Despite evidence in national surveys of declining consumer confidence, District retail spending continues to expand, but there are signs of slowing. Many District businessmen plan to increase their plant and equipment spending; there was less certainty, though, about increasing inventory outlays. In response to the President's request, District businessmen and Governmental officials are adopting energy conservation programs and are very concerned about the adequacy of fuel supplies this winter. District farmers are making good progress in harvesting this year's crops and look for record yields.

Although Bank Directors reported that consumer spending continues quite strong and District retailers in general look for a good Christmas season, some softening in sales growth has recently emerged. A Director associated with the retail trade industry revealed that a recent decline in consumer sentiment has not yet affected his firm's sales. He did, however, express some concern about how the recent deterioration in consumer confidence would affect Christmas spending. Furthermore, he stated that substantial year-to-year sales gains this Christmas season are going to be hard to achieve, since sales gains were so large last Christmas. A Twin Cities area banker disclosed that his commercial customers report some recent slowing in retail sales gains but are quite optimistic about Christmas spending. Another Minnesota director noted that retailers in his area are optimistic about Christmas spending but are experiencing delays in receiving needed inventories. Given the favorable agricultural situation, a North Dakota director termed the outlook for retail spending in his state as very good. A Duluth Director indicated that a definite softening in his area's retail spending has occurred in the last three weeks, and many retailers expect that Christmas spending will probably remain at last year's level.

District businessmen, according to Directors' responses, plan to increase their plant and equipment spending, but the outlook for inventories was mixed. One Director said that customers surveyed by his bank plan to substantially increase their plant and equipment spending and that many firms want to expand their inventories but are encountering supply constraints. Another Director disclosed his firm is having difficulty obtaining steel supplies as a result of recent increases in business spending. In the Upper Peninsula of Michigan, the construction of a large mining installation has stimulated a great deal of plant and equipment spending. In the Duluth area, several major capital investments are under way, but businessmen are being very cautious with regard to inventory spending.

In response to the President's request to curb energy usage, District businessmen and Governmental officials have instituted fuel conservation programs. Many Minneapolis/St. Paul businesses have announced plans to forego their annual Christmas lighting, and temperatures have been lowered in many of the area's major office buildings and plants. In addition, the airlines headquartered in the District have cut flights. Furthermore, many firms are encouraging their employees to form car pools and are imposing 50 m.p.h. speed limits on company vehicles.

Fuel shortages have not yet seriously hampered District business activity, but businessmen are concerned about shortages this winter. A Twin Cities area retailer thought it possible that his firm may have to shorten hours this winter. Although a lack of fuel has not yet restricted operations, major district manufacturers reported difficulties obtaining needed supplies. If shortages develop, two firms indicated they may shift to a four-day week, while another may close its smaller plants. Twin Cities area motor carriers are very concerned about inadequate fuel supplies, and one railroad headquartered in the District looks for a really difficult winter. Major fuel oil distributors are not accepting any new business but are hopeful they will be able to meet their old customers' fuel needs this winter.

Blessed with favorable weather in recent weeks, farmers in the grain-producing areas of the District have made good progress in harvesting this year's crop. Favorable harvest conditions have all but eliminated the threat of propane shortage for drying the District's 1973 corn crop. As of November 4, the harvest of soybeans in Minnesota was 98 percent completed. The corn harvest was 74 percent completed, compared with less than 50 percent a year ago. Record yields are now being forecast for both crops.