No signs have yet developed in the Seventh District that the uptrend in overall activity is losing momentum. Businessmen and bankers, almost universally, believe the 60-day price freeze was ill conceived, but the immediate impact on slowing activity seems to be confined to food processing and petroleum refining. Any slowing of growth in other sectors appears to reflect shortages of manpower, materials and components, and summer vacations. The freeze and a tough Phase IV may have an adverse affect on long-range planning, however. Inventories are generally low relative to activity, critically so in some cases. Retail sales of both hard and soft goods appear to be very strong.

Most businessmen and bankers are aware of forecasts of a recession to begin late this year or early next year. Even those who accept such projections, however, indicate that they see no signs of slippage in their own areas. In fact, most manufacturers are most concerned about their ability to maintain production schedules and product quality in the face of bottlenecks.

The 60-day freeze was very generally opposed in this District, even by most of those who viewed favorably the 1971 freeze. One factor, of course, is the fact that wages are excluded. But a widespread belief exists that tight price controls under conditions of tight supplies will do more harm than good. Businessmen are particularly adamant that a pass-through of increased costs of raw materials and imported commodities must be permitted to prevent further shortages.

Many District feeders of swine and cattle say they will lose money because of the squeeze between operating costs and the price of meat packers can afford to pay under ceilings. A number of medium-sized pork packers have ceased operations. An ominous note for future months, the current swine slaughter includes a highly abnormal proportion of pregnant sows. The number of cattle moving into feed lots is below last year, partly because cattle are being kept longer on grass. Beef processors are aided by high prices for by-products. Except where supplies have been reduced by adverse weather, canning of fruits and vegetables appears to be proceeding normally. But there are reports that part of the pack will be held back awaiting the end of the freeze. A bright spot in the meat situation is the drop in spot prices for soybean meal, partly because of the embargo. Corn prices remain near recent highs, however. Current developments in agriculture probably will have their major adverse impact on livestock and meat supplies in the fourth quarter.

A number of District firms had to cancel price increases because of the freeze, e.g., steel, appliances, and machinery. They maintain they must have price flexibility to justify the risk of new investments.

Oil industry experts say that the price freeze has sharply curtailed imports of refined products, and, in some cases, imports of crude oil. The sharp increase in prices of imported petroleum means that imports can only be resold at an out-of-pocket loss. The gasoline crisis appears to have eased except for scattered situations. But oil firms are not building up stocks of heating oil as planned.

A steel producer now estimates shipments of U.S. mills at 108 million tons for 1973, with all categories much stronger than had been projected earlier. There is "absolutely no sign of demand weakening." Steel warehouse stocks are very short.

The Milwaukee Purchasing Managers report (July 8) that "lead times on a vast number of products are extremely long." Items in short supply include steel, castings, aluminum, paper, lumber, plywood, fuels, rubber, cork, electronic components, wire, small motors, glass, fasteners, bearings, zinc, many chemicals including petrochemicals, hydraulic components and large tires. Delivery dependability has deteriorated badly and almost one-third complain of poor quality.

A Chicago producer of a variety of products stated recently: "every component we purchase is in short supply. Paper, wood, steel—everything. The worst in my 30-years in business." This moderate-size firm, like many others, has appointed a "procurement expediter."

Steps taken to side-step price controls include: low profit lines dropped; products "redesigned"; fictitious upgrading; inclusion of rejects; dropping discount practices; insistence on larger orders than customers require; "tie-in" sales; elimination of "free" services; new charges for "extras"; curtailment of sales to nonaffiliated customers; and curtailment of sales to customers whose business is less profitable.