Although bank directors remain optimistic about District retail spending in 1972, reports varied concerning retail sales in January and February. Business loan demand at Ninth District commercial banks was described as steady or weak. Ninth District businessmen in general were characterized by bank directors as being comfortable or satisfied with their current inventories.

Directors' reports were mixed concerning retail sales in January and February. The head of a large Minneapolis-based retailing firm indicated that his sales had flattened out in January and February, while another director reported that automobile and hard goods sales had improved in the Twin Cities during the first two months of 1972. Severe weather was cited by two directors as restricting sales in their areas, but another reported that retail sales in his had matched or exceeded earlier expectations in both January and February.

Bank directors continue to anticipate that 1972 will be a good year for consumer spending. One director was quite optimistic about retail trade in his area, and cited as evidence the fact that three groups are considering building shopping centers there. A director from South Dakota indicated that his state is looking forward to a very good tourist season this summer. One director, however, revealed that retail sales in his area probably will not be as strong as they were in 1971, while another does not expect retail sales growth in his area to match the projected advance in national retail spending. In addition, an economist with a large District retailer is forecasting that in 1972 national retail sales will be up 7.2 percent from a year ago, and department store sales will advance 12.1 percent.

Business loan demand at Ninth District commercial banks was described by most directors as steady or weak. One director, who considered business loan demand in his area weak, did report a recent pickup in consumer and real estate lending, while another attributed brisk business loan demand in his area to the fact that businessmen and farmers needed more money to operate this year. Still another director reported that higher livestock prices have been responsible for an increase in agricultural loans in his area.

Ninth District businessmen in general were characterized by bank directors as being comfortable or satisfied with their current inventories. These observations concur with those made by manufacturers responding to our latest industrial expectations survey, as 72 percent of the respondents considered their inventories satisfactory. The remaining respondents were equally divided, with 14 percent describing their inventories as high while the other 14 percent considered theirs too low. Because severe weather in the northwestern part of the United States had slowed the production of lumber products, one director did report, however, that suppliers of building materials in his area were concerned that a shortage of building materials could develop. He also indicated that restrictive price ceilings had discouraged manufacturers from producing certain needed building materials.