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.