Higher livestock and grain prices this year have stimulated District economic activity and helped spur third quarter retail sales. However, no significant reduction is expected in District unemployment.

According to Bank directors, this year's higher livestock and grain prices are stimulating District economic activity. A Montana director revealed that recent high wheat prices will increase Montana farm income by $16 million and result in greater farmer spending. In a North Dakota director's opinion, almost every businessman in his state will benefit from this year's high grain prices, and a South Dakota director was optimistic about the prospects for retail spending in his state. Furthermore, Bank directors unanimously expect an increase in farm machinery sales. A Twin Cities banker also believes that this year's improved farm income will increase the cash inflow to country banks this fall and increase correspondent balances at his bank. Although the Port of Duluth did not benefit from the recent wheat sales, a Duluth director believes additional sales to Russians would aid his area.

Partially reflecting the improved farm income situation, District consumer spending advanced in the third quarter, and District retailers look for further gains in the fourth quarter. Four out of five Twin Cities Area retailers revealed that their third quarter sales were quite good, two noted a definite pickup in August and September. In addition, Gamble Skogmo's business economist indicated that their business in the District's rural areas had improved in the third quarter. These retailers revealed that their third quarter sales had generally matched earlier expectations, although one Twin Cities discounter stated that his third quarter sales only matched last year's level. These retailers unanimously expected good to excellent business in the fourth quarter.

The anticipated stimulus from farm spending, however, is not expected to significantly reduce District unemployment. A survey of State Employment Security Offices in 16 of the District's largest labor areas revealed that, although employment growth is expected to improve in many areas, no substantial reduction in unemployment is anticipated. When asked to characterize the outlook for employment growth during the next 90 days, two respondents termed it "excellent," seven called it "good," six considered it "fair," and one referred to it as "poor." Nine of the respondents foresee job openings in their areas to be up from a year ago—seven said only "slightly,"—while five respondents expect employment opportunities to match last year's level and two anticipate drops. Since most respondents also look for normal to above normal labor force growth in the fourth quarter, no significant reduction in unemployment is expected. Seven respondents look for fourth quarter unemployment to be down slightly from a year ago, three foresee no change, and six anticipate some increase in joblessness.

In the Minneapolis/St. Paul Metropolitan Area, which accounts for a third of District employment, job openings are expected to be up from a year ago, and a modest fourth quarter increase in employment is anticipated. However, unemployment is only expected to be down nominally from a year earlier.

Bank directors' opinions varied with regard to the labor market outlook in their respective areas. In Northeastern Minnesota, unemployment is up, and no significant reduction in joblessness is foreseen. LaCrosse, Wisconsin's unemployment rate, however, is at its lowest level since September 1969, and further improvement is expected. And in the Upper Peninsula of Michigan, the construction of an iron mining facility is expected to stimulate employment growth next spring. Furthermore, a South Dakota director anticipates a modest gain in his area's employment, and a Montana director attributes more jobs in his area to a pickup in construction activity. In North Dakota, meanwhile, the employment situation was characterized as "pretty good," with few married men out of work. One director revealed that his firm is finding common laborers plentiful, but not skilled workers. Another director indicated that employers are advertising for additional workers but are being very selective in hiring them.