Opinions expressed by Federal Reserve Bank Directors, of both the New York Bank and the Buffalo Branch, and by other businessmen suggest that the increased uncertainties surrounding the near-term economic outlook that have emerged in recent months continue in evidence. Recovery from the GM strike has been slower than had been expected: holiday retail sales have been relatively good, but not booming, and in general no real sustained pickup in consumer spending is looked for until later in the year. The settlement in the forthcoming labor negotiations in the steel industry is not expected to be significantly smaller than in the auto industry. Sentiments were mixed as to the potential level of borrowings in 1971 in the corporate bond market.

The views expressed on the general economic outlook were not particularly optimistic. The directors felt that economic activity was not recovering as rapidly and as strongly from the settlement of the GM strike as they had expected. The chairman of the board of a large New York City bank stated that he felt less encouraged regarding the overall economic outlook than a couple of months ago, and that he had not felt very encouraged then, while the president of a New York City department store looked for only a moderate increase in economic activity in the later part of the year.

With respect to consumer spending, the retailers that were contacted reported that pre-holiday sales, in dollars, exceeded last year's, primarily because of a big spurt in the week before Christmas. The retailers reported continued consumer resistance to higher priced items, but favorable responses to special sales, and the volume of post-Christmas retail sales so far has been good. These retailers looked for good business through January, a leveling off in sales through the spring and a pickup in the latter part of the year.

On the labor front, opinions were about evenly divided with respect to the duration of a possible strike in the steel industry. Some directors—including the general manager of an upstate plant of a large steel corporation—stated that they did not expect a long strike. Others, however, felt that prospects were good that any strike would be a lengthy one. The directors agreed that the settlement would not be significantly smaller than that received by the auto workers. In this connection, other businessmen that were contacted felt that little progress was being achieved toward curbing inflation, and that little could be expected until wage demands abated.

Sentiments regarding prospective borrowing in the corporate bond market were mixed. The chairman of the large New York City bank, the president of a large manufacturing concern, and the chairman of a Rochester bank felt there would be little decline in such borrowings from their 1970 record highs. The president of the manufacturing concern reported that the consensus among corporate executives is that the bond market would be "soft" in the next three or four months, but that rates would be higher by the end of the year. Accordingly, he felt companies would come early to the market. On the other hand, some other directors felt that there would be a significant decline from 1970 levels.