Weather conditions in the Tenth District are adversely affecting the agricultural harvest, and according to major retailers contacted in a number of large metropolitan areas in the District, slowing down Christmas shopping traffic as well. Despite this slowdown, however, sales are described as good, particularly for hard goods, and, retailers are quite optimistic for sales prospects over the Christmas season as a whole. This strength in the retail area extends into new car sales, and the more expensive models or options are reported to be in strong demand. The strength of retail activity is reflected in Tenth District banks, where several bankers noted improved consumer attitudes toward installment buying. In fact, demand in all major loan categories is still reported as strong, and, in the face of either flat or declining demand deposit figures in November among larger Tenth District banks, a more aggressive seeking for funds has emerged. Negotiable CD growth appears to have picked up, with several District banks paying from one-eighth to one-half a percentage point more than the going New York rates.

Adverse weather conditions over a wide area of mid-America have greatly slowed the harvest of soybeans and feed grains this fall. At last report, considerable acreage remains standing as heavy rains and snow have turned the fields into a quagmire of mud. Temperatures within the District have recently dropped below the freezing point, and many farmers are now able to move through the fields with less difficulty. However, field losses appear to be heavy—particularly for soybeans and grain sorghum. Consequently, final production levels likely will fall considerably short of the estimates released in the November crop report coupled with reports about additional grain sales abroad. These developments have led to sharp price advances in the grain markets. In the period ahead, prices likely will remain sensitive to new rumors—pro and con—until the harvest is completed.

Bad weather also is blamed for slowing down Christmas shoppers, but major department stores throughout the District still expect strong finishes to a year of good business. Since Thanksgiving, snow and extreme cold have cut traffic in many stores, although a few report that their sales paces are above last year at this time. Managers report little difficulty in finding extra clerks for the holiday season, nor do they complain generally of problems with suppliers. For the year to date, sales of hard goods have been especially good, notably major appliances and furniture. Without exception, store managers expect strong sales into 1973, although one thinks the first quarter of 1972 will be hard to beat.

New car delivery times, for all of the big three, have doubled in major District cities. Sales are as good as or substantially better than last year. Buyers seem more flush. They have more to put down, and if they don't buy the top of the line, they buy a lot of options. Most dealers expect next year's sales to top this year's.

After recording moderate to sizable gains in demand deposits during September and October, the larger banks in the Tenth District reported flat or declining demand deposit figures for November. Interbank deposits were the weakest category, showing a significant decline—perhaps, as a result of the change in Regulation J—but all categories apparently were sluggish. In contrast, negotiable CD growth seems to have picked up. Several District banks are paying from one-eighth to one-half percentage point more than the going New York rates, with an individual bank's CD inflow reportedly depending on how large a premium it is willing to pay relative to those of local competitors. A few banks expected to add slightly to their CD's after the issuance of revenue sharing checks.

Demand is reported still strong in all major loan categories. Local commercial customers and consumer installment borrowers (auto paper and credit cards, in particular) were the most frequently mentioned sources of loan demand. Several bankers said that they had been conducting campaigns aimed at increasing installment loans and noted that consumer attitudes toward installment buying had improved since earlier this year. Most agreed that the strength of retail activity was probably the major factor. One respondent reported that term loans have been accounting for much of the strength in the bank's lending activity.

Fears of disintermediation were rare among District bankers contacted. However, all respondents felt that somewhat higher lending rates would be justified either now or in the near future.