Beige Book Report: Atlanta
September 9, 1970
The consensus of directors, bankers, and businessmen contacted is that the moderate economic slowdown in the Southeast has run its course but that inflationary expectations are deeply imbedded and that recovery of spending and production will be sluggish. High unemployment areas were also surveyed—those experiencing a gradual increase in economic activity but suffering from persistent structural unemployment and those affected by factors such as aerospace layoffs. Areas experiencing structural unemployment foresee no early end to their difficulties.
Reports about the textile industry indicate that, with some exceptions, employment and production may be stabilizing after a decline. One industry executive described the industry as "trying to bounce off the bottom." The same official reported that some types of textile machines have been offered at very attractive prices, while the demand for other types of machines, such as those used to make double knits and texturing, remains strong. Carpet manufacturing is also anticipated to expand in the near future.
The mobile home industry provides another example of an industry where employment and production seem to have bottomed out, attributed by one banker to a relaxation of tight money. In addition, a large auto assembly plant in the Atlanta area has added 500 workers to its lines. Appliance and furniture manufacturers in east Tennessee are encouraged by recent increases in orders.
However, there are indications that business is still lagging and that recovery will be slow. Directors and bankers from central and east Tennessee are pessimistic about significant improvement in business activity and expect unemployment to increase in the coming months. In two other states, telephone revenues have been rising less rapidly this year and the company continues austerity programs. Auto sales in the Atlanta area have slumped again after strengthening in June and July. A distributor of prestige men's clothing for the Southeast reported that some stores have eliminated a fall line of sport clothes, moving immediately into their normal winter lines. A rug producer stated that, while he expected an increase in sales, he was counting on an increase in productivity rather than an expansion of his labor force. Aluminum producers do not anticipate recalls of laid-off workers in coming months.
There has been only a slight dampening of inflationary expectations. Businessmen are nearly universal in their fears of steep wage increases. Unacceptable high wage demands are prolonging strikes that stymie major construction in Atlanta and Knoxville. In the past month, several District newspapers have carried editorials bemoaning the inflation problem. An average 23-percent increase in TVA electricity rates will be adding to cost pressures in the northwest sections of the District.
A telephone survey of areas experiencing high unemployment indicates they fall in two categories: rural, agricultural areas experiencing a gradual improvement in their industrial bases but suffering chronic unemployment and those affected by factors such as layoffs in the aerospace industry. Those in the first category see no early end to their persistent unemployment, yet nearly all described their economies as progressing normally. Negroes make up a relatively large portion of population in these areas. Among those areas affected by aerospace layoffs, Huntsville, Alabama, and Marietta, Georgia, are experiencing little difficulty adjusting, while the Cape Kennedy economy continues to drift in a vacuum. Although the Cape Kennedy layoffs have slowed, there has been no substantial influx of industry or retirees to fill the void. A deterioration in labor markets elsewhere has slowed out-migration from the Cape, yet much vacant housing remains. On the other hand, the Mississippi Gulf Coast area, where unemployment has been high, is expecting a surge of economic activity because of a large destroyer contract and accelerated rebuilding in the wake of Hurricane Camille.