Total loan demand at most Tenth District banks remains strong. Savings inflows to Tenth District savings institutions improved in January, and demand for mortgage money has increased somewhat. However, residential construction activity is expected to remain weak during the first half of this year. The Colorado ski industry is booming in spite of the national energy shortage. Relatively small inventories of grains and of cattle are contributing to further strengthening in the prices of farm products.

Interviews with larger Tenth District banks reveal deposit and loan activity about in line with seasonal expectations, although a few banks noted a greater than seasonal decline in commercial demand deposits in the last few weeks. Consumer demand and time deposits have shown very little change. An undesired buildup in the volume of large CD's at some District banks is being countered by a progressive lowering of CD offering rates. Loan demand continues strong at most banks. The total volume of real estate loans has remained stable as declines in residential lending are being offset by increases in commercial real estate loans. Business loan demands for normal inventory and capital expansion needs are being augmented by attempts to stockpile materials that might soon be in short supply. Among the special situations noted were a nearly insatiable desire for oil drilling equipment and the money needed to finance its purchase in Tulsa, and strong loan demand from ski resorts in Colorado. Consumer demand for auto loans is declining, but only gradually, and is being partly replaced by increases in charge card and other personal borrowing.

January savings inflows to savings and loan institutions in the Tenth District exceeded the industry's expectations. Inflows were also greater than mortgage demand, permitting some needed buildup of liquidity. Demand for residential mortgage money has begun to increase somewhat. Savings and loan officers seem to expect a slight improvement in their business, although the energy shortage and other elements of uncertainty are combining to make the future even less clear than usual. Rates of 8 1/2 percent on 80 percent loans and 8 3/4 percent on 90 percent loans are fairly general across the District.

According to executives of home builders associations in major District cities, residential construction is not expected to improve much in the first half of 1974 over a bad second half last year. However, a "substantial" pickup is anticipated by July—possibly before, in some areas. Nearly all associations are jumping on the "buy now" campaign bandwagon, emphasizing inflationary expectations in the housing market. Building materials prices continue to rise rapidly, and some things are reported as hard-to-get in certain areas—e.g., window glass, steel reinforcing bars and I-beams, plastics, insulating materials, and plumbing fixtures. Limitations on utility hookups to new houses do not appear to be a major concern yet (except in Colorado), although there is some speculation about possible future effects. Housing contractors in the Kansas City area are more concerned with the possible negative impact on suburban building of a continued gasoline shortage.

The national energy shortage has apparently had little negative impact on the Colorado ski industry. Business at major ski areas is reported to be "very good," and "operating at capacity and booked up for the year." Most respondents reported that, compared to past years, more people are arriving by bus and air transportation, including special tours, rather than by private automobile. One local air carrier that serves Colorado ski areas reported a 50 percent increase in revenue passengers during the Christmas holidays, compared with a year earlier. However, New Mexico ski areas, which are more dependent on auto transportation, have had a significant decline in their business.

Farm prices spurted sharply last month, rising 9 percent from mid-December to a level nearly 40 percent above a year ago. Contributing most to the increase were higher prices for cattle, hogs, and most grains, and cotton. Recent reports from the USDA suggest, moreover, that farm prices will remain quite strong for several months. With the exception of soybeans, January 1 grain stocks were not only below year-earlier levels but were even tighter than expected.

Cattle on feed numbers were 6 percent below a year ago, and the all-cattle inventory, while larger, was smaller than anticipated. Therefore, another round of strong farm prices seems likely in the months ahead. One factor looming large in this scenario, however, is the current truckers' strike. Reports on the effect of the strike are still sketchy, but the livestock industry has grave concerns about a protracted shutdown. A survey of markets in the District shows that livestock shipments have slackened considerably, but that prices are holding up fairly well thus far. However, some price weakness is expected for slaughter animals if the strike continues because the packing plants are rapidly cutting back on their operations. With the number of animals in the heavier weight groups being up 40 percent from a year ago, a lengthy truck strike will ultimately result in a backlog of fleshy animals which, when finally slaughtered, likely will break prices in a manner similar to the post-freeze pattern last September.