The District's economy continues to hold up well, but distortions related to energy and materials shortages in some industries have been reported. Christmas holiday sales were good, if not outstanding, in most areas. New car sales especially in the larger models are sluggish, and the used car market has fallen completely apart. Announcements of new and expanded plants as well as new commercial projects were strong, but energy problems are causing some curtailment in previous plans. For the most part, workers laid off in some industries are finding jobs in other areas; however, some rise in unemployment insurance claims has occurred.

Consumer cautiousness and apprehension over merchandise shortages may have kept a "good" Christmas buying season from being a "great" one. The largest department store in the Southeast has only a modest gain in Christmas sales over 1972. Tennessee retailers report that many people shopped earlier than usual because of expected merchandise shortages that never materialized. Many retailers were pessimistic about the outlook for 1974 sales.

Auto sales continue to be blah but small car sales remain strong. A Nashville-area car dealer reports that pickup truck sales have been excellent. Small foreign cars even with price increases are in great demand. In the Montgomery, Alabama area, sales of larger cars are down by 20 percent or more. The area most adversely affected is the used car market as reports from around the District indicate very sluggish sales. One dealer indicated that a 1971 Cadillac, with a wholesale book value of $3,500 a month ago, now wholesales at about $1,500. Dealers are very reluctant to take cars in on trade.

Energy-related shortages are continuing to plague District manufacturers, causing only inconvenience to some in actual production and employment declines to others, and some smaller plant shutdowns. The plastics industry is experiencing severe problems in obtaining raw materials. One Tennessee manufacturer is cutting back on his labor force by 55 percent because of these shortages. He cited suppliers exporting plastic materials overseas in order to make better profits as the reason. These materials, which previously sold for 30 cents per pound, were finally purchased in the foreign market for 90 cents per pound. Plastic pipe manufacturers report they cannot find enough resin, and an Atlanta-area wire manufacturer indicates no shutdowns or layoffs as yet but difficulty in finding plastic for plastic-covered wiring.

A Mobile, Alabama area manufacturer of engines for small private aircraft has recently laid off 300 workers, with the energy crisis cited for the softening in demand. Mobile home and recreation vehicle manufacturers are being severely affected by the energy shortage. Motor home and mobile home manufacturers in Florida and Georgia have reported layoffs and shorter workweeks. Many motor home manufacturers have switched to producing smaller vehicles such as campers and trucks. Georgia mobile home manufacturers report production declines because of high interest rates and fuel shortages. A furniture manufacturer who supplies the mobile home industry has also reduced its payrolls and workweek. In another energy-related development, a south Florida citrus processor says it will delay the opening of its new $5 million plant until the United States Government can assure adequate fuel supplies. Textile manufacturers, on the other hand, are expecting a good year and are not yet seriously affected by energy shortages. They may absorb some workers released from other industries.

Tourist-related activity continues to soften, with the gasoline shortage most often cited as the primary reason. Motel occupancy along Georgia's major highways is down considerably, and operators are offering enticements such as "free breakfasts" and a "guaranteed tank of gas" to attract the dwindling number of travelers. Disney World has laid off 700 employees because of declining attendance related to the fuel shortage. Cypress Gardens has announced a layoff of 10 percent of its work force.

Announcements of new commercial and industrial projects continue strong. Eastman Kodak plans to double capital expenditures from 1973 levels. General Motors has announced plans to build a $50 million facility in Huntsville, Alabama, to manufacture power-steering components. Florida Power and Light has signed a $65 million contract with Westinghouse for the construction of a new electric generating plant. The Baton Rouge, Louisiana area has reported several plant expansion plans. At least $200 million will be spent by area plants for pollution control. One oil refinery has announced a capacity expansion of 150,000 barrels which will double capacity. However, one area businessman estimated that only about 50 percent of these planned expenditures will actually take place because of the present energy shortage. There have also been isolated reports of other postponements in capital spending plans in the District. These have been limited largely to Southern Bell Telephone and the plastics industry.