The economic mood of businessmen and bankers is one of solid optimism. One Tennessee director actually described the prosperity in his area as "almost unbelievable." Boom conditions are reported throughout Florida. Nevertheless, many businessmen have grave doubts about the long-term economic health of the nation because of the Federal deficit and labor problems. The only weak spots in the District are areas of aerospace layoffs or work stoppages.

Construction continues to highlight economic prosperity in the District. Shopping center construction is strong in many areas. In Nashville, plans for two savings and loan buildings and for three major motels have recently been announced, and an existing hotel will undergo a $5-million renovation. Construction will also start shortly in Nashville on a $25-million Federal building. Final plans are being formulated for a $25-million convention center on the Mississippi Gulf Coast. In Atlanta, still another large hotel will be built, this one rising 70 stories. In South Florida, an unprecedented boom in residential construction may be slowed by a decision of the Florida Pollution Control Board to reject all sewer hookup applications in areas of Florida that do not provide adequate waste treatment. One Florida real estate economist has predicted that some areas of South Florida are overbuilding and due for a serious shakeout in 1973. Brick is in short supply in several areas of the District, with delivery taking at least two months. A survey of three New Orleans savings and loan associations indicates a shortage of mortgage funds in that city in the face of strong demands.

Manufacturing employment is increasing in many areas, and capable labor is scarce. A major electronics firm has increased its East Tennessee labor force from 7,000 to 12,000 in the past year. Numerous plant announcements and expansions should continue pressure on tight labor markets. However, aerospace layoffs are causing softness in the Huntsville, Alabama Area. Huntsville businessmen, however, are confident about their long-term economic prospects. Labor stoppages have slowed construction and depressed the economy in the Lake Charles, Louisiana Area. It has been reported that work on a large chemical plant addition in Lake Charles has been slowed intentionally because of uncertainty concerning the expiration of 17 separate construction-related labor contracts in the coming months. The huge tufted carpet industry in North Georgia is enjoying record production and shipments.

Business leaders attending a meeting in Birmingham expressed considerable concern about inadequacies of wage and price controls. One nonunion firm claims that it is experiencing a labor shortage because it can only raise wages 5.5 percent when union settlements have been negotiated at higher rates than permitted under the guidelines. A manufacturer of coal and coke reported being caught in a profit squeeze because raw material cost increases could not be passed through. This executive stated that, although the market for his product was taxing capacity, he did not anticipate opening any new coal mines since, under the present cost and price control structure, they would not be economically justified. This apparently was the opinion of bankers and others from whom the company had sought funds to finance expansion.

Plant and equipment expenditures are being undertaken by some firms predominantly to reduce costs rather than increase output. A representative of one firm manufacturing electrical equipment emphasized that his firm was engaging in capital expenditure programs specifically to improve costs, and these programs went to the extent of closing some plants and relocating production in lower cost areas. Capital expenditures are also heavy for projects to reduce pollution.