The strong momentum of the business expansion and the improved psychology of businessmen, lenders, and the public are increasingly evident in the Seventh District. The job market continues to improve gradually, consumers are spending and using credit more freely, order backlogs are rising, and output of some industries will not show the usual seasonal decline in the winter months. Capital expenditures are advancing further. Inventories continue under tight control, but apparently are increasing at a faster pace.

Employment has not increased as fast in the District as in the nation. Moreover, employment in the Chicago Area, almost 30 percent of the District total, is estimated by state agencies to be no higher than a year ago, while the manufacturing sector is below last year. In this expansion, some smaller plants have been closed in the central or near suburban areas of large cities. Commonly, output is expanded, and new facilities are located in remote suburbs or smaller centers far from the headquarters. The implication for the future of the large cities is ominous.

Despite slower than average growth in employment, unemployment in most areas is estimated to be below last year. Local employment service offices frequently refer to withdrawals from the labor force since last year. But these views may not be based on adequate evidence.

Demand for appliances, furniture, television sets, motor homes, snowmobiles, and other "recreational vehicles" has been excellent. A number of producers of these items have announced plans to expand capacity in new, or existing, facilities. Consumers are continuing to use installment credit freely. Nevertheless, savings inflows, especially at S&Ls, continue at a high level.

Sales of mobile homes remain very strong, and local experts contradict reports that the market is softening. HUD acquired thousands of mobile homes for disaster relief following floods in South Dakota and Pennsylvania. As a result, mobile home producers, who customarily keep abreast of demand, now have order backlogs. (Some smaller mobile home producers are not sharing in this prosperity, however.) Modular housing, on the other hand, is doing poorly, and some District plants have been closed.

Huge new shopping centers are accounting for a substantial share of the increase in retail sales, particularly in the Chicago Area. In recent months, many stores have lengthened their hours to include Sundays and/or evening operations to 9 or 12 P.M. They report widespread use of these extended hours, especially on Sundays.

In the capital goods sector, farm machinery producers are very pleased with demand, here and abroad, and are planning to continue output at a higher level than normal in the winter months. Producers of components for capital goods—including dies, forgings, electrical apparatus, drives and couplings, and controls—report orders up 20 to 50 percent from last year's level, which was still quite depressed in some sectors. In part, this reflects the need to build inventories. Other strong areas include forklift trucks, used machinery, solid waste disposal systems, and safety equipment. Capital goods producers are hampered in expanding output by shortages of skilled workers, especially for second shifts.

The strength of the auto and truck markets is well publicized. Shortages of truck engines and other components have spurred expansion plans.

Steel orders are proceeding at a good pace, with demand for sheets especially good. Lighter structural steels also are showing strength. Ford is expanding its steel capacity at Dearborn.

Among the weaker capital goods sectors are coal mining equipment (which had been excellent), railroad equipment, the oil industry, and pipelines. Paradoxically, these are among the sectors where needs are the greatest.

Prospects for another record year in construction in 1973 are excellent, although the pace of residential construction is expected to be down—perhaps by 10 percent. Housing permits surged again in the Chicago Area in August after slowing earlier in the year. Commercial construction (other than office buildings), manufacturing buildings, and water and sanitary facilities are expected to provide strength.

Price Commission rulings are quite effective in many industries. Firms unable to justify price increases commonly notify suppliers that they must also hold the line. In some major industries where the leading firm cannot justify price increases because of the profit margin rule, competitors who could justify increases must also hold back.

Private forecasters now estimate midwest soybean and corn production at somewhat higher levels than the recent government estimates. These private estimates take into account heavy rains that have damaged some crops and delayed harvesting.