The likelihood of a gradual uptrend in total business activity for the remainder of 1972 is widely accepted in this District. However, most analysts in the region who attempt to estimate economic aggregates foresee a rise of $80 billion to $90 billion, at most, in gross national product (GNP) for 1972 over 1971. Fears of a resurgence of price inflation are widespread. Employers are greatly concerned over productivity and union opposition to work-rule changes. Consumers continue to add to liquid savings at a high rate. Retail sales of durables are much more vigorous than sales of nondurables. Orders and output for most types of capital equipment are either vigorous or improving moderately. More companies are concerned about whether inventories of components and finished goods are adequate to take full advantage of a more pronounced uptrend in demands. Nonresidential construction of most types apparently will rise this year, while residential construction, although continuing at very high levels, is expected to slow down gradually. With an ample supply of funds, lenders are again seeking to make certain types of loans that they deemphasized in the late 1960's.

The uptrend in employment in recent months appears to have been less vigorous in the Seventh District than in the nation. Employers have been very cautious in increasing staff. With rising output, spectacular increases in productivity are occurring in some industries. One major airline is handling about 10 percent more traffic than a year ago with about 10 percent fewer employees. Jobs remain "hard to get", in almost all areas of the District, certainly by comparison with 1969. Employers usually are able to choose between a large number of applicants and can apply higher standards. At the same time, large employers are subject to pressures to avoid using hiring standards that may be judged to discriminate against minority groups.

Makers of furniture, appliances, and TV sets continue to be very pleased with the trend of orders and sales. Inventories are said to be in good shape. The main increase in inventories since last year has been at the distributor level, a development that is viewed as desirable.

Retailers we know report sales of nondurables are lagging sales of durables. But it is very difficult to get an adequate reading on retail sales by type or region, partly because companies are secretive and partly because the fortunes of particular chains and individual stores are shifting year by year. The completion of large new shopping centers, the introduction of seven-day shopping weeks, and the changing character of certain retailers—product lines, locations, merchandising techniques, etc.—keeps the picture in a state of flux and reduces the value of reports from a fixed group of stores, even if reports are current and accurate.

While it is often said that consumers are "cautious", "buying what they need", etc., there is much contrary evidence. Perhaps the most vigorous component of the consumer goods field is recreational vehicles-motorcycles, golf carts, snowmobiles, and motor homes (called "expensive toys" by a prominent District producer). Production of most of these goods has been at or near capacity.

The improvement in capital goods continues to be spotty, with heavy trucks the star performer. Sales of some types of farm and construction equipment ate far above last year's rate. None of the capital goods producers are reporting further declines in orders, but complaints about the lack of a vigorous uptrend are common.

Steel orders and shipments are now improving in a steady fashion in place of the "sputtering" uptrend noted earlier in the year. Some steel users are believed to have reduced stocks excessively and are now reversing the process. Steel demand from producers of motor vehicles, other consumer durables, construction, and shipbuilding is good. Demand for steel for bridges, highway projects, pipelines, and railroad equipment is still slow.

A District chemical company with a broad product line reports that orders are strong for most lines and that the market has a much better "tone" than a few months ago.

Housing experts expect a gradual decline in starts, seasonally adjusted, as the year goes on. First, vacancy rates are rising, especially for high-priced homes and apartments. Second, reports of shoddy construction, charges of dishonest Federal Housing Administration appraisals, and sharp increases in foreclosures in the central areas of some large cities (especially Detroit) may cause some home buyers and lenders to be more hesitant in making commitments.

Banks and other lenders are actively seeking borrowers. Business loan demand at large banks continues very weak. Some banks are increasing real estate loans and purchases of consumer installment paper. Some life insurance companies are returning to the farm mortgage field. Savings and loan associations are becoming active in financing mobile homes. With savings inflows continuously very strong, some large banks are no longer offering consumer certificates of deposit (CDs) at premium rates, and bank executives are outspoken about their desire to cut the passbook savings rate if competition would permit. On the other hand, a very large bank is now offering longer maturity CDs (up to four years) at graduated rates (up to 6 1/4 percent).