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.