Dallas and San Francisco, report gains in home building, and several districts report some degree of optimism on the part of builders with regard to the 1995 construction season. Moreover, multifamily construction activity is buoying some regions, especially St. Louis and San Francisco. Furthermore, in several districts, notably Cleveland, Minneapolis, Dallas and San Francisco, commercial and other non-residential construction is strong, in some cases fully offsetting any weakness in the residential sector. Leasing and sales of existing housing follows a similar checkered pattern. Eastern cities such as Boston, New York and Washington reportedly have weakening rental markets for housing and commercial property, as does Chicago. But Atlanta and San Francisco report strong rental markets in some areas. Agriculture Conditions are poor for farmers in several districts, largely because of adverse weather. For Chicago, Kansas City, Minneapolis and St. Louis, the problem is too much rain. Corn, soybean and wheat planting has been severely delayed across most of the Midwest and much of the Great Plains and yield expectations are dropping. Missouri, North Dakota and South Dakota are particularly hard hit. Dallas and Kansas City report that winter wheat is in poor condition due to unfavorable weather earlier in the year. Bad weather is also hurting agriculture in the Richmond and Dallas districts, but here the problem is drought and unseasonable heat. The Carolinas and southern Texas are particularly hard hit. Livestock prices remain depressed. Kansas City reports higher than normal levels of farm loan refinancing, largely as a result of losses in the livestock industry. Cleveland, which describes producers as expecting excellent harvests, is one bright spot in the agricultural sector. San Francisco, which reports strong growth in exports of fruit and other agricultural products, is another. In other natural resource sectors, Dallas and Minneapolis report increased oil and gas activity, but Kansas City notes continuation of a half-year decline in drilling. For Dallas, the increase is concentrated offshore, while for Minneapolis production drilling into a new formation has led to a minor boom in North Dakota and Montana. Minneapolis also reports high production in iron and non- ferrous metal mining, and good business for paper mills and loggers in spite of a price slump for lumber producers. Financial Institutions and Credit Most districts report flat to slight increases in loan demand. One exception is San Francisco where growth is strong throughout the district, with improvements in real estate and construction lending in California. Loan demand softened somewhat in Cleveland, although new mortgage lending and mortgage refinancing have improved with declining rates. Loan demand is mixed in Atlanta, with moderate to strong activity in commercial real estate, industrial and general business lending, and slower activity in consumer lending, especially auto loans. Loan rates decreased slightly in several districts. Average loan rates declined at about 60 percent of small and mid-size banks in the New York district. In Richmond rates fell slightly for consumer and commercial loans and fell sharply for mortgage loans. Kansas City reports little change in rates. General retail sales improved slightly in May compared to April in most districts. Exceptions include New York and Minneapolis where sales show moderate growth and Richmond, St. Louis and San Francisco where sales are sluggish. In Boston sales are up 1 percent to 10 percent over year-earlier levels, though retailers view the second half with uncertainty. Computers and telecommunications equipment are selling well in Cleveland, while home improvement products are moving slowly. A large retailer in Chicago reports that sales of appliances and home electronics exceeded average for May and June, while apparel sales also strengthened. Auto sales are slow in many districts. Sales are described as significantly lower than year-earlier levels in Cleveland and Dallas, while waning in St. Louis. Kansas City dealers report flat or declining sales for the past month. Sales continue somewhat below last year's pace in Minneapolis, but there are signs of an upturn. Chicago dealers report that sales are up for May and early June, compared to April, and they expect a small gain in the latter half of 1995. Tourism is mixed across districts. Activity for May was above April and year-earlier levels in Richmond. Tourism in Florida is spotty, but growing in the rest of the Atlanta district. Cold weather has slowed activity in Minneapolis, while San Francisco service industries report continued strong demand. Labor Markets Labor markets remain tight Employment growth remains robust, Minneapolis notes, and several New York small business executives relate difficulty in attracting and retaining skilled workers. Many areas of the St. Louis district are still experiencing tight labor markets, particular for entry-level positions, and have relaxed hiring standards. One-third of manufacturing firms surveyed by Boston have current openings or hiring plans. Help-wanted advertising and demand for temporary workers are strong in the Chicago district. Philadelphia, however, notes that area manufacturers plan to trim payrolls. Wages and Prices Notwithstanding taut labor markets, wage pressures are muted. Reports of wage increases remain scattered, according to Kansas City, and recent wage agreements specify increases in the 2 percent to 3 percent range in the Minneapolis district. Wage increases remain generally stable, states Atlanta. Moreover, although district labor markets remain tight, Chicago reports that a slowing of expansion in the demand for labor may have eased wage pressures in recent months. While prices continue to increase, the rate of increase has recently diminished, according to Chicago, Cleveland, Dallas, Kansas City, Philadelphia and Richmond. Some of this easing relates to the letup in home-building as Atlanta, Dallas, Minneapolis and San Francisco report a softening in building material prices. Atlanta's apparel and carpet producers are having trouble passing on higher material prices to consumers. Only 10 percent of manufacturers are raising prices on their own products, according to a Philadelphia survey. Semiconductor prices, however, have accelerated, states Dallas, while Boston, Kansas City and Minneapolis report price increases for packaging materials. But according to Dallas, manufacturers of paper and corrugated boxes said that selling prices have flattened, which may signal easing cost pressures in coming months. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1860 -beige_book_pure_text_pre2000,1995,"Most districts continue to report economic expansion, although in some areas the rate of expansion has moderated recently. The Upper Midwest, Southeast and West continue to expand. Other areas are experiencing little or no growth. Expansion of retail sales also varies by geographic region, with the center of the country generally doing somewhat better than other areas. Manufacturing, particularly the auto and construction-related industries, continues to slow in many districts. However, orders are up in some districts, and inventories generally are considered to be at acceptable levels. Reports of tight labor markets come from many districts, but few report increased wage pressures. Three-quarters of the districts continue to report higher prices for raw materials, but the rate of increase is decelerating. Retail prices are generally unchanged or up modestly. In most areas of the country, residential and commercial real estate markets are picking up; loan demand is steady or strengthening. Weather concerns dominate reports from most agricultural-producing districts, while livestock producers face reduced profits because of lower selling prices and higher feed grain prices. Consumer Spending Compared with one year ago, retail sales are up slightly in the Atlanta, Chicago, Kansas City, New York and St. Louis districts, while the remaining districts report sluggish or declining sales. The Atlanta, Chicago, Kansas City and New York districts report strong growth in apparel sales, while the Boston and Dallas districts report either declining or steady apparel sales. Boson also notes that sales of durables are below retailers' expectations. The Philadelphia district reports that discount stores are doing well and that the recent heat wave increased the demand for air conditioners, fans, outdoor furniture and lawn equipment In general, though, retailers in this district are experiencing their usual seasonal slowdown. The Kansas City and New York districts note that sales of home furnishings and home improvement goods are weak, while retailers in the Atlanta district have seen a recent uptick for these products. Most districts report that retailers' inventories are at acceptable levels. Contacts in the Atlanta district expect a good back-to-school season, while St. Louis contacts are somewhat more pessimistic. Reports on auto sales are mixed, ranging from sluggish in the Atlanta, Minneapolis and San Francisco districts, to above last year's levels in the Cleveland, Dallas and Kansas City districts. In the Philadelphia district, increases in auto sales are leveling off from their higher rates earlier in the year, and dealers in the St. Louis district report flat to moderately strong growth. In the Chicago district, auto leasing is very strong. Manufacturing Manufacturing production continues to slow in most districts. The Boston, Cleveland. Dallas, Minneapolis, Philadelphia, Richmond and St Louis districts report some slowing, while New York and San Francisco have mixed reports from their contacts. Some districts note that the auto and construction-related industries have slowed recently, with accompanying effects on firms that supply these industries. The Atlanta, Chicago and Kansas City districts report some gains in overall production, with Atlanta, Chicago and San Francisco noting increases in orders. The demand for machinery has jumped significantly in the Boson district. Computer and electronic firms in the Atlanta district indicate that recent increases in orders are adding to their backlogs. Heavy truck manufacturers in the Cleveland district report that a backlog of orders is sustaining their business. The Chicago district notes a decline in steel demand, while St. Louis is experiencing an expansion in the steel industry. Exporters in the Boston district report that even though sales to European markets have been sluggish, demand from developing countries has grown substantially. Inventories at firms in the Cleveland and Kansas City districts are at desired levels, but firms in the Atlanta district report that levels remain below those posted earlier in the year. Small high-tech firms in the Minneapolis district note expanding activity. Labor Markets Labor market conditions vary across and within districts. Contacts in the Philadelphia district note that they have trimmed payrolls and reduced hours. Similarly, contacts in the St. Louis district note that the need for temporary workers or overtime has diminished greatly. The New York district says that announcements of employment gains have been mostly offset by recent layoffs. Temporary employment agencies in the Boston, Dallas and Richmond districts, however, report strong demand. Firms in more than half of the districts continue to report difficulty hiring and retaining both skilled and entry-level workers. Wages and Prices Nearly all districts note that price pressures remain on materials and supplies, with reports of increasing prices generally outnumbering reports of flat or declining prices. Overall, though, the rate of increases appears to be moderating. Despite reports of minimal wage pressures, there are some reported exceptions. In the Dallas and Richmond districts, for example, wages for temporary workers have been accelerating while in the Chicago and Minneapolis districts, upward pressure on wages for entry-level employees continues. Retail prices in the Kansas City and New York districts are generally unchanged to up slightly, although individual districts report declining apparel and computer prices. Some retailers in the San Francisco district are now tempering their price increases for fear of hurting sales. Input price increases at the manufacturing level are more widespread and appear to be more prevalent for raw materials like paper and wood products, chemicals and certain metals. Nine districts report higher input prices; of those nine, two-Boston and Cleveland-expect to see higher prices of cotton goods and furniture, respectively, later this year. In the Dallas district, on the other hand, recently announced increases in chemical prices have been rescinded, and in the Chicago district, prices for steel and resin have actually declined. Construction and Real Estate Residential and commercial real estate markets have improved somewhat in most districts. Contacts in the Atlanta, Chicago, Dallas, Kansas City, Philadelphia and San Francisco districts report recent increases in single-family home construction or sales, while New York and St. Louis report slack activity. Despite recent increases, year-to-date residential construction is still below the records set in many districts in 1994. Recent reductions in mortgage interest rates are credited for the pick-up in new construction and sales. Real estate agents in the Philadelphia district report a large inventory of homes for sale, but contacts in the Atlanta district complain of a low inventory. Activity in commercial real estate markets, especially industrial markets, continues to increase or hold steady across all reporting districts. Commercial vacancy rates have declined in the Minneapolis and Richmond districts, while holding steady in the Dallas and Philadelphia districts. The multifamily sector is strengthening in the Atlanta, Boston and Dallas districts. New residential construction is reported in the Atlanta, Chicago, Dallas and Minneapolis districts and in selected portions of the Richmond and San Francisco districts. Banking and Finance Loan demand appears to be steady or rising in a majority of districts. Both the Atlanta and St. Louis districts note that competition among lenders on price ad credit terms is fierce. Atlanta, Cleveland, Kansas City, Philadelphia, Richmond, St. Louis ad San Francisco report strong commercial and industrial loan demand. Consumer loan growth is reported to be up in the Cleveland, Dallas, Kansas City ad St. Louis districts. The Atlanta, Cleveland, Dallas, New York, Philadelphia and Richmond districts report increased residential mortgage lending because of home sales, refinancings or both. Commercial real estate lending is reported to be steady in the Dallas and Kansas City districts and weaker in the Atlanta and New York districts. Loan delinquencies remain low in the Cleveland, New York ad St. Lows districts. Agriculture and Natural Resources Crops conditions are generally favorable across the nation. Most districts, however, report some form of adverse weather that has led to heightened concerns about the size and quality of many crops, which stem in part from this year's unusually late spring plantings. For example, Kansas City reports that weather will need to be ideal for the remainder of the season to produce normal yields for corn ad soybeans. Elsewhere, hot, dry weather has affected crops in the Dallas ad St. Louis districts, while Chicago, Minneapolis and Richmond report some heat-related losses for poultry ad cattle producers. Increasing feed grain prices and lower livestock prices have diminished profit levels for livestock producers in the Kansas City and Minneapolis districts; some producers in the Kansas City district plan to reduce the size of their breeding herds in response. With the wheat and small grain harvest complete in many areas, yields are reportedly smaller and of lower quality in the Kansas City district and parts of the St. Louis district. On the other hand, record or near-record yields are reported in the Richmond district ad in other parts of the St. Louis district. Energy production has changed little despite lower oil prices. A marked decline in crude oil price has not prevented an increase in oil drilling activity in the Kansas City district. Despite lower natural gas prices in the Dallas district, drilling activity for natural gas is reportedly higher. Minneapolis reports robust growth in its natural resources industries. In particular, copper and wood products producers are operating at capacity, while activity in the San Francisco district's mining industry is increasing. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1925 -beige_book_pure_text_pre2000,1995,"On balance, the district reports point to some further expansion in economic activity with no clear change in underlying price pressure. Broadly interpreted, the expansion in business activity is seen as largely the same as in the previous report with minor modifications. Industrial activity appears to have stabilized and in some areas may now be strengthening. Many districts also report a pickup in construction. In sectors where business conditions are reported to be soft, such as retailing and agriculture, the hot, dry summer weather is commonly blamed. Only the New York and Dallas districts characterized business conditions as having deteriorated since the last report. Prices There has been little change in price pressures since the last report. Industrial materials prices have slowed from their strong pace in 1994, although higher costs for some materials (including paper, certain plastics, and building materials) continue to trouble some manufacturers. Overall, however, industrial cost pressures appear to be relatively minimal. Reduced crop yields have boosted prices for a range of agricultural commodities, and in some cases, such as grains, prices are substantially above levels at this time last year. More generally, consumer price increases are somewhat restrained, and there is little apparent concern about an acceleration in retail price pressures over the immediate term. Labor Markets Few changes in employment conditions are reported. In the New York and Cleveland districts, unemployment has risen, although in the latter instance, the higher rate of joblessness is tied to model- year changeovers in the auto industry. Some labor market tightness is noted, such as for construction workers in the Richmond and San Francisco districts, and in some specific areas of the St. Louis and Dallas districts. By and large, however, the demand for labor is seen as growing moderately with little unusual pressure on wage gains. Retailing A preponderance of districts report lackluster retail spending in August. Exceptions are the San Francisco district, where spending has improved after weakening earlier, and the Atlanta region, where a strong pace of back-to-school purchases and optimism over holiday sales are reported. The Philadelphia district notes a typical seasonal increase in retail activity. These reports break from a general pattern of a subdued back-to-school shopping season caused in large part by unusually hot August weather in much of the country. Apparel sales are described as soft in a majority of the district reports. August home goods sales were off from July levels in the Boston, Cleveland, and Chicago regions, but stronger in the Kansas City district. Auto sales were mixed by district, showing little propensity to move much in either direction. With a few exceptions (many districts report high apparel stockpiles), retail inventories are described as being in good shape. Manufacturing The slowing in manufacturing activity reported in the last district summary appears to have leveled off. In some districts, such as Philadelphia, Richmond, and San Francisco, manufacturing activity appears to have strengthened slightly. Only the New York district indicates a continued falloff in overall manufacturing production. Most reports echo the Minneapolis district, where manufacturing sales are described as ""good, but not growing at the pace they were a year ago."" Continued high levels of production are noted in the Cleveland and Kansas City regions, and by sector, demand is strong in the areas of computer, fabricated metals, telecommunications, and electronics manufacturing. Construction and Real Estate Among the more favorable developments since the last district summary has been an apparent strengthening in construction activity in many regions. The Chicago and St. Louis districts note strong home sales, and Cleveland reports an improvement in residential construction. The Atlanta district indicates that single-family home sales are running ""modestly above year-ago levels"" and that residential construction has improved. Multifamily construction activity has picked up in the Kansas City district, and nonresidential construction has increased in many parts of the Cleveland, Atlanta, and San Francisco districts. Agriculture Of the seven districts reporting on agricultural conditions, the St. Louis, Minneapolis, and Dallas regions indicate that crops are in good shape, although heat and insect problems have affected some areas. The Kansas City district sees crops in fairly good condition, but their development is two to four weeks behind schedule as a result of spring rains. In the New York, Richmond, Chicago, and San Francisco districts, dry, harsh weather and other calamities have adversely affected crop yields and pushed some prices higher. In particular, corn, soybean, cotton, peanut, and tobacco harvests are down from last year. Other General Business Conditions The tourist season appears to have been a bright spot in many district economies. The New York district describes tourism as brisk, especially from abroad, Philadelphia reports a good season, and Minneapolis sees tourism in its eastern region as having improved. In addition, Minneapolis reports tourism as ""outpacing that of last year,"" as does Richmond, although traffic has apparently fallen off slightly in recent weeks. In other sectors, business reports are mixed. Service-sector growth has decreased in the Richmond district, and drilling activity is flat in the Kansas City and Dallas regions. In the Dallas report, however, business services demand is seen as having strengthened, and the San Francisco district reports continued strong demand in service-producing industries. Banking and Finance Lending activity is reported to have held steady, and in some cases, such as the Philadelphia, Cleveland, Richmond, St. Louis, and Kansas City districts, it has actually grown somewhat further. Consumer borrowing has declined ""considerably"" in the New York district and is characterized as ""soft"" in the Atlanta report, but is growing in many other parts of the country. In two districts, Philadelphia and Cleveland, revolving credit demands are especially strong. Most districts report continued growth in commercial credit demand, while mortgage credit extensions are mixed by region. No deteriorations in credit quality are noted. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1249 -beige_book_pure_text_pre2000,1995,"Reports from the twelve Federal Reserve districts suggest that moderate growth in economic activity continued in early fall, although perhaps at a slower pace than at the time of the previous set of reports. The evidence of a possible slowing in demand mainly was from the reports on consumer spending, which suggested a pause in retail sales in some districts. However, a pickup in exports and strong domestic demand for certain types of business equipment led to stable or increased manufacturing activity in most districts, after the dropback earlier in the year. Although the summer rebound in residential construction was not generally augmented by additional gains, the slightly improved level of building activity appeared to be maintained in recent months. Some districts reported that nonresidential construction strengthened, and several districts noted a firming in commercial and industrial leasing activity. A few districts reported new manifestations of labor market tightness, but overall wage gains remained moderate, and reports of rapidly rising materials costs have lessened substantially. Retail Trade Retail sales, on the whole, appeared to be soft in early fall. Several of the districts with preliminary reports on October sales-- Boston, Chicago, New York, and Philadelphia--noted some signs of weakened spending, although this partly was attributed to weather- related sales volatility. Elsewhere, retail sales results generally were described as disappointing and below expectations. Retail inventories are somewhat heavy with fall merchandise in several districts, and some retailers have scaled back stocking plans to prevent a further runup. Apparel and other soft goods appear to have been the weakest sales areas. Reports on sales of autos and other big ticket items were mixed. Manufacturing Many districts reported stable or increased manufacturing activity, after the dropback earlier in the year. Chicago, New York, Philadelphia, and Richmond noted generally rising manufacturing output. Dallas, Philadelphia, and San Francisco pointed to makers of semiconductors, computer products, and other electrical machinery as a major source of strength. Elsewhere--in Atlanta, Boston, Cleveland, and St. Louis--changes in manufacturing activity were mixed, as renewed strength in exports offset slowing domestic demand for some types of goods. Real Estate and Construction On balance, residential building activity appears to have been little changed this fall, after the summer rebound. However, the pace of residential construction varied widely by geographic area. In Philadelphia and Richmond, residential construction was scaled back. Chicago and Minneapolis finished the peak building season at high levels, and parts of the San Francisco district reported increased residential construction. In Atlanta and Kansas City, multi-family construction strengthened recently, whereas Dallas reported a pickup in construction of single-family units. In many of the areas with increased residential construction, home sales also have improved lately, as buyers took advantage of lower mortgage interest rates. Some districts reported strengthening nonresidential construction. St. Louis and San Francisco suggested that there has been a general increase in nonresidential building activity. Atlanta and Richmond pointed to gains in construction of structures for commercial use, whereas Minneapolis noted increased construction of office and warehouse space. Moreover, demand for nonresidential space picked up in Atlanta, Dallas, Richmond, St. Louis, and parts of the San Francisco district. In contrast, office and commercial real estate markets were sluggish in Philadelphia, Boston, and New York. Services Some districts mentioned increased activity in selected service- producing industries. Demand for business services increased in some districts; Dallas and San Francisco noted increased demand, for legal or financial advice on business transactions, and Boston mentioned a pickup in outsourcing of personnel department functions to temporary help agencies. Atlanta, Boston, Minneapolis, and San Francisco noted gains in tourism. Financial Institutions Loan demand reportedly increased in early fall in most districts. Philadelphia, Cleveland, Atlanta, and San Francisco singled out business lending as the primary source of increased loan volumes. New York found that demand for consumer loans also increased in the last two months. Agriculture and Natural Resources The recent harvests of many major crops were marked by lower than average yields and increases in prices. St. Louis, Kansas City, and other districts noted that yields of corn and soybeans were below average, and prices increased in recent months. Richmond, St. Louis, and Dallas also noted that adverse weather and insect problems hurt the cotton crop. In the San Francisco district, yields for selected crops were low too, but some agricultural producers there recently have benefited from increased exports of apples and other agricultural commodities. Wages and Prices Reports of rapidly rising materials costs have lessened, and several districts noted a partial reversal of earlier commodity price run- ups. Boston mentioned softening of prices of paper packaging materials, metals, and plastics. Cleveland reported a drop in steel prices, after earlier increases. Some finished manufactured goods prices still are under pressure from the earlier runup in costs of intermediate materials. However, reports from several districts suggest that retail goods prices were little changed, and in some cases, discounting this fall was heavier than last year. A few districts reported new manifestations of labor market tightness, but overall wage gains apparently remained moderate. The report from the Minnesota district noted that, as it has become harder to attract and keep good workers in that area, some firms have expanded employee eligibility for benefits. Many districts continued to emphasize that skilled workers--particularly construction workers in fast-growing states and employees in high technology industries--have been commanding larger than average wage gains. In this report, Cleveland also noted that the movement of workers from less-skilled jobs into skilled positions is increasing training costs of employers and pushing up wages for less-skilled workers, who reportedly also are in short supply in many parts of that District. In Richmond and Chicago, salaries of workers at temporary help supply agencies were said to have increased particularly fast. Reports from San Francisco suggested that other types of workers are focusing more on job security than on wages, restraining the overall pace of increase in labor compensation rates. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1274 -beige_book_pure_text_pre2000,1995,"Reports from the twelve Federal Reserve Districts suggest that national economic activity continues to expand, but at the somewhat slower pace reported in the last beige book. Most district banks indicated little change from the last report; however, Cleveland and New York reported slower growth, and Chicago reported moderating growth in manufacturing. Many districts noted that retail sales appeared stronger in early November following widespread weakness in October. Districts reporting on initial holiday sales found mixed conditions. Dallas and New York said sales were lower than expected, while Atlanta, Chicago and Cleveland reported encouraging holiday results. Most reports of auto sales were weaker. Manufacturing production continued to rise, with strong demand for high-tech products in the Boston, Dallas, Minneapolis and San Francisco districts. However, several district banks reported slowing in some manufacturing industries. Single-family construction activity was mixed, but commercial real estate and construction activity remained a bright spot in many districts. Loan demand increased in most Federal Reserve districts, with strong demand for commercial and industrial loans. Demand for most business services remained strong. Rising crop prices boosted farm income in Chicago, Kansas City and Minneapolis, yet higher feed costs and low cattle prices continued to squeeze margins for ranchers in some districts. Energy activity was mostly unchanged, despite a cold snap in the Midwest and Northeast that caused prices for natural gas, heating and crude oil to rise. Most Federal Reserve districts reported tight labor market conditions for both skilled and unskilled labor. Several districts, including Chicago, Dallas and Minneapolis, reported rising wage pressures for entry-level positions. There were a few reports of price increases in intermediate goads, but very few for final goods. Consumer Spending and Retail Trade Many districts reported weak retail sales in October, but most said sales appeared stronger in early November. Initial holiday sales were mixed. Of the districts that reported on day-after-Thanksgiving sales, Dallas and New York said contacts were somewhat disappointed that sales did not meet expectations, while Atlanta, Chicago and Cleveland said sales had met or exceeded retailers expectations. Sales of apparel and other soft goods continued to be weaker than sales of hard goods. Contacts in Atlanta, Boston, Chicago, Minneapolis and Philadelphia said sales were strongest for computers, electronic equipment and related goods. Discounting and promotions were common across districts. Vehicle sales weakened over the past six weeks according to several district banks. The Kansas City and St. Louis districts said a shortage of popular models constrained sales. Auto dealers in Philadelphia said sales of new model cars have not met expectations, and dealers in Chicago noted sports/utility vehicle sales were outperforming auto sales. Dallas was the only district reporting improved sales. Manufacturing Most district banks said production rose during the past six weeks. Most notable was an increase in orders for high-tech products--such as computers, telecommunications equipment, semiconductors, electrical equipment and medical products--reported by the Boston, Dallas, Minneapolis and San Francisco districts. There were some reports of slower growth in a few industries, however. Several districts, including Boston, Dallas, Philadelphia aid St. Louis, noted weaker orders for apparel. Boston and Dallas also said demand for packaging products slowed. The Bosom and San Francisco districts reported softer orders for some construction-related products. Chicago said new orders had slowed in all industries except those related to auto manufacturing. Services In those districts reporting on the service sector, contacts suggested continued strength in demand for business services. Some districts indicated increased demand for temporary services, and contacts in Chicago, Dallas and Richmond said they were having difficulty filling temporary positions. After strong growth throughout the year, demand for accounting and legal services in the Dallas district eased somewhat, according to contacts. Tourism remained strong in the Atlanta district, despite hurricane-damaged beach properties in the Florida Panhandle and the recent closing of New Orleans' land based casino. San Francisco also reported strong tourism but said the warm weather may hurt ski areas. Real estate and construction Housing Single-family construction activity was mixed. New home sales and construction were strong in the Dallas and Minneapolis districts. Residential activity was mixed among states in the Boston, New York and San Francisco districts. The pace of home sales slowed in the Chicago district after strengthening in recent months. The Richmond and St. Louts districts reported declines in home construction since the last beige book report. A few districts reported increases in multifamily construction. In the Atlanta district, low vacancy rates and higher rents were boosting new apartment development. The Kansas City and St. Louis districts also reported a pickup in apartment construction over the past six weeks. Commercial Commercial real estate markets strengthened across much of the country in October and November, and were a bright spot for several districts. High demand and low vacancies boosted nonresidential construction in the Atlanta, Chicago, Minneapolis and St. Louis districts. Strong demand for prime office space pushed up rents in the Atlanta, Dallas and Richmond districts. New York was the only district bank that reported weaker commercial real estate conditions. Leasing activity fell in downtown Manhattan in October, and the midtown vacancy rate rose slightly as continued strong leasing activity failed to offset a sharp rise in available space. Financial institutions Loan demand continued to increase in most Federal Reserve districts in late October and early November. Lending was strongest in the Dallas, Kansas City and Philadelphia districts. Most district banks said commercial and industrial lending remained strong and some said mortgage refinancings had picked up. The exceptions were the Cleveland, New York and St. Louis districts which reported a slight moderation in loan demand growth. There were some reports of rising past due loans and consumer delinquencies in these districts, but bankers said current levels were not worrisome. Agriculture and natural resources Although several districts reported below normal crop yields, strong export demand and higher crop prices suggest improvement in farm income. Corn and soybean yields remained below last years levels in Chicago and Kansas City, and dry weather in the Dallas and Kansas City districts impeded the growth of some crops such as winter wheat. The San Francisco district said sales of agricultural products were high and that exports were above last year's levels. Higher grain prices pushed up feed costs, squeezing margins for ranchers who continue to suffer from low beef cattle prices. The Dallas and Kansas City districts reported little change in energy markets, despite a weather-related rise in natural gas, heating oil and crude oil price in recent weeks. Natural gas spot prices rose from $1.70 per thousand cubic feet in mid-October to $2.10 per thousand cubic feet by late November. Wholesale heating oil prices rose by 5 cents per gallon as colder weather hit the Midwest and East Coast. The price increases were not enough to encourage new drilling activity, however. Mining and drilling contacts in die Minneapolis district were pleased with current levels of activity. Labor markets and wage pressures Most Federal Reserve districts reported tight labor market conditions for both skilled and unskilled workers. San Francisco reported shortages of construction workers. Chicago, Dallas and Richmond cited difficulty filling temporary service positions. Boston, Cleveland and Dallas noted a shortage of workers in high- tech jobs such as software development, systems analysis and electrical engineering. Richmond said there was a general scarcity of labor, particularly in skilled manufacturing positions. There were widespread reports across the districts of labor shortages for unskilled workers, and entry-level compensation was reportedly rising in the Chicago, Dallas and Minneapolis districts. Only the Atlanta district noted subsiding wage pressures. Price pressure There were a few reports of rising prices for intermediate goods from district banks, but overall price pressures were minimal. San Francisco reported higher prices for industrial equipment and machine tools, while Kansas City and Minneapolis said prices were rising for aluminum and packaging materials. However, paper producers and corrugated box manufacturers in Dallas said they were lowering selling prices, and Boston noted a recent decline in paper prices. Petrochemical and steel prices continued to come down according to some district reports. Retailers in several districts reported heavy discounting for the holiday season. Contacts in the temporary services industry said despite wage pressures they could not raise fees because of fierce competition. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1736 -beige_book_pure_text_pre2000,1996,"Reports from the twelve Federal Reserve Districts suggest that the national economy was growing at a generally modest pace at the end of 1995. Holiday retail sales were generally reported to be below expectations, with extensive discounting. Manufacturers saw uneven growth, with weakness noted in auto-related production. The federal government shutdown hurt winter tourism at national parks, but other areas reported increased activity. Single-family home sales are experiencing some seasonal slowing in most of the country. However, commercial real estate contacts in many areas report strengthened markets. Loan demand is steady in most areas. Firms say that prices are generally remaining stable, but some areas still report shortages of skilled workers. Consumer Spending Retail sales during December generally fell below retailers' expectations, with heavy discounting the rule. However, the majority of retailers in the Atlanta, Kansas City, and St. Louis Districts experienced moderate growth over last year's levels. Reports from Boston, Chicago, Minneapolis, New York, Philadelphia, and San Francisco retail contacts indicated that year-over-year growth was mixed within each of these regions. According to District contacts, electronics, computers, fine jewelry, and cosmetics were the best- selling items, while apparel sales were generally disappointing. According to retailers in the New York and Cleveland Districts, overall retail sales suffered because of harsh weather; however, hardware stores got a boost from high demand for snow-related equipment. Merchants in the Atlanta, Kansas City, New York, and St. Louis Districts report that inventories are in line with plans. Overall, retailers' outlook for the first quarter is guarded, with retailers in the Atlanta and Kansas City Districts anticipating little growth year-over-year, while the St. Louis District's outlook is mixed. Several retailers in the Dallas District are contemplating scaling back new store openings, and contacts in the Boston and Cleveland Districts anticipate rising retail vacancy rates this year. Sluggish auto sales were reported in the Boston, Chicago, Cleveland, Kansas City, and Minneapolis Districts. Dallas was the only District that noted auto sales increases. Manufacturing Overall factory activity was mixed, according to District reports. Manufacturing output growth has slowed in Atlanta, New York, Philadelphia, and Richmond since the last Beigebook. Atlanta, Chicago, and Cleveland report recent orders weakness for auto suppliers. New orders have fallen for heavy equipment producers in Minneapolis. Dallas reports weaker orders for manufacturers over the past six weeks and points to a slight deceleration in the rapid growth of semiconductor production. San Francisco also reports excess capacity and rising inventories among some California semiconductor firms, but notes that, in general, demand for electronic goods continues strong. Manufacturers continue to operate at high levels in Boston, Chicago, Cleveland, and Kansas City. Machine tool orders in Boston are above year-ago levels, and computer products continue to grow robustly. Steel orders have improved for producers in the Chicago and Cleveland Districts. St. Louis reports that although the pace of industrial activity remains relatively unchanged, new announcements of large plant openings will add to the District's factory payrolls. Atlanta contacts anticipate that rebounding home sales and construction will boost building material and carpet production. Tourism and Convention Business The Federal Government shutdown is hurting winter business in national parks, according to District reports. However, an early and above-normal snowfall has boosted tourism in the Minneapolis and Richmond Districts. Visits by Europeans are up, and advance bookings are strong in southern and central Florida. Real Estate and Construction Contacts in most Districts report a slowdown in single-family home sales during December mainly because of seasonal factors. However, home sales improved over last year in Cleveland, while sales equaled last year's levels in the Kansas City District and fell slightly in the Atlanta District. Single-family home construction in the Atlanta, Kansas City, and St. Louis Districts fell slightly behind last year's levels and equaled last year in Cleveland. Atlanta, Chicago, and Kansas City District Realtors report tight home inventories in several markets. Both Atlanta and Kansas City District contacts report rising home prices, while Richmond contacts reported declines. Real estate contacts in the Atlanta and Chicago Districts are optimistic going into 1996, while contacts in the Minnesota District anticipate building will be somewhat less. Nationally, commercial real estate contacts report improving markets. Real estate agents in the Atlanta, Kansas City, and New York Districts report that new multifamily construction and conversion is strong. However, reports from the Dallas District indicate that worries about overbuilding are causing developers to curtail plans for new projects. Contacts in the Atlanta and Dallas Districts report that build-to-suit projects dominate nonresidential construction activity. Office vacancy rates continue to decline in the Atlanta, Chicago, Richmond, and Dallas Districts; however, downtown Boston and midtown Manhattan have shown little improvement recently. Overall, commercial real estate contacts report a positive outlook. Financial Services Loan demand appears to be steady, according to reports from most Districts. In general, loan demand is stronger from businesses than from consumers. Refinancing activity has increased for all loan types. Banks say that, although credit quality remains very good, delinquencies have increased modestly in the majority of Districts. Contacts in the Atlanta and New York Districts report weaker consumer loan demand since the last Beigebook; but in southern California, as well as in the Cleveland, Dallas, and St. Louis Districts, stronger demand was noted. On the commercial side, loan demand was reported as strong in the Atlanta, Chicago, Cleveland, Dallas, and St. Louis Districts. Only the Richmond District noted weaker commercial loan demand. Agriculture and Forest Products Agricultural conditions across the U.S. were, for the most part, reported to be normal for the season. Notable exceptions include the Dallas and Kansas City Districts where dry weather and insect damage have hurt the winter wheat crops. The St. Louis, Minneapolis, and San Francisco Districts reported slower lumber and forest product production. Wages and Prices Boston, Dallas, Kansas City, Chicago, Richmond, and San Francisco report some shortages of skilled labor. Manufacturers in Dallas say that lack of skilled workers is a major concern, and wage pressures remain prevalent. In Chicago, placement specialists note a high number of unfilled orders for permanent and temporary employees. Most manufacturers report modest wage and salary increases. Some Districts, such as Boston, report few or reduced cost pressures. There are scattered reports of increasing materials prices in some Districts, but prices remain generally stable, according to their contacts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1412 -beige_book_pure_text_pre2000,1996,"Reports from the 12 Federal Reserve districts suggest the national economy grew modestly in January and February. Over half the districts cite moderate economic growth or continuing solid levels of economic activity. Most of the others mention recent improvements, largely reflecting rebounds from weather-related slowdowns earlier in the year. Accounts of manufacturing activity are mixed. More than half the districts report gains in at least some industries or sub-regions, but Boston, St. Louis, Minneapolis, Kansas City, and Dallas suggest production is either level or growing more slowly than in the last report. Retail results generally improved in February, but in several districts these improvements represent only a partial recovery from weak sales during the holidays and January. Wage and price pressures are generally described as subdued, notwithstanding observations of tight labor markets in several districts. Wages are reported to be increasing at a modest pace. Retail prices are rising only slightly if at all. Most commodity prices are said to be steady, stabilizing, or increasing very little; a few are falling. Retail Districts across the country report weak retail sales in January; most, but not all, note an encouraging pick-up in February. Severe winter weather contributed to January's slow pace, particularly on the East Coast. February's uptick in sales was not seen in parts of the west and mid-west, where the San Francisco, St. Louis, and Minneapolis districts note continued sluggishness. Durable goods and electronics are typically selling better than apparel, although some respondents observe a rise in demand for selected clothing items, contacts in New York and Chicago report the largest sales gains in stores at the high end of the market. Retailers in a majority of districts are optimistic that sales will pick up in the next few months. The outlook for those in the Cleveland, San Francisco, Dallas, and Minneapolis districts is more guarded. Upward movements in retail prices continue to be limited. Reports from Boston, Atlanta, and St. Louis indicate vendor prices generally remain stable. Auto dealers in the Philadelphia, Chicago, Cleveland, and Kansas City districts report improved sales in February, following a disappointing January. Dallas notes sluggish sales in both months, leaving inventories larger than desired. contacts in the Chicago, Cleveland, and Kansas city districts express more optimism about this spring's auto sales than those in Dallas, Minneapolis, and Philadelphia. Tourism Excellent skiing conditions on the East coast boosted tourism in the Boston and Richmond districts. Atlanta reports strong tourism and convention business, particularly in Florida, where northerners are fleeing to escape harsher than usual winter weather. Minneapolis notes a drop in tourism because of poor skiing conditions in Montana, an unfavorable Canadian exchange rate, and the temporary federal shutdown of South Dakota's national parks and monuments. Other Non-Financial Services In most districts surveying business services, demand accelerated in February from a seasonal or weather-related lull in January; elsewhere, services continued to expand at a good pace over both months. Dallas notes gains in accounting and transportation while San Francisco reports growing exports of high-tech services like telecommunications, software, and financial consulting. The demand for temporary workers picked up in Richmond, Chicago, and Dallas, with Chicago noting ongoing labor shortages and Richmond reporting that temporary workers' wages rose faster than the general price level over the last year. Manufacturing Manufacturing activity has been mixed but fairly flat on average. Several Federal Reserve Banks in the middle of the country (Minneapolis, Kansas City, and Dallas) report slightly slower sales and orders, while the majority of districts to the east (Philadelphia, Cleveland, Richmond, and Atlanta) indicate a slight strengthening since the latter part of 1995 or the beginning of 1996. Only the San Francisco report has a generally positive tone for recent months, based largely on trends for machinery and equipment. A number of districts report growing demand for capital goods, notably industrial machinery, with Cleveland, Atlanta, and Chicago citing a boost from exports. Sales of electronic and computer- related equipment appear to be rising, although Minneapolis reports a slowing rate of growth for computer components, and Dallas notes a drop-off in demand for memory chips and microprocessors. St. Louis and Dallas indicate robust markets for cement. Auto-related and apparel demand are widely reported to be sluggish, and paper mills are experiencing declining sales according to contacts in several districts. Manufacturers throughout the country report little or diminished materials cost pressures. Paper prices in particular are falling, and lumber prices are either falling or have ceased to rise. Several districts note growing wage pressures or tight markets for some categories of manufacturing workers. Overall wage inflation reportedly remains moderate, however. Philadelphia and Richmond report recent declines in finished goods prices, while most other districts indicate little or no increase. Several districts attribute the modest size of upward price movements to competitive conditions in addition to the lack of cost pressures. Real Estate And Construction All districts report increased interest and activity in residential real estate; most also report increased residential sales. Among those with higher sales, Cleveland, Richmond, Atlanta, Chicago, Kansas City, and Dallas indicate low-priced and subsidized houses have done better than higher-priced homes. Upstate New York and Philadelphia continue having excess inventories of housing stock. Prices are said to be stable in most districts, but appear to be showing some increase in the Kansas City (especially for low-priced homes) and Richmond districts and in the San Francisco Bay area. Richmond, Minneapolis, and Kansas City are seeing an increase in new residential construction, and San Francisco notes increased construction of apartment buildings in Arizona. Commercial real estate markets have also experienced increased activity. New York, Philadelphia, Chicago, and Dallas report rising demand for commercial space. Vacancy rates are said to have dropped in the Philadelphia, Richmond, Atlanta, and San Francisco districts. Cleveland, Richmond, Atlanta, Minneapolis, Dallas, and San Francisco report increased commercial construction in their districts. Contacts in all districts anticipate a strong and active spring season. Despite some concern about interest rates and about overbuilding in selected areas, respondents are optimistic about both residential and commercial real estate activity during the upcoming months. Financial Services Loan demand appears to be increasing in the majority of districts, although it has eased in Cleveland and California. Most districts indicate that demand for commercial loans has risen more than the demand for consumer credit. contacts in New York, Atlanta, and Cleveland report slightly higher loan delinquencies. Respondents in all districts reporting on bank activity mention a surge in refinancing activity. Agriculture and Natural Resources Arctic cold, drought, and fire have damaged the winter wheat crop and pasturage in much of the St. Louis, Kansas City and Dallas districts. In addition, in the Richmond district, parts of the Pacific Northwest, and the eastern Dakotas, floods or heavy snows have also hurt crops. With uncertain prospects for the 1996 harvest and tight global inventories, grain prices are at their highest levels in many years. While these conditions are benefiting grain farmers in the parts of the Minneapolis and San Francisco districts that have adequate moisture, ranchers are caught in a squeeze. With the ratio of livestock prices to grain prices unusually low, the Minneapolis, Kansas City, and Dallas districts report declines in ranch profits. In Minneapolis, bankers reportedly expect a rise in ranch liquidations. Beef exports to Canada and Asia are helping to support producers in the San Francisco district. In other natural resource industries, conditions are mixed. Iron mines in the Minneapolis district shipped at the highest level in over a decade, while output from nonferrous mines stayed stable. Energy prices are reportedly volatile, with natural gas and fuel oil prices fluctuating at high levels, while crude oil prices are relatively weak. Dallas and Minneapolis report strong gas and oil exploration activity, but in Kansas City and Dallas, the operating rig count remains low. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1680 -beige_book_pure_text_pre2000,1996,"Economic activity advanced at a moderate pace in March and April, according to reports from the Federal Reserve Banks. All the districts with the exception of New York indicated that economic activity expanded, and several noted that the pace of expansion had quickened recently. Both retail sales and manufacturing activity picked up somewhat. In addition, manufacturers' inventories appeared to be at or near expected levels in several districts. Activity also picked up in nonfinancial services, commercial and consumer lending, and real estate. Mortgage loan activity slowed, as did tourism in several districts, and agriculture suffered from adverse weather. Price increases remained generally subdued and there were only scattered reports of wage pressures despite continued tight labor markets and somewhat stronger economic growth. Several District banks noted the sharp increases that had occurred in oil and grain prices, but Dallas observed that oil price futures pointed to a near-term decline. Consumer Spending Most districts reported gains in retail sales, but the Boston and New York districts indicated that retail sales were mixed and San Francisco said that sales were stable. Six districts noted that apparel sales were up from the previous year and several attributed the uptick to warmer weather. Retailers in several districts expected a moderate increase in sales over the next few months. The Minneapolis, Kansas City, and Dallas districts reported strong auto sales, while the Philadelphia and Chicago districts reported that auto sales were sluggish. Most districts said that retail inventories were near desired levels and were consistent with their contacts' expectations of increased sales. Manufacturing Manufacturing output strengthened by varying degrees in nine of the twelve districts. The growth rate picked up in Boston, Philadelphia, Cleveland, Richmond, St. Louis, and Minneapolis; Chicago, Kansas City, and San Francisco reported that plants in their districts were operating at moderate to high levels of capacity. However, manufacturing conditions were mixed in New York and weakened somewhat in Atlanta. Dallas said activity was below the level of a year ago but that April manufacturing orders rebounded from March. The Boston, Chicago, Dallas, and Minneapolis districts indicated that manufacturers' inventories were at or near desired levels; Kansas City, Philadelphia, and San Francisco reported that inventories were edging down; and Atlanta said that inventories were increasing moderately. District banks reported varying pockets of strength and weakness in manufacturing. Cleveland, Chicago, and St. Louis noted increased demand for auto and auto-related products. Boston, Atlanta, and Minneapolis all reported stronger demand for electronic and computer-related equipment. Boston, Atlanta, St. Louis, and Dallas indicated that the market for building materials showed gains. In contrast, Philadelphia noted that some of their firms which produce homebuilding products and materials saw declining demand. Dallas indicated that the growth in demand for semiconductors and telecommunications equipment had weakened in recent months. Boston, Philadelphia, Atlanta, and St. Louis reported excess capacity and rising inventories of paper products. Nonfinancial Services Philadelphia, Richmond, Dallas, and San Francisco reported that the service sector was generally healthy in their districts. Philadelphia reported strong demand for computer-oriented businesses, while San Francisco noted an increase in demand for both computer and telephone communication services. An earlier Easter and colder-than-normal temperatures hampered beach tourism activity in the Richmond and Atlanta districts. Minneapolis indicated that the long winter was damping tourism activity in February and March. In contrast, Philadelphia reported that tourism was healthy in their district, with increased bookings for conferences and business meetings in the Pocono Mountain region of Pennsylvania. Spring bookings were also higher in the Richmond and Atlanta districts, and Minneapolis said that business owners were optimistic about bookings for the spring and summer. Real Estate and Construction Most Districts reported that residential real estate activity increased; some contacts characterized the activity as ""brisk."" Housing sales strengthened in the Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco districts. The Richmond and Kansas City districts indicated that housing starts were steady. Kansas City reported that the stock of unsold homes was lean, while Atlanta said that home inventories were ""in good shape."" Pockets of strength in western and southern New York were overshadowed by sluggish markets in northern New Jersey and upstate New York; one New Jersey contact described the market there as ""listless."" Commercial real estate activity also increased in most districts. Dallas, Richmond, and Atlanta reported strong leasing activity with low vacancy rates and high rental rates. The Dallas, St. Louis, Minneapolis, and San Francisco districts noted strong growth in construction activity; Atlanta reported that several speculative projects were under way and more were anticipated. Boston indicated that its commercial real estate market improved somewhat, and New York reported a stable commercial real estate market. San Francisco, however, indicated that the market was soft in the Los Angeles area, and Chicago noted that commercial development remained slow, despite positive absorption rates and firming rents in office and retail space. The recent uptick in mortgage rates had mixed effects on real estate and construction activity. Chicago and Richmond reported that the rise may have spurred potential homebuyers to take action. The New York district reported that the increased rates had no apparent effects. Financial Services Overall lending activity increased slightly in most districts with moderate gains in commercial and consumer lending activity offsetting weaker residential mortgage and home refinancing activity. The demand for consumer loans was mixed across districts- increasing in Atlanta, Philadelphia, and Dallas but decreasing in Chicago and St. Louis. In the Cleveland, Richmond, and Kansas City Districts, the demand for consumer loans remained steady. New York and Cleveland reported that loan delinquency rates were unchanged. However, Chicago reported that loan delinquency rates rose, although overall credit quality was unchanged. St. Louis reported a slight increase in nonperforming consumer loans. Agriculture Agriculture was adversely affected by the weather and high feed costs in March and April, according to district bank reports. Kansas City, Dallas, and San Francisco reported that severe drought conditions had damaged the winter wheat crop; Richmond and St. Louis said that crops there suffered from the lingering effects of winter's severe temperatures. In contrast, Minneapolis indicated that the wheat crop held up well. Several banks cited the small wheat crop and tight carryover stocks as reasons for soaring grain prices. Dallas, Minneapolis, Kansas City, and San Francisco noted that high livestock feed costs combined with low livestock prices were leading to financial stress among ranchers and some feedlot operators. San Francisco and Richmond reported that fruit trees were in worse than normal condition, and St. Louis indicated that an early spring freeze resulted in the loss of 75 percent of the Arkansas peach crop. Kansas City noted that spring planting activity may be delayed by the drought; Minneapolis reported that planting delays have resulted from unseasonably wet weather. Employment and Wages Most Districts reported tight labor markets but only scattered upward pressure on wages. Tighter markets for manufacturing workers were noted by St. Louis and Kansas City. Chicago said that labor shortages were the main concern of businesses there, although demand for manufacturing workers had softened. Boston indicated that some manufacturers experienced difficulty in filling software and telecommunication positions. The Atlanta and Kansas City districts reported shortages of retail workers. While Dallas reported fewer labor shortages overall, a short supply of skilled workers had caused delays in the construction of warehouses and office buildings. Cleveland indicated that labor shortages were occurring less frequently than a year ago. Districts generally reported only modest wage pressures, although St. Louis said several industries experienced increased labor costs and Minneapolis reported wage increases of 4 to 5 percent. Kansas City said that wages rose for skilled workers such as welders and machinists. Prices Most districts reported little upward pressure on prices other than sharply higher prices for grains and energy-related items. Boston, New York, and Atlanta reported that prices in their districts changed little. Price increases in the San Francisco district continued to be moderate overall. Retail prices were steady in Kansas City and increased slightly in Richmond. Materials prices rose in the Kansas City and St. Louis districts but declined slightly in Richmond. Richmond indicated that service-sector and finished goods prices increased slightly. Atlanta reported some pockets of price deflation in lumber and paper, and Dallas reported that oil prices were likely to decline soon. Contacts in the Philadelphia district expected increases in the prices of purchased supplies and materials over the summer. Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco reported sharp increases in grain prices; however, the Dallas, Kansas City, and Minneapolis districts noted lower livestock prices. St. Louis, Minneapolis, and San Francisco indicated prices for fuels rose, and Dallas and Minneapolis reported price hikes in plastics. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1854 -beige_book_pure_text_pre2000,1996,"Reports from the twelve Federal Reserve Districts suggest economic activity continued to advance at a moderate pace in May and early June. Nearly all districts report expanding activity, and several indicate the pace of growth accelerated recently. The retail and service industries generally strengthened, and manufacturing activity improved in several districts. Residential and commercial construction activity also picked up in most districts, although wet weather hampered homebuilding in some areas. Loan demand increased in most districts, despite a decline in mortgage lending. In the natural resource industries, agriculture was hurt in several districts by unfavorable weather and low cattle prices, while energy activity increased in regions producing oil and natural gas.Several districts note rising prices for some raw and intermediate products, especially building materials, petroleum products, and grain. Evidence of rising prices for retail products, however, was much less widespread. Most districts continued to report tight labor markets for both entry-level and skilled workers, although indications of rising wages remained scattered. Retail Retail sales strengthened in nearly all districts, with sales generally exceeding year-ago levels. The only exceptions were the Boston and New York districts. In the Boston district, retailers indicated that recent sales were disappointing, especially in off- price discount stores, but they were generally optimistic about sales prospects during the remainder of the year. In the New York district, sales slowed slightly in early June after exceeding expectations in May.Recent sales gains followed normal seasonal patterns in most districts. Retailers in the New York, Philadelphia, Cleveland, Atlanta, Kansas City, and Dallas districts report strong sales of seasonal items such as air conditioners, men's and women's apparel, and lawn and garden products. In the Cleveland and Chicago districts, however, unusually wet weather slowed sales of home improvement products and other seasonal items.Automobile sales remained strong in most districts. Dealers in the Philadelphia, Cleveland, and St. Louis districts attribute part of the recent sales strength to various sales incentive programs. Some popular models were in short supply in the Cleveland and Kansas City districts. The Philadelphia district, however, reports weak sales of heavy trucks. Manufacturing Manufacturing activity improved in several regions, while pockets of weakness remained in some districts. Districts reporting generally improved manufacturing activity include Boston, New York, Philadelphia, Richmond, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco. Reports from the Cleveland, Atlanta, and St. Louis districts indicate manufacturing activity was uneven or flat.Activity improved in a wide range of industries. Both consumer and capital-goods industries improved in the Boston district. In the Richmond, Chicago, and San Francisco districts, industrial machine and tool manufacturing strengthened. Construction-related industries were strong in the Dallas and San Francisco districts. Conditions in the oil field equipment industry improved in the Dallas district.Some districts report weak spots in manufacturing activity, however. In the Boston district, demand for hospital equipment was weak, reportedly due to lower cost health care plans. The heavy truck and construction equipment industries remained soft in the Cleveland and Chicago districts. In the Dallas district, the semiconductor industry remained weak, due to a slump in demand for computers and related products. Services Service activity continued to expand in districts reporting on this sector. In the Boston district, demand for temporary workers continued to strengthen. Service producers in the Richmond district indicate that employment rose in May, although revenues declined slightly. The San Francisco district reports strong demand for computer-related services, telecommunications, and long-distance trucking. The tourism industry remained robust. The New York district reports hotel occupancy in New York City remained at a 16-year high. In the Richmond district, tourism activity picked up in May despite wet weather. The Atlanta district reports strong gains in attendance at Florida hotels and theme parks and rising gambling revenues in Mississippi. Also, the approaching Olympic Games have apparently boosted passenger traffic at Atlanta's Hartsfield International Airport. In the Minneapolis district, the tourism industry holds optimistic expectations for the summer, even though the season's start was delayed by cold, wet weather. Construction and Real Estate Residential real estate activity generally strengthened in most districts, including New York, Philadelphia, Atlanta, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. Signs of sluggishness emerged in some districts, however. Housing sales slowed in some parts of the Boston and New York districts. Builders in the Richmond district report declining buyer interest in new homes, although housing sales rose. In the Chicago district, wet weather slowed homebuilding and sales, but builders expected a stronger third quarter.Commercial real estate activity continued to improve in most districts. The Philadelphia, Richmond, and Atlanta districts report declining office vacancy rates, higher rents, and gains in commercial construction activity. The Minneapolis district reports solid gains in contracts for large projects. In the Dallas district, the tightest supply of suburban office space in a decade was pushing up rents. A few districts report a weakening in commercial activity. The New York district reports office vacancy rates edged up in New York City in May. In the St. Louis district, commercial construction slowed in some areas of Tennessee and Arkansas. Banking and Finance Overall loan demand rose in most districts, although demand for commercial loans and consumer loans varied among the districts. Demand for commercial and industrial loans was strong in the New York, Chicago, Kansas City, Dallas, and San Francisco districts, and was flat to down slightly in the Philadelphia, Cleveland, Richmond, Atlanta, and St. Louis districts. Demand for consumer loans was strong in the Cleveland, Richmond, Atlanta, Chicago, Kansas City, and Dallas districts, and flat to down slightly in the New York, Philadelphia, St. Louis, and San Francisco districts. The Cleveland and Chicago districts report intense competition among lenders. Mortgage lending and refinancing declined in most districts. In the Boston district, assets managed and employment at investment management firms strengthened. Agriculture and Resource-Related Industries Agriculture was hurt in several districts by unfavorable weather and low cattle prices. Wet weather delayed the planting of spring crops and slowed crop development in the Cleveland, Chicago, St. Louis, Minneapolis, and Kansas City districts. The Cleveland and Chicago districts report that more favorable weather recently enabled corn and soybean planting to progress. Recent rains improved crop conditions in some parts of the Richmond district. The wet weather arrived too late in the Kansas City district, however, to avert an expected sharp decline in winter wheat production caused by drought earlier in the year. In the Dallas district, drought sharply reduced the expected size of the winter wheat crop and trimmed pasture and forage supplies. The St. Louis, Minneapolis, Kansas City, and San Francisco districts report unfavorable conditions in the livestock industry, due to low cattle prices and high feed costs.Energy activity improved somewhat in the Minneapolis, Kansas City, and Dallas districts, despite declining energy prices. The Minneapolis district reports stronger iron mining activity and mixed conditions in the forest products industry. Prices and Wages Prices advanced for some raw and intermediate materials in several districts, especially for building materials, petroleum-based products, and agricultural commodities. Evidence of rising prices for finished products and at the retail level was less widespread. The Boston, Kansas City, and Dallas districts report higher prices for building materials, including lumber. Prices for packaging materials, some plastics, machinery, and steel were up in the Atlanta district. Higher wheat prices pushed up flour prices in the Minneapolis district, but otherwise had little effect on retail food prices. Manufacturers in the Boston and Richmond districts report rising product prices, but flat to slightly lower materials prices. In the St. Louis district, some manufacturers report difficulty in raising product prices due to highly competitive markets. Retail prices held steady in the Boston, St. Louis, and Kansas City districts and rose more slowly in May than in April in the Richmond district. Retailers in the New York district, however, indicated that a decline in price discounting was boosting effective retail prices. Most districts continued to report tight labor markets for both entry-level and skilled workers. The Cleveland, Atlanta, St. Louis, and Kansas City districts report a tight market for retail workers. In the Boston and Chicago districts, the number of temporary workers shifting to permanent assignments was increasing. Markets for skilled laborers remained tight in the Chicago, St. Louis, Minneapolis and Kansas City districts. The Boston district reports that a tight local labor market has prompted area businesses to recruit professional workers from other parts of the country. Reports of rising wages are scattered, despite widespread tightness in labor markets. The Boston district reports rising wages in manufacturing. In the St. Louis district, some fast-food establishments offer wages above the minimum wage and include a signing bonus. The approaching Olympic Games were pushing up entry-level wages in the Atlanta district. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1875 -beige_book_pure_text_pre2000,1996,"The economy continued to expand in June and July, though in some areas the pace of growth has moderated since the last report. A number of districts report tight labor markets, especially for entry-level workers; however, wage pressures remained subdued. Retail sales slowed in most districts, particularly for non-auto durables. Many districts report continued expansion in the manufacturing sector, and a number have seen a pickup in hiring. Most manufacturers and retailers report that inventories were roughly on target. Housing markets remained fairly strong in most districts, though a few areas report a slowdown; a number of districts note particular strength in the multi-family segment. Commercial and industrial real estate markets continued to firm in almost all districts. A number of districts note brisk tourism activity-especially on the east and west coasts. Crop conditions have generally improved since the last report, although late plantings across the Midwest raise the potential for damage in the event of an early frost. While there are scattered reports of rising commodity prices, most districts report that input prices, as well as prices for finished goods, were essentially flat. Most districts report increased demand for commercial and industrial loans, but softer demand for consumer and mortgage loans. Consumer Spending Retail sales softened in most districts, though sales were generally up from a year-ago. Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and Dallas note some weakening since the last report. However, contacts in Minneapolis, Kansas City, and San Francisco say that sales remained strong. Retail inventories were generally on target. Demand for non-auto big ticket durables-such as home furnishings, appliances and electronics-was particularly soft in several districts (New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and Kansas City). Auto sales were mixed; most districts report steady sales, but Kansas City reports a pickup, while Dallas notes some softening. New York and Chicago report that unusually cool weather may have contributed to weakness in seasonal items, such as fans and air conditioners. Apparel sales were fairly good in the New York, Atlanta, Kansas City and San Francisco districts, but were weak in the Boston, Philadelphia, and Dallas areas. Manufacturing Manufacturing activity continued to expand in most districts. Boston, New York, Philadelphia, Minneapolis, Kansas City and San Francisco report that conditions firmed. However, Richmond, Atlanta, and Dallas note some softening. Cleveland and Chicago also report some recent moderation in growth, but add that the sector is still strong. Most districts report that inventory levels were in line, although they were a bit high in Richmond. However, auto-industry suppliers in the St. Louis and Chicago districts report lean inventories, and this has hindered light truck assemblies. Conditions in high-tech industries are very strong in Minneapolis but weak in Dallas; San Francisco notes increased activity in research and development, but some moderation in growth of computer manufacturing. Dallas reports increased demand for energy-related products. Real Estate and Construction Residential real estate markets remain fairly strong in most districts. Some slowing was observed in the Richmond, Atlanta, Chicago and St. Louis districts. However, Boston, New York, Cleveland, Minneapolis, Kansas City, Dallas, and San Francisco report continued improvement. Boston, New York and Atlanta noted particular strength in the multi-family housing market. Commercial real estate continued to firm in almost all areas. Tight markets and declining vacancy rates are cited in Boston, New York, Richmond, Chicago, Minneapolis, Dallas, and San Francisco. St. Louis and Atlanta report mixed conditions, with the latter mentioning strong demand for office and industrial space, but softening demand for retail space. Nonfinancial Services and Tourism Service activity continued to expand in districts that report on this sector. A monthly survey of service sector firms in the Richmond district shows increased activity in July. Temporary employment firms and contractors in the Philadelphia and Richmond districts report brisk business. San Francisco reports a pickup in software development activity. Tourism has been notably brisk in the seaboard regions-Boston, New York, Richmond, Atlanta, and San Francisco. Minneapolis reports that tourism is below expectations, but roughly on par with last year. The Olympics have clearly attracted large numbers of tourists to the Atlanta area, and other parts of the district have benefited as well-large numbers of Atlanta residents reportedly visited Florida during the games. However, some of the district's other traditional destinations report disappointing traffic. Financial Services Banks in virtually all districts report that demand has softened for consumer and mortgage loans but strengthened for commercial and industrial loans. The New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, and San Francisco districts report increased demand for business loans, while Philadelphia and Kansas City report steady demand. However, consumer and mortgage loan activity weakened in the New York, Richmond, Atlanta, St. Louis, and Kansas City. Banks in New York, Philadelphia, and Chicago indicate some increase in loan delinquencies, while Cleveland reports that delinquency rates have leveled off. Insurance companies in the Boston district report mixed sales of insurance products but increased mutual funds sales. Agriculture and Resource-Related Industries Crop conditions were mixed but generally improved since the last report. Contacts in St. Louis, Minneapolis, and Kansas City report that crops were generally in good condition; conditions were below normal but improving in Cleveland and Chicago. Late crop plantings in the Cleveland, Chicago, St. Louis, and Minneapolis districts raise the potential for crop damage in the event of an early frost. A severe drought in the Dallas district-and parts of the St. Louis district-has caused extensive damage to corn and other crops, although recent rainfalls have helped somewhat. Hurricane Bertha caused some moderate crop damage in the Richmond district. The energy industry has picked up in the Minneapolis, Kansas City and Dallas districts, with contacts reporting increased drilling activity. The strength is largely attributed to high crude oil and natural gas prices, while Minneapolis also cites new seismic and drilling technologies as a factor. Employment & Wages Labor markets remain tight, but there has been no widespread increase in wage pressures. Contacts in virtually all districts outside the Northeast cite tight labor markets and scattered shortages of both skilled and entry-level workers; most report that wage pressures remain subdued, though San Francisco reports that ""wage inflation pressures are evident in some areas"". Businesses in Atlanta, Kansas City, and Dallas mention limited availability of entry-level workers; contacts in Philadelphia and Richmond report increased demand for temporary workers; Chicago reports shortages of construction workers and professionals. Prices Despite scattered reports of rising commodity prices, most districts report that both input prices and costs of finished goods were, on balance, flat. Manufacturers in Boston and Richmond report stable to declining input prices; those in New York, Chicago and Kansas City report some rise in materials costs. Other districts report mixed trends in raw materials costs; steel prices reportedly increased in Chicago and Kansas City but declined in Cleveland and Dallas. Prices for finished goods were generally flat in the New York, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City districts, and up slightly in Boston and Richmond. Contacts in Philadelphia and Atlanta attribute the difficulty of raising prices to intense competition. Cattle farmers have been pinched by weak cattle prices and rising feed prices. Corn and soybean prices fell sharply in late July, after surging in preceding weeks. Some areas report an escalation in real estate costs. Contacts in Boston, New York, Richmond, Atlanta, and Dallas note upward pressure on commercial rents. Boston and New York also report some firming of residential rents. St. Louis mentions a pickup in new home prices, driven by rising costs of both land and construction materials. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1651 -beige_book_pure_text_pre2000,1996,"Inflation indicators from the District reports were varied and generally inconclusive, although there appears to be greater upward pressure on wages than on prices. Business activity in most Districts is reported to be generally good and expanding moderately. Wages and Prices Reports of substantial price increases were notably absent from many District summaries. Several Districts indicated that consumer prices are either stable or rising only slightly (Boston, New York, Cleveland, and Kansas City). Price increases were cited for a wide variety of industrial commodities, but these appear to be confined to a small set of markets, such as lumber (Boston, Richmond, Chicago, and Dallas), steel (Cleveland and Chicago), and various agricultural commodities including grains and dairy products. Several Districts also noted price declines in a few areas, especially memory chips (Boston and Dallas).Wage gains have tended to outstrip price increases, however. The Richmond District sees ""widespread"" upward pressure on wages, and rising labor costs were also noted in the San Francisco District. The Boston District's wage and salary increases are in the 2% to 4% range. In Cleveland, wage growth is reportedly 2% to 3%, although ""the cost of new hires is accelerating."" This is consistent with the Minneapolis report, in which several sources observed ""upward pressure on entry-level wages."" The Chicago District notes that small retailers in Michigan were ""raising their starting wages to attract qualified workers,"" but most contacts reported no discernible acceleration in wages. In the remaining regions, upward wage pressures were characterized as either ""subdued"" (as in the New York and Chicago Districts), or ""scattered"" (Atlanta, Kansas City, and Dallas).None of the Districts indicated inflationary pressures are subsiding and at least one report noted that price increases are expected to intensify. According to the San Francisco District, although about 55% of respondents see inflation remaining constant over the next 12 months, ""nearly 40% expect [inflation] to accelerate."" Labor Markets Many District reports indicated pockets of labor market tightness, and in a few regions, this tightness appears to be broadly based. In the Richmond District, tight labor markets are ""widespread,"" labor markets ""remained tight in much of the [Kansas City] District,"" the Chicago District's labor markets are ""tighter than the nation as a whole,"" and tight labor markets ""continue to be a concern for most contacts"" in the St. Louis District. Elsewhere, ""some reports of labor shortages"" were noted in the San Francisco District, and a number of District summaries contained scattered indications of labor shortages in entry-level positions, retailing, and some skilled occupations. Low unemployment rates were noted in the Cleveland and Minneapolis Districts. Business Activity Overall, the District reports reveal a moderately expanding economy, with only a few exceptions: Growth in the San Francisco District is characterized as ""strong,"" and the St. Louis region has ""continued to moderate slightly."" Manufacturing In most Districts, industrial activity is either expanding or holding steady at a high level. Richmond reports ""substantially faster"" manufacturing growth. Although a moderation in industrial production growth is seen in the Cleveland and Kansas City Districts, both report continued high levels of production. Orders growth is indicated by many Districts (Philadelphia, Cleveland, Richmond, Chicago, and Dallas). Notable exceptions include continued cutbacks or closings in apparel and textiles (Atlanta and St. Louis) and drop-offs in heavy truck production (Cleveland and San Francisco). Only a few constraints on industrial capacity are reported, and capacity increases are occurring in the Boston and Atlanta Districts. Retailing The back-to-school shopping season got off to a good start, and several Districts indicated that sales are meeting--or exceeding-- expectations. A good number of Districts reported strong apparel sales (Boston, New York, Cleveland, Atlanta, and Kansas City), although these vary by type and outlet. Household appliances and other ""big-ticket"" items are a noted weakness in two reports (Cleveland and Chicago).Overall, inventories are considered ""in line with sales,"" and the Boston District reported that some retailers are ""cautiously building inventories."" While auto sales are generally described as flat or declining slightly, thin car stocks are seen as a contributing factor (Cleveland, Kansas City, and Dallas). Real Estate and Construction Building activity remains strong in most parts of the country. The Chicago District reports ""robust"" construction, Minneapolis sees all types of construction as ""brisk,"" and Kansas City indicates ""solid"" home building activity. The San Francisco District reports ""tight"" residential and commercial real estate markets in most areas, and office vacancy rates are low in parts of the New York, Philadelphia, Minneapolis, and Dallas Districts. Construction and sales vary more for residential properties than for commercial ones. Boston reports the residential real estate market to be in good shape across much of New England. Residential real estate has improved in the New York District, and inventory problems are noted in downstate New York and Massachusetts. However, softer residential markets are reported in the Cleveland, Richmond, and Dallas regions. Banking and Financial Markets Loan demand appears to be holding steady at a generally high level. Exceptions to this trend include the Richmond District, where overall lending has slowed slightly, the Atlanta District, where demand is ""moderate,"" and the St. Louis District, which saw slight declines in total loans between mid-June and mid-August. Borrowing activity is mixed by category. Several Districts indicate a moderation in commercial lending (New York, Richmond, and St. Louis), but some also see relatively strong commercial lending growth (Chicago and San Francisco). Consumer borrowing reports are equally varied. While some deterioration in credit quality and increases in delinquency rates were noted, no concerns about overall debt quality were expressed. Seasonal Industries Agricultural conditions vary widely by District, but most regions report better crop conditions today than earlier in the summer. Still, a delayed planting season has resulted in underdeveloped crops in many areas, and there is concern that crops could be threatened in the event of an early frost (Chicago and Minneapolis). The Richmond and Kansas City Districts report very good corn and soybean crops. High feed costs are contributing to livestock liquidations, and milk production is down substantially from last year (Chicago and Minneapolis). Districts with a significant tourist trade reported mixed results for the summer season. ""Ticket revenues for the Olympics, overall, exceeded projections,"" according to Atlanta. That District also notes that while tourism in central Florida remains strong, its other, non-Olympic venues have been disappointing. In New York, hotel occupancy rates are near record highs, and the San Francisco District indicates strong hotel occupancy and other tourism trade in several states. The Richmond region had ""below average"" tourism revenues in the Atlantic coastal areas, and a ""weak, but not disastrous year"" for tourism was reported in the Minneapolis District. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1522 -beige_book_pure_text_pre2000,1996,"Moderate expansion of business activity characterizes the economy in most Federal Reserve districts, but on balance the pace of growth reportedly has slowed somewhat. Slower growth is reported in the Southwest and along the eastern seaboard except for New England. The Midwest continues to show moderate to strong growth. Boston and San Francisco, two districts which had lagged much of the rest of the nation through the first half of the 1990s, indicate an improved performance. Although there are few indications of significant price increases for raw materials, goods or services, reports of upward pressure on wages are more widespread. Consumer Spending On balance, consumer spending is best characterized as moderate. There are some signs of strength, but no areas where sales are booming. There is considerable variation in patterns of spending both by region and by category of merchandise. Boston describes double-digit growth in furniture and hardware, but slow sales for discounters and a shoe chain. In the New York district, apparel is strongest and durables such as appliances lag. The same pattern is true for Kansas City. Philadelphia describes strong women's and youth clothing sales, but notes that some retailers ascribe this strength to price cuts. Cleveland reports strength in sportswear and major appliances, with weakness in computers, toys and home items. Retailers in the Atlanta district are meeting their targets, with greatest strength in apparel. Conditions are similar in Chicago, where apparel leads home improvement goods and appliances in gains over year-earlier levels. Chicago and Dallas characterize the retail sector as one of intense competition, but they are generally optimistic about the upcoming holiday season. Competition is also sharp in the Minneapolis district, but sales tax revenues indicate moderate strength in general merchandise sales. San Francisco indicates that demand for retail goods and services was solid overall. Reports on the auto sector are mixed. They are particularly strong in the Minneapolis district, where favorable crop incomes and overall economic strength bolstered September vehicle sales. For Cleveland, sales are up compared to a year ago, but somewhat below early 1996. Kansas City saw some slowing in September, but dealers expect sales to be ""fairly strong over the remainder of the year."" For Philadelphia, vehicle sales are reportedly steady, and for Dallas sales have slowed more than expected. Tourist spending is similarly mixed, with greatest strength along the East Coast. Tourism ""remains strong"" in New York. Richmond reports substantial strength in inland areas not affected by hurricanes. Atlanta lists brisk activity in Florida, the Mississippi Gulf Coast and New Orleans, and notes an upbeat outlook for tourism and convention activity. The Upper Midwest is less favored, with Minneapolis reporting a slow or somewhat disappointing summer season in its states. Manufacturing On balance, the manufacturing sector is largely stable to stronger, with considerable regional variation. Boston reports that a near majority of firms ""indicate solid sales gains from a year ago."" Cleveland describes the sector as strong with ""some pickup noted between August and September."" For Atlanta, ""contacts report increasing activity."" And for Chicago, activity increased in the district through early October. St. Louis notes reports of sales and employment increases and plant expansions far outnumbering reports of declines and closures. San Francisco's manufacturing sector expanded further, led by the aircraft sector. However, obvious strength in these districts contrasts with Minneapolis, Kansas City and Dallas, where manufacturing was steady to mixed; Philadelphia, where manufacturing gains in October were less widespread than in summer; and New York, where surveys of purchasing managers reported sharp improvement in local manufacturing in September. Several districts report localized effects from the auto workers strike in Canada, but none foresee significant or long-term effects. A number of districts report that manufacturing inventories are generally normal to somewhat below normal, and show little indication of either production bottlenecks or of weakening demand. Construction and Real Estate Construction is strong in several districts, but slackening in a few. New York notes that rising demand for apartments is spurring new construction, which had been dormant for some years. The Midwest is generally strong, with Minneapolis and St. Louis noting particular strength. Chicago reports increases in commercial and retail work are ""offsetting some slowing on the residential side."" Kansas City notes some slowing, but says that activity is still above a year ago. San Francisco characterizes the sector as generally robust, but with deceleration or weakness in some regions. However, slowing is apparent in the Southeast. Richmond describes some decrease in residential construction overall, but notes increases in materials prices and a shortage of skilled construction labor in North Carolina. In Atlanta, construction activity has fallen below year-earlier levels. Market conditions for residential and commercial real estate are mixed, with strength in the Northeast and West (New York, Boston, San Francisco) and some slackening in the Southeast (Richmond, Atlanta) and Midwest (Chicago, St. Louis, Kansas City). Agriculture The 1996 crop is turning out better than many anticipated this spring, when drought scourged the Southwest and unseasonably cold, wet weather delayed planting on the Northern Plains and in the Midwest. Although crop development still lags usual levels in several districts, there is little damage from early frosts. Cleveland reports that the corn harvest was past the halfway mark in Kentucky and starting in Ohio. Chicago describes the harvest as ""well underway."" St. Louis says that corn and soybeans have generally ""reached full maturity,"" but notes that the harvest is slow in Illinois and Indiana. Minneapolis and Kansas City both tell of good to excellent yields, but with some harvest delays due to rain. The effects of drought continue to plague the Dallas district, especially corn and cotton. St. Louis also notes problems with cotton, in this case due to boll rot. Most winter wheat is grown in the Dallas and Kansas City districts; Dallas reports the new-crop condition as good, but Kansas City relates that fall planting is delayed by rain. Conditions are less favorable for livestock producers; a number of districts report continued losses for cattle ranchers. San Francisco notes a decline in beef exports to Japan. But there are some glimmers of improvement: Minneapolis reports that beef prices are not as bad as had been anticipated, while Kansas City says that profitability has returned to the feeding end of the sector and that ""feedlots are filling quickly."" Minneapolis and St. Louis report sharp increases in milk prices, in response to higher feed costs. The Chicago district has had more apparent cuts in hog and milk production than elsewhere but says that the rate of decline has slowed as feed costs have dropped. Energy, Mining and Forestry Natural resource sectors are generally robust. Dallas describes shortages of offshore rigs, drill pipe, and drilling crews and ""little capacity available anywhere"" in oil services. Kansas City activity improved somewhat from August to September, but the rig count was unchanged from a year ago. Minneapolis reports continued strong oil activity in North Dakota and very strong output in iron mines. Forest product output is reportedly steady. Financial Institutions and Credit Districts describe a financial sector that is stable to slightly stronger. New York lists increases in nonresidential mortgage loans and stability in other categories, along with some increase in delinquency rates. Philadelphia reports steady to slower loan activity. Richmond, Atlanta, St. Louis and Dallas describe little significant change. Kansas City and San Francisco note strength in loan demand. St. Louis and San Francisco describe banking competition as ""fierce"" and ""sharp."" Labor Markets Employment continues to grow in most districts. A majority, including Minneapolis, Chicago, Cleveland, Richmond, Philadelphia, Kansas City, Dallas and San Francisco, describe labor markets as tight. For Minneapolis, labor markets ""constitute a constraint to increased output."" ""Labor shortages continue to be a problem in most areas,"" reports Chicago. Labor markets remained tight and wage increases more common, according to Kansas City, while Philadelphia reports that employers have had increasing difficulty finding qualified workers. The Northeast is an exception to this pattern. Labor availability is not a problem, according to Boston sources, and New York notes an acceleration in manufacturing job losses. Wages and Prices Indications of upward pressure on wages continue to spread geographically and to grow in terms of affected occupations and ranges of skill levels. Wage pressures appear most quiescent in the East. Boston reports that a couple of manufacturers have frozen wages, but that most are granting increases of 2 percent to 4 percent. New York notes increases only in bonuses from Wall Street firms, and while Philadelphia lists labor shortage difficulties, it notes acute wage increases only for some entry-level clerical workers. Similarly, while Atlanta identifies increasing reports of labor shortages, wage pressures have apparently not systematically emerged. In the rest of the country, more pay increases are evident. Cleveland identifies ""steady pressure to increase wages"" for some specialties, while Richmond sees wage increases in low-unemployment areas and reports expectations of upward pressures in the next six months. Chicago says that ""wage pressures appear to have remained concentrated at the lower end of the pay scale, and ... this pressure may be intensifying."" For Kansas City, ""reports of rising wages increased,"" and in the Dallas district ""there were more reports of labor shortages leading to wage pressures."" San Francisco describes wage pressures as ""moderate overall,"" but points to ""upward pressure on the wages of entry-level workers... has been added to existing upward pressure on wages for some categories of skilled workers."" The Minneapolis district apparently has the tightest labor markets, and notes ""increasing reports of compensation increases."" In contrast to some proliferation of wage increases, reports of price increases for raw materials, goods and services remain limited. Boston reports some increases in chemicals prices, but notes that half of manufacturers report no change in selling prices. New York reports that merchandise costs are generally flat. The cost of raw materials has not increased for most industrial firms surveyed by Philadelphia. Retailers contacted by Cleveland ""have not experienced any substantial price pressures"" and ""note price declines in consumer electronics."" Most of Atlanta's contacts expect no change in material or finished goods prices. St. Louis relates that some firms have experienced increases in raw materials prices but have been unable to pass them along, while other firms reported recent declines in raw material prices. From Minneapolis, price hikes generally remain scattered and small, while Dallas indicates ""more reports of lower prices than in the last beige book,"" although energy and some other materials were higher. Specific exceptions to this general pattern of low price pressures include Richmond, where manufacturers report increasing prices for finished goods and raw materials in September, and Kansas City, where retail prices held steady but those for some manufacturing and construction materials rose. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2143 -beige_book_pure_text_pre2000,1996,"Moderate economic growth continues to be reported in nearly all Federal Reserve Districts. Labor markets in most Districts remain tight, although wages pressures are generally not increasing except for some technical occupations and skilled workers. Retail prices are stable in most Districts although some firming, mainly in prices for materials and intermediate goods, is noted by Richmond, Atlanta, Kansas City, and Dallas. Consumer Spending Retail sales have increased in most Federal Reserve Districts. Sales have moved up in Boston, New York, Philadelphia, Minneapolis, Kansas City, and Dallas in the past four to six weeks, and San Francisco reported moderate improvement in recent months. Atlanta and St. Louis have had year-over-year increases. Chicago reported that retail sales have been flat in the past month but above last year?s level. The only reports of weaker sales come from Cleveland, where sales were down compared to a year ago, and Richmond, where sales have moderated in the past month. By product line, apparel sales have been relatively strongest in New York, Cleveland, Atlanta, St. Louis, Minneapolis, Kansas City, and Dallas. Home products were also selling well in Atlanta and St. Louis. Electronic products were selling strongly in Minneapolis and Kansas City but poorly in New York, Cleveland, and Chicago. Appliances were not selling as well as other types of products in New York, Chicago, and Minneapolis. All Districts that obtained information on inventories reported that stocks were in line with merchants? current or expected sales. Price discounting was increasing in Boston, New York, Philadelphia, and Cleveland. Retailers? expectations for sales in the upcoming holiday season are modestly optimistic. In the Boston, New York, and Philadelphia Districts, merchants forecast gains ranging from 2 to 6 percent, year-over-year. Atlanta merchants expect a slight increase. In St. Louis, Kansas City, Dallas, and San Francisco the season is expected to be strong. Auto sales were mostly steady in Districts that got reports from dealers. In Philadelphia, St. Louis, Kansas City, and San Francisco, sales were roughly unchanged in recent weeks but at a high level. The sole negative report came from Dallas where sales were characterized as sluggish. Tourism has been strong in the nation?s coastal states. Richmond, Atlanta, New York, and San Francisco report high hotel occupancy rates. Theme park attendance and bookings for winter stays at coastal resorts have been high in Florida. Minneapolis, however, reported lackluster tourism, although early snow has boosted business in areas popular with skiers and snowmobilers. Manufacturing Nearly all Districts reported continued expansion of manufacturing activity in October and November. The improvement was generally modest, although manufacturers in the Boston District said they were seeing year-over-year gains in orders and revenue of up to 15 percent. Less positive conditions prevailed in the Cleveland District, where production was just steady, and in the Atlanta District, where ""an increasing number of factories are reporting decreasing production and shipments."" Boston noted strong orders for consumer durables, furniture, appliances, computers, and medical equipment. Dallas and Atlanta reported stronger demand for electronic products and industrial equipment. Boston and San Francisco indicated that production of aircraft and related equipment was moving up. Dallas noted strong demand for energy equipment and oil machinery. Some disruption in the production of autos and related equipment because of strikes was reported by New York, Cleveland, and Chicago; Cleveland also noted that lost production was not scheduled to be made up. Inventories were described as ""normal"" in the Cleveland District and ""satisfactory"" in the Kansas City District. Inventories were declining in Philadelphia. Producers of electronic goods in the Dallas District said their inventories were high but coming down. Real Estate and Construction All seven of the Districts reporting on commercial real estate markets noted improvement. New York and Dallas indicated continued improvement in office markets, and Richmond and Atlanta noted increases in rental rates and drops in vacancy rates. Commercial construction activity increased in the Districts of Richmond, Atlanta, St. Louis, Minneapolis, and Dallas. Richmond and Atlanta received reports of increased speculative construction of office buildings. Development of light industrial and retail space was also under way in Atlanta and Minneapolis. Minneapolis reported robust public infrastructure construction, and Dallas reported strong construction of extended-stay hotels in that city. Districts reporting on residential real estate mainly observed slowing sales, although sales levels remained high. Richmond, Chicago, Minneapolis, and Kansas City reported slower sales. In the San Francisco District sales fell back somewhat in Arizona, Idaho, and Utah but increased in Washington, Oregon, and the San Francisco Bay area. Home prices were steady in Boston and New York, falling in Richmond, and rising in St. Louis and the stronger markets in the San Francisco District mentioned above. Agriculture In general, Federal Reserve Districts that surveyed agricultural conditions received good reports. Minneapolis noted that grain yields were ""excellent and better than had been expected through the growing season."" St. Louis said that ""initial reports suggest that yields were generally above average."" The soybean crop was plentiful in the Cleveland and Dallas Districts. Minneapolis and Cleveland received positive reports on the potato crop. Other crops for which yields were said to be good were rice, peanuts, and sugar beets. Kansas City reported an excellent corn harvest, but Cleveland said the corn harvest in Ohio was about 20 percent below normal. Minneapolis and Kansas City reported that recently planted winter wheat was in good condition in their Districts, but Cleveland said seeding was hampered by muddy field conditions. Dallas described livestock conditions as ""good overall,"" and Kansas City and Minneapolis said higher cattle prices have led to an increase in cattle at feedlots. National Resource Industries The current level of oil prices is prompting high and growing oil-field activity. Dallas noted that ""high prices continued to boost demand for oil services,"" and Kansas City reported that the District?s rig count rose 2.4 percent in October and was above the year-ago level. Minneapolis reported that ""iron ore mining and oil drilling continue at the brisk pace that has prevailed for several months."" Financial Services and Credit Credit demand varied among Districts. Only Cleveland and San Francisco indicated growth in overall bank lending. In other Districts, lending was mixed. Competition for new lending was characterized as aggressive for business loans in Philadelphia and St. Louis, for consumer loans in Richmond, and in general in Cleveland. In New York, Philadelphia, Cleveland, Atlanta, and San Francisco, banks reported deterioration in credit quality, especially for consumers. Tightening of credit standards was mentioned in New York, Philadelphia, Chicago, St. Louis, and Kansas City. No Districts reported easing credit standards. Employment and Wages Labor markets were characterized as tight in a majority of Districts. Districtwide labor market tightness persisted in Richmond, Chicago, Minneapolis, St. Louis, and Kansas City. Atlanta and Cleveland said labor markets were tight in many parts of their Districts. In most Districts employers said skilled trades workers and specialized technical workers were in particularly short supply. Boston reported that ""demand for highly skilled temporary workers continues to outpace supply."" Richmond, Chicago, and San Francisco also noted strong demand for skilled construction workers. Chicago and Minneapolis said retailers were having difficulty hiring temporary help for the holiday season. Reports from District banks do not indicate a generalized acceleration in wage increases despite growing reports of labor shortages. Cleveland, for example, said that its contacts see ""few signs of any significant rise"" in wages, and Atlanta said ""reports of increasing wages are infrequent in the region."" Minneapolis reported that ""many employers say there is no generalized upward pressure on compensation."" Nonetheless, there appear to be more instances of stepped up compensation, especially for highly skilled technical workers. Boston reports that in the area around that city ""compensation packages to attract key technical employees are said to be escalating rapidly."" Richmond contacts reported more pronounced wage pressures in October than in September. A large temporary help agency reported to Chicago that wages in the Midwest were rising. Also in the Midwest, Kansas City noted ""continued evidence of wage pressures,"" especially in manufacturing. Prices District reports on prices suggest there has been virtually no change in trend recently. Boston contacts said ""prices remain generally stable."" New York indicated ""there has been little change in price pressures."" Cleveland and Richmond characterized price increases as ""modest."" Chicago reported that ""price pressures remained largely in check."" Minneapolis received ""few reports of price increases for raw materials, consumer goods, or services."" Most manufacturers in Philadelphia and Cleveland indicated that both input costs and output prices were steady. Manufacturers in Chicago said their input costs were flat, and firms in St. Louis said the cost of materials were ""stable to up somewhat."" Exceptions to the relatively steady price picture are petroleum products and fuels, whose prices rebounded after falling in early November. Also, there were more reports of rising industrial prices in recent surveys in Richmond and Atlanta. Kansas City observed rising costs of ""some manufacturing and construction materials,"" and Dallas noted that ""several industries reported a general firming in prices."" We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2085 -beige_book_pure_text_pre2000,1997,"Most District reports characterized early autumn's economic activity as moderate to strong in most areas. Retail sales in most Districts in September were weaker than anticipated, with some pickup in October. Automobile sales were mostly slower. Manufacturing activity accelerated or remained at high levels for most Districts, and the outlook was generally positive. Despite the residential real estate markets' recent uneven performance, activity remains at elevated levels overall, and most commercial real estate markets continue to perform at strong levels. The energy extraction sector continues to strengthen. Labor shortages have intensified for key sectors, such as the high-tech and energy extraction industries. Yet, reports of increasing wage pressures are infrequent. Prices remain stable, as competitive factors and resistance from buyers are making it difficult for producers to pass on any cost increases. As harvesting progresses, recent rains have had varying effects on crops nationwide. Commercial lending remained strong in many Districts, while consumer lending was more mixed. Consumer Spending Most Districts report that retail sales were mixed during September and early October. Atlanta, Chicago, Dallas, New York and Philadelphia said that sales did not meet some retailers' expectations, and sales declined in Philadelphia. Atlanta, Chicago, Cleveland, New York, and Philadelphia merchants said that unseasonably warm weather put a damper on sales in September, particularly apparel. However, in the Chicago, Cleveland, Dallas, and New York regions the advent of cooler weather in October reportedly has boosted sales. Retail sales growth remains moderate in the San Francisco District despite slow apparel sales in parts of the District. In Minneapolis, recent sales have been good with back-to-school sales stronger than normal. In the Atlanta District, home-related product sales were strong and, in New York, several retailers noted a resurgence in home goods sales. Appliance sales were said to be strong in both Boston and Cleveland. In Richmond, however, big-ticket items weakened further. In most Districts, retail inventories remain at desired levels. Looking toward holiday sales, retailers in Atlanta, Chicago, Kansas City, and Dallas are optimistic concerning their prospects. Many retailers note their only concern is finding seasonal employees. Most Districts reported that automobile sales were down at least slightly. Total automobile sales were down in the Cleveland, Kansas City, and Philadelphia Districts, although demand for light trucks and sports utility vehicles remain strong in Kansas City and Philadelphia. Tourism and Convention Business Tourism appears to have strengthened from a year ago, according to most reports. Tourism spending has recently picked up in the Minneapolis District. Mild weather has boosted visitors to attractions in the Richmond District. Travel and tourism is strong in California and Utah, although fears of El Nino have caused some cancellations for the winter season. Atlanta reports that in Florida, room rates are up and hoteliers are encouraged by advance bookings. Cruise ship vacation demand out of Florida is up with unusually high levels of bookings. Manufacturing Manufacturing activity continued to grow in many parts of the country. Plants were operating at high levels relative to capacity in the Kansas City, Chicago, Dallas, and Cleveland Districts. St. Louis and Minnesota report healthy sales by manufacturers. In San Francisco, wood product production and expansions in food processing are occurring in addition to the strong growth in aircraft and high-tech equipment. San Francisco also reports transportation shortages, causing difficulties for production and delivery. Richmond notes that growth in shipments increased in many industrial sectors, and New York reports a broad improvement in the region's manufacturing sector. In the Boston District, makers of aircraft parts and computer-networking equipment are posting rapid growth, and the semiconductor industry is increasing production. In Minneapolis, computer-related producers are also doing particularly well. Production of heavy equipment is accelerating from already high levels in Chicago. Dallas and Atlanta report that demand for oil and gas equipment also remains strong. Increased sales are prompting plant expansions and employment gains in the St Louis region's factory sector. Steel plants are operating at high levels in the Chicago District and the strength is expected to last for the remainder of the year. Atlanta reports that new contracts have spurred shipyards to operate at capacity levels. Atlanta and Boston also note that factory contacts are mostly optimistic that the coming year will see a continuation of current trends in the manufacturing sector. Less positively, Minneapolis reports that restructuring continues to result in significant layoffs in their factory sector, and weakness persists in Atlanta's large apparel sector. Real Estate and Construction Residential construction and sales have been uneven. Chicago noted a pick up in construction and new home sales. An unexpected demand for housing also boosted residential homebuilding in Dallas. In the Richmond District, homebuilding starts have been flat to down recently. Construction is said to be down from last year's levels in Kansas City and St. Louis, while homebuilding is characterized as generally strong in Minneapolis and San Francisco. Commercial construction continues to grow. In Boston and Chicago, construction of most types is at higher levels recently. Office markets in Atlanta, Dallas, and San Francisco continue to tighten. Industrial space is difficult to find in areas of Atlanta, Minneapolis, and San Francisco. However, in Dallas, new supply is expected to exceed demand by year-end. In Minneapolis, many firms are planning expansions. Financial Services Overall, bank lending was mixed across Districts and loan types. Commercial loan demand increased in many areas of the country. Cleveland, St. Louis, Philadelphia, Kansas City, Atlanta, and Chicago reported that commercial loan demand continued to grow. Consumer lending slowed in Atlanta, St. Louis, Cleveland, and Philadelphia but increased in New York and Richmond. Residential mortgage demand was described as strong in Chicago and Richmond, up slightly in Atlanta, and slowing in Dallas. Mortgage refinancing continued to increase in New York and Richmond, while holding at a constant level in Cleveland. Bank credit standards remained steady in Cleveland and increased in Philadelphia and Chicago. Some of the slowdown in consumer borrowing has been attributed to the deterioration in consumer balance sheets and increased credit restrictions, according to reports from the Atlanta and Philadelphia Districts respectively. Agriculture and Natural Resources Good weather helped the harvests in Chicago, Minneapolis and San Francisco. Recent rains were too late to offset the drought damage to the corn crop but helped soybean, cotton, and peanut yields in Richmond. Rainfall also assisted small grains and winter pastures in Dallas. However, heavy rains have caused concerns about the cotton crop in St. Louis. Harvesting was slowed in San Francisco by shortages of seasonally employed laborers and fierce competition for transportation needed to get harvests from field to market. Scattered instances of rural rail disruptions were reported in Chicago and in the St. Louis District. They have hampered some crop shipments. Oil and gas industry activity is increasing in the energy producing regions of the nation. Wages and Prices Many Districts report tight labor markets and hiring difficulties in some occupations, but there are few reports of wage or price pressures. In Dallas, business service firms' revenue growth has slowed because there are not enough workers to meet increasing demand and, in San Francisco, a shortage of skilled workers is beginning to limit activity in some industries. Temporary employment agencies in Cleveland are having trouble meeting demand. Job turnover in the Minneapolis/St. Paul area is reportedly nearing 30 percent. A contact in Chicago notes that some manufacturers are ""desperately short of people,"" especially for entry-level positions, and retailers in that District are already concerned about finding holiday help. A severe shortage of people with technical and computer skills is hurting some companies in the Atlanta District. Atlanta and St. Louis report that some companies are trying to encourage job training that would better address current business needs. Although increases in wages generally remained limited to computer-related occupations or those in the energy extraction industry, several Districts noted growth in other forms of compensation, such as expanded merchandise discounts, benefits for seasonal workers, and referral awards. Prices of inputs and finished goods remain stable for most Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1652 -beige_book_pure_text_pre2000,1997,"District economies generally continue to expand at a relatively moderate pace. Retail sales are up in most districts from a year ago. Most districts report high levels of manufacturing activity, with only pockets of weakness. Tight labor markets still dominate in almost all parts of the country. Nevertheless, wage gains generally remain moderate. Price pressures, such as those reported by most retail and manufacturing contacts, appear to have been temperate. Most districts report strong residential real estate markets, with many citing increases in year-over-year building permits, increases in new or existing home sales and rising home prices. Commercial real estate markets continue to strengthen, with many districts reporting declining vacancy rates, rising rents and new nonresidential construction activity. Loan demand conditions are decidedly mixed across districts in all major categories of loans?commercial, consumer and real estate. Most districts report that prospects for livestock producers have brightened recently. Despite moderate drops in oil prices, activity has picked up noticeably in the energy extraction industries. Consumer Spending Most districts report that January and February sales are up from one year ago. The Atlanta, Boston and New York districts report that sales have exceeded expectations. The San Francisco district describes sales growth as moderate, while the Cleveland district reports retail conditions as essentially unchanged from its previous report. Apparel has been a strong seller in the Atlanta, Chicago, Kansas City and New York districts; however, apparel sales are down in the Boston district and unchanged in the Richmond district. Cosmetics, building materials, pharmaceuticals and home furnishings are also strong sellers, according to contacts. The New York district reports that a ?tax-free? week in New York City spurred sales, but severe winter weather in the Minneapolis and San Francisco districts hampered sales at many local stores. Current inventories are generally at or slightly below desired levels. Vehicle sales are mixed across districts. The Kansas City district reports slightly higher auto sales levels, while the Minneapolis district notes strong sales of pickup trucks. Car sales in the Philadelphia district remain unchanged, while the Cleveland and Dallas districts note slower-than-expected sales. Vehicle inventories are generally adequate, although a few reports of shortages of popular vehicles have been received. Manufacturing Most districts report that manufacturing activity remains at a high level and is, in many cases, growing. Pockets of weakness, however, are interlaced with this growth in many districts. The Dallas and Richmond districts report their manufacturing sectors as either ?still in a seasonal lull? or down slightly. The Minneapolis district, on the other hand, describes its manufacturing sector as ?hale and hearty.? The St. Louis district notes that even though the level of activity has not changed much from the last report, contacts are still optimistic about the near term. Auto suppliers in both the Atlanta and Boston districts and heavy-duty truck manufacturers in the Chicago and Cleveland districts report strong business, while the San Francisco district notes that the aircraft and high-technology industries in the Pacific Northwest are expanding. In the Philadelphia district, metal and chemical products are showing recent strength, while furniture and home furnishings producers in the Boston, Chicago and St. Louis districts report that orders are up. Most districts are experiencing an ongoing contraction in the apparel industry, with some of this production heading overseas. Several districts also note that their paper and textile industries are in decline. The New York district notes a moderate slowing of manufacturing activity in New York City, and the San Francisco district reports that the electronics industry in California has slowed somewhat. Growth in the steel industry is slowing in the Chicago district, while remaining strong in the Cleveland district. Labor Markets Contacts in almost every district report difficulty finding and retaining new workers because of tight labor markets. Shortages of engineers and construction, skilled manufacturing and high-tech workers are most often noted. The Boston and Dallas districts report that temporary employment agencies are also having difficulties finding workers. The San Francisco district reports worker shortages in the hospitality industry, but notes a surplus of financial-sector workers because of consolidation in the banking industry. A survey of manufacturers in the Philadelphia district found that about 40 percent plan to hire employees in the near term, while a survey of businesses in the St. Louis district found that 20 percent are looking to hire. Wages and Prices Despite tight labor markets in nearly every district, nominal wage gains show no signs of breaking out of the 3 to 4 percent range that has been cited in the last several reports. Pockets of persistently upward wage gains associated with fast-growing sectors and regions remain, however. In particular, wage pressures remain in the Chicago district but are most pronounced at the upper end of the pay scale, while the Minneapolis and San Francisco districts report sector-specific wage increases tied to the high-technology and aircraft sectors. The Dallas and Kansas City districts, on the other hand, report a lessening of wage pressures. Aside from higher raw materials prices reported in a few districts, price increases at retailers and manufacturers?both on the input and output side?have generally been temperate, as many districts report that competitive pressures have stemmed price hikes. The Boston, Cleveland, New York, Philadelphia and Richmond districts report that retail prices are ?mostly flat? or ?steady.? Moreover, in the Atlanta, Boston and Cleveland districts, wage and input price advances have been offset or negated by increased productivity gains. Materials and finished goods prices have reportedly accelerated in the Atlanta and Richmond districts; however, contacts suggest that these increases may be temporary. Construction and Real Estate Most districts report strong residential and even stronger commercial real estate markets. Contacts in the Minneapolis, Philadelphia, Richmond and San Francisco districts report increases in single-family residential construction. Contacts in the Boston, Chicago, Cleveland and St. Louis districts also report strong residential market conditions. Mild winter weather is credited for some of the strength in the Boston, Philadelphia and Richmond districts, while poor weather is blamed for moderate weakness in the Chicago and Dallas districts. The Atlanta and Kansas City districts report little change in year-over-year construction activity. Sales of new or existing homes are reported to be up in the Kansas City, New York, Philadelphia, Richmond and San Francisco districts. Slight price increases, some due to increases in material prices, are reported in the Boston, Minneapolis, Philadelphia, Richmond and San Francisco districts. Commercial real estate markets continue to improve in most districts. Declining office vacancy rates and rising rental rates are reported in the Atlanta, Dallas, New York, Philadelphia and Richmond districts. New nonresidential construction is reported in the Atlanta, Dallas, Minneapolis, Richmond and San Francisco districts. Contacts in the Chicago, Cleveland and St. Louis districts also describe their commercial real estate markets as strong. Banking and Finance Loan demand conditions are decidedly mixed across districts, although more districts report declining or steady loan demand than rising demand. The Dallas district reports little change in overall demand since its last report, and the San Francisco district reports healthy overall demand. Commercial and industrial (C & I) loan demand is reported to be strong in the Chicago district and steady in the Atlanta, Cleveland and Philadelphia districts. The Kansas City, New York, Richmond and St. Louis districts report slight declines in C & I loan demand. A number of districts continue to report low margins and fierce competition among lenders for C & I loans; a contact in the Richmond district characterized margins as ?ridiculously low.? Consumer loan demand is reported to be increasing, but at a slower rate, in the Chicago district and mixed or flat in the Atlanta and Cleveland districts. The Philadelphia, Richmond and St. Louis districts report declines in consumer loan demand. There appears to be no consistent trend in consumer loan quality; the Cleveland and New York districts report rising delinquencies, while the Atlanta and San Francisco districts report improving consumer loan quality. Residential mortgage demand is mixed. The Atlanta, Philadelphia and Richmond districts report increases in residential mortgage demand, while the Kansas City, New York and St. Louis districts report decreases. Agriculture and Natural Resources Other than weather-related cattle deaths in the Minneapolis district, increased profit margins are the rule rather than the exception among livestock producers. For example, the Kansas City district reports that bankers expect wider margins for cattle and hog producers because of lower feed costs. Increased cattle prices have also been noted in the Dallas and Richmond districts, buoying producers. In the natural resources industries, the Dallas, Kansas City and Minneapolis districts report that their energy extraction industries are experiencing an uptick of economic activity; this has occurred despite modest drops in crude oil prices. The Dallas and Minneapolis districts also report higher lumber prices, which, in Minneapolis at least, have been passed on to builders. Weather-related problems have and will likely continue to affect economic activity in many districts. Severe winter weather in the Minneapolis district has reportedly hampered weight gains in the cattle industry. The Minneapolis district also reports a potential for the worst flooding in several decades because of substantial snowpack. Flooding and wind-related damage stemming from severe winter storms in early March have also been reported in the St. Louis district. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1865 -beige_book_pure_text_pre2000,1997,"District economies generally continued to expand at a moderate rate through March and April. Most districts indicated that retail sales were above year-ago levels. Light vehicle sales tapered off from very high March levels in most of the nation. The housing and construction industries remained strong, with commercial construction outpacing residential in most districts. Manufacturers were operating at very high levels, with new orders increasing significantly in some areas. Labor markets remained tight in most districts, with a few new reports of upward wage pressures. Virtually all districts were reporting relatively flat retail prices, while reports were mixed for raw and intermediate goods. Most districts reported a pickup in business lending activity, with some reporting fierce competition and credit standards being lowered to attract business loans. At the same time, demand was mixed for mortgage and consumer loans and a few districts were reporting tightened credit card standards. Agricultural conditions were mixed, with some reports noting above-average crop progress and improving livestock conditions. But adverse weather delayed or damaged crops in other districts and caused heavy livestock death losses and flood losses in the Minneapolis district. Energy prices continued to drop in most regions, but production in the industry remained strong. Consumer Spending Most districts reported a moderate year-over-year increase in retail sales. Only the Boston and Richmond districts, which noted strong growth, and the New York district, which reported considerable slowing, differed markedly from this pattern. Apparel sales were strong in the Boston, New York, Cleveland, Atlanta, and Chicago districts, while Philadelphia was the lone district reporting weak apparel sales. The Boston and New York districts reported particular strength in sales of building materials. The demand for electronics improved slightly in the Chicago district but remained soft there and in most other regions. Appliance sales were also soft in the Boston, New York, and Atlanta districts but were improving in the Cleveland district. Inclement weather hindered the sale of some spring merchandise (sporting goods, lawn and garden equipment, etc.) in the Chicago district. Overall retail inventories were in line with sales and/or merchants' expectations in most districts. Strength in tourism spending was noted in the Boston, Richmond, and Atlanta districts and most of the San Francisco district, where the strengthening dollar was cited as contributing to a decline in Hawaii's tourist trade. The Minneapolis district indicated that severe weather was adversely affecting their tourist trade. April vehicle sales softened in the Philadelphia, Cleveland, Chicago, and Minneapolis districts after strong results in March. Automobile dealers in the Kansas City district reported a slight increase in sales, with notable strength in light trucks and sport utility vehicles. The Dallas district reported an auto sales rebound in April, but sales for the month still fell short of last year's results. The Chicago district reported that scattered strikes were limiting the availability of some of the automakers' most popular models. Housing and Construction New home construction was reportedly strong in most of the nation, but down slightly from last year's very high levels. The Chicago and Kansas City districts experienced a pickup in new home sales from earlier in the year but did not reach last year's levels. The Cleveland and New York districts described new housing activity as improved. The New York district also reported that remodeling activity was booming. Particular strength was noted in multifamily construction by the Chicago, St. Louis, and Dallas districts, while the Atlanta district reported softening in this segment of the market. Existing home sales were mixed across much of the nation. The Richmond district said the market for existing homes was ""brisk,"" while the Minneapolis district reported softening from ""exceptional strength"" earlier in the year. Commercial real estate remained very strong through most of the nation. Declining office vacancy rates and increasing rents were reported by most districts. Leasing activity was described as ""torrid"" by the New York district. The Richmond, Atlanta, St. Louis, and Minneapolis districts all reported an increase in office construction. The Atlanta, Chicago, Dallas, and San Francisco districts were reporting strong industrial activity. Manufacturing Overall manufacturing activity increased across much of the nation despite scattered auto-related strikes which were affecting several districts. Industrial activity reportedly increased in all but the New York and Dallas districts. The Dallas district noted weakness in paper, box, and most construction-related products. The Boston district reported ""solid"" year-over-year gains due in part to strength in biotech instruments and computer networking equipment as well as a recovery in the aerospace industry. Expansion in the aerospace industry also contributed to manufacturing strength in the Atlanta, St. Louis, and San Francisco districts. Strength in the steel industry was cited in the Cleveland and Chicago district reports. Demand for capital equipment was strong in the Cleveland and Richmond districts. Apparel and garment production strengthened in the San Francisco, Dallas, and Richmond districts but fell off in the Atlanta and St. Louis districts. Strong sales boosted light vehicle production earlier in the year, but recent strikes against automakers and their suppliers idled plants in several regions, most notably the Chicago and St. Louis districts. However, contacts in the Chicago district had yet to feel any significant impact from these strikes. Surveys indicated broad-based gains in new orders in the Cleveland, Chicago, and Philadelphia districts, while new orders in the Richmond district ""surged."" Contacts in the St. Louis district indicated that demand for their manufactured goods had increased and a contact in the Minneapolis district reported ""We have plenty of new orders."" One-quarter of the Boston district's manufacturing contacts indicated that they were facing capacity constraints, but slight declines in order backlogs and delivery times in the Philadelphia district suggested that ""demand was not pushing against capacity limits."" Banking and Finance Overall lending activity was decidedly split, with most of the strength on the business side and most of the weakness on the consumer side. The Philadelphia, Chicago, St. Louis, Kansas City, and Dallas districts all reported increases in business lending. The Cleveland and Richmond districts noted that business lending was mixed. None of the twelve districts reported an outright decrease in business lending during this reporting period. Fierce competition for business customers was cited in the Cleveland, Richmond, Chicago, and San Francisco reports. Credit standards for commercial loans were reportedly lowered in the Chicago and San Francisco districts and more favorable loan arrangements were noted in the Richmond district. On the consumer side, only the Kansas City district was reporting an increase in overall lending activity, albeit slightly. Most districts were indicating flat or decreasing activity. Mortgage lending had declined noticeably in the Cleveland, Richmond, and St. Louis districts and had become ""spotty"" in the Chicago district. The New York and Kansas City districts were reporting increased mortgage lending activity. Consumer credit standards were being tightened in the Philadelphia, Chicago, and Dallas districts. Two districts, New York and Cleveland, reported slight improvement in consumer delinquency rates while a contact in the Chicago district noted an increase in store credit card delinquencies following a period of flattening earlier in the year. However, overall bank asset quality and/or loan quality was reported to be good in the Cleveland, Atlanta, and Chicago districts. Labor Markets, Wages, and Prices Tight labor markets and shortages of qualified help persisted throughout much of the nation in March and April. Two districts, New York and Chicago, reported further tightening, while the St. Louis district noted fewer reports of tight labor markets. Labor shortages existed in each district, with computer-related and other highly skilled workers cited most often. Employment growth lagged the nation in the Cleveland and Chicago districts, though the latter noted an increase in manufacturing employment recently after trending downward in 1996. Despite tight labor markets, upward wage pressures remained generally subdued. The notable exceptions are those areas and occupations where serious shortages existed. In addition, the Minneapolis district noted new reports of upward pressure on manufacturing wages. Increased turnover rates were reported by the Boston, Cleveland, and Atlanta districts. Increased use of bonuses to attract workers was reported in the Dallas and Cleveland districts. Prices for raw materials were reportedly flat to down in the Boston, New York, Cleveland, Chicago, and Minneapolis districts. In addition, declining energy prices were noted in the Chicago, Minneapolis, Kansas City, and Dallas districts. Contacts in the Philadelphia, St. Louis, and Kansas City districts reported increases in some raw material prices and only the St. Louis district cited an increase in energy prices. Costs of construction materials--especially lumber, drywall, and concrete--increased sharply in the Richmond district. Significant resistance to price increases persisted in most districts. Consequently, most districts reported that prices at the retail level remained subdued. There were exceptions, however. Continued strong demand enabled many retailers in the Boston district to increase their prices and contacts in the Chicago district reported a reduction in the use of discounting to move inventory. Agriculture and Natural Resources The agricultural reports were mixed. Above-average progress in crop plantings was indicated in reports from the San Francisco, Richmond, and Chicago districts, while the St. Louis, Kansas City, and Minneapolis districts noted delays in plantings and/or crop development. A late freeze damaged fruits and vegetables in the St. Louis and Richmond districts and wheat in the Kansas City district. An early April blizzard added to the high winter death losses of cattle in the Dakotas. By contrast, improved market conditions ended the culling of most cattle herds in the Kansas City district and started a rebuilding of herds in the Dallas district. Hog numbers were reported to be growing considerably in some areas of the Richmond district, while the Chicago district noted that tougher environmental restrictions on larger producers were delaying the expected expansion. Energy industry activity increased in the Minneapolis, Kansas City, and Dallas districts despite continued price decreases. Refinery profit margins were increasing for the Dallas district's energy industry since crude prices were falling more rapidly than product prices, and demand was reportedly strong enough to support an additional 10 to 20 drilling rigs in the Gulf of Mexico. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2047 -beige_book_pure_text_pre2000,1997,"All twelve district economies expanded in May and early June, although there were pockets of weakness and evidence of capacity constraints restraining growth in some industries. Consumer spending growth was weaker than reported in the last Beige Book, with several districts reporting slower growth in retail and auto sales. Manufacturing activity appeared to remain at high levels and was growing in many districts, but there were some areas of weakening. Construction and real estate markets were strong across much of the country, but some districts reported pockets of weak growth. Overall lending activity was mixed, with stronger demand for commercial than for consumer loans. Labor markets tightened, leading to some wage increases. Although energy prices and some real estate prices were up, there were few reports of other price increases, and business contacts suggested that robust competition restrained upward pressure on final prices of goods. Agricultural reports were generally favorable, but cool weather and adverse moisture conditions hindered production in parts of the country. Consumer Spending Many districts reported weaker retail sales growth in May than in April. Unseasonably cool weather in the Cleveland, Chicago, New York, Richmond and St. Louis districts dampened sales growth. Sales were ""weak"" in the Atlanta district, and growth ""downshifted"" in the Dallas district. However, sales growth was ""steady"" in the Boston and Philadelphia districts, ""adequate"" in the San Francisco district, had ""edged up"" in the Kansas City district, and was ""brisk"" in the Minneapolis district. Sales were lower than anticipated in the Atlanta, Dallas and New York districts, but sales growth either met or exceeded retailers' expectations in the St. Louis district. Many districts reported slow sales of seasonal goods, such as air conditioners, swimwear, and lawn and garden supplies. The Cleveland district reported a dip in personal computer sales following strong sales in April. Apparel sales ""have been notably soft"" in the Cleveland district, with the exception of specialty clothing, such as better sportswear and business casuals. Apparel sales have been good in the Chicago and New York districts, however, and the Philadelphia district reported gains in men's clothing and home furnishings. Outdoor furniture and gardening products were the ""biggest sellers"" in the St. Louis district. Inventories were in line with sales in the Atlanta, Boston, Chicago, Kansas City, Philadelphia, San Francisco and St. Louis districts, but excess inventory was a problem for some retailers in the Cleveland, Dallas, New York and Richmond districts. Dallas and Chicago district contacts canceled purchases to keep inventories in line. Some New York district contacts expressed mild concern about an overhang of summer merchandise, but said inventories were ""generally in good shape."" While retailers in the Cleveland district were generally satisfied with inventory, a few noted slightly higher than desired apparel inventories. The Cleveland, Philadelphia, St. Louis and San Francisco districts reported slow auto sales growth. Sales were ""little changed"" in the Kansas City district, and the Dallas district reported good sales ""in most major cities but a continued trend down in Dallas and Fort Worth."" Auto sales in Minneapolis were ""brisk."" Manufacturing Most districts reported growth in manufacturing activity, and a few reported a very high level of activity. Manufacturing production was at ""high levels"" in the Cleveland and Kansas City districts, while ""tightening capacity constraints were noted by various respondents"" in the San Francisco district. Overall shipments remained at ""record levels"" in the Richmond district. Manufacturing activity also continued to expand in the Chicago, Dallas, New York and Philadelphia districts. Sales growth was reported as ""moderate"" in the St. Louis district, and firms continued to report ""good sales"" in the Minneapolis district. The Boston district reported that recent business was ""flat or up at a single-digit rate compared to a year ago."" Only the Atlanta district reported ""production is slowing overall."" Production was up for aircraft and related products in the San Francisco district, while the pace of new orders quickened for paper goods, textiles and apparel in the Richmond and Dallas districts. Orders also were up for electrical equipment and industrial machinery in the Richmond district. Plant expansions are under way in the electronics, telecommunications and chemical industries in the Atlanta district. The Atlanta and Dallas districts reported strong demand for equipment by the energy sector. The Dallas and St. Louis districts noted a pickup in sales of construction-related manufactured products, although Dallas noted that sales were below last year's ""gangbuster"" levels. Strong demand for steel and heavy equipment led to a pickup in production in the Chicago district, and steel producers reported capacity utilization remained very high. But the Philadelphia district noted ""some slippage in demand"" by primary metal and instrument producers, and the Cleveland district reported ""some flattening in steel orders, although production is steady at a high level."" In the San Francisco district, demand for machine tools grew but at a slower rate than earlier, with growth focused on the export market. High-tech manufacturers in the Dallas and San Francisco districts reported supply constraints for some computer components and slower demand growth for telecommunications products. The Richmond district reported weaker shipments by the apparel, furniture and printing industries. There was continued weakness for soft goods in the Atlanta district, while the Minneapolis district reported that output of packaging materials was weak. Some inventory problems were noted. One automaker in the Chicago district said weak sales had resulted in a sizable inventory buildup, while the Dallas district reported inventories of brick and cement were too high. Manufacturers have been trimming their inventories in the Kansas City district, and some say they plan further reductions because stocks exceed desired levels. In the Chicago district, inventory-to-sales ratios declined despite some inventory building. During the past month, order backlogs inched up for manufacturers in the Philadelphia district, and delivery times lengthened slightly and inventories edged down. Services Temporary-employment firms and other service providers continued to report strong activity in the Boston, Dallas, Richmond and San Francisco districts. Tourism activity was strong in the Atlanta, Minneapolis, New York, Richmond and San Francisco districts. Construction and Real Estate Real estate markets and construction activity ""remained strong"" in most areas of the San Francisco district, while ""strong residential and heavy construction"" was reported in the Minneapolis district. Construction activity remained very strong in the Chicago district, ""particularly in nonresidential segments."" Several districts reported increasing commercial real estate activity but slower growth in home sales than at this time last year. Residential real estate ""continued its strong course"" in the Boston district, although ""somewhat less so than earlier."" The Chicago, Cleveland, Kansas City and Philadelphia districts reported that home sales had slowed since the beginning of the year. Home sales and construction ""flattened"" in the Atlanta district. Banking and Finance Overall loan quality was ""generally holding steady"" in the Atlanta district and ""good"" in the Chicago district, with little change in credit standards. A few banks tightened their lending standards in the Kansas City district, citing concerns over credit quality. Contacts expressed concern about an oversupply of loanable funds in the Dallas district, but delinquency rates had not increased. The Chicago, Cleveland, Dallas, San Francisco and St. Louis districts reported stiff competition for borrowers, particularly for commercial loans. Competition encouraged lower interest rates and a relaxing of credit requirements in the Chicago, Dallas and St. Louis districts and ""ongoing efficiency-driven consolidation"" in the San Francisco district. Consumer lending was up in the Atlanta and Philadelphia districts, but was reported to be flat in the Richmond district, and has softened somewhat in the Cleveland and St. Louis districts. The Chicago district reported slower credit card usage but continued high delinquencies. Credit card loan charge-offs continued to rise in the Philadelphia district. The Cleveland and New York districts reported tighter standards on consumer loans and a decline in delinquencies, but in the Cleveland district ""several bankers continue to note a rise in bankruptcies."" Labor Markets Labor markets tightened in the Chicago, Cleveland, Dallas, Richmond and San Francisco districts. Continuing labor shortages were reported in the Atlanta, Boston, Kansas City, Minneapolis and St. Louis districts. Tight labor markets were still reported for skilled professionals in the high-tech, construction and energy industries. The Atlanta, Chicago, Dallas, Kansas City, Minneapolis and San Francisco districts noted greater difficulties finding skilled blue-collar and entry-level workers. Most districts reported little or no wage pressure or noted that pressures were confined to a few markets. At some temporary-employment firms in the Cleveland district, however, the growing number of marginally qualified workers has translated into higher training and screening costs. The pressure to raise wages increased in the Dallas, Minneapolis and St. Louis districts. The Minneapolis district reported ""a continuing move to extend benefits to groups of workers previously not covered. One Wisconsin contractor reportedly paid full wages to an idle crew for three weeks between jobs, just to avoid losing them to competitors."" In the St. Louis district, ""Some firms are unable to meet higher demand because they are understaffed."" Prices Prices for energy and for some metals and real estate rose, but few districts reported upward pressure on final goods prices. Several districts suggested that retail and manufacturing prices were being held in check by heavy competition, which was stimulating continued cost reduction or productivity increases. The Dallas district reported higher prices for oil, gasoline, natural gas and heating oil. Most steel producers in the Chicago district were successful in pushing through moderate price increases recently. Scrap metal prices were down in the Dallas district, although there was some feeling that this was a result of customers' building too much inventory, and therefore only temporary. In the San Francisco district, the metal industry reported aluminum mill operations at 90?95 percent capacity, with prices escalating for certain materials in short supply. The Dallas and Minneapolis districts reported higher chemicals and plastics prices. Philadelphia reported scattered rising input prices, mainly in the nondurable goods sectors. A few districts noted higher housing, construction or land prices. Housing prices were up in the Boston district, and there were sharp rises in New York City co-op and condo prices and hotel rates. Office rents were up 20 percent over year-earlier levels in the Dallas district, and land prices were rising for industrial and office locations. The Kansas City and San Francisco districts reported increasing construction costs. The Cleveland and Chicago districts reported strong increases in farmland values. Agriculture and Natural Resources Excess moisture in the Cleveland, Dallas, Minneapolis and St. Louis districts slowed fieldwork and led to some replanting, while dry conditions slowed planting activity and crop development in the Chicago and Richmond districts. Planting and growth of crops were also hampered by cool weather in the Chicago, Richmond and St. Louis districts. Several districts reported improving livestock and pasture conditions, and growing demand for cattle and lower grain prices. The San Francisco district reported weak demand for the Idaho potato. The Dallas, Kansas City and Minneapolis districts reported that energy industry activity was strong or improving. Dallas reported that, at current energy prices, cash flow is strong at oil service companies and the return on investment is ""phenomenal,"" creating a rush to get wells drilled. Bottlenecks continued to be created, however, by shortages of key personnel, such as machinists, engineers, ship captains and crews, as well as of drill pipe and many types of equipment. The Minneapolis district reported that iron mining production was strong, and forest production was ""steady."" We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2287 -beige_book_pure_text_pre2000,1997,"Economic activity generally expanded at a moderate rate in many districts in June and July, although several reported that growth was more brisk. The tempo of consumer spending picked up since the last Beige Book report, aided in part by improved weather. Automobile sales, however, were slightly softer. Manufacturing remained at a high level or expanded further across most industries, particularly for nonautomotive durables. Most districts indicated that manufacturers' inventories remained at generally desirable levels. Commercial real estate activity strengthened across much of the country as vacancy rates declined further and rents rose. Home sales and construction increased modestly in recent weeks, but still lagged slightly below year-ago levels. Labor markets tightened further but only scattered wage pressures were noted. Prices for most goods were stable, although reports indicated that lumber and some agricultural prices rose. Recent rains in some districts brought relief to crops damaged by heat and sparse rainfall. Several districts indicated that commercial lending strengthened while reports on consumer lending were more mixed. Consumer Spending Most districts reported stronger retail sales since the last report; only Kansas City had weaker activity. July's sales were noticeably stronger in New York, Richmond, and Minneapolis, with descriptions of sales ranging from ""well above plan"" to ""vigorous."" Philadelphia, Atlanta, and San Francisco, however, reported more modest improvements. Dallas indicated that consumer expenditures were mixed across that district. Some districts attributed a rebound in sales growth to the arrival of warmer weather. However, New York stated that increased sales were not limited to seasonal items. Minneapolis reported that sales had increased, in part because some consumers had to replace flood-damaged belongings. Apparel demand appeared stronger in many districts, with Boston, New York, and Chicago citing particular strength in sales of women's fashions. However, Cleveland characterized the demand for children's apparel as soft, and Boston had weak sales of men's clothing. Consumer purchases of big-ticket items increased in New York, Richmond, and Chicago. Chicago also noted that sales of some luxury items were up ""noticeably"" from a year ago, particularly of personal watercraft and all-terrain vehicles. In most districts, vehicle sales edged lower; sales of light trucks and sport utility vehicles continued to display considerable strength, but sales of domestic passenger cars softened. Retail inventories were in line with sales across most districts. New York, Philadelphia, Cleveland, Atlanta, and Chicago reported that retailers' inventories were on target. Kansas City said that retailers there had trimmed inventories and did not believe further reductions were necessary. Tourism Tourism continued to strengthen in much of the country. Hotel occupancy rates were generally described as very high. Atlanta noted that the luxury hotel segment continued to post strong growth, and that hotels in Florida enjoyed high occupancy rates despite not offering normal off-season discounts. Philadelphia noted increased business travel and a greater number of summer vacationers. Minneapolis, however, indicated that visits to national parks were ""on the soft side,"" while San Francisco said that vacation traffic was weak in Hawaii but normal elsewhere. Manufacturing Many districts reported that there was further expansion in manufacturing activity. Production picked up in the Boston, Philadelphia, Cleveland, Chicago, and Dallas districts, and continued at moderately high levels in the Richmond, Kansas City, and San Francisco districts. New York reported moderate growth in manufacturing, while Minneapolis noted that growth there was ""solid, but not spectacular."" Atlanta described growth as mixed. Production rose for aircraft and related products in the Boston district, but a shortage of skilled labor slowed aircraft production in the San Francisco district. Atlanta noted strength in shipbuilding. Chicago indicated that steel producers and manufacturers of heavy equipment continued to see increased production and strong orders. In the Cleveland district, however, demand for steel moderated, and in Philadelphia's district, primary metal producers faced slackening demand. Weaker demand for textiles reduced production in the Richmond and Philadelphia districts, while continued softness in apparel demand forced further plant closings in the Atlanta district. Furniture manufacturers in the Richmond district reported weaker product demand. The Philadelphia and Dallas districts noted greater demand for construction and building products. Few inventory problems were noted. Philadelphia and Kansas City reported that stocks of manufactured goods had been trimmed slightly, and further reductions were anticipated by Kansas City. Inventories in the Cleveland district were only slightly higher than earlier in the year. Construction and Real Estate Residential real estate activity was reported to be higher in some districts, but mixed in others. Chicago noted an increase in sales of existing homes in June, but indicated that year-to-date sales continued to lag. Contacts in the Dallas district reported increases in home sales and housing construction, particularly for more affordable homes. Housing starts edged lower in the Kansas City district and were generally unchanged from a year ago. Reports on residential permits were mixed; St. Louis and New York noted increases while Chicago reported that building permits were below those of a year ago. Most districts reported strong commercial real estate activity, with declining vacancy rates and vigorous construction. Several districts also reported rising rents, from ""modestly"" in New York, to ""sharply"" in Boston. Richmond, St. Louis, and San Francisco reported strong nonresidential construction activity, as did Atlanta, although a lack of suitable land there was slowing industrial development. In the Chicago district, some areas experienced ""record levels of activity,"" and Cleveland reported that ""commercial building improved from the spring."" Labor Markets Labor markets strengthened during June and July. Boston, Cleveland, Richmond, Atlanta, Chicago, St. Louis, and San Francisco reported tight labor markets and shortages of skilled workers. Most manufacturers in the Boston district described the pool of available labor as adequate, but Chicago and San Francisco indicated that labor shortages had curbed production in those districts. Finding employees with adequate computer skills prompted some employment agencies in the Cleveland and Richmond districts to offer in-house training. Employees for entry-level and retail positions were increasingly difficult to find and retain in the Cleveland, Chicago, St. Louis, and Kansas City districts. Despite the persistent labor market tightness, wage pressures remained generally subdued. Exceptions included Richmond, where retail wages surged in July, and Chicago and Kansas City, with intensifying wage pressures for low-paying, entry-level, and clerical positions. Minneapolis described increased wage pressures accompanied by higher benefits costs. In the Boston district, employers were enhancing compensation packages and offering up-front bonuses to attract job candidates. Dallas reported that more employers were offering nonpecuniary forms of compensation instead of raising wages. Prices Overall prices were stable, and contacts in many areas attributed their inability to raise prices to competitive pressures. Boston, New York, Philadelphia, Atlanta, Chicago, and Kansas City generally reported that prices remained steady; Cleveland saw only modest increases. Minneapolis noted that product prices for intermediate and final goods remained ""quiescent."" Several districts did refer to price movements in agriculture and energy. Minneapolis reported higher hay, cattle, and hog prices, and Dallas noted that lumber prices were up. Minneapolis, Kansas City, and Dallas indicated that gasoline and crude oil prices were falling, and Kansas City noted lower wheat and fed cattle prices as well. San Francisco reported downward price pressure on meat and produce in grocery stores, although cattle prices there had ""firmed further."" Agriculture and Natural Resources Generally, crop conditions appeared to be in good shape, although warm, dry weather hampered crop development in several districts. Cleveland, Richmond, Chicago, St. Louis, and San Francisco reported that below normal rainfall caused some deterioration in crops. Recent rains, however, brought relief to farmers in the Richmond and Chicago districts. Chicago noted that the rains came at a critical time for pollination, and Richmond suggested that while it may be too late for some crops, the rains would prove beneficial on balance. Elsewhere, dry weather helped crop development in Texas and promoted fruit and nut yields in California. Livestock remained in good condition, and beef and hog producers enjoyed higher prices. Kansas City reported that many producers were marketing cattle early to head off further price declines, and that hog producers were expanding their operations. In Minneapolis, output from beef and hog producers was steady. Energy activity continued to improve, with Minneapolis stating that, because of new rigs coming on line, oil and gas exploration in that district was at its highest level in more than a decade. Kansas City reported that the rig count was well above a year ago, while Dallas noted that the rig count there had leveled off. San Francisco indicated that logging operations continued to expand at a ""good clip."" In sharp contrast, Minneapolis reported a noticeable decrease in Montana's production of forest products. Iron and steel production in that district also showed signs of falling off, but this was attributed to structural changes rather than weaker demand. Banking and Finance Overall lending activity was mixed across districts. Commercial lending increased in several areas of the country. Cleveland, Richmond, Atlanta, and Chicago reported that commercial loan demand remained strong. Consumer lending was higher in Philadelphia and Cleveland, flat in Chicago, and down in the St. Louis district. Both Philadelphia and Chicago noted some increases in home equity lending. Residential mortgage demand was described as higher in the Richmond district, stable in the New York district, and relatively flat in the Atlanta district. Delinquency rates fell somewhat in several districts. New York and Philadelphia reported that delinquency rates continued to decline for most types of loans. Delinquencies remained low in the Dallas district, especially in consumer lending. However, Cleveland reported a slight increase in consumer delinquencies. Cleveland and Kansas City reported tightening of credit standards, as some bankers cited concerns over credit quality. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1998 -beige_book_pure_text_pre2000,1997,"Economic activity expanded in July and August in all twelve Federal Reserve Districts. Although some Districts note signs of slowing in selected sectors, about half the Districts say their region's overall pace picked up in July and August while the others report continued moderate growth. Retail results range from ""mixed"" to growing at a ""solid clip."" Manufacturers report generally rising orders and revenues, with durables manufacturing especially strong. Residential and commercial real estate markets are mostly improving, although the level of new construction activity varies widely. While most energy suppliers are seeing improvements, other natural resource industries and agriculture show considerable variability as a result of weather and other factors. Most regions are experiencing tight labor markets, recruiting difficulties, or growing labor shortages. Two-thirds of the Districts, however, report that these supply-demand imbalances are not translating into generally higher wages, although wages may be rising faster in selected industries, occupations, firms, or localities. Several Districts note that firms are using creative recruiting or compensation techniques to reduce the pressure on wages. With a few exceptions, prices for goods are said to be moving very little, if at all, at the manufacturing level for inputs or finished goods, and at the retail level. Consumer Spending Most Districts report that retail sales are growing at a fairly moderate pace. Exceptions are the Minneapolis and San Francisco Districts, which report very strong sales growth. Only the Richmond District says that sales growth has slowed, albeit from a brisk to a more moderate pace. Districts reporting unanticipated increases in sales activity are Chicago and Dallas. In most Districts, inventories are at desired levels. However, Chicago reports lower inventories due to a weather-related increase in sales, while Richmond reports inventory accumulation as a result of moderating sales growth. Sales of apparel, other back-to-school items, and tourism are said to be very strong in most Districts. In addition, the St. Louis and San Francisco Districts say that sportswear and sporting goods sales are strong, while Boston, New York, and Cleveland cite strength in home furnishing sales. Sales of appliances and other consumer durables are mixed, with almost half the Districts (Boston, Richmond, St. Louis, Minneapolis, and San Francisco) reporting weak sales results, but New York and Cleveland experiencing strong sales. Although San Francisco reports generally solid retail sales growth in the District, softness is noted in Utah's retail and tourism businesses. All Districts report tight labor markets and difficulty attracting and keeping retail employees. Nonetheless, most Districts say that wages are either holding steady or rising only moderately. Only the Richmond District notes sharp wage increases in the retail sector. There is little evidence of price pressures at the retail level; in most Districts, both consumer and vendor prices are stable. Only Dallas and New York say that consumer prices are rising, albeit slowly. Manufacturing Manufacturing activity is reported to be at a high level and rising moderately throughout much of the nation. Richmond, Chicago, Minneapolis, and Dallas note that business was accelerating or exceeding expectations. The most restrained commentary comes from Cleveland, where production has moderated but conditions remain ""good or better,"" and Atlanta, which indicates only ""slight"" improvements in manufacturing activity. Most other Districts cite steady growth in shipments or orders. Durables manufacturers appear to be doing particularly well; Districts typically cite strong or accelerating demand for computers and other business equipment, metals, machine tools, aircraft, and heavy equipment. Steel mills, in particular, are said to be struggling to build inventories to meet strong demand from such sectors as construction, oil and gas, and machinery. According to Chicago, light vehicle production will be higher this quarter than last (in part to rebuild stocks depleted during labor stoppages) and order backlogs are increasing for heavy trucks. Several Districts indicate growing sales of furniture and lumber, although San Francisco notes that declining foreign demand and rising imports had a depressing effect on sales and prices of wood and lumber products in that District. Nondurables manufacturing results are mixed. Oil refineries were operating at record high levels of capacity utilization this summer, according to Dallas. However, Atlanta and St. Louis note layoffs in the apparel industry, and Minneapolis and Dallas mention sluggish conditions in food processing. Several Districts report that the United Parcel Service strike created temporary disruptions, and rail shipments have been a problem in the Dallas District. Otherwise, there are no indications of unusual delivery lags. In general, materials cost pressures are described as modest, although several Districts indicate that manufacturers are paying higher prices for metals and packaging. Output prices largely remain in check, with Chicago and San Francisco noting a heightening of competitive pressures as a result of the appreciation in the value of the dollar. Reports of tight labor markets are widespread, but manufacturers appear to be facing only selective hiring bottlenecks or pay pressures. Boston, Atlanta, Minneapolis, Kansas City, and San Francisco report stiff competition or accelerating compensation for workers in technical and other specialized occupations. Kansas City manufacturers were also experiencing difficulties hiring production workers. Only Richmond indicates generalized wage acceleration and hiring concerns among manufacturers, while Cleveland exemplifies the other extreme, citing ""no significant labor shortages or wage increases."" Real Estate and Construction Most Districts report moderate activity in residential real estate markets. A modest increase in sales of existing homes is cited by Boston, New York (upstate only), Richmond, Chicago, Dallas, and San Francisco (in southern California, Oregon, and Washington). However, Boston reports a decline in condominium sales, Chicago a drop in new home sales, and San Francisco a decline in the volume of sales in Utah. Philadelphia, Atlanta, and Kansas City indicate no notable changes in sales. Home prices remained relatively steady everywhere except for the Twelfth District, where large price increases are noted in California, Washington, and Alaska. Excess inventory of existing homes is reported by Philadelphia, Atlanta, and St. Louis. Commercial real estate markets have been strong in most Districts that reported on this activity. Vacancy rates declined in New York, Philadelphia, Atlanta, Dallas, and San Francisco, with particularly strong office markets. Despite the declines in vacancy rates, almost no Districts note rising rents. Philadelphia reports a slight increase in rental rates but indicates that new construction could cause them to decrease. Rising commercial construction is reported by Philadelphia, Richmond, Atlanta, Minneapolis, and Dallas. Banking and Finance Overall lending activity rose in most Districts, with slow growth in Richmond and Philadelphia and moderate gains in New York, Dallas, and San Francisco. Among loan types, consumer lending softened in several Districts. Commercial loans and home mortgages account for most of the overall increase, although in Atlanta, Cleveland, and Philadelphia commercial lending continued flat or fell slightly. Delinquency rates for both commercial and consumer loans continued stable to improved across the country. Several Districts report improved asset quality and some tightening in credit standards, although New York and Chicago note some apparent easing of standards for consumer credit and commercial mortgages, respectively. A number of Districts mention continued strong competition among banks and other institutions, especially for commercial and industrial loans. Philadelphia bankers note ongoing competition from commercial finance and specialized small business lenders, while Dallas says that stiff competition is exerting pressure on loan rates. San Francisco and Kansas City report a drop in bank deposits, citing strength in equity markets. Nonfinancial Services Temporary employment firms and other service providers continue to expand in all Districts, with the exception of Richmond, where service-sector revenue growth eased slightly. Those Districts contacting temporary employment or staffing agencies indicate that labor markets tightened further. Many Districts report strong competition for highly skilled workers, especially those in computer-related fields. Temporary employment agencies in the Cleveland District describe high demand for clerical and light industrial laborers, and some San Francisco services respondents note a tightening market for entry-level workers. Boston, Cleveland, Dallas, and Richmond report wage increases in the service sector as demand continues to outpace supply. Agriculture and Natural Resources Although recent rains have improved crop conditions in some areas, hot dry weather earlier in the year reportedly reduced the corn, soybean, hay, and fruit crops in parts of the Cleveland, Richmond, St. Louis, and Chicago Districts. However, in Minneapolis, Kansas City, and Dallas, where yields have been relatively good, producers are benefiting from favorable corn and soybean prices. Prospects for the cotton crop have improved in St. Louis and are good in Dallas, while the winter wheat harvest is likely to exceed 1996 levels in Cleveland but to be no more than average in Minneapolis. Richmond, Minneapolis, Kansas City, Dallas, and San Francisco all report strong demand and favorable price conditions for poultry and livestock products. Benefiting from good pasture and good prices, Minneapolis and Kansas City ranchers are reportedly building breeding herds or holding calves until the spring of 1998. Contacts also note growing exports of pork and of beef to Mexico and Southeast Asia. Reports on the oil sector indicate that continued strong demand for energy products has led to price increases, good profits, and a resurgence in oil and gas exploration activities. In the Minneapolis, Kansas City, and Dallas Districts, rig counts are at their highest levels in years. While prices remain below their late 1996 levels, supplies are currently tight; however, seasonal declines in gasoline prices are expected soon, and mild weather damped down energy prices in the San Francisco District. Contacts in Atlanta note that the resurgence of the energy sector along the Gulf Coast has produced strong demand for geoscientists and petroleum engineers, while some Dallas contacts believe that a shortage of experienced crews may limit future drilling activity. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2000 -beige_book_pure_text_pre2000,1997,"Most District reports characterized early autumn's economic activity as moderate to strong in most areas. Retail sales in most Districts in September were weaker than anticipated, with some pickup in October. Automobile sales were mostly slower. Manufacturing activity accelerated or remained at high levels for most Districts, and the outlook was generally positive. Despite the residential real estate markets' recent uneven performance, activity remains at elevated levels overall, and most commercial real estate markets continue to perform at strong levels. The energy extraction sector continues to strengthen. Labor shortages have intensified for key sectors, such as the high-tech and energy extraction industries. Yet, reports of increasing wage pressures are infrequent. Prices remain stable, as competitive factors and resistance from buyers are making it difficult for producers to pass on any cost increases. As harvesting progresses, recent rains have had varying effects on crops nationwide. Commercial lending remained strong in many Districts, while consumer lending was more mixed. Consumer Spending Most Districts report that retail sales were mixed during September and early October. Atlanta, Chicago, Dallas, New York and Philadelphia said that sales did not meet some retailers' expectations, and sales declined in Philadelphia. Atlanta, Chicago, Cleveland, New York, and Philadelphia merchants said that unseasonably warm weather put a damper on sales in September, particularly apparel. However, in the Chicago, Cleveland, Dallas, and New York regions the advent of cooler weather in October reportedly has boosted sales. Retail sales growth remains moderate in the San Francisco District despite slow apparel sales in parts of the District. In Minneapolis, recent sales have been good with back-to-school sales stronger than normal. In the Atlanta District, home-related product sales were strong and, in New York, several retailers noted a resurgence in home goods sales. Appliance sales were said to be strong in both Boston and Cleveland. In Richmond, however, big-ticket items weakened further. In most Districts, retail inventories remain at desired levels. Looking toward holiday sales, retailers in Atlanta, Chicago, Kansas City, and Dallas are optimistic concerning their prospects. Many retailers note their only concern is finding seasonal employees. Most Districts reported that automobile sales were down at least slightly. Total automobile sales were down in the Cleveland, Kansas City, and Philadelphia Districts, although demand for light trucks and sports utility vehicles remain strong in Kansas City and Philadelphia. Tourism and Convention Business Tourism appears to have strengthened from a year ago, according to most reports. Tourism spending has recently picked up in the Minneapolis District. Mild weather has boosted visitors to attractions in the Richmond District. Travel and tourism is strong in California and Utah, although fears of El Nino have caused some cancellations for the winter season. Atlanta reports that in Florida, room rates are up and hoteliers are encouraged by advance bookings. Cruise ship vacation demand out of Florida is up with unusually high levels of bookings. Manufacturing Manufacturing activity continued to grow in many parts of the country. Plants were operating at high levels relative to capacity in the Kansas City, Chicago, Dallas, and Cleveland Districts. St. Louis and Minnesota report healthy sales by manufacturers. In San Francisco, wood product production and expansions in food processing are occurring in addition to the strong growth in aircraft and high-tech equipment. San Francisco also reports transportation shortages, causing difficulties for production and delivery. Richmond notes that growth in shipments increased in many industrial sectors, and New York reports a broad improvement in the region's manufacturing sector. In the Boston District, makers of aircraft parts and computer-networking equipment are posting rapid growth, and the semiconductor industry is increasing production. In Minneapolis, computer-related producers are also doing particularly well. Production of heavy equipment is accelerating from already high levels in Chicago. Dallas and Atlanta report that demand for oil and gas equipment also remains strong. Increased sales are prompting plant expansions and employment gains in the St Louis region's factory sector. Steel plants are operating at high levels in the Chicago District and the strength is expected to last for the remainder of the year. Atlanta reports that new contracts have spurred shipyards to operate at capacity levels. Atlanta and Boston also note that factory contacts are mostly optimistic that the coming year will see a continuation of current trends in the manufacturing sector. Less positively, Minneapolis reports that restructuring continues to result in significant layoffs in their factory sector, and weakness persists in Atlanta's large apparel sector. Real Estate and Construction Residential construction and sales have been uneven. Chicago noted a pick up in construction and new home sales. An unexpected demand for housing also boosted residential homebuilding in Dallas. In the Richmond District, homebuilding starts have been flat to down recently. Construction is said to be down from last year's levels in Kansas City and St. Louis, while homebuilding is characterized as generally strong in Minneapolis and San Francisco. Commercial construction continues to grow. In Boston and Chicago, construction of most types is at higher levels recently. Office markets in Atlanta, Dallas, and San Francisco continue to tighten. Industrial space is difficult to find in areas of Atlanta, Minneapolis, and San Francisco. However, in Dallas, new supply is expected to exceed demand by year-end. In Minneapolis, many firms are planning expansions. Financial Services Overall, bank lending was mixed across Districts and loan types. Commercial loan demand increased in many areas of the country. Cleveland, St. Louis, Philadelphia, Kansas City, Atlanta, and Chicago reported that commercial loan demand continued to grow. Consumer lending slowed in Atlanta, St. Louis, Cleveland, and Philadelphia but increased in New York and Richmond. Residential mortgage demand was described as strong in Chicago and Richmond, up slightly in Atlanta, and slowing in Dallas. Mortgage refinancing continued to increase in New York and Richmond, while holding at a constant level in Cleveland. Bank credit standards remained steady in Cleveland and increased in Philadelphia and Chicago. Some of the slowdown in consumer borrowing has been attributed to the deterioration in consumer balance sheets and increased credit restrictions, according to reports from the Atlanta and Philadelphia Districts respectively. Agriculture and Natural Resources Good weather helped the harvests in Chicago, Minneapolis and San Francisco. Recent rains were too late to offset the drought damage to the corn crop but helped soybean, cotton, and peanut yields in Richmond. Rainfall also assisted small grains and winter pastures in Dallas. However, heavy rains have caused concerns about the cotton crop in St. Louis. Harvesting was slowed in San Francisco by shortages of seasonally employed laborers and fierce competition for transportation needed to get harvests from field to market. Scattered instances of rural rail disruptions were reported in Chicago and in the St. Louis District. They have hampered some crop shipments. Oil and gas industry activity is increasing in the energy producing regions of the nation. Wages and Prices Many Districts report tight labor markets and hiring difficulties in some occupations, but there are few reports of wage or price pressures. In Dallas, business service firms' revenue growth has slowed because there are not enough workers to meet increasing demand and, in San Francisco, a shortage of skilled workers is beginning to limit activity in some industries. Temporary employment agencies in Cleveland are having trouble meeting demand. Job turnover in the Minneapolis/St. Paul area is reportedly nearing 30 percent. A contact in Chicago notes that some manufacturers are ""desperately short of people,"" especially for entry-level positions, and retailers in that District are already concerned about finding holiday help. A severe shortage of people with technical and computer skills is hurting some companies in the Atlanta District. Atlanta and St. Louis report that some companies are trying to encourage job training that would better address current business needs. Although increases in wages generally remained limited to computer-related occupations or those in the energy extraction industry, several Districts noted growth in other forms of compensation, such as expanded merchandise discounts, benefits for seasonal workers, and referral awards. Prices of inputs and finished goods remain stable for most Districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1652 -beige_book_pure_text_pre2000,1997,"On balance, Federal Reserve Districts report a continued moderate pace of economic growth since the last report. Non-auto retail sales improved in most regions. While a number of Districts report that sales were still a bit below plan, retailers are generally optimistic about the sales outlook. Inventories are deemed to be in good shape. Automobile sales continued to be sluggish, with inventories on the high side. Manufacturers report continued high levels of activity, with some constrained by capacity limitations; contacts in the West and South report continued shipping problems due to rail bottlenecks. Asian financial turmoil and currency weakness have adversely affected demand for manufactured and agricultural exports, and some Districts report increased competition from imports. Residential real estate markets are mixed, but commercial real estate markets continue to tighten in most areas. Virtually all regions are experiencing tight labor markets, with some reporting increased wage pressures in specific industries and occupations with labor shortages. Retailers are having a particularly difficult time in hiring and retaining seasonal workers. More generally, businesses are using a variety of nonwage incentives to attract and retain workers. Business respondents report that price pressures remain neutral, on balance, as steady to declining commodity prices, productivity gains, and increasing overseas competition appear to be offsetting any effects of wage gains. Consumer Spending Most Districts report that retail sales have improved since the last report, buoyed by the late arrival of winter weather in the eastern half of the country. Boston, Minneapolis, Kansas City, Dallas, and San Francisco report steady improvement, while New York, Philadelphia, Cleveland, Richmond, Atlanta, and Chicago note a weather-related rebound from the sluggish performance indicated in the last report. Inventories are reported to be in good shape in all parts of the country, with retailers in most regions expressing optimism about the sales outlook for the holiday season. However, New York reports that consumers are budgeting less than last year for holiday spending, and Boston notes that some retailers are concerned about possible fallout from the Asian financial market turmoil. Automobile sales generally remain soft, with a corresponding rise in inventories. Overall, sales of light motor vehicles were sluggish in Philadelphia, Cleveland, Chicago, St. Louis, and Kansas City, though the latter three Districts report strong demand for sport utility vehicles. Manufacturing Manufacturers report high levels of capacity utilization, but a variety of supply and demand factors are constraining current output growth and future expansion plans. On the supply side, bottlenecks in rail shipments are cited by Atlanta, Dallas, and San Francisco; labor constraints are noted in Boston, Richmond, Atlanta, Minneapolis, and San Francisco. On the demand side, there is some concern about the fallout from Asian financial turmoil and currency weakness?with respect to both exports and competition from imports. Weakening Asian demand is noted in Boston, Philadelphia, Cleveland, Dallas, and San Francisco, while Atlanta reports that manufacturers have scaled back production levels in anticipation of softening sales to the Far East; on the other hand, Chicago notes that there has been no immediate impact from the events in Asia. By industry, heavy equipment manufacturers and steel producers in Chicago and Dallas report strengthening demand. In contrast, demand for apparel, textiles and electronic equipment appears to be weakening in a number of Districts. Construction and Real Estate Commercial real estate markets continue to tighten, while residential markets are mixed but generally firm. Low and declining office vacancy rates have led to rising rents in New York, Philadelphia, and Atlanta, and have spurred increased construction in Philadelphia, Cleveland, Atlanta, Dallas, and San Francisco. Chicago, St. Louis, and Minneapolis report high, though not rising, levels of construction activity. Residential real estate markets are reported to be fairly strong in most Districts, though some recent slowing is noted in Atlanta, Kansas City, and San Francisco. Boston and Philadelphia report that demand has been strongest for higher-end homes, but Dallas reports a shift toward more starter homes. Atlanta, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco report brisk homebuilding activity. However, Boston and New York note low levels of construction, despite recent strength in the market. Banking and Finance Loan demand is mixed but stronger, on balance, with strength in commercial loans more than offsetting some softening in the consumer segment. Kansas City, however, reports a pickup in consumer lending, and strong growth in commercial loan demand is reported from Philadelphia, Cleveland, and Atlanta. The only Districts to note softer loan demand overall are New York and St. Louis. Delinquency rates were little changed, on balance?Philadelphia and San Francisco report some deterioration in credit quality but New York notes improvement. Intense competition for commercial and industrial lending is reported in a number of Districts: Philadelphia, Cleveland, Richmond, Dallas, and San Francisco. Nonfinancial Services Tourism, including business travel, continues to boom along the Eastern seaboard regions. Boston, New York, Richmond, and Atlanta report that tourism remains exceptionally strong, with Boston and New York noting a shortage of hotel rooms and rising rates. In contrast, Minneapolis reports that tourism is one of the few weak sectors of late. A number of Districts indicate ongoing strength in business services. Boston and Dallas report continued solid growth in the temporary employment industry; St. Louis notes strength in the gaming industry and mortgage and insurance claim processing; Minneapolis reports that computer consulting firms are ""swamped with orders""; San Francisco reports strength in telecommunications and business services. Labor Markets, Wages and Prices All regions report tight labor markets. Boston, Richmond, Atlanta, and Minneapolis specifically note shortages of technical computer workers and engineers. More generally, temporary employment agencies in Boston, Cleveland, Richmond, Atlanta, and Dallas report strong growth in labor demand. Wage pressures have increased somewhat but are generally isolated to a few industries and occupations with severe labor shortages. Boston, Richmond, Dallas, and San Francisco report increasing labor demand in the financial services sector, with some reports of increased wage pressures. Retailers in almost all Districts are having particular trouble hiring and retaining workers for the busy holiday season. While some retailers in Boston and Minneapolis have hiked wages, certain stores in the New York and San Francisco Districts have resorted to offering nonwage incentives, such as bonuses and steeper in-store discounts. More generally, businesses are dealing with labor shortages in a variety of ways. Some are tapping broader geographic labor markets: Atlanta reports that shipyards are recruiting from overseas; Chicago cites businesses recruiting in nearby rural areas or relocating to the inner-city. Cleveland reports that firms are offering increased benefits and more flexible work rules, while retailers and banks in the San Francisco District are converting part-time to full-time jobs. Despite the increase in wage pressures, prices for goods remain flat, although there are scattered reports of price pressures in areas such as commercial real estate and hotel lodging. Businesses report that steady to declining commodity prices, increasing competition from overseas and productivity gains appear to be counteracting effects of wage gains on selling prices for goods. In particular, Dallas and San Francisco indicate that the strong dollar has lowered import prices, and Cleveland notes that increased steel imports have held prices down. Boston, New York, Cleveland, Atlanta, and Kansas City indicate that finished goods prices are steady or down slightly, while Richmond reports modest increases. Agriculture and Natural Resources Favorable crop conditions are reported from most agriculture-intensive Districts? Cleveland, Minneapolis, Kansas City, Dallas, and San Francisco. However, heavy rain caused delays in fall planting and harvesting of wheat, barley and oats in Richmond and cotton in St. Louis. Rail disruptions were reported to be minimal in the St. Louis District, but some problems related to the handling and storage of perishable crops were cited by San Francisco. Minneapolis reports that grain producers in North Dakota have been hurt by severe plant disease problems. Livestock conditions are also said to be generally favorable in Richmond, Minneapolis, Kansas City, Dallas, and San Francisco. Only San Francisco and St. Louis indicate some adverse impact from the Asian currency crisis on agricultural export demand. Dallas reports ""extremely high levels"" of activity and labor shortages in the oil services sector, while Minneapolis notes a boom in gas and oil development. Kansas City reports that energy-sector activity has recently declined but remains above year-ago levels. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1715 -beige_book_pure_text_pre2000,1998,"Federal Reserve Districts reported that as 1997 came to a close the pace of economic growth continued to be moderate. After a slow start in early December, retail sales gathered momentum in the days before Christmas and during the post-holiday weeks. Overall, retail sales for the holiday season were mainly at or slightly above expectations. Motor vehicle sales picked up at yearend due mainly to strong sales of sport utility vehicles, minivans, and light trucks. Manufacturing activity remained fairly strong, although some Districts reported signs of easing. Construction and real estate markets were strong at yearend, with tight markets for office and industrial space in several regions. Some Districts reported evidence of more speculative construction in response to increasing rental rates. Lending activity was brisk throughout the nation despite softer demand for consumer loans. Agriculture reports were generally favorable, although adverse weather has hurt livestock production in some Districts. The impact of Asian financial turmoil was felt in most Districts. Manufacturers and agricultural firms report weaker exports to Asia, and there was some evidence of increased competition from Asian products in U.S. markets. Despite lower prices, oil and natural gas drilling activity was strong last month. Labor markets remained tight or very tight in all Districts. Reports of firms scaling back production or expansion plans due to labor shortages were more common. Some Districts reported increased wage pressures, particularly for retail workers and some skilled occupations. According to business respondents, prices were generally flat due to intense competition and lower import prices. Consumer Spending Most Districts reported that retail sales were slow in early December but picked up strongly during the days before Christmas and during post-holiday sale events. With few exceptions, holiday sales met or slightly exceeded expectations. Retailers noted that sales of electronics, computers, appliances, and jewelry were particularly strong. Some merchants reported disappointing sales of winter- related items, such as snow-blowers and winter clothing, due to unseasonably warm weather in many parts of the country. Post-holiday inventories were at desired levels. The tourism industry posted strong holiday results, with hotels operating at record high occupancy rates in areas such as New York, Boston, Florida, and California. Ski resorts, however, reported problems due to lack of snow. Automobile dealers enjoyed good overall results last month, although sales were mixed across vehicle categories. Sales of sport utility vehicles, minivans, and light trucks remained stronger than sales of passenger cars. Manufacturing Manufacturing activity remained fairly strong, although some Districts showed signs of easing. Boston and Philadelphia reported manufacturing activity improved last month, while New York and Dallas noted weaker performance for the sector. Richmond reported a sharp slowdown in activity. Strong demand, production, shipments, and new orders were reported for aircraft parts, telecommunication and computer-related products, capital goods, and automobiles. In most Districts, the Asian financial turmoil started to have some impact on manufacturing activity. Some Districts reported weaker export demand for industrial equipment, building materials, aircraft parts, semiconductors, processed food, and some metals. There was also some evidence of increased Asian competition in the domestic market. Manufacturers in several regions expressed concern that the Asian turmoil and the overall strength of the dollar might hurt sales and profits in 1998. Labor availability remained a major concern in most Districts. Manufacturers continued to report difficulties in hiring skilled technical workers, such as engineers. Some contacts in the St. Louis District could not meet demand because of a shortage of workers, and a major producer of high-tech equipment in the Chicago District had to cancel some projects because of the shortage of engineers. Construction and Real Estate Construction activity and real estate markets remained strong in most parts of the nation. The only two exceptions were Atlanta and Kansas City. New home sales in the Atlanta District were flat-to- down compared to last December, while construction activity was spotty. In the Kansas City District housing starts were down slightly last month. Low and declining vacancy rates for retail, office, and other commercial space in urban areas began to put upward pressure on rental rates. Evidence of some speculative construction was cited by Boston, Atlanta, St. Louis, and Dallas as a response to persistently strong demand for commercial and industrial space. The housing market remained strong in most regions. Unseasonably warm weather in many areas of the country boosted traffic and sales of new homes above their average December levels. Housing markets showed further signs of strength in New York and Dallas and a slight rebound in Chicago. In the Minneapolis District a fast construction pace became the norm. Banking and Finance Lending activity was brisk in most Districts, led by strong demand for commercial loans and mortgages. New York reported small to medium-sized banks faced softer demand for loans, especially for consumer loans and residential mortgages. Minneapolis reported that demand for bank loans was softening after a very strong 1997. Most Districts reported that demand for mortgage refinancing was strong due to falling mortgage rates but that demand for consumer loans remained sluggish. New York, Cleveland, and Dallas noted that loan delinquency rates declined or stabilized at moderate levels. Lenders in most Districts reported that strong competition was reducing the spread between borrowing and lending rates, particularly for quality borrowers. In contrast, contacts in Richmond indicated that pricing spreads had been maintained. In general, lending standards were unchanged in most of the Districts. Agriculture, Energy, and Natural Resources The agriculture reports were generally favorable, although performance was mixed across crops and livestock. Favorable crop conditions were reported by Richmond, Kansas City, Dallas, and Minneapolis. Winter wheat and small grain crops appeared to be in good shape. Crop harvesting was near completion in the Richmond District, and contacts there suggested that yields of most crops might fall short of 1996 levels. Chicago noted that farm prices for many key Midwest commodities have declined recently, which may hurt farm earnings in 1998. Chicago, St. Louis, and San Francisco reported that some agricultural producers were concerned that Asian turmoil will lead to weaker farm exports in 1998. In the livestock sector, Kansas City and Minneapolis reported favorable conditions, while Dallas reported that snow and cold temperatures hurt some livestock operations. San Francisco also reported herd losses due to unfavorable weather and grazing conditions, particularly in the mountain states. Chicago noted that a seasonal rise in domestic hog marketings and a bulge in hog imports from Canada contributed to a decline in U.S. hog prices. Minneapolis, Kansas City, and Dallas reported strong drilling activity for oil and natural gas last month despite weak energy prices. Minneapolis noted that output for iron ore and most forest products may stabilize in 1998 after strong or moderate growth in the last two years. San Francisco reported that a number of western mines had shut down operations due to falling gold prices. Labor Markets, Wages and Prices All Districts reported that labor markets were tight or very tight last month. Although labor shortages appeared to be broad-based, some skilled workers were in especially short supply. Most areas noted problems in finding computer-related workers, construction skilled tradesmen, and technicians. Shipbuilders in New Orleans were looking to hire foreign welders, shipfitters, electricians, and others. A company in Nashville was forced to idle more than 10 percent of its equipment due to labor shortages. In the Chicago District some projects were canceled due to a lack of labor, while in the St. Louis District some contacts were unable to meet production schedules due to labor problems. Some businesses in the Cleveland District increased their recruiting efforts, resulting in higher demand for human resources personnel. Some Districts reported increased wage pressures, especially for some specific industries and skilled occupations. Boston and Richmond reported upward wage pressures in the retail sector. Boston also noted that some manufacturers began offering double-digit pay increases in categories such as engineering. San Francisco reported that wage and salary pressures remained high in financial institutions. Some employers in the Dallas District began offering higher compensation for skilled and semiskilled workers in the service sector and for skilled workers in construction, fabricated metals, bricks and lumber. Atlanta, Chicago, and Minneapolis reported that wage pressures were generally being held in check, with more significant wage pressures confined to specific skilled workers. Most Districts suggested that employers continued to be creative in finding and recruiting additional labor. Some companies were subsidizing transportation for employees located far away from their work sites. Employers in several Districts adopted flexible work schedules and more generous benefit packages. While reports of price changes for goods and services were mixed, prices overall remained generally flat. At the retail level, many Districts reported that most of the holiday sales occurred late in the season at large discount levels. Richmond reported that prices in the retail, service, and manufacturing sectors grew at a somewhat slower pace than in the last report, except for soaring prices for starter homes in a specific area of North Carolina. Manufacturers in most areas reported stable prices for their inputs and final goods, due to intense competition and lower import prices. Minneapolis noted that manufacturers of intermediate goods continued to receive pressure from customers to lower prices. Tourism appeared to be an exception from the overall price picture, with Boston, New York, and Atlanta reporting higher rates for hotel rooms. Higher rental rates were also reported for commercial and industrial space in many urban areas. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2003 -beige_book_pure_text_pre2000,1998,"All district economies continue to show overall strength, but a few have noted some recent moderation in their rates of growth. Retail sales are generally up in most districts, exceeding retailers' expectations in many of them. Auto sales, however, are generally down, although demand for pickup trucks and sport utility vehicles remains high. Industrial activity is on the rise in most parts of the country, with orders and production up. Most districts, though, are experiencing a decline in exports to Asia. Continuing the theme of recent reports, the demand for labor remains strong, with nearly all districts reporting shortages of workers at the entry level and in certain skilled categories. Widespread labor market tightness appears to have increased the degree of wage pressures compared with recent reports. Pressures on product prices remain eerily calm, as domestic competition, productivity gains and the Asian situation help to constrain production costs. Residential housing markets, buoyed by low interest rates and mild weather in many districts, are unseasonably hardy. Commercial real estate markets are healthy across districts. Loan demand, especially for residential mortgages, remains strong in most districts. Agricultural conditions are mixed, with some districts reporting that an abundance of precipitation has harmed crop prospects and delayed field preparation activities. Consumer Spending Most districts report that January and February sales are up from one year ago. The Boston, Chicago, Cleveland, Dallas, New York and Richmond districts report that sales have generally exceeded retailers' expectations; in the Atlanta and St. Louis districts, sales have generally met expectations. Almost all districts report that unseasonably mild winter weather has helped boost sales of items in many categories, especially home improvement products, furniture and building materials. Sales of winter clothes, however, have suffered in most parts of the country. The New York district notes that contacts experiencing weak retail sales have usually cited mild weather as a cause. The Atlanta, Chicago, Cleveland, New York and Richmond districts report strong sales of spring clothes, particularly for women; the Boston and San Francisco districts note that apparel sales are down. The San Francisco district adds that department store sales in Southern California are also down. Most districts report that retailers' inventories are at desired levels, although some contacts in the Kansas City and St. Louis districts report that inventories are too high. Auto sales in most districts are down from one year ago. While sales of pickup trucks, sport utility vehicles and minivans remain strong, sales of passenger cars are either flat or down. The Richmond district reports, though, that sales of new and used vehicles have exceeded expectations. The Dallas district notes that vehicle sales surged in January, before slowing somewhat in February. Almost all districts report that vehicle inventories are too high, although contacts in the Kansas City district are satisfied with their stocks. Contacts in most districts expect some strengthening in sales this spring. Manufacturing Almost all districts report steady or increasing growth in industrial activity, although the Dallas district notes a slight weakening in growth. The Chicago district reports that activity is robust, with nearly every sector operating near capacity, while Kansas City district contacts report that current operations are at moderately high levels of capacity utilization and expanding. The Cleveland district notes that, although production is up at most surveyed firms, the number reporting a slowing in production has risen. The Richmond district describes a resurgence of activity, with sharp rebounds in orders and shipments. The Chicago, Cleveland, Minneapolis, New York, Philadelphia, St. Louis and San Francisco districts also report hikes in new orders, while the Kansas City district has seen a mild decline. Makers of building materials and related products generally report continued brisk or rebounding sales due to strength in construction markets. The Dallas district, however, notes that sales of construction materials are down because of a wetter than usual February. Aircraft and heavy truck parts, primary and fabricated metals, and steel production are reportedly strong in the Boston, Chicago, Cleveland, Minneapolis, St. Louis and San Francisco districts. Demand for business services, particularly real estate services, and telecommunications services is up in the Richmond and San Francisco districts. Contacts in the Dallas district, though, report that sales of telecommunications equipment are essentially flat. The apparel industry is in decline in almost all districts. Plant closings, falling sales and declining orders are common, reflecting both increased import penetration and a weakening of export demand. Just about every district reports that exports of many goods to Asia are dropping. The Richmond district, however, notes that activity in the district, except in the textiles industry, has not been affected by the Asian situation. The Boston district adds that the strong dollar has been hurting exports to all parts of the world, not just to Asia. Labor Markets The tone of this report is largely unchanged from that of recent reports: Taut labor markets continue to hamper business activity in a variety of ways. In general, the apparent imbalance between the demand and available supply of workers remains the dominant theme, with the majority of district reports suggesting that the supply of entry-level and skilled workers-most often in technology-related fields, but also in construction and certain skilled craft positions-appears to be insufficient to meet existing production schedules. In the St Louis district, for instance, contacts note that UPS is concerned it will not be able to find enough workers to staff a major expansion. Firms have used a variety of methods to ameliorate these shortages. For example, in the Boston and Cleveland districts, firms are hiring temporary workers and outsourcing production more often, while in the Atlanta, Chicago and Kansas City districts, firms are resorting to worker training programs and various incentive or award programs. Wages and Prices With labor markets stretched to the limit in many areas, there have been reports of rather large wage increases-although this is by no means consistent across all districts. In the Boston district, vigorous demand at temporary employment agencies has produced wage increases of up to 15 percent; wage increases in the retail sector are running 4 to 6 percent higher than the previous year, while wage increases in manufacturing are running at 3 to 5 percent. Wage gains appear to be more measured elsewhere in the country. The Cleveland district reports wage gains of 3 percent, while the Minneapolis and San Francisco districts report wage increases of anywhere from 0 to 4 percent. The Atlanta and Richmond districts report somewhat faster wage growth in the retail sector, but note that overall wage gains are modest to subdued, which is similar to the Chicago and Kansas City district reports. Price pressures appear to be less pressing than wage pressures, according to most district reports. Manufacturing raw materials costs have reportedly increased little, if at all, in the Boston, Chicago, Cleveland, New York and Philadelphia districts. At the same time, nonmanufacturing firms in the New York district, as well as manufacturing firms in the Kansas City and St. Louis districts, note higher input prices. In addition, a few districts continue to report that competitive pressures and productivity gains have worked to offset higher materials prices and to limit product price increases. Although a few firms in the Chicago district have attempted to raise their selling prices, these efforts have not been entirely successful. The evolving Asian situation has had some depressing effect on prices, according to most district reports. The Dallas district reports that Asian currency movements against the U.S. dollar have caused widespread declines in the prices of commodities, computer components and petrochemical products. In the Atlanta district, some import prices have fallen, although not among importers with fixed contracts. Meanwhile, retailers in the New York district report that no significant price declines in consumer goods have occurred. Construction and Real Estate Every district reports strong residential housing market conditions. New home construction is described as unseasonably brisk in several districts, including Boston, Chicago, Cleveland, New York and St. Louis. Mild winter weather, high consumer confidence and low interest rates are credited with much of this strength. However, in several districts, such as Atlanta, Dallas, and Richmond, otherwise robust activity is being hampered by wet weather. Sales of new and existing homes are reportedly strong in most districts, and modest price appreciation is noted by many districts. Commercial real estate markets are uniformly described as strong by reporting districts. Contacts in a number of districts are reporting declining vacancy rates, rising rental rates and increasing speculative construction. The commercial real estate market has ""picked up dramatically"" in the Richmond district, with ""floods of tenants looking for space."" Nonresidential construction and prices are up in California, while the Dallas district reports a sharp increase in land prices. Contacts in several other districts, however, see signs of an impending slowdown and are worried about the pace of speculative building. Banking and Finance Most districts report moderate to vigorous demand for bank loans. Contacts in the Chicago, Cleveland, Dallas, Minneapolis, Philadelphia and San Francisco districts indicate that loan competition, especially on the commercial side, is stiff, although there are concerns in some districts that this competition could compromise credit standards. Mortgage lending, especially refinancings, is reportedly strong in the Atlanta, Chicago, Cleveland, Dallas, Kansas City, New York, Philadelphia, Richmond and St. Louis districts. Contacts in the Atlanta and Chicago districts report robust consumer loan demand, while contacts in the Cleveland, Dallas, Philadelphia and St. Louis districts note some softening. A reduction in consumer loan delinquencies is reported in the Chicago and New York districts. The Chicago district notes that credit card repayments are up and personal bankruptcies are declining. Agriculture and Natural Resources Agricultural conditions vary widely across districts. The deluge of rain that hit California has damaged crops. Near-record precipitation has reportedly worsened the condition of the winter wheat crop in the Richmond district rather significantly. In the Kansas City district, however, the winter wheat crop appears to be in good shape. Although rains have delayed field activities in the Dallas and Minneapolis districts, overall conditions are reportedly good in those areas. Contacts in the Richmond district are worried that a late frost may harm the apple and peach crops. The Chicago district reports that corn exports have weakened markedly-not solely because of Asia-although the soybean export picture is somewhat brighter. In the St. Louis district, cotton exports to Asia, while still expected to wane, are not declining as much as many had expected since sales to other markets, such as Mexico, have picked up. The San Francisco district reports a similar situation for beef and pork exports. Lower cattle and hog prices are hurting the profit margins of producers in the Chicago, Minneapolis and Kansas City districts. The unseasonably warm winter weather has affected the energy extraction industries to varying degrees. The Dallas and Minneapolis districts report increased activity, while energy output increases have begun to decline in the Kansas City district. Solid demand for steel continues to bolster iron ore output in the Minneapolis district. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2337 -beige_book_pure_text_pre2000,1998,"Reports from Federal Reserve Districts indicated that economic growth generally continued to be moderate to strong in March and April. Expansion was occurring in nearly all Districts, although Dallas reported some recent signs of slowing growth amid basically strong regional economic conditions and Minneapolis noted some weakening of business activity in parts of that District. Consumer spending was generally robust in all regions of the country. Manufacturing activity advanced. Real estate markets were generally strong. Agricultural conditions were mixed, as was lending activity. Activity has eased in oil drilling and mining. Labor markets continued to be tight. There was some evidence of increased wage pressures in service industries and for computer and technical professionals. Despite increases in labor costs, business contacts indicated that competitive pressures were holding prices in check for most goods. Some increases in service prices were noted, however, in the Dallas and San Francisco Districts. Consumer Spending Retail sales rose generally throughout the country in April. In New York, Cleveland, Chicago, and Dallas the strength of the gain exceeded merchants' expectations. Increases were said to be more modest in Philadelphia and Richmond, and retailers in several Districts cautioned that the April results were probably boosted above trend by this year's late Easter. Spring apparel has been selling well in Boston, New York, Philadelphia, Atlanta, and Minneapolis. Healthy sales of home furnishings, furniture, and appliances were also cited by several Districts. Merchants said store inventories were in line with sales in Boston, New York, Cleveland, Atlanta, Chicago, and Kansas City, but some retailers in Richmond said inventories were at higher than desired levels, although they were not increasing. In most of the Districts reporting on auto sales, demand has slipped. In Philadelphia, Chicago, Minneapolis, Kansas City, and San Francisco, sales of cars have softened in recent weeks. In contrast, Cleveland and Dallas reported recent increases in motor vehicle sales. Spring tourism was described as very good in Richmond and Atlanta. Reservations for summer lodging were strong in coastal areas of the Richmond District, and Atlanta reported that cruise bookings were at an all time high in Miami. But the recently concluded winter tourism season in the Minneapolis District was called disappointing. Manufacturing Manufacturing activity continued to expand. In March and April, strong gains were recorded in Chicago and Minneapolis. Activity grew in Boston, New York, Cleveland, Richmond, St. Louis, Kansas City, and San Francisco. Philadelphia, Atlanta, and Dallas also reported gains, but the rate of growth in those Districts has slowed from earlier in the year. Manufacturing output has increased in a wide variety of industries. In particular, construction materials and home-related goods, such as furniture and appliances, were mentioned by several Districts. In contrast, output of electronic items was said to be down in Boston and Chicago, and chemical production fell in St. Louis and Dallas. Declining exports to Asia were cited as the main cause of weakness in these industries. Richmond noted falling exports of machinery. Increased competition from imports was reported by manufacturers of metals in Philadelphia and chemical manufacturers in Cleveland. Real Estate and Construction All Districts reporting on commercial real estate markets described improvement. For office buildings, rents were rising, vacancy rates were falling, and construction activity was rising. Boston and Richmond reported speculative construction in areas around Boston and the District of Columbia, respectively. New York City office rental costs have increased markedly since the beginning of the year. Besides these Districts, increases in office occupancy and construction were reported from Cleveland, St. Louis, Minneapolis, Dallas, and Atlanta. However, Atlanta also noted that vacancy rates in the industrial sector have risen slightly. San Francisco noted increased construction in Alaska for highways and oil-development infrastructure. Demand for housing was on the rise in seven of the eight Districts that obtained information on this sector. Home construction was increasing in April in New York, Cleveland, Chicago, St. Louis, Minneapolis, and Kansas City. Sales of new and existing homes were up in Richmond, as were home prices. Real estate contacts in several Districts were wary that recent warm weather has encouraged home buying earlier this year than normal and that sales could slip later. Perhaps as a harbinger of this trend, home sales in Atlanta fell in April after an increase in March. Agriculture Agricultural conditions were mixed, as favorable developments for some crops were offset by weakness in livestock markets. The winter wheat crop was said to be in good condition in the Cleveland, St. Louis, and Kansas City Districts; however, St. Louis noted some damage to the peach crop because of freezing conditions earlier this season. Spring field preparation and planting was ahead of schedule in Cleveland, on schedule in Richmond and Dallas, but behind schedule in Chicago, St. Louis, and Kansas City because of wet ground. Wet conditions have also delayed planting of cotton and some other crops in the San Francisco District. Low livestock and feed grain prices have seriously impaired farm income in the Minneapolis District, and a fall in hog prices in Kansas City has led to some liquidation of herds. Livestock sales and prices were said to be waning in San Francisco also, although Chicago reported some firming of feed cattle prices in April. Natural Resource Industries Oil-drilling activity has declined recently in the three Districts that reported on it: Minneapolis, Kansas City, and Dallas. Dallas did note, however, that drilling for gas remains active, although below the strong level recorded near the end of last year. Minneapolis noted that mining operations for most minerals have been reduced because of low prices. Financial Services and Credit Most of the Districts reporting on loan demand indicated that commercial lending was rising and residential mortgage activity was up, but consumer loan demand had slipped recently. Six Districts were recording increases in bank lending to businesses while one District, Cleveland, said business borrowing was flat. The increases in commercial and industrial loans were posted in Philadelphia, Richmond, Chicago, St. Louis, Kansas City, and San Francisco. Mortgage originations, both new and refinancings, were up in all of the Districts that mentioned real estate lending: New York, Philadelphia, Richmond, Atlanta, Chicago, Kansas City, and San Francisco. Consumer lending varied. In recent weeks it was up in Atlanta and Chicago, down in Philadelphia, St. Louis, and Kansas City, and flat in New York and Cleveland. Despite these mixed results, bankers said the quality of their institutions' consumer loan portfolios was either steady (in Atlanta) or slightly improved (in Philadelphia, Cleveland, and Chicago). Employment and Wages Seven Districts obtained assessments of their overall labor markets from business contacts, and in all these, conditions were described as tight. Strong labor demand was noted in Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas. Wage increases in a variety of industries were estimated to be in a range of 2 to 6 percent above last year's levels according to surveys in Boston and Cleveland. Boston noted that computer professionals and engineers were getting wage increases of 8 to 10 percent, and Cleveland reported that temporary help firms were boosting wages by 5 to 20 percent. Richmond and Dallas received reports that wage increases were becoming more frequent in service industries, but the increases were not sharp. In Atlanta and Chicago, wage gains were said to be more widespread, but the size of the increases was not great. Contacts in St. Louis said upward pressure on wages was growing. Prices Information obtained by most Districts suggests that goods prices at most stages of production are nearly steady. Retail prices were steady according to reports obtained by Boston, New York, Minneapolis, Kansas City, and Dallas. Prices for manufacturing inputs were said to be steady in Boston, Philadelphia, Cleveland, Minneapolis, and San Francisco. Some increases were noted in the Kansas City District, however, along with declines. As already noted, livestock prices were said to be weak in San Francisco and Minneapolis, and Minneapolis reported low prices for natural resource commodities. Oil prices also were reported to be low. One factor apparently keeping goods prices in check is import competition in intermediate and finished consumer products, primarily from Asian countries, as reported to New York, Philadelphia, Cleveland, Minneapolis, and Dallas. While the prices of most goods are nearly steady, growing construction activity has resulted in some price increases for construction materials, especially lumber. In contrast to the prices of goods, increases in the prices of business services were noted by Dallas and San Francisco. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1810 -beige_book_pure_text_pre2000,1998,"In agriculture, crop conditions are generally favorable, but crop and livestock prices are low. Oil and gas drilling continues slack, while output in other natural resource industries is generally stable. Seven districts report some adverse effects from economic problems in Asia. Household Spending The strength of the nation's economy is reflected in household spending. Boston reports 5 percent to 8 percent growth over year-earlier retail sales, while New York and Chicago describe them as above-plan or above expectations. Philadelphia and Richmond describe sales as healthy, Minneapolis as brisk, Kansas City and San Francisco as robust and Dallas as strong. Atlanta sees somewhat softer consumer spending, with most retailers saying ""recent sales had gone as planned, but a significant minority noted their disappointment."" In the Chicago district spending increased modestly, with sales exceeding retailers' expectations, while for St. Louis average sales are up 2 percent to 2.5 percent. The composition of consumer spending varies somewhat by region. Home furnishings and related goods are strong in several districts. Summer clothing and other apparel are strong in the Midwest, but mixed in New York. Motor vehicles are selling well in San Francisco, Philadelphia, Richmond, Kansas City and Chicago, but more slowly for Dallas and in rural parts of the Minneapolis district. St. Louis was one of several districts to note the effects of strong incentive programs on auto sales. Sport utility and luxury vehicles continue to sell more strongly than other models in many areas. Tourism is strong in Boston, New York City and the Carolinas. Atlanta expects a very good season in Florida and notes record business at Mississippi casinos. Minneapolis district tourist businesses also anticipate a good summer season. San Francisco reports good tourist trade at present but anticipates some falling off in October. Construction and Real Estate Construction is an engine of growth in many districts. Boston, New York, Minneapolis, St. Louis, Kansas City and Dallas all report vigorous home building. Cleveland notes a continued overall strong sector, with residential building up across its district but mixed activity in nonresidential categories. Home building is very strong in California, but softer in Oregon and Utah. Chicago's construction sector is bolstered by strong commercial building activity. Several districts report strong market activity for existing real estate, both residential and commercial. Richmond relates that residential and commercial business was strong, but the pace of growth was moderating. Minneapolis notes that long waits for newly constructed homes are fueling interest in existing housing. Chicago and New York report tighter markets for office space in contrast to some softening in Philadelphia. Manufacturing Manufacturing generally is growing strongly, particularly in the Northeast and Midwest but at a somewhat slower pace elsewhere. Chicago describes particularly robust manufacturing, especially in heavy equipment, appliances and steel. St. Louis reports vigorous activity, while Boston lists double-digit sales gains for aircraft components, power equipment, and medical and pharmaceutical equipment. Philadelphia notes continued gains, and Kansas City says plants are operating at a high level of capacity. Minneapolis describes manufacturing growth as strong but not spectacular. Cleveland says that production is expanding at a slower pace than earlier in the year. In contrast, manufacturing growth appears somewhat slower across the Southeast and South. Richmond says that shipments have declined recently and new orders are more modest. For Atlanta, production has increased but expectations reportedly are for some softening. Dallas similarly reports a slightly slower manufacturing sector, driven in part by sluggishness in the energy industry. But demand for construction-related goods in the Dallas district is so strong that items such as drywall and concrete are being rationed by suppliers. San Francisco notes expanded output overall, but deceleration for some products, particularly those affected by slack demand in Asia. Agriculture Conditions for farmers vary widely depending on region and crop or livestock enterprise. Crop conditions are good in most areas, especially the corn and soybean areas of the Chicago, St. Louis and Minneapolis districts. Kansas City anticipates excellent winter wheat yields on a somewhat reduced acreage from a year earlier. Richmond also anticipates good yields for its grain producers. Exceptions to this general pattern are wheat growing areas of Montana and the Dakotas, where drought is a concern as it is for some Dallas district farmers. Cleveland notes mold problems for Kentucky tobacco growers as well as a short wheat crop there. Moreover cold, wet weather has hampered some fruit production in California and the Carolinas. Crop prices remain depressed in response to anticipated strong yields and weak export demand. Low cattle and hog prices are putting pressure on producers' bottom lines, although Chicago notes some recent improvement in hog prices from lows experienced earlier in the year. San Francisco and Kansas City report that cattle feeders are losing money. Other Natural Resource Industries All districts reporting on oil and gas drilling describe it as slack. Dallas notes further slowing of drilling due to large stocks of gas and oil. The energy sector is also weak in the Minneapolis district, with gas somewhat better than oil. Kansas City reports a slight uptick, though activity remains well below year-earlier levels. Iron mining sources in the Minneapolis district indicate that 1998 output should match the strong pace set in 1997. Forest product output apparently is stable. Paper manufacturing reports are mixed, with Minneapolis describing profitability varying among grades of paper and Dallas noting increased pulp imports. For Atlanta, mills are still operating below capacity, but with some improvement. Banking and Insurance Banks and other financial firms are generally in good shape. San Francisco reports stronger demand for loans by businesses than by consumers. Dallas sees increased consumer borrowing, except for auto loans. Kansas City describes higher lending to consumers and agriculture. Minneapolis says that while loan volumes continue to grow, the growth rate has slowed somewhat, and lenders are becoming somewhat more cautious. Bankers in the St. Louis district reportedly describe loan demand and competition as strong. Lending to consumers and businesses in the Chicago district is apparently very brisk, and loan quality may be improving. Banks' loan business is also strong in Richmond, Philadelphia and New York. Boston describes slack demand for traditional life insurance, but increasing interest in lines such as group disability policies as employers increase employee benefits. Employment, Wages and Prices Employment levels are high and labor markets tight in most areas. While no district reports widespread increases in general wage levels, reports of increases in occupation-specific, targeted or nonwage compensation are frequent. Boston, Atlanta, Cleveland and Chicago cite acute shortages of information technology workers and say that some jobs are going unfilled. Boston notes that tight labor markets are not yet leading to sizable wage hikes but says that temporary employment firms are expanding sharply. Cleveland reports some acceleration in compensation costs amid indications of tight labor markets. Richmond says that demand for workers remains intense but overall wage pressures are still mild. Similarly, Atlanta describes labor shortages as plaguing parts of its district, but with little upward wage pressures. Chicago sees signs of broad-based labor shortages, with wages rising in specific occupations and at the lower end of the pay scale, but reports that general wage pressures are still subdued. Demand for labor remains strong in the St. Louis district, with some upward pressure on wages noted. Minneapolis continues to have very tight labor markets with widespread nonwage compensation increases despite overall restraint of base wage increases. Kansas City reports continued, but not increasing, moderate wage pressures in very tight labor markets. Dallas made note of firms' widespread difficulty in hiring skilled workers and their use of targeted wage increases. Construction workers are in short supply in the San Francisco Bay area, though there is some easing of employment among high-tech manufacturers. Despite indications of tight labor markets in all districts and higher compensation costs in several, prices of goods are largely stable. Boston and New York report manufacturing input costs as flat or down. New York purchasing managers see upward pressure on contracted services, with most firms reporting unchanged input and output prices. Cleveland and Atlanta note largely stable commodity, input and finished goods prices. Minneapolis says that commodity and energy prices are holding down increases in the general price level. Price changes are mixed in the Dallas district, with the preponderance lower. San Francisco cites some cost increases for services. Inventories Reports that mention inventories generally describe them as at normal levels relative to sales. Philadelphia reports stable manufacturing order backlogs and inventories and retailers' inventories at appropriate levels. Cleveland describes some upward movement in inventory levels but categorizes them as in line with production levels. Atlanta views inventories as generally on target, while Chicago says retail inventories are ""in good shape."" St. Louis and Kansas City say that most retailers are managing inventories at lower levels, although some auto dealers have too many cars on hand. Minneapolis notes some evidence of shorter delivery times and higher supplier inventories. Asia Seven districts made specific note of effects from economic problems in Asia. Boston says such troubles have held down some input prices and reduced demand for some manufactures. New York describes incipient price reductions for imported electronics and apparel. Philadelphia lists declining orders from Asia for primary metals and construction materials. Richmond sees more effects from import competition in apparel and textiles than on exports. Chicago steel producers are facing increased competition from Asia and high-tech and electronics is also suffering. Dallas lists weak Asian demand for petrochemicals and telecommunications gear. San Francisco district producers of computer components and lumber also have seen a drop in sales to Asia. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1996 -beige_book_pure_text_pre2000,1998,"Reports from Federal Reserve Districts generally indicated a high level of economic activity and further expansion recently, though with moderation in growth for some regions and sectors. In most Districts, retail sales were in line with retailers' expectations, and inventories generally were characterized as balanced. Manufacturing activity remained at a high level, although the GM strike, weakening demand for exports, and general slowing in the high-tech sector damped expansion. Robust sales growth in residential and commercial real estate markets continued to fuel construction activity in most of the nation. Reports on the agricultural sector were mixed, with drought-like weather in the South and low prices for some products tempering the outlook. Financial institutions across the country continued to report healthy loan demand and generally accommodative credit conditions. Despite the high level of economic activity in recent weeks, many Districts noted that labor shortages, shipping bottlenecks, and continued weakness in East Asia were beginning to temper growth in their regions. Consumer Spending Retail sales increased in most Districts in late June and July. Boston, Cleveland, Dallas, and Minneapolis reported strong sales growth since the last report, often exceeding merchants' expectations. Among other Districts, Chicago, Kansas City, New York, Philadelphia, and San Francisco reported steady but healthy retail sales, while reports from Atlanta and Richmond indicated mixed sales results. In general, consumer spending remained robust across many product lines and types of outlets. Sales were strongest for seasonal women's and children's apparel and big-ticket items such as motor vehicles, home furnishings, and major appliances. Retailers attributed the continued strength of retail sales to strong consumer confidence, robust home sales creating demand for complementary items, and favorable financing terms for large purchases. For the most part, retailers reported that inventories were adequate for anticipated sales growth. However, shortfalls were noted for some products. Unseasonably hot weather caught Midwest retailers with inadequate inventories of fans and air conditioners. Declining inventories of GM products constrained sales at GM dealers and service centers across the country, but other auto dealers reportedly maintained sufficient supplies of new cars and parts. Tourist activity picked up in recent weeks, as the summer travel season got under way. At beach resorts along the East Coast, hotel bookings and day trip traffic reportedly surpassed year-earlier levels. In Boston, increased tourist traffic from Europe offset declines in business from East Asia and contributed to the sector's robust growth. Fires depressed tourism in much of Florida, but other parts of the Southeast attracted visitors, including those interested in riverboat gambling and Mississippi Gulf Coast casinos. In the West, tourism-related restaurant sales, car rentals, and hotel occupancy rates reportedly were strong, and attendance at parks such as Yellowstone and Mount Rushmore rose above year-earlier levels. Manufacturing Manufacturing activity remained at a high level in recent weeks, although growth slowed in most Districts. Boston, Chicago, Dallas, Kansas City, and St. Louis reported good growth in non-GM related manufacturing. In Boston and Dallas, telecommunications manufacturers reported good sales gains; in Chicago strong demand for construction equipment and building materials kept producers running near capacity in recent weeks; in St. Louis, robust demand for refrigerators and other appliances induced overtime hours for some producers. In general, manufacturers reported no difficulties obtaining materials or supplies, and prices on many inputs to production were either flat or declined. The GM strike and continued weakness in East Asia slowed manufacturing growth in many regions. In the Atlanta, Chicago, Richmond, New York, and St. Louis Districts the GM strike directly reduced manufacturing employment, idling workers at GM plants and related suppliers in these areas. The GM strike also affected electronics manufacturers in Dallas and chemical, plastic, and steel producers in Cleveland. Weakness in East Asia and increased low-cost imports continued to depress demand for a variety of U.S. products. Manufacturers reported that sales and orders for apparel and textiles, computing equipment, electronic components, industrial machinery, paper, and wood products fell in many Districts. Reports also indicated employment reductions through layoffs or attrition at some companies. Construction and Real Estate Construction activity and real estate markets remained robust in most parts of the nation. Home sales were characterized as strong to booming in Dallas, Kansas City, Minneapolis, Richmond, and St. Louis, and above year-earlier levels in Atlanta, Chicago, Cleveland, and San Francisco. Low mortgage interest rates continued to attract first-time buyers, fueling demand for low to moderately priced homes in many regions. Only Richmond reported concerns about an excess supply of homes on the market; all other Districts indicated that housing inventories were low to moderate and consistent with the strong growth in home demand. Commercial real estate demand also grew rapidly in many areas, although growth was less uniform across Districts than for residential markets. Declining vacancy rates and increasing rental prices were present in a number of cities. In Boston, low availability and limited new construction of commercial space have forced some large and growing firms to relocate to the suburbs. In Manhattan, asking rents on Class A properties have risen 25 percent since last year. In Minneapolis and St. Paul, construction of large office buildings was at its highest level in a decade. In the West, respondents from California reported that low vacancy rates for commercial office and warehouse space have prompted commercial and industrial construction in the tightest markets. Only Dallas expressed concern about over building. Non-Financial Services Districts reporting on the services sector indicated continued strong growth in recent weeks. In Dallas, demand for business services continued to rise, fueled by initial public offerings, mergers, and acquisitions. In San Francisco, sales of telecommunications and cable television products rose above an already high level. Cleveland reported that transportation and shipping activity remained very strong in the District, largely due to increased import volumes from East Asia. Unbalanced trade flows to and from East Asia produced an oversupply of empty containers at West Coast ports, while in East Asia new containers were being built to meet the demands of their exporters. In New York, one large retailer stocked up on holiday-season imports earlier than usual due to shipping bottlenecks at West Coast ports. Banking and Finance Loan demand was steady but strong in most Districts in recent weeks. However, the composition of loan demand differed among regions. Growth in loan demand in Chicago, Cleveland, Kansas City, and San Francisco was broad-based. In Philadelphia, commercial and industrial lending was flat, while consumer lending rose slightly. In Dallas, demand for home and auto loans increased, while in Richmond demand for home mortgage and commercial construction loans increased. Overall, Districts characterized financial markets as intensely competitive, with quality borrowers receiving good terms and rates. Most Districts reported no signs of deteriorating credit quality. Cleveland, Dallas, and New York reported that loan delinquencies and writeoffs fell in recent weeks. Agriculture and Natural Resources Reports on agricultural conditions were mixed across the Districts. Reports from Cleveland, Chicago, Kansas City, and St. Louis highlighted generally good agricultural conditions in their regions, as favorable weather put many crops at or ahead of schedule. In the South, unseasonably hot, dry conditions distressed crops, in many cases destroying fields that could not be irrigated. These drought-like conditions also have damaged range and pasture lands. In other Districts, reports focused on prices rather than weather. Minneapolis and San Francisco reported that low prices have reduced profitability among agricultural producers. Price declines for some commodities have been so large that producers cannot cover costs. In addition, many storage facilities remain stocked with the 1997 crops, thereby producing higher storage costs for farmers as they seek alternative facilities. Labor Markets, Wages, and Prices All Districts reported that labor markets remained tight in recent weeks. Labor shortages were broad-based, and some skilled workers were in especially short supply. Most areas noted problems finding information technology workers and construction tradesmen, such as framers. In addition, a number of Districts noted shortages of quality entry-level workers for retail positions; certain skilled workers such as machinists and welders; finance and banking personnel; and drivers for both short- and long-haul delivery. However, general wage increases remained limited, as employers chose to use one-time payments and merit increases to attract and retain specific types of employees. Goods prices remained stable during the recent survey period, although there were scattered reports of increases in some services. In general, declining input prices and intense competition were credited with keeping retail prices in check. Manufacturers and retailers reportedly cannot sustain price increases in the current competitive environment. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1766 -beige_book_pure_text_pre2000,1998,"The overall tenor of the District reports suggests that the economy is continuing to expand at a moderate pace, although several Districts indicated slowing in some sectors. Notably, the New York District reports that significant segments of its economy were slowing, and the Dallas District notes that economic activity decelerated in August as the manufacturing sector declined. Still, most Districts see at least modest growth in business activity from generally high levels. Despite some continuing--and in some cases increasing--softness in certain industries due to the weakened Asian economies, many Districts indicate unusually high levels of construction and good retail sales growth. While there appear to be only marginal changes in the strength and pattern of the business expansion since the last report, several Districts indicate a sharp deterioration in both business and household expectations regarding the economy in the fourth quarter and in 1999. The Philadelphia, Atlanta, St. Louis, and San Francisco Districts all report a less buoyant economic outlook than earlier, and the Boston District sees increased uncertainty about 1999. In the Minneapolis District, ""the number of sources expressing concern about the near future is striking."" A large number of Districts continue to exhibit labor market tightness, which appears to be pushing wages up at a faster pace. On the other hand, retail prices remain generally steady or are declining slightly in most Districts, and falling import prices have helped push industrial commodity prices lower. Construction Construction activity is characterized as very strong across the nation, although a few Districts report signs of slowing in some markets from high levels of activity. New and existing home sales remain high in most areas, and low inventories of unsold homes were noted in the Atlanta and Kansas City regions. Office vacancies are low or falling in the New York, Philadelphia, Atlanta, and Chicago Districts, although the St. Louis District has seen vacancy rates creep up slightly. In the Dallas region, there is concern about overbuilt industrial space. The unusually strong growth in building activity appears to be constrained by the availability of construction workers in some areas. The Cleveland, Atlanta, and Chicago Districts note shortages of construction workers; for the San Francisco District, finding qualified construction workers posed a significant obstacle to new construction in areas where building is brisk. Rents are rising in the New York and Philadelphia regions. Retail Sales Retail sales remain strong in many Districts. Leading categories in recent sales growth include electronics, appliances, and furniture. Apparel items were also thought to be selling especially well. While a few Districts describe back-to-school sales as spotty, these results may have been affected by the timing of the Labor Day holiday weekend (which is not captured in this report.) In addition, auto sales were mixed by region and by model. In some cases, a continued shortage of General Motors products was thought to be still restraining auto sales. Retailers were mixed in their reaction to the recent fluctuations in U.S. and foreign capital markets. Boston notes some uncertainty among retailers they contacted concerning a possible fallout from financial market turmoil for 1999 and beyond, although the St. Louis District reports that retailers there have not yet observed a falloff in sales because of swings in the stock markets and are optimistic about sales prospects for the rest of the year. Similarly, contacts in the Richmond District remarked that retailers there do not expect the recent volatility in financial markets to trim their sales in the coming months. Manufacturing The industrial sector continues to be affected by softness in the Asian economies. Chemicals, construction materials including steel, textiles, and some types of capital goods industries have been hurt by reduced exports to Asia. Nevertheless, domestic demand continues to keep industrial activity steady at a relatively high level in many, if not most, regions. Domestic orders growth appears to be holding nearly steady or rising slightly in many regions. In the Boston District, orders for medical equipment are said to be rising strongly. A few Districts indicate a drop in computer-related manufacturing. In the Dallas region, demand for semiconductors is said to be still weak; in the San Francisco District, sales and market conditions weakened for computer and electronics manufacturers. Agriculture Agricultural conditions vary greatly by region. In the Midwest, including the Cleveland, Chicago, Minneapolis, and northern St. Louis Districts, crop conditions are highly favorable. The Kansas City District expects a bumper crop of corn and soybeans, except in Oklahoma where drought damage has been severe. Bad weather conditions are thought to have reduced yields in the Dallas and San Francisco regions, and Hurricane Bonnie is reported to have caused significant crop damage in some parts of the Richmond District. The Districts report that the combined influence of generally good harvests and weak foreign demand has exerted considerable downward pressure on agricultural commodity prices. In several cases, these influences are thought to be putting stress on farmers' balance sheets. The Dallas District indicates that low yields and low prices have led to serious financial stress for many crop producers; in the Minneapolis region, where high yields are not sufficient to offset the low crop prices, farmers reportedly face the most serious financial situation in a decade. Kansas City, however, reports that agricultural bankers in its region were not especially concerned about low crop prices. Labor Markets and Wages Labor shortages are still being reported in most regions, and many Districts have seen an accelerated rate of compensation growth. The workers in greatest demand are information systems personnel, including programmers. Construction and retail workers are generally thought to be in short supply. The District reports also note insufficient numbers of engineers, architects, investment managers, bus drivers, and administrative assistants. The Boston District indicates that worker shortages are impinging on retail expansion plans. In the Cleveland District, there are concerns that farm worker shortages will make it difficult to harvest Kentucky's tobacco crop. In the Kansas City region, employers are having difficulty hiring at almost all levels. Most, although not all, Districts have seen a pickup in compensation growth this year. Wage increases are somewhat higher in many areas, although sharply higher growth rates are seen only in fields where labor shortages have become critical, such as information systems. The Chicago District sees wage growth as stable but reports increased nonwage compensation. Minneapolis notes that strikes have become a more prominent feature of the collective bargaining environment than in recent years. Prices The District reports show wide agreement that price pressures remain relatively subdued. Falling import prices are said to be having a major impact on a variety of retail goods prices, such as apparel, consumer electronics, and food. However, the San Francisco region notes that prices for services such as airline travel, health care, and cable TV have started to rise significantly. Manufacturing prices are flat, and in some industries, such as lumber, petrochemicals, steel, and a number of other commodities, prices have been falling. The only significant upward movement has occurred in the construction materials industry, with prices rising in the Cleveland, Atlanta, and Kansas City regions. Banking Loan demands are mixed by region and by category. In the New York and Philadelphia Districts, loan volumes have been declining recently, although seasonal factors may be at work in the former case. On the other hand, lending activity remains brisk in the Richmond, Dallas, and San Francisco regions. In the Cleveland District, demand for commercial loans continues to strengthen, but consumer borrowing has been flat. In the Kansas City region, consumer, mortgage, and agricultural loans increased, while other loan categories held steady. Credit quality also varies by region. Delinquency rates are reported unchanged in the Cleveland District and are stable to slightly lower in the New York District. In the Richmond, Minneapolis, and San Francisco regions, credit standards have deteriorated, although a few banks in the Dallas District have tightened lending standards recently. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1609 -beige_book_pure_text_pre2000,1998,"District reports suggested that the pace of economic expansion moderated in September and October amid signs of slowing in some sectors. Retail sales were mostly at or below merchants' expectations, but there were only scattered reports of unanticipated inventory accumulation. Real estate and construction activity remained generally robust, especially in residential markets, but most Districts reported that more stringent credit standards were a factor slowing commercial real estate activity. Manufacturing activity continued at relatively high levels, but was the sector most often cited as showing signs of softening. Lending activity varied by region, with demand remaining strong, although many lenders were reported to be tightening standards somewhat, mostly on business loans. Labor markets remained very tight in most Districts, although demand for workers in manufacturing industries was softening in some areas. Crop conditions varied across Districts as the fall harvest progressed. Low commodity prices and adverse weather conditions in some areas were increasing concerns among farmers and agricultural banks. Upward pressure on most wages remained subdued. Prices at the retail level were little changed, while producers' prices for intermediate inputs were generally flat to down. Virtually all Districts reported that businesses and consumers remained cautious about the economic outlook. Boston and St. Louis noted increasing concern while Philadelphia, Atlanta, and Minneapolis reported a modestly improved outlook. Consumer Spending & Tourism Most Districts reported slowing retail sales growth with results coming in at or slightly below most merchants' expectations. However, the Boston, Cleveland, Richmond, and San Francisco reports suggested that sales gains were moderate to strong. Discounters were reported to be outperforming other retailers in some Districts. Light vehicle sales were picking up in the Cleveland, Richmond, and Chicago Districts while softening in Philadelphia, Dallas, and Kansas City. Sales of other big-ticket items (such as jewelry, home furnishings, electronics, appliances, etc.) were strong in many Districts, but mixed in Chicago and soft in San Francisco. Apparel sales picked up as the weather cooled in the Chicago District but remained slow in New York and San Francisco. Retailers in most areas reported satisfactory inventory levels, but there were a few reports of inventory overhangs. However, only the Chicago District noted greater-than-usual promotional activity to clear them. Tourism and travel spending was reported to be very strong in the Boston, Minneapolis, and San Francisco Districts, but slowed in the Atlanta region where Hurricane Georges and weakness in Latin American economies hindered travel. Construction & Real Estate Residential building and sales continued strong, but generally flat, in most of the country. The Richmond District reported an increase in new housing activity, while Atlanta and Kansas City suggested some softening. New York indicated general strength with pockets of weakness, particularly in the New York City area. The pattern was similar for existing home sales, with most regions reporting solid, but flat, sales volumes. The Chicago District noted exceptional activity in September, with no signs of the typical seasonal slowdown in October. Atlanta and Richmond said sales of existing homes had softened somewhat recently. The Chicago and Richmond Districts reported some weakness in sales of higher priced homes, the former attributing this to recent volatility in financial markets. Nonresidential construction activity, both private and public, remained strong in most Districts, although there were signs of softening in commercial real estate markets. St. Louis and Richmond reported noticeable decreases in speculative building. A contact in the Richmond District attributed the weakness, in part, to the lack of credit, adding that ""spec"" development that wasn't already underway had come to a halt. Minneapolis, on the other hand, was reporting the strongest office market in over a decade. Manufacturing Reports indicate that growth in overall manufacturing activity slowed in 11 of the 12 Districts. St. Louis was the only District not reporting overall softening, with its strength due largely to production of transportation equipment. Three-quarters of the Districts indicated that economic turmoil abroad, especially in East Asia, was at least partially responsible for softening demand. Steel producers in the Cleveland, Atlanta, and Chicago regions attributed a significant slowdown to a dramatic increase in imported steel over the late summer and early fall. Producers of semiconductors and other high-tech equipment noted decreased shipments in half of the Districts. Agricultural equipment makers cut fourth-quarter output schedules, but producers of other heavy equipment continued to run near capacity. Production in the auto industry picked up amid efforts to restock strike-depleted inventories. Increased shipments of personal computers were noted by the Dallas and San Francisco Districts. Banking Business lending activity was mixed across Districts, while low interest rates buoyed consumer and home mortgage lending activity. Philadelphia, Cleveland, and St. Louis reported increasing business lending, while Atlanta, Minneapolis, and Kansas City noted declines. Most regions continued to experience strong demand for business loans, but increased uncertainty about economic conditions made lenders more cautious. Tightening of credit terms or standards on business loans was reported in two-thirds of the Districts, with the majority of them pointing to a less favorable economic outlook as justification. Commercial real estate was the segment most often targeted for tightening though there were a few reports of tightening on merger and acquisition lending. Contacts in the Philadelphia, Cleveland, and San Francisco Districts suggested that there was a pickup in loan demand from borrowers who typically would have gone through other channels such as capital and equity markets. Consumer lending activity was reportedly strong in most Districts, especially in New York, Chicago, and Kansas City. Cleveland noted a further softening of consumer lending conditions from their last report. Mortgage originations and refinancing activity picked up as mortgage interest rates fell. Asset quality on consumer loans was generally unchanged from the last Beige Book report, and only two Districts--New York and Kansas City--reported tightening standards, albeit modest. Concerns at agricultural banks continued as low commodity prices persisted. Chicago reported that after a few good years most farmers could withstand the low prices this year, but could falter if soft prices continued well into next year. Banks in the Minneapolis District continued to be very concerned, as some banks sought to diversify by branching into urban markets. Lenders in the Kansas City District noted a deterioration in their agricultural portfolios from last year. Labor Markets, Wages, and Prices Labor markets remained very tight in most Districts, but there were few new reports of intensifying wage pressures. Dallas was the only District to indicate ""marked"" slackening in some labor market segments. Reports suggested that labor market tightness continued to hamper business creation and expansion plans in some areas. Contacts in the Atlanta District reported difficulty in finding mid-level managers for positions that were downsized just a few years ago. Shortages of workers persisted in most areas, but appeared to be no more pronounced than in previous reports. Information technology, skilled trades, and construction workers were most often cited as being in short supply. Reflecting a general softening in the industrial sector, manufacturing employment reportedly declined in nearly half the Districts, while St. Louis and Kansas City indicated increased hiring in some segments. The Boston and New York Districts noted layoffs and bonus reductions in the financial services industry due to recent volatility in financial markets. By contrast, the Chicago District noted little effect. Upward pressure on wages and prices remained generally subdued, according to most District reports. Cleveland, however, noted that temporary help agencies had increased wages in order to fill positions in the last three months. Contacts in the Atlanta District suggested that, while wages continued to go up in parts of the region, employers were absorbing most of the added costs and not passing them along in the form of higher prices. Most producers' input prices declined while output prices generally remained flat. The general tone of District reports suggests little, if any, change in retail price pressures. Agriculture Agricultural conditions varied widely across regions and concern about deterioration in financial conditions in the industry increased. The fall harvest generally progressed at or ahead of normal in the Midwestern Districts. Chicago, Cleveland, St. Louis, and Minneapolis reported that corn and soybean yields and quality were good to excellent. However, crop conditions in the southern and western U.S. were decidedly less favorable. Dallas noted that conditions remained very difficult, with the combination of bad weather, high costs, and low prices leaving many agricultural operations in serious financial shape. St. Louis observed that weather conditions in the southern part of its District had adversely affected crop conditions. San Francisco reported that poor yields and a late harvest adversely affected the California industry. With the exception of dairy producers, who were benefitting from low feed costs and near record product prices, the industry was facing low prices that resulted from the squeeze generated by a substantial carryover, large new crop production, and a marked cutback in demand from foreign markets, Asia in particular. Contacts in the Dallas District noted that as many as 25 percent of the region's producers would discontinue production over the next year. Kansas City observed that the downturn in the farm economy was also being felt by rural ""Main Street"" businesses, and farm equipment dealers and manufacturers. Other Natural Resources Activity in the extractive industries continued weak. Kansas City noted that an increase in oil prices in September had resulted in a marginal gain in energy activity; however, declining prices in October were expected to reverse that move. Dallas observed that energy activity continued to decline in that region and that oil directed drilling was near an all-time low. Severe weather conditions in the Gulf of Mexico forced temporary abandonment of some drilling rigs, but damage was less than expected. Minneapolis noted that an increase in steel imports forced the curtailment of activity in some Minnesota iron mines. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2002 -beige_book_pure_text_pre2000,1998,"The information collected for these district reports suggests that all twelve district economies continued to expand in November, despite contraction in export industries. The rate of economic expansion slowed in the Atlanta, Boston, Dallas, Kansas City and St. Louis Districts, was unchanged in the Chicago, Minneapolis, Richmond and San Francisco Districts, and growth strengthened in the New York District. Consumer spending was up, but several districts said sales were weaker than expected. Manufacturing activity was generally softer, mostly due to output declines in export-related industries. Several districts noted that some manufacturers were expecting further reductions in output. Overall, construction activity increased. Stronger consumer confidence and lower interest rates spurred homebuilding, refinancing, and a rebound in commercial construction activity in some areas. Loan demand was strong in most districts, but bankers reported generally tightened credit standards. Low prices and weak exports continued to hammer the natural resource and agricultural industries. Several districts noted sizable losses incurred by many agricultural producers. Labor markets remained tight in nearly all districts, but reports suggest that wage pressures have subsided somewhat. Generally, prices of goods were reported to be steady or falling in nearly all districts, although there were scattered reports of higher prices. Consumer Spending Retail sales increased in most districts, but the tone of these sales reports was mixed. Strong sales were reported in the Kansas City, Minneapolis, New York and Richmond Districts, but most districts referred to sales growth as modest, good or rebounding. Atlanta said retail sales were generally flat, while Boston said sales growth was positive but clearly slowing. Sales of seasonal merchandise and traditional gift items, such as toys, have been the strongest. Some districts noted that heavy homebuilding boosted sales of furniture and home goods. Several districts said sales were weaker than retailers expected. Although a couple of districts noted that some contacts were concerned that consumers might be pulling back, most retailers blamed the unseasonably warm weather, which reduced demand for winter apparel and other products. A particular exception was the Minneapolis District, where retailers said the warm weather was stimulating overall sales. Auto sales were reported to be strong or increasing in the Chicago, Dallas, Kansas City, Minneapolis, Philadelphia, and St. Louis Districts. The Cleveland District, however, said auto sales slowed significantly from their robust summer pace, and dealers were reporting full-to-heavy inventory levels. A few districts said dealers had increased the use of sales incentives and rebates to stimulate sales. Manufacturing Manufacturing activity generally softened, with output declines reported in export-related industries. The Chicago, Cleveland, Dallas, Philadelphia, St. Louis and San Francisco Districts reported weaker manufacturing activity than in the last beige book. The Kansas City and Minneapolis Districts reported unchanged activity, but Richmond reported that manufacturing had rebounded in that District. Industries that were mentioned as cutting back production include agricultural equipment, apparel, chemicals, energy-related equipment, lumber, paper, some high-tech products, and primary metals?particularly steel. There were areas of strength, however. Production of automotive and aircraft parts, construction-related products, furniture and some high-tech products were mentioned as expanding or strong. While production of and new orders for heavy trucks were strong in the Chicago District, there were reports of canceled orders, some with substantial down payments. There was a small rebound for semiconductor firms in the Cleveland District, although business has remained significantly below last year's levels. Tobacco and textile firms in the Richmond District were trimming their workforce levels. Services San Francisco noted an acceleration in the demand for numerous services, while Dallas and Richmond reported a general deceleration. Transportation firms reported that shipments were up in the Dallas, St. Louis and San Francisco Districts. Demand for temporary-service employees was strong in the Cleveland and Richmond Districts and had rebounded from a third quarter drop in the Boston and Dallas Districts. The tourist season was one of the best in recent years in the Minneapolis District, and tourism was boosted by fair weather in the Richmond District. Tourism is moderating in the Boston District. Atlanta reports that tourism has been hard hit in Florida and attributes the decline to fewer visitors from Latin America. Construction and Real Estate Overall, construction activity increased in November. Most districts reported that housing markets and home building remained strong or had strengthened since the last report. Commercial construction activity rebounded in several districts, which contacts attributed to lower interest rates and improved consumer confidence. There were reports that lenders had increased interest rates and credit standards for commercial projects, which hampered commercial markets in some areas, although new projects were still going forward. Banking and Finance Low interest rates were stimulating loan demand in most districts, but bankers had generally tightened standards and credit terms. The demand for loans was strong or increasing in the Chicago, New York, Richmond, St. Louis and San Francisco Districts. In contrast, loan growth had slowed in the Minneapolis District, and Cleveland said that loan demand was soft. Several districts said residential mortgage and refinancing activity was strong or increasing, but noted a slippage in the credit quality of agricultural loans. Labor Markets Labor markets remained tight in nearly all districts. An exception was San Francisco which noted that, in a change from previous survey periods, manufacturers did not report difficulty finding skilled employees. Reports suggest wage pressures have subsided somewhat in many districts, with the exception of the Atlanta District and for some types of workers in the Boston, Chicago and Dallas Districts. Several regions mentioned that the retail industry was having great difficulty finding qualified workers, and wages had increased for these workers in a few markets. A shortage of construction workers was also mentioned by several districts. The Dallas District reported that some contacts in the high-tech sector had turned their focus to retaining workers rather than hiring, partly because firms are focusing more on expanding capital rather than labor. An Atlanta contact also noted that any capital investment made by the firm was to increase efficiency and decrease labor costs. Prices Generally, prices of goods were reported to be steady or falling in nearly all districts. Reports of falling prices were prevalent in the manufacturing sector, with districts mentioning lumber, paper, petrochemicals, plastics, textiles, steel, and automotive and aircraft parts. Prices for some of these products are expected to decline further. Unseasonably warm weather in the United States contributed to falling energy prices and high inventories. Oil prices have fallen to their lowest nominal levels in more than a decade. Agricultural prices are also low, with the exception of milk. There were a few reports of price increases, particularly for construction materials and in some real estate markets. Agriculture and Natural Resources Financial stress in the farm sector was reported by the Dallas, Chicago, Minneapolis, Kansas City and San Francisco Districts. Output reports were mixed, but regions with good production were hurt by low product prices. Hog prices are at their lowest levels in nearly 30 years, bringing large losses and some liquidations. A number of apple orchards in the Pacific Northwest went unpicked because prices were too low to cover production costs. High output and slow sales have resulted in a storage crunch in some areas, with large quantities of grain in temporary storage on the ground, although the Chicago District reports that the situation has not matched earlier concerns. St. Louis reports sharply slower demand for farm machinery and agricultural chemicals. The winter wheat crop was reported to be in good shape, but conditions remained dry in some areas. The energy sector continued to decline, with falling drilling activity and a drop off in demand for oil field machinery and services. Drilling in the Kansas City District was down 10 percent in November, after falling 7 percent in October, while Dallas reports that drilling in Texas is down 38 percent from last year. Contacts in the Dallas District believe oil and gas producers are pulling back hard, in preparation for a prolonged period of low oil prices. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1567 -beige_book_pure_text_pre2000,1999,"According to reports from business contacts in the twelve Federal Reserve districts, most regions are showing solid economic growth overall, despite mixed or weak results for individual sectors in some areas. New York, Philadelphia, and Richmond report a pickup in activity recently, while Boston, Atlanta, Cleveland, Kansas City, and San Francisco indicate that the pace of growth for at least some sectors has slowed. Most districts report generally stable or declining prices for both producers and consumers, but exceptions exist. For example, home prices are rising in some districts, fees for services are said to be up in Dallas, and Boston mentions price increases by selected manufacturers. Energy and most agricultural prices are low by historical standards. Retail discounting just before Christmas and around the turn of the year was more extensive than usual in some areas. Reports from all districts mention labor market tightness, with Atlanta, Chicago, and Richmond recording heightened wage pressures in some sectors and St. Louis citing increased worker ""poaching."" However, the Kansas City, Boston, and San Francisco districts say some extreme shortages have eased. Looking forward, business contacts in most districts remain optimistic about 1999, especially the first half. Philadelphia and Atlanta indicate that some contacts expect business activity to accelerate early this year. However, respondents in most districts expect somewhat slower growth in 1999 than in 1998. Consumer Spending Most districts report that retail sales grew at a moderate pace during the holiday period. By exception, the Kansas City, Philadelphia, and Minneapolis districts experienced brisk sales growth. Respondents in the Boston and Philadelphia districts cite mixed sales results, with some sectors showing strong activity and other sectors experiencing softness. Only in the Atlanta district do contacts report weak holiday sales, up only slightly from a year earlier. Retailers in many districts report a surge in sales late in the season, led by extensive price discounting, which brought inventories to desired levels. Only in the St. Louis district are retail inventories said to be higher than desired. Sales of consumer durables are reportedly strong in every district, with the most robust results in home appliances, home furnishings, consumer electronics, and automobiles. By contrast, unseasonably warm weather in most of December weakened sales of winter apparel and tourist activity in many districts; some districts report a pickup in winter merchandise sales with the advent of cold weather. Discount retailers reportedly profited more from the late buying surge than did department stores. There is little evidence of price pressures at the retail level and most districts say that retail wages are rising moderately. In almost all districts, retailers discounted extensively, but where consumer demand was very strong, less discounting occurred, leaving consumer prices about flat. Manufacturing Many districts report mixed results in manufacturing. On the whole, Dallas notes continuing expansion, and Philadelphia and St. Louis indicate some recent pickup. By contrast, New York and Kansas City report overall declines, while Atlanta indicates that factory activity remains sluggish. The Cleveland and Chicago reports cite strong production and expectations of continued strength in the motor vehicle industry. Respondents in Chicago, St. Louis, and San Francisco indicate positive trends in construction-related manufacturing; in Dallas this sector is flat, although orders for cement remain at a high level. Boston and San Francisco cite medical equipment as a bright spot. Various districts mention depressed revenues for producers of paper, steel, agricultural equipment, and oil-related products. Boston and Dallas report that the semiconductor industry is doing substantially worse than a year ago but seems poised to stabilize or improve in coming months. Almost every district cites examples of manufacturers whose business is being hurt by weak exports, particularly to Asia. In most cases, industrial prices are flat or falling. Steel and paper prices reportedly are under intense downward pressure as a result of import competition (and, in the case of paper, weak demand). Prices for refined petroleum and petroleum derivatives remain low or have fallen, and Dallas reports that full capacity utilization has resulted in ""huge"" inventories of home heating oil. Chicago and Kansas City mention price increases for some construction materials. Manufacturers face disparate labor market conditions across the country, according to district summaries. For instance, Chicago indicates ongoing softness in the demand for manufacturing help, while San Francisco says that filling vacancies remains difficult. On the whole, pay pressures in manufacturing seem unchanged or slightly more moderate than in the recent past. Some workers are experiencing a weaker job market because of recent layoffs, especially in trade-sensitive sectors or regions. Business Services Districts reporting on the business services sector describe an extremely tight labor market. Most districts also report both wage increases and stable selling prices. In Cleveland, New York, and Dallas, temporary employment firms are having difficulty finding workers to fill their orders. Customer service workers, secretaries, and receptionists are in high demand in Cleveland. In Dallas, contacts report strong demand for system programmers and other computer-related workers. Though job growth in business services appears generally strong, some exceptions exist. Contacts at temporary employment firms in Richmond and Chicago note ongoing softness in the manufacturing sector. In both Richmond and San Francisco, service activity, including legal and accounting, was flat. Construction and Real Estate Many districts report unusually high levels of real estate activity in November and December. Residential construction did not experience typical slowdowns in December; unseasonably mild winter weather and favorable demand conditions are cited as explanations. High levels of new home construction are reported by the New York, Cleveland, Richmond, Chicago, St. Louis, Kansas City, Dallas, and San Francisco districts. Chicago and Minneapolis are experiencing very strong markets for new construction, with large increases in the number of permits and new home sales. Commercial development is also robust in the Chicago and San Francisco districts. Labor markets are tight in several districts, with especially short supplies of skilled tradesmen, such as plumbers and electricians. Existing home sales are strong as well. Parts of the Boston, New York, and Chicago districts tallied record sales of existing homes in November or December. Other districts, including Richmond, St. Louis, and San Francisco report high but stable levels of sales. Small or moderate increases in home prices are reported by Boston, New York, Richmond, and St. Louis. The commercial real estate market is moderately active. New York and Richmond report small increases in office rental rates. Office vacancy rates are increasing slightly in the tight Manhattan market, but declining in Minneapolis-St. Paul and the Richmond district. Financial Services Districts reporting on banking activity indicate that demand for commercial loans is mixed. Dallas reports that an earlier slowing in commercial lending has abated, while New York notes a seasonal decline in commercial lending in December. Business lending expanded at a healthy pace in Atlanta. Some tightening of underwriting standards is reported by Philadelphia, San Francisco, and New York. Some banks in Cleveland note adverse effects of the Asian crisis on their industrial customers. Most districts report continued strong demand for residential mortgages. Refinancing activity was especially strong in Atlanta while Philadelphia reports large increases in mortgages to finance newly built homes. Agriculture and Natural Resources Agriculture, oil, and mining continue to face financial pressures. According to contacts in the Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco districts, low prices for cattle, hogs, wheat, feed grains, cotton, and some vegetables have been squeezing profits and, in some cases, failing to cover production costs. Large domestic supplies, falling demand for feed stocks, and reduced exports are reportedly responsible for the low prices. Hog farmers have been particularly hard hit; hog prices in mid-December were at 30-year lows and nearly 60 percent below late 1997 levels, although Chicago reports that hog prices recovered modestly in early January. In general, unless prices improve, many farmers expect to lose money in 1999, and agricultural lenders in the Minneapolis and Kansas City districts express some concern about future loan repayments and borrower solvency. By contrast, dairy farmers are facing the most favorable milk-to-feed-cost ratios in years. Looking ahead, some contacts in the San Francisco district report a pickup in export orders, especially for meat. The late December freeze did little apparent harm to winter crops except in California, where the cold damaged 50 to 70 percent of the citrus crop. Conditions in energy and mining worsened late last year, according to respondents in Atlanta, Minneapolis, Kansas City, and Dallas, despite the cold snap in late December that pushed natural gas prices up slightly. Contacts in Minneapolis, Kansas City, and Dallas report that U.S. rig counts are near post-World War II lows. The rig count has fallen 34 percent, year-over-year, in the Kansas City district and by even larger percentages in Montana and North Dakota. Energy producers have cut exploration, capital spending, and production plans; demand for capital equipment and oil services is deteriorating, and, in the Dallas district, energy sector layoffs are widespread. Contacts in the Minneapolis district also report that copper prices are near shutdown levels at Montana mines, while Minnesota and Michigan iron mines expect to see significant drops in output in 1999 because of increased imports of iron ore and finished steel. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1897 -beige_book_pure_text_pre2000,1999,"The districts reported some further gains in economic activity in January and February, despite weakness in agriculture and a few manufacturing industries. Consumer spending continued to display strength, aided by post-holiday price discounting and mild weather in some regions. Motor vehicle sales increased, led by light trucks, and furniture sales benefited from robust home sales. Manufacturing activity expanded in most districts, although foreign competition and low energy prices depressed textile, apparel, and energy-related industries. Commercial real estate and construction activity, already at a high level, grew at a brisk pace in most districts. Residential construction was strong in most regions. Several districts reported a pickup in business lending, and a few noted that lenders' standards were stable to slightly tighter. Agriculture continued to be plagued by low farm commodity prices, and an increasing number of farmers were under financial stress. Labor markets remained tight. Finding qualified workers has become more difficult in several districts, and reports of faster wage increases were more widespread than in recent months. Prices of most goods remained little changed, and several districts said that businesses remain reluctant to press for price increases. Consumer Spending Retail sales remained strong in the first two months of the year, and most districts reported that activity was substantially higher than a year ago. Inventories were balanced and in line with future sales expectations. Boston, New York, Cleveland, Chicago, and Dallas experienced faster-than-expected sales growth, while in Atlanta, sales were flat or up only slightly from the prior year. In the Philadelphia, Richmond, Chicago, Kansas City, and San Francisco districts, substantial post-holiday price discounting helped move winter merchandise and boost sales, while Cleveland reported strong sales despite unusually small discounts. Healthy housing markets supported strong demand for furniture and home products in Boston, Cleveland, Richmond, Atlanta, Chicago, and Dallas. Apparel sales were lackluster in New York and Richmond but remained strong in Boston, Atlanta, and Chicago. Automobile sales increased in many districts in January and February. Philadelphia, Cleveland, Chicago, Dallas, and San Francisco noted that motor vehicle sales--especially of sport-utility vehicles and light trucks--strengthened compared to December. Auto sales were lagging in Kansas City and flat in Minneapolis. Two districts had upbeat reports on tourism. Resort activity was up from a year ago in the Atlanta District, while in Minneapolis skiing revenues were strong. In the Richmond District, mild weather damped revenues at ski areas but helped tourism in coastal regions. New York noted that their tourism boom had leveled off and that hotel occupancy rates had fallen. Manufacturing The tone of manufacturing improved in most districts, although some industries continued to be hampered by foreign competition. Growth in overall manufacturing activity strengthened in the New York, Philadelphia, Richmond, St. Louis, Minneapolis, and San Francisco districts. In the Boston, Cleveland, Atlanta, Chicago, and Dallas districts, manufacturing was described as mixed, while Kansas City said that its manufacturing sector remained weak. Motor vehicle production moved higher in the Boston, Cleveland, Chicago, and San Francisco districts. In Cleveland and Chicago, heavy truck orders exceeded analysts' expectations in February and led some to raise their sales forecasts for 1999. The Boston and Richmond districts noted strength in the furniture industry, while St. Louis characterized its furniture industry as mixed. Several districts noted that shipments of semiconductors and high- tech equipment increased. Expectations for business conditions in coming months were mostly positive. Boston, for example, reported that most manufacturers' expectations were positive but cautious for 1999. Producers in the Philadelphia and Richmond districts expected orders and output to increase over the next six months. Construction and Real Estate Residential real estate activity remained vigorous in nearly all districts. Increases in housing starts were reported in the New York, Cleveland, Chicago, St. Louis, Minneapolis, and San Francisco districts. Residential construction was particularly active in Ohio, where some of the activity was described as speculative. Also, residential construction was said to be running at a record pace in St. Louis, and in the Minneapolis District, reports of increased residential construction were widespread. In contrast, new home construction eased a bit in the Atlanta, Dallas, and parts of the San Francisco District. Contacts in the Chicago District indicated that existing home sales have slowed since December. Housing sales were described as brisk in the New York, Philadelphia, and Dallas districts. New home purchases were above the previous year's level in Kansas City and builders there were optimistic about the next few months. Home prices moved higher in the New York, Philadelphia, Cleveland, Richmond, and St. Louis districts. In the Cleveland, Richmond, Minneapolis, and Kansas City districts, construction costs increased in recent weeks. Drywall and insulation shortages, as well as tight markets for skilled labor, placed upward pressure on prices. In contrast, San Francisco reported that lower labor costs in Utah and sluggish activity in Oregon had slowed construction cost increases in those areas. Commercial real estate activity remained strong in most districts, although there were a few reports of slowing activity. Competition for commercial space intensified in the Carolinas. Rental rates rose in the New York and Philadelphia districts, and reached record high levels in the San Francisco Bay area. Chicago and Minneapolis noted faster growth in construction activity, particularly of public works projects. Boston reported an uptick in activity around Hartford, Connecticut, with several new construction projects planned. In contrast, Atlanta, Dallas, and San Francisco reported slowdowns in new construction, while activity in the Cleveland District was described as flat. Office leasing was said to be leveling off in Boston, and in the St. Louis District vacancy rates rose in central business districts. Banking and Finance Lenders were upbeat in most districts. Atlanta and San Francisco reported strong overall demand for loans, and New York and Kansas City said that loans or loan demand increased. Several districts noted strength in specific categories of lending: Chicago cited strong demand for consumer and business loans, while Dallas said that auto lending and home equity refinancing showed ""signs of strength."" Overall loan volumes were steady in Philadelphia and Richmond. Higher mortgage rates slowed the pace of lending in Richmond and caused a drop in loan originations and refinancing applications for some banks in the Chicago District. The only district reporting a decline in overall lending was St. Louis, where total loans at a group of large banks was said to be down 2.5 percent since the beginning of the year. Reports on credit quality and delinquency rates were mixed. Chicago said that credit quality improved and New York reported lower delinquency rates for all types of loans. Cleveland, however, noted that many banks reported higher delinquency rates. In addition, automobile dealers in the Cleveland District expressed concerns about the credit worthiness of some new car buyers. San Francisco said that the only report of deteriorating credit quality was from the Oregon coast, where loan delinquencies rose. Labor Markets, Wages, and Prices Labor markets remained taut with higher employment levels reported in nearly all districts. Employers in the Chicago, Minneapolis, Kansas City, and Dallas districts continued to experience difficulty finding qualified workers. Markets for retail labor remained tight across much of the nation, especially in the New York and Kansas City districts, where finding even entry-level workers was said to be difficult. Cleveland also said that retail labor conditions remained tight, but somewhat less so than in December. Retailers in the Richmond District trimmed workers in an effort to control costs. Temporary employment firms faced strong demand for their services in January and February. Boston and Chicago indicated that more businesses had recently turned to temporary employment firms to find workers. Cleveland and Richmond reported that temporary help firms were unable to meet their clients' demand for workers, raising the probability of future wage increases. The demand for contingent workers was mixed in the Dallas District, where requests from telecommunications firms, call centers, and banks remained at high levels, although demand from manufacturing and oil companies slackened. Manufacturing employment was mixed across districts in January and February. St. Louis manufacturers increased their workforces, and plants in the Philadelphia District planned to add workers and lengthen the workweek in coming months. Boston and Richmond reported steady manufacturing employment, while declines were cited by New York, Cleveland, Kansas City, Dallas, and San Francisco. The Boston, Cleveland, Richmond, Chicago, Minneapolis, Kansas City, and Dallas districts reported greater upward wage pressures in January and February. Generally stable wages were reported by New York, Atlanta, and San Francisco. Most districts indicated that higher wage costs were absorbed by businesses. Low commodity prices and a perceived lack of pricing power by firms helped keep prices stable during January and February. Boston, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, and San Francisco reported generally steady prices, while Dallas indicated that price declines outnumbered price increases in that district. Rising lumber and drywall prices were reported by Cleveland and Minneapolis, while insulation and sheetrock prices inched up in the Kansas City District. Escalating health care costs continued to plague employers in the Atlanta, Minneapolis, and San Francisco districts. Agriculture and Natural Resources The weather had mixed impacts on agricultural production across the districts, and low commodity prices affected both agricultural and energy producers. Respondents from Richmond and Minneapolis said that above-normal temperatures generally improved crop and pasture conditions and reduced the need for supplemental feeding of livestock in some areas. Richmond and Kansas City noted, however, that warm weather had accelerated crop development, which increased the potential for frost damage. San Francisco reported ""severe damage"" to its citrus crop from a late December freeze. Agricultural banks in several districts stated that weak commodity prices had caused financial hardship for some farmers. Lenders in the Chicago District experienced a drop off in agricultural loan repayment rates compared to a year ago, and some hog farmers in the Kansas City District liquidated herds earlier than normal. Both districts noted that credit standards for agricultural loans had recently been raised. Contacts in the Dallas District said that a greater number of producers had left the farming business recently. In the energy sector, Minneapolis, Kansas City, and San Francisco reported that falling oil prices were causing some oil and gas wells to be withdrawn from production. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2214 -beige_book_pure_text_pre2000,1999,"District reports indicate that the U.S. economy continues to operate at generally strong levels and to expand at a moderate pace. Consumer spending remains healthy, led by strong motor vehicle sales. Most Districts noted improvements in manufacturing activity; however, weak foreign demand is a problem for some industries in some regions. Both residential and commercial construction remain at high levels, although some slowing in the rate of expansion was noted in several Districts. Reports on agriculture have been mixed, while the outlook in the energy sector has improved. Loan demand is generally described as strong in many areas of the country. Most Districts continue to report tight labor markets, but these conditions are apparently not often translating into higher wages; however, there are reports that non-wage compensation is increasing. Prices generally remain stable, with the exception of oil and gas, and some building materials, which are in short supply. Consumer Spending Most areas of the country experienced year-over-year retail sales gains during March and April. Inventories continue to be balanced. Many Atlanta and Chicago retailers reported that the early Easter holiday shifted purchases into March while weakening April sales results. New York and Dallas reports indicate that sales growth has moderated since January and February, while sales have improved from earlier in the year in the Kansas City and Philadelphia Districts. Retailers in the Cleveland, Dallas, Kansas City and Richmond regions expressed optimism going forward. Motor vehicle sales grew at a healthy pace in most Districts in March and early April. Sales were strong in the Richmond, Kansas City, Chicago, Philadelphia, and San Francisco Districts. In the Philadelphia District, sales of sports cars and luxury models increased, while sales of trucks and sports-utility vehicles held steady, demand was particularly strong for sports-utility vehicles in Dallas. Chicago reports that new and used light vehicle sales were robust. After a strong first quarter, some Cleveland dealers report a slowdown in early April. Tourism and Convention Business The tourism and business travel sector continues to post strong numbers, according to most District reports. Tourist activity remains strong in most of Florida, according to Atlanta, but there is concern about a falloff in international visitors to south Florida. Gaming continues to thrive in Mississippi with large crowds packing a new resort. Richmond reports record attendance at Washington D.C.'s National Cherry Blossom Festival and an increase in popularity of coastal resorts. Inquiries are up substantially from a year ago for destinations in the Minneapolis District. Summer bookings are ahead of schedule in the St. Louis District. Manufacturing Most Districts report recent improvement in the manufacturing sector. Manufacturing is generally strong in Chicago. In Philadelphia, there is a ""broad based improvement"" for some manufacturers. Boston reports that the strongest trends are in medical and automotive equipment suppliers, and most manufacturers contacted expect business to expand in coming months. Recently in Richmond, factory shipments and new orders have risen sharply. Some manufacturers in San Francisco continued to be hampered by international trade conditions, but demand for computers and electronic components remains stable, and production of telecommunications equipment is at high levels. Richmond and Atlanta report growing activity for makers of telecommunications and electronics equipment. Some industries that showed softness earlier in the year, such as industrial machinery components, have improved in Cleveland. Strength in housing markets and commercial construction is boosting orders for building materials in Atlanta, Philadelphia, and Dallas. In Minneapolis, while there are signs of expansion in the factory sector, the weak international economy is curtailing some firms' output. Foreign demand also remains weak for firms in Philadelphia. Chicago and Cleveland report that an inventory overhang has slowed an anticipated recovery in the steel industry. Apparel production and orders remain below those of a year ago in the Atlanta region, and some contacts there are not optimistic about the near-term outlook because of fierce foreign competition. Aerospace production has softened in the Cleveland District. Real Estate and Construction Reports on residential construction varied around the country. The pace of residential building remained brisk in the Cleveland District, with some recent improvement. New York also reported strong recent growth in permits. Home construction is described as ""vigorous"" in California. Minneapolis reported large year-over-year increases in housing permits in some areas. In Atlanta, new home construction was flat to up slightly since late 1998. Some parts of the Kansas City District experienced starts slightly below last year's pace. February permits in the St. Louis region improved from earlier in the year but remained below year-ago levels. Overall, home sales continue at healthy levels and demand remains strong. In the Chicago District, existing home sales remained brisk in most areas, exceeding expectations. Home sales have strengthened since February in the Kansas City region, while Realtors in the Richmond District report significant increases in home sales. Many areas of the St. Louis region are being referred to as a ""sellers market,"" and the New York housing market is described as ""tight."" Boston markets are characterized by strong demand and improving sales. Most Realtors in the Atlanta District said that home sales were mixed in March and flat in early April. Commercial construction continued at strong levels in most Districts, although there were a few reports of slowing activity. In the Atlanta District, continuing high levels of commercial building fell somewhat below the year-ago level. Construction is described as strong in the Chicago District and continues at a brisk pace in the San Francisco District. Occupancy rates stabilized during the first quarter in New York, while leasing costs escalated. Construction is running ahead of last year's levels in the Minneapolis region, while development was recently mixed in markets in the Cleveland District. Financial Services District reports on banking activity indicated that overall loan demand remains fairly strong. The Dallas, Atlanta, and Chicago Districts report that lending growth was robust. Lending increased in the Philadelphia, Kansas City, and New York Districts but declined in the St. Louis District and was mixed across sectors in Cleveland. Consumer credit grew strongly in the Dallas, Atlanta, and Chicago Districts, leveled off in the Cleveland and St. Louis Districts, and decreased slightly in the Kansas City District. Commercial loan demand was strong in the Richmond and Chicago Districts, expanded in the Philadelphia, Kansas City, Atlanta, St. Louis, and New York Districts, and flattened in the Dallas and Cleveland Districts. Mortgage demand grew in Kansas City. Refinancing slowed in the Richmond, Atlanta, and New York Districts. Credit quality was little changed overall. In New York there was some tightening of standards for commercial loans, and delinquency rates fell on consumer loans. The quality of business and consumer loans was good, and consumer delinquencies were down in Chicago. There have been no changes in credit quality, and consumer and commercial delinquencies remain low in Cleveland, and little change in credit standards in the Richmond region. Intense competition may have led to some relaxation in terms and covenants in the commercial sector in Atlanta. Agriculture and Natural Resources Agricultural reports were mixed across the country in March and early April. In Minneapolis, agriculture is still in the doldrums, as depressed livestock, corn, soybean, and wheat prices continue to hurt farmers. While Texas livestock conditions remained mostly good, lack of winter preparation damaged some of the wheat crop. Farmers made good progress on spring tillage and planting in recent weeks reports the Richmond District, and in the Kansas City District the winter wheat crop remains in good shape, and growing conditions continue to be generally favorable. Reports from Chicago indicate that low commodity prices continued to adversely impact farmers as spring plantings began; sales of many agricultural products were hampered by weak export demand in San Francisco. Weather has been favorable for farmers, and crops are reported to be ahead of schedule for the season in the Cleveland District, while St. Louis reports that favorable weather conditions and abundant moisture levels have resulted in a winter wheat crop that is in mostly good-to-excellent condition. The energy sector is stabilizing. Natural gas exploration has picked up recently, but oil exploration still remains weak in the Minneapolis District. In the Dallas District, drilling has not increased in response to higher oil and natural gas prices. After declining in March, the rig count in the Kansas City District began to edge up during the first few weeks in April, and Atlanta reports that rising oil and gas prices have improved the outlook for Louisiana companies linked to the oil and gas industry. Wages and Prices Most Districts continue to report tight labor markets, but there were no reports of significant pickup in wage increases. Some reports, however, indicate that firms are increasing non-wage compensation for higher-level personnel and are using hiring and retention bonuses to attract and hold on to skilled workers. In Chicago, concerns about labor shortages have become more pronounced. Shortages of qualified truck drivers have slowed shipping growth in Atlanta, St. Louis, and Chicago. In Minneapolis and New York, labor shortages have forced manufacturing plants to move to other regions. Tight labor markets in St. Louis are affecting many firms' plans for expansion or relocation, but wage pressures remain subdued. Labor shortages are adversely affecting builders in the Atlanta and Dallas Districts. Despite continued remarks noting tight labor markets in St. Louis, comments about wage pressures from contacts there have been ""noticeably lacking."" Most prices remain stable. Building materials prices, especially for sheetrock, are increasing in the Atlanta, Kansas City, Cleveland, Minneapolis, and Boston regions. Contracted services costs have increased in New York. Low commodity prices in Minneapolis persist in depressing farm income and are curbing metal mining. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1982 -beige_book_pure_text_pre2000,1999,"District reports indicate that the U.S. economy remains strong, with gains in activity widespread. Retail activity in most districts has shown little sign of slowing, and consumers remain upbeat about the economy. Home furnishings and motor vehicles sold particularly well in April and May. Manufacturing activity continues to improve in most areas from the sluggish conditions of the past year and a half. Production of such items as electronics, machinery, heavy trucks, and construction equipment has been especially strong, although some sectors, such as steel and apparel, continue to face stiff competition from foreign producers. Construction continues to grow at a brisk pace throughout the nation, spurred by strong home sales in most parts of the country. Shortages of labor and materials, however, have resulted in higher building costs in some districts. Lending activity remains strong in most districts despite a slowdown in refinancings due to slightly higher mortgage rates. In the agricultural economy, growing and planting conditions have been mixed. There is little optimism about farm incomes in 1999, as most agricultural commodity prices remain low. Energy activity in most regions has been slow to react to the recent increases in oil prices, although expectations of a solid recovery are high. Labor markets remain very tight in almost all districts, with increased reports of upward pressure on wages in many parts of the country. There have been some reports that labor supply constraints are impeding employment growth in many sectors. Prices, however, with the exception of several construction materials, remain well behaved. Consumer Spending The strong retail activity in most districts earlier in the year showed almost no signs of easing in April and May, as consumers remained upbeat about the economy. The only district reporting weaker activity was Kansas City, where sales have edged down but are still above year-ago levels. Retailers in the Cleveland district report especially strong sales numbers for May, particularly for specialty apparel items. The hottest selling products in most districts have been home furnishings and appliances, in part reflecting continuing strength in home sales and housing construction. Stores in metropolitan areas of the Dallas and Minneapolis districts posted vigorous sales, but rural merchants in these districts continue to suffer as a result of a weak agricultural sector. Airline and cruise bookings in the Atlanta district remain strong even as prices have edged up, and advance summer bookings for south Florida resorts are higher than a year ago. Labor shortages are a major concern for many retailers, especially for entry-level workers and sales associates. In the Cleveland district, virtually all companies operating amusement parks have been severely understaffed, with some having to cut back operations as a result. Stores in several districts increased their inventories in May in anticipation of robust sales throughout the summer. Automobile sales increased in most districts in April and May due largely to the continued popularity of light trucks and sports-utility vehicles. Inventories of new trucks have been tight in most places, particularly in the St. Louis and Kansas City districts. Auto dealers in the Chicago district have been able to push through modest price increases. Manufacturing Manufacturing activity in most districts has continued to improve from the sluggish conditions experienced in the recent past. Boston, Atlanta, and Dallas, however, report mixed results, and New York notes some slowing in factory activity. Strong new orders, production, and shipments were reported for many manufacturing products, such as heavy trucks, electronic equipment, machinery, and food and biotechnology products. Brisk demand for construction equipment and building materials has continued across the nation, as construction activity remains strong. Similarly, a strong housing market continues to fuel the demand for appliances. San Francisco reports that increased demand from East Asia has helped paper and pulp processors in the Pacific Northwest. Some sectors continue to report strong foreign competition, however. For example, activity at steel mills remains weak and many apparel producers continue to struggle with competition from cheap imports. Manufacturers in several regions have expressed concern about labor availability and continue to report difficulties in hiring skilled technical workers, especially in the information technology area. As a result of a shortage of qualified workers, not all of the increase in demand for manufactured goods in the St. Louis district has been met. Additionally, labor costs have become a major concern for most contacts in that district. On a positive note, many districts continue to report healthy productivity gains, with Richmond noting that several manufacturers are experiencing record productivity, in part because of increased capital spending. Construction and Real Estate Construction activity and real estate markets remain robust in most parts of the country following an exceptional first quarter. Only New York, Atlanta, and Kansas City appear to be experiencing slightly weaker building activity, but in all three districts activity is still well above year-ago levels. Sales of new and existing homes remain very strong in Chicago and St. Louis, with a shortage of available houses leading to rising prices and quick sales. Construction in the Kansas City district is expected to pick up considerably over the summer months as Kansas and Oklahoma rebuild from tornadoes that destroyed or severely damaged more than 10,000 homes and businesses. Commercial real estate markets have improved in most districts. Demand for office space in downtown Boston continues to increase. Retail, office, and warehouse leasing commitments in the Richmond district have been stronger as well, especially in Virginia and the Carolinas. In Chicago, the retail segment has been particularly vibrant. Builders in most districts continue to complain of substantial shortages of labor, especially for framers. Several construction materials, particularly sheetrock, also remain in short supply. The shortages have created rising construction costs, and project schedules in some districts have been affected, but builders in general remain optimistic about the future. Banking and Finance Demand for loans has remained strong in most districts, although some weakness in commercial loan demand has been seen in New York and Atlanta. Several districts report strong competition among banks for high-quality commercial customers, with some indication in Chicago that this may be affecting lending standards. In most districts, however, lending standards remain generally unchanged. Higher mortgage rates appear to have slowed refinancing activity across the country, but real estate loan origination and consumer lending remain strong overall. Chicago, New York, and Philadelphia report some signs of weakness on the consumer side, however. Loan delinquency rates have shown some improvement across districts. Agriculture, Energy, and Natural Resources In the agricultural sector, growing and planting conditions have been mixed across districts. Cleveland, Chicago, St. Louis, and Dallas report planting has been generally at or ahead of schedule. Dry conditions have hindered planting and crop development in some areas of the Richmond and Cleveland districts, however, while Minneapolis has seen some problems caused by wet fields. There is little optimism about farm incomes across districts, as commodity prices remain low. As a result, agricultural credit markets are somewhat stressed, with Minneapolis reporting increases in farm liquidations and bankruptcies and Chicago reporting a general slowing in agricultural loan repayments. Oil exploration has been slow to react to price increases in most areas, but expectations of a solid recovery are high if the price increase is sustained. Some increases in activity have been seen recently, such as in the Kansas City district, but rig counts remain well below year-ago levels. Labor Markets, Wages, and Prices Labor markets were extremely tight last month in almost all districts, with no signs of easing in the foreseeable future. Despite the summer influx of student workers, temporary employment firms in many districts have been unable to fill all their job openings. Employers in Cleveland are hiring temporary workers in hopes they will become permanent employees after a short trial period. Richmond, Chicago, and St. Louis note that severe labor supply constraints are hampering employment growth in many sectors. Although labor shortages are reported in almost all sectors, some skilled workers have been in especially short supply and many employers have broadened their searches from local to regional and national levels. Information technology workers, in particular, are very difficult to find. As an employment agent in Northern Virginia put it: ""Anyone that can operate a personal computer can get a job."" Skilled tradesmen in the construction sector are also extremely scarce, especially in urban areas where the building boom continues. The Minneapolis district reports that builders in Duluth imported 200 trade workers due to the lack of available local workers. Persistently tight labor markets have resulted in many reports of increased wage pressures, especially for some specific industries and skilled occupations. Chicago, St. Louis, and Richmond report upward wage pressures in almost all sectors, while other districts report more scattered wage increases. For example, retailers in the Boston district report a recent increase in the use of higher wages as a recruiting tool, while a large retail chain in New York notes increased wage pressures primarily for entry-level positions. In Dallas, wages have risen for truckers, secretaries, legal assistants, and workers with technical skills. Similarly, wage changes in San Francisco have been generally limited, but increases were noted for some types of workers. Cleveland and Philadelphia report that wage pressures have generally been held in check, but rising benefits costs have become more common. The Kansas City district is an exception, as wage pressures there appear to have eased somewhat from previous surveys. Many districts suggest that employers have continued to be creative in finding and recruiting additional labor. Employers in the Atlanta district, for example, appear to be using more bonuses and incentives as part of total labor compensation, and many companies are using more part-time workers and consultants as well as allowing employees to work at home. Some firms in the Boston district are avoiding higher labor costs for new hires by outsourcing and changing work assignments internally. Prices remain generally subdued, but many districts report pockets of higher prices for some specific sectors and goods. At the retail level, price increases have been marginal and infrequent. Retailers indicate that stiff competition continues to restrain price increases. Dallas, for example, reports that smaller markdowns have resulted in a slight increase in average selling prices and Kansas City notes that retail prices continue to edge up. Chicago suggests there have been a few signs that consumer resistance to price increases has softened somewhat. In contrast, retailers in the New York district report that selling prices and merchandise costs have been flat to slightly down. Prices for manufacturing goods and materials have held steady, with modest increases for a few items, such as cardboard, packaging materials, metals, and ethylene-based petrochemicals. The big exception has been building materials, especially sheetrock, which continues to experience substantial price increases. Housing prices and commercial rental rates have also increased in several districts. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2186 -beige_book_pure_text_pre2000,1999,"District reports indicate continued strength in economic activity, though there are widespread reports of supply constraints. Retail sales, which had been robust in the second quarter, decelerated somewhat in July, in some cases due to low inventories of clearance merchandise. Manufacturing activity continues to expand in most parts of the country, though a few districts indicate some softening. Performance has varied substantially by industry: electronics, heavy trucks and construction materials continue to exhibit strength, while textiles and metals remain weak. Residential construction and housing markets remain strong in most districts, though in some areas shortages of materials, labor, and available land have constrained home construction, delayed projects and boosted costs. Commercial real estate markets remain tight in most districts; building is mixed but generally strong. Tourism has generally been strong, especially in the Middle and South Atlantic seaboard regions. Loan demand is steady or rising in most districts. Although there has been some decline in residential mortgage lending, and especially refinancing activity, demand for commercial and industrial loans, as well as consumer (largely auto) loans, continues to grow briskly. Expectations of large Midwest harvests have depressed grain prices, but drought conditions are hurting crops in the eastern part of the country. The energy sector has shown some signs of improvement in recent weeks, as oil prices have continued to climb, but the level of drilling activity remains sluggish and lower than a year ago. Widespread labor shortages persist in virtually every district, but there have been only scattered reports of an actual acceleration in wages. Final prices of goods and services remain relatively stable for the most part. There are some reports of accelerating prices--largely related to home construction--but there is no evidence of any broad-based pickup in consumer price inflation. Consumer Spending July retail sales were characterized as strong in most districts, but the pace of growth appears to have eased since the last report. While sales continue to run higher than a year ago in all districts, activity has slowed somewhat in New York and Dallas--partly due to low clearance inventories--and has held steady in Kansas City. Overall, retail inventories are generally at desired levels. However, lean stocks of summer merchandise, most notably air conditioners, are reported in New York and Philadelphia. Contacts in Philadelphia, Cleveland, Richmond, Kansas City, and San Francisco express optimism that consumer spending will continue to be strong in the months ahead. Automobile sales continue at high levels in most parts of the country. In July, robust vehicle sales are reported in Cleveland, Richmond, Minneapolis, Dallas, and San Francisco. Dealers in Cleveland report low inventories, with certain models sold out. However, auto dealers in Philadelphia and Chicago say that sales slowed, following very brisk activity in June. Manufacturing Overall, manufacturing activity has been expanding in most districts, though Atlanta, Chicago, and Kansas City report some slowing. Manufacturing-sector performance varied considerably by industry. Output of industrial equipment and home-construction materials has been expanding briskly across most of the country, though there are scattered indications that growth is being limited by shortages of raw materials and labor. Boston, Cleveland, Dallas, and San Francisco report strong demand for electronic (computer/telecommunications) equipment; Cleveland and Chicago indicate strong orders for heavy trucks. There are also reports of strength in medical equipment (Boston), furniture (Richmond), and chemicals (Dallas). Weak or declining activity is reported in metals industries in Philadelphia, Chicago, and San Francisco, and in the textile industry in Philadelphia, Richmond, and Atlanta. Other reports of weakness come from makers of machine tools in Boston and San Francisco, farm equipment in Cleveland and Chicago, and commercial aircraft in St. Louis and San Francisco. Manufacturers in the west--Dallas and San Francisco--report some pickup in exports to Asia; producers in the Boston district see only scattered signs of improvement in Asian markets. Real Estate and Construction Housing activity continues at a vigorous pace in most districts, though supply constraints are limiting growth in many areas. Boston, New York, Philadelphia, Cleveland, St. Louis, and Minneapolis indicate persistent strength in residential real estate. Chicago, Kansas City, Dallas, and San Francisco report that housing activity slowed somewhat in July. New York and Richmond indicate that the recent rise in mortgage rates has not adversely affected the housing market and may have prompted some buyers to act. Shortages of materials, labor and land are hindering construction and delaying projects in some areas. Land shortages are cited in New York and Atlanta. Labor shortages are indicated in New York, St. Louis, Chicago, Dallas, and San Francisco--mainly for skilled tradespeople, such as carpenters, framers, and masons. Many districts also report problems in obtaining key construction materials, most notably drywall, insulation and bricks. Home sales in Boston, New York and Atlanta are being limited by construction bottlenecks, combined with low inventories of existing homes. Commercial real estate markets remain tight in most areas. St. Louis indicates a pickup in activity, while New York, Richmond, Chicago, Atlanta, Dallas, and San Francisco report that conditions are steady and strong. However, some contacts in the Cleveland and Dallas districts, though pleased with current conditions, express concern that vacancy rates have begun to rise. Tourism and Services Tourism has generally been very strong. Philadelphia, Richmond, and Atlanta note that summer resort areas are having an exceptionally good year; New York reports that hotel business has held steady at a high level through the first half of 1999. Boston and San Francisco cite a decline in international visitors from Asia and (in Boston's case) from Canada. Districts reporting on other non-retail service industries--Richmond, Dallas, and San Francisco--indicate that they are in good shape. Financial Services Banks in most districts report that overall loan demand is steady or growing, despite a dip in demand for residential mortgages. Atlanta, Chicago, and Kansas City indicate increasing loan demand, while New York, Philadelphia, Cleveland and Dallas report that demand is flat, on balance. By contrast, St. Louis district banks report declining loan demand, though this is largely attributed to a loss of share by banks in the mortgage market. Strong growth in commercial and industrial loans is reported from Philadelphia, Richmond, Atlanta, Chicago, St. Louis, and Kansas City. Consumer lending is reported to be strengthening in the Atlanta, St. Louis, Kansas City and Dallas districts but flat in New York and Cleveland. However, residential mortgage lending is generally weaker in Richmond and Dallas, as well as St. Louis. Declines in refinancing activity are reported in New York, Richmond, Chicago, and Kansas City. Credit quality appears to have improved, on balance, since the last report. New York, Cleveland and Chicago note an improvement in overall credit quality, while Atlanta and San Francisco indicate little or no change. Lending standards are mostly unchanged, though New York and Cleveland report some tightening in standards. Agriculture, Mining, Natural Resources Hot and dry weather in the eastern part of the country has caused some crop damage, but crops are generally reported to be in good shape in the interior regions. Philadelphia and Richmond report that drought conditions are severely hurting this year's corn and soybean crops. Cleveland, Chicago, and St. Louis report that the corn and soybean crops are generally in good condition, but pasture conditions are poor. Expectations of a large harvest have depressed prices, hurting farmers' incomes. In Minneapolis, Kansas City and San Francisco, wet weather has hindered output of some crops. The recent rise in oil prices has boosted activity in the Kansas City, Dallas, Minneapolis and San Francisco districts, though rig counts are still said to be well below last year's levels. Dallas reports that most of the increase in activity is in small, low-risk projects, while major projects (off-shore and foreign drilling) continue to trend down. Labor Markets, Wages, Inflation Virtually all districts report widespread labor shortages, but most indicate that overall wage growth remains subdued. There are severe shortages of skilled construction workers--particularly carpenters and brick masons--in most districts. Excess demand for computer and information technology workers is reported in Cleveland, Richmond, Atlanta, Kansas City and Dallas; however, Chicago notes some slackening in demand for Y2K staff. Retailers, including restaurants, report labor shortages in New York, Philadelphia, Richmond and Kansas City. San Francisco notes a shortage of seasonal agricultural workers. Despite the labor shortages, none of the districts reports evidence of any broad-based acceleration in wages. Still, there were scattered reports of accelerating or rapidly-rising wages--in biotechnology (Boston), construction (New York, Kansas City, San Francisco), retail (Philadelphia, Richmond), health-care (Atlanta), and transportation (Minneapolis). In addition, strong wage increases for office workers with technical skills are reported in Chicago and Kansas City. Aside from boosting wages, businesses are dealing with labor shortages in various ways: retailers in Boston are expanding performance-based compensation; businesses in Cleveland are providing job security commitments; truckers in St. Louis and builders in Kansas City are increasingly recruiting internationally and (in the latter case) using signing bonuses more than in the past. Consumer prices remain relatively stable, despite some apparent intensification in input price pressures. Manufacturers in New York, Philadelphia, and Chicago indicate a general increase in input costs, although those in Boston report flat to declining input prices. A number of districts indicate an acceleration in prices for certain materials--particularly construction materials such as drywall, lumber, bricks and insulation materials, as well as energy and transportation costs. Also, steel and paper prices, though low, have turned up recently. Agriculture and livestock prices, however, remain weak and are mostly down from a year ago. There is no evidence of any broad-based acceleration in prices of finished goods and services. Retailers in Boston, New York, Atlanta, Chicago, Minneapolis, and San Francisco report stable prices, while those in Philadelphia, Richmond, Kansas City, and Dallas indicate modest increases. Hotel room rates have risen noticeably in Boston but have leveled off in New York following sharp rises last year. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2096 -beige_book_pure_text_pre2000,1999,"All district economies continue to exhibit overall strength, with most experiencing moderate-to-brisk rates of growth. Retail sales are generally up in most districts, with back-to-school sales meeting or exceeding retailers' expectations in many cases. Vehicle sales remain robust, although some dealers are unable to meet demand for popular models. Industrial activity is on the rise in most parts of the country, with orders and production both up. In some cases, resurgent Asian demand is contributing to this rise in activity. Although commentary from most district reports continues to highlight widespread labor shortages, several districts have noted a slackening in the demand for labor. There are few reports of acceleration in nominal wages and salaries, although some districts note a substantial upswing in the cost of health-care benefits. While price pressures at the consumer level remain mostly calm, numerous districts report significant increases in some materials prices. Home sales and construction remain elevated, but many districts have begun noticing a slowdown. Commercial real estate markets are tight in many districts. Loan demand, except for residential real estate loans, is well-sustained across districts. Credit quality and standards remain unchanged, for the most part. The recent drought has worsened crop and livestock conditions in the East and parts of the Midwest. Consumer Spending Most districts report that retail sales are up from their year-ago levels. Back-to-school sales, in particular, either met or exceeded expectations in the Boston, Chicago, Philadelphia, Richmond and St. Louis districts. The Atlanta district, however, reports declining sales from a year earlier, while the Kansas City and New York districts indicate mixed or flat sales. The San Francisco district notes that back-to-school shoppers remained cautious this year, searching for bargains and delaying purchases until Labor Day sales arrived. Apparel sales have been brisk in the Atlanta, Cleveland, Kansas City, Philadelphia and St. Louis districts, but not in the Chicago district or parts of the New York district. The Minneapolis district reports strong sales of high-end electronics in Minnesota. Hot weather hampered sales of lawn-and-garden goods in the New York, Richmond and St. Louis districts. Most districts report that retailers' inventories are at desired levels, although some contacts in the Cleveland district note that their inventories are a bit lean. On the other hand, some contacts in the Kansas City district believe that their inventories are too high. Auto sales, particularly of new vehicles, remain strong in most parts of the country. The Cleveland, Dallas, Kansas City and St. Louis districts note substantial gains in auto sales, while the Richmond district reports a weakening of sales, due mostly to hot weather. Consequently, dealer inventories in the Richmond district are up. On the other hand, some dealers in the Cleveland, Philadelphia and St. Louis districts are still having difficulty stocking enough popular models to meet demand; inventories are not a concern for dealers in the Kansas City district. Manufacturing Manufacturing activity appears to have accelerated in almost every district. The Richmond district, however, reports some moderation in the rate of growth. The Kansas City district notes that its contacts are experiencing their highest capacity-utilization levels in a year. The Chicago, Cleveland and St. Louis districts report solid demand for steel and other metal products, particularly from the auto industry. The Boston, Dallas and Minneapolis districts note strong demand for semiconductors and computer components. The San Francisco district reports that improving demand from East Asia has boosted orders in the electrical equipment, wood, chemicals, processed food and industrial machinery industries. Industrial machinery production also accelerated in the Atlanta district and rebounded in the Boston district. The production of apparel appears to be down across the board. Orders for heavy trucks and construction and agricultural equipment have weakened at Chicago district firms. While the tobacco industry in the St. Louis district is experiencing a slackening in domestic demand, tobacco shipments from Richmond district firms remain strong. The commercial aerospace industries in the Atlanta and San Francisco districts report weakening demand. The Philadelphia district notes that manufacturing inventories are at desired levels. The Atlanta district comments that a maker of batteries and flashlights expects heavy demand around year-end and, therefore, plans to increase its inventory accordingly. Cleveland district contacts report no inventory stockpiling, while San Francisco district contacts have seen their excess inventories drawn down recently. Contacts in the Kansas City district plan to trim inventories soon because they are getting too high. Labor Markets For the most part, the theme of this report is unchanged from recent reports: The demand for labor continues to outstrip the readily available supply of labor in most areas. The Atlanta, Chicago, Minneapolis and Philadelphia districts note that tight labor markets remain the norm. Retailers in the Boston, Kansas City and New York districts reported that they cannot find enough staff to fill vacancies. Manufacturers in the Boston and St. Louis districts express the same concern. A couple of districts continue to highlight the construction industry's ongoing labor supply problems, although the number of these reports has lessened somewhat. Demand at temporary employment agencies remains on the upswing in the Boston, Dallas and Richmond districts, while remaining steady in the Cleveland district. In contrast, a few districts have noticed a slight easing of labor market tightness. The Richmond district reports that manufacturing employment and hours have grown at a slower pace than they had previously. The completion of Y2K-compliance work in some industries in the Dallas district has reduced the demand for technology workers, while weakness in the San Francisco district's commercial aircraft industry has led to layoffs at major producers and suppliers. Wages and Prices On balance, wage and salary increases remain within the range noted in previous reports. Wages at manufacturing firms are reportedly picking up in the Minneapolis, Philadelphia and Richmond districts, remaining steady in the St. Louis district, and easing somewhat in the Kansas City district. The Boston and Minneapolis districts note that wages at retail establishments are growing between 3 and 5 percent; in the Kansas City district, retailers report feeling increased wage pressures. The Cleveland and Dallas districts note accelerating wage growth, particularly among some classes of temporary workers. The Atlanta and Minneapolis districts report sharp increases in the employer costs of health-care benefits. The majority of district reports indicate that price pressures at the retail level are not readily apparent. Where they are apparent, they are categorized as temperate. Prices pressures at the wholesale level appear to be somewhat greater. The Chicago, Cleveland and Richmond districts report price increases at manufacturers, with steel makers in the Cleveland district announcing hikes of between 5 and 7 percent. The Atlanta, Cleveland, Kansas City, Philadelphia and Richmond districts all report that higher raw materials costs are evident. The Dallas district adds that construction costs (both labor and materials) are up between 5 and 8 percent so far this year. The San Francisco district, however, notes that prices for manufacturers' inputs have been ""stable or declining."" Real Estate and Construction The consensus across most districts is that while home sales remain elevated, some slowing has recently become apparent in both sales and construction. Home sales have already weakened somewhat in the Atlanta and Chicago districts. The New York district, however, reports that real estate activity in New Jersey is increasingly being hampered by supply constraints--low inventories of existing homes and a shortage of usable land for new construction. The San Francisco district notes that real estate markets in Southern California, the San Francisco Bay Area and Washington's Puget Sound region are robust; elsewhere in the district, they have slowed. Just about all districts cite higher mortgage rates as a primary reason for the recent slowing. Other reasons include rising building costs and market saturation. Many districts are still reporting labor and/or material shortages, which are delaying construction. The Richmond district, however, notes that fewer complaints about labor or material shortages were received, perhaps signaling an easing in the pace of residential construction. Still, it seems that numbers of sales and new construction permits/starts in most districts are ahead of year-ago levels. Commercial real estate markets are tight in the Boston and Philadelphia districts, although real estate agents in the Philadelphia district believe that demand there may be peaking. The Cleveland district reports that nonresidential market conditions remain at a high level. Speculative nonresidential building is up in the St. Louis district. Apartment construction is strong in parts of South Dakota because of low vacancy rates. Banking and Finance Despite a drop in demand for mortgage and home-refinance loans, lending activity remains relatively strong. Only the Philadelphia and St. Louis districts report weaker overall loan demand. The strength of business lending varies by district, with only the Chicago, Cleveland, New York, Philadelphia and Richmond districts citing growth in the commercial-and-industrial loan category. Consumer lending has strengthened further in the Atlanta, Dallas and Kansas City districts, has weakened in the Philadelphia and St. Louis districts, and has remained unchanged in the Richmond district. The Dallas and Philadelphia districts add that residential real estate lending remains healthy. The Cleveland and St. Louis districts report that competition for deposits is strong, while banks in the Dallas district report steady loan growth. Banks in the Kansas City and New York districts have recently tightened credit standards; banks in other districts report no change in standards. Outside of a concern about agricultural loan performance, credit quality remains good. Agriculture and Natural Resources Drought conditions in much of the East and parts of the Midwest have taken their toll on both crops and livestock. The Chicago, Cleveland, Richmond and St. Louis districts all indicate that their corn and soybean crops are in poor-to-fair condition. The Cleveland district notes that the tobacco crop is also suffering. The rice and cotton crops in the St. Louis district are in good condition, though. The San Francisco district reports that unseasonable weather has lowered the quality and yield of many of its grains, fruits and vegetables. In contrast, the Dallas, Kansas City and Minneapolis districts report favorable agricultural conditions, with their corn and soybean crops in good-to-excellent condition and with above-average yields expected. Livestock in the Cleveland, Dallas and Richmond districts are in poor-to-fair condition. Many farmers in the Cleveland and Richmond districts have begun feeding hay to their herds because of poor pasture conditions. Some farmers in the Cleveland district have even started paring down the sizes of herds. In the Kansas City district, however, low feed costs, stronger cattle prices and increasing profits are leading to a rebuilding of herds. Strong demand for natural gas has increased prices and drilling activity in the Dallas and Kansas City districts. With the price of oil also on the rise, the number of rigs on-line in the Kansas City district has been rising. In the Minneapolis district, though, the rig count is below year-ago levels. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",2226 -beige_book_pure_text_pre2000,1999,"Most districts continue to report strong economic growth but some slowing is noted. Manufacturing activity continues to advance in almost all districts and for most industries. Although four districts report some slowing in consumer outlays, spending generally remains strong and most retailers are expecting increases in holiday sales from last year. Real estate and construction are still robust in most districts, though there are signs of some moderation in activity. The mining and energy industries are showing signs of recharging. Overall loan demand remains brisk, although a softening is noted by some districts in consumer loan demand. Labor markets remain tight across the country, with numerous districts reporting continued difficulty in finding and retaining qualified workers. Many districts report a pickup in wage increases, but overall prices remain stable with some notable exceptions: Increases in prices were noted for some manufacturing inputs, health care, memory chips and construction materials. By contrast, low prices continue to weigh heavily on some important segments of the agricultural sector. Consumer Spending Many districts report continued steady to strong retail spending, while the Chicago, Dallas, Kansas City and New York districts mention weakening sales. The Minneapolis and San Francisco districts report sizable increases in sales; in the Philadelphia district, several stores experienced double-digit increases over last year. Sales growth in the Boston district is generally exceeding retailers' expectations. But retailers in the Kansas City district report a decline in sales, following flat activity in the three previous surveys. Most districts note that retailers expect strong consumer demand as the holiday season approaches. Auto dealers report solid sales in the Dallas, Kansas City and Philadelphia districts, with weakening demand indicated in the Chicago district. In the Cleveland district, auto sales slowed in October after a record summer. Some dealers continue to have short inventories of some popular models. Fall tourism is steady compared to a year earlier in the Minneapolis district. Hurricane Floyd depressed tourism at coastal destinations in the Richmond district, but inland mountain resorts report gains. Manufacturing Nearly all districts report that manufacturing activity is growing. The Boston district reports most suppliers to the semiconductor, telecommunications, biotech and construction industries are experiencing double-digit increases in business. Several manufacturers of industrial products and chemicals in the Philadelphia district note increases in orders from customers in Asia. The Richmond district reports that shipments and capacity utilization levels are increasing; production was particularly strong in printing and publishing. Shipyards in Louisiana are operating at full capacity, according to the Atlanta district. The Chicago district reports that automobile production was steady at very high levels in recent months. Strong growth in sales of plastics and building materials is reported by the St. Louis district. The Dallas district reports a slight increase in manufacturing activity. The San Francisco district reports expansions in petrochemical production, paper processing, steel manufacturing and high-technology equipment manufacturing. Kansas City is the only district reporting a slowing in overall manufacturing activity. In addition, the Boston district notes that production of industrial machinery and machine tools remains below year-earlier levels. Labor Markets Labor markets remain tight across most of the country. The Cleveland, Dallas, New York and Richmond districts report strong demand for temporary workers. In New York, ""effectively, there are no more temps."" The New York district attributes a slowing in payroll employment to labor shortages, and the Chicago district says its labor markets remain tighter than the nation as a whole. In the Atlanta district, excessive overtime to offset labor shortages is causing morale and productivity problems. In the Dallas district, retailers' entry-level turnover is 200 percent to 300 percent a year. Throughout the San Francisco district, finding and keeping qualified entry-level and skilled workers is a challenge. Some districts, however, detect an easing in selected labor markets. The Dallas and New York districts indicate some letup in requests for computer specialists and IT-related jobs as Y2K-preparation work is completed. The Philadelphia district states hospitals and health services firms have laid off workers recently, and the Chicago and Kansas City districts disclose some softening in requests for manufacturing workers. Wages and Prices In most districts, the persistent tightness in labor markets continues to put upward pressure on wage increases. Boston reports that labor costs may be accelerating somewhat, with manufacturers offering attractive recruitment packages and slightly higher wage increases while retailers engage in more raiding. The Chicago, Minneapolis, Richmond and St. Louis districts report accelerating wages as well. There are few signs of a general pickup in prices of final goods and services. Several districts report few price changes, and in the Boston, Kansas City and New York districts retail prices are either steady or declining, despite increases in the cost of manufacturing inputs. Moreover, several districts report selected price increases: health care costs (Atlanta, Chicago and Minneapolis), memory chips (Dallas), paper (Minneapolis) and construction materials (Atlanta and Minneapolis). In contrast, the Dallas district reports the prices of lumber and wood products and cement have declined recently. Real Estate and Construction Real estate and construction remain robust in most districts, though indications of some slowing have surfaced recently. Residential real estate activity is at high levels in the Richmond and San Francisco districts, although the pace of growth is slowing. In the Boston, Chicago and Kansas City districts recent interest rate increases have curbed home sales. Existing home sales rose just 1 percent in September in New York State, but prices increased 6 percent from a year earlier. In the Kansas City district building activity improved following several months of decline, but was flat compared with a year ago. Housing units authorized are above year-earlier levels in the Minneapolis and St. Louis districts. The commercial real estate markets are considered tight in several districts and commercial construction is increasing. The Chicago, New York and Richmond districts report low office vacancy rates. The pace of construction is slightly ahead of a year ago in the Atlanta district, but the level of activity was uneven across the district. Most districts report that residential and nonresidential construction is constrained by labor shortages and higher prices on some construction supplies. The St. Louis district notes that shortages of workers and certain materials will continue to delay some projects. Banking and Finance Most districts report increases in overall loan demand, although four districts indicate some easing in the demand for consumer loans. The Cleveland, New York, Richmond and Chicago districts report a softening in consumer loan demand. Only the New York district experienced weakness in overall loan demand. Commercial lending activity increased in the Philadelphia, Richmond, Chicago and Kansas City districts. The Richmond district reports that commercial bank lending is driven by continued business expansion and, in some cases, the anticipation of higher interest rates. Consumer lending has strengthened in the Philadelphia, Atlanta, St. Louis and Kansas City districts. Credit quality is good in the Atlanta district, and bankruptcies continue to gradually decline. The San Francisco district reports continued solid credit quality, while in the St. Louis district many bankers are becoming increasingly concerned about delinquency rates and have upped their loan loss reserves accordingly. The New York district reports tighter credit standards for all categories of loans. Agriculture and Natural Resources Most of the country is having a good harvest. The Chicago, Cleveland, Kansas City and Minneapolis districts all report good harvest conditions for their crops. Record soybean and sugar beet crops are projected for some states. Drought has reduced yields in the Dallas, Richmond and St. Louis districts, but hurricanes brought much-needed rain to most areas of the East Coast and too much rain in some areas. The San Francisco district reports mixed agricultural conditions, with good conditions for fruits and rice, and poor conditions for vegetable and grain producers. Farm income, however, remains depressed as dismal agricultural prices are offsetting the bumper crop. Conditions for dairy producers remain strong, report the Cleveland and San Francisco districts. Meanwhile, cattle and swine herds have benefited from low feed prices. The Kansas City and San Francisco districts report favorable conditions for cattle ranchers; however, the Chicago district reports a sharp decline in the size of the swine breeding herd. The Dallas district reports most pastures had limited forage for livestock, and supplemental feeding and herd reduction continued in most areas. Oil exploration is on the rise, with oil rig counts in the Dallas, Kansas City and Minneapolis districts higher than early summer levels. In addition, the Minneapolis district reports several iron ore mines restarting taconite production. We serve the public by pursuing a growing economy and stable financial system that work for all of us.",1667 -beige_book_pure_text_pre2000,1999,"Reports from most Federal Reserve Districts indicated continued moderate to strong economic growth in October and November. Growth was described as strong in the New York, Richmond, Dallas, Minneapolis, and San Francisco Districts, and moderate in the Boston, Philadelphia, and Atlanta Districts. Further growth was reported in the Chicago District but at a slower rate than earlier in the year. In the Cleveland, St. Louis, and Kansas City Districts, business conditions were little changed. Consumer spending picked up over the Thanksgiving weekend, after being hampered by warm weather earlier in November. Manufacturing activity continued to advance in most Districts. Commercial real estate markets remained strong in most parts of the country. Home sales have slipped. Agricultural conditions were mixed, and low prices persist for grains and some other commodities. Oil and gas drilling has increased. Bank lending has declined for residential mortgages but risen for consumer loans. Lending to businesses has risen in some Districts but declined in others. Labor markets remain tight in all Districts. The pace of wage and salary increases did not appear to be accelerating generally, although there were some reports of larger recent salary increases in some industries and regions. Prices appear to be mostly steady at the retail level. Reports from manufacturers have been mixed. Although prices of industrial goods were reported to be mostly steady in a majority of Districts, prices of some goods have been on the rise. Consumer Spending Retail sales slowed somewhat in most of the country in November prior to the Thanksgiving holiday. Store executives said warmer-than-normal weather in many regions resulted in slow sales of winter clothing and other seasonal merchandise. Only Boston, Richmond, and San Francisco reported strong sales continuing into the month from October. However, sales picked up significantly in most Districts over the Thanksgiving weekend, and retailers expressed confidence that the brisker pace of sales will continue throughout the holiday shopping period. In Districts where merchants have made sales forecasts for the holidays, estimates of gains for this year compared to last year range from 5 to 6 percent in Philadelphia, Cleveland, and St. Louis to over 6 percent in Minneapolis. Listed as top selling merchandise are apparel (other than winter outerwear) and jewelry in Philadelphia, Richmond, and St. Louis; consumer electronics in Boston and Chicago; and furniture and home furnishings in Boston, New York, St. Louis, and Kansas City. Auto sales slipped in November in Philadelphia, Chicago, St. Louis, Kansas City, and Dallas. Dealers in several of those Districts think the slowdown has been seasonal and that car and truck buying will pick up in January. Cleveland reported an increase in motor vehicle sales. Manufacturing Manufacturing activity rose in November in most Districts and capacity utilization was said to be high in St. Louis and Kansas City. Continued growth was reported in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Kansas City. In San Francisco and Dallas, growth accelerated. San Francisco manufacturers attributed the pickup to reviving foreign demand, and makers of telecommunications and computer equipment provided much of the boost in Dallas. Manufacturers in Chicago and Minneapolis indicated that production remained strong. The advance in manufacturing activity has been broad-based. Boston reported strong demand for pharmaceuticals and instruments; Cleveland noted rising activity among steel manufacturers; Richmond indicated rising output of processed food products; and Atlanta and Dallas saw increases in production of chemicals. Other products said to be growing in demand were plastics and automotive parts (St. Louis) and furniture (Boston and Richmond). Some sectors have lagged, however. Output of industrial equipment was down in Boston and Richmond, aerospace production slowed in Philadelphia and San Francisco, and demand for textiles and apparel weakened in Richmond and Atlanta. Real Estate and Construction Commercial real estate markets were described as strong in most Districts, although there were some scattered indications of slowing demand for office space. Office vacancy rates were moving down in Boston and Philadelphia but rising in Atlanta and Dallas. Nonresidential construction was on the rise in Cleveland and Minneapolis, steady in Chicago and Richmond, and falling in Philadelphia. In the San Francisco District construction was described as robust in most markets except Oregon, Utah, and Arizona, where activity was down and vacancies were rising. Residential construction activity was mixed around the nation, with more regions experiencing slowdowns than increases. Reports of declining rates of housing construction came from Philadelphia, Cleveland, St. Louis, and Chicago, and New York indicated a sharp drop. The Kansas City District reported continuing growth in homebuilding, but contractors in the District expect a slowdown in coming months. Several Districts said real estate agents noted declines in existing home sales as mortgage interest rates rose, but some agents also said sales had eased because fewer houses were being put on the market. Agriculture Agricultural markets still exhibit low grain prices, although there appears to be some improvement in foreign demand. San Francisco reported improved exports of some agricultural commodities, but low sales revenues for cotton, grains, and vegetables. This year's harvests of corn, soybeans, and sorghum exceeded last year's. Chicago and St. Louis noted that corn harvests were so large that storage facilities in those Districts have been inadequate. Some agricultural commodities have been disappointing. Richmond and St. Louis indicated that cotton yields and quality declined compared with last year. Recently planted winter wheat was said to be suffering from dry soil conditions in the Cleveland, Chicago, and Dallas Districts, and in parts of the St. Louis District. However, Kansas City reported that winter wheat in that District was in good condition. Low levels of soil moisture were also said to be adversely affecting field conditions and forage generally in the Richmond, Minneapolis, and Dallas Districts. Natural Resource Industries Oil drilling and production have increased with the rise in oil prices. In the Minneapolis and Kansas City Districts, the increase in oil drilling was strong, but Dallas reported only a slight increase. Dallas reported greater gains in gas drilling. Metal mining was said to be running at a steady pace in the Minneapolis District. Financial Services and Credit Bank lending was mixed across Districts as well as within Districts. Growth in commercial and industrial loans was reported in Richmond, Atlanta, Chicago, and Kansas City but St. Louis and Dallas indicated recent slowdowns in borrowing by businesses. Commercial and industrial loans were steady in New York and Philadelphia. Mortgage lending for home purchases and refinancings generally fell in November from October. Drops were recorded in Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco. Dallas reported an increase. Consumer lending remained on an upward trend in most Districts. New York indicated slowing in all categories of lending except commercial and industrial loans, and Cleveland reported declines in all categories except auto loans. Interest rate margins were said to be tightening at commercial banks in the Cleveland and St. Louis Districts. Bankers in the San Francisco District said margins remained narrow. Credit standards have remained unchanged in most Districts, although Cleveland bankers were imposing stricter conditions for consumer loans and Chicago bankers indicated that standards for commercial loans have been eased. Consumer credit quality was reported to be improving in the New York, Atlanta, and Chicago Districts. Dallas noted a rise in commercial loan delinquencies. Employment and Wages Tight labor markets were reported in all Districts. Workers that have been in especially high demand include high technology workers in Boston and Atlanta, carpenters in Cleveland, skilled workers in St. Louis, and entry level employees in a variety of industries in Kansas City. Stores in Boston, Philadelphia, Chicago, Minneapolis, and San Francisco said they were having difficulty finding temporary workers for the holiday shopping period. Wage increases were described as persistent in most Districts. Reserve Banks received reports of increases ranging from 3 to 10 percent on an annual basis. Although the rate of increase did not appear to be accelerating generally, there were some reports of higher recent salary increases in some industries and regions. Richmond District employers noted substantial wage increases recently. Atlanta noted significant increases in compensation for health-care workers. The use of signing bonuses has spread, according to reports from several Districts. Prices Prices at the retail level have been nearly steady in most Districts, but some moderate increases were noticed in Richmond and San Francisco. Boston District retailers indicated that list prices have been steady but price markdowns have become less frequent. Reports from goods-producing industries have been mixed. Boston and Richmond reported generally flat prices during November in the manufacturing sector. New York and Philadelphia reported increases. Other Districts indicated mostly steady prices with some increases. Products for which price increases were particularly notable included paper (Boston and Atlanta), building materials (Atlanta, Minneapolis, Kansas City, and Dallas), and chemicals (Kansas City and Dallas). 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