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.