The general economic picture appears to be very mixed. While the current situation is one of shortages, layoffs, sluggish residential construction, and a sharp dip in tourism, the longer run view is one of optimism, as reflected by many announced commercial and industrial projects. Some bankers report a softening in commercial bank loan demand and a growing inflow of funds, partially brought about by consumers' growing conservatism in spending patterns. Reported shortages of fertilizer throughout the Southeast and flooding conditions in Louisiana may reduce agricultural output. South Florida appears hardest hit by gasoline shortages, and a proposed stricter building moratorium may add to the decline in construction activity in this area.

Job layoffs continue in several key industries, as the effects of petroleum and gasoline shortages rippled through the economy. Atlanta area auto assembly plants continue to report layoffs, both temporary and permanent, because of the decline in large-car auto sales. The second shift at one GM assembly plant has been shut down, leaving 1,150 workers without jobs. The slowdown in car sales is also affecting auto parts manufacturers. An Alabama knitting mill will shut down because of the cutback in the auto industry's demand for fabrics. A manufacturer in Meridian, Mississippi, was forced to lay off 500 workers because of a shortage of plastic materials.

Steel shortages remain a problem. Two Alabama manufacturers plus an electrical supply company reported, when surveyed, that steel shortages are affecting production and profits. One of these manufacturers, a large coat hanger manufacturer, reports a definite shortage of steel wire.

Residential construction and tourism remain weak. South Florida's construction sector received some shocking news when proposed amendments to the building moratorium were announced by Florida's Pollution Control Board. Endangered by these more restrictive amendments are several large condominium projects in the Palm Beach area. South Florida's decline in tourist activity may have bottomed out at least temporarily. Tourism has dropped 5 to 15 percent in some areas because of the gasoline shortage. Tourist activity may dip further this summer when tourists traditionally arrive by automobile. It is estimated that only 20 percent of the area's tourists arrive by automobile in the winter and 80 percent arrive by mass transit, but the situation completely reverses in the summer months. Rainbow Springs, a 50-year old tourist attraction in North Central Florida, has closed because of the fuel shortage. Tennessee's tourist industry also is beginning to feel the fuel shortage. The number of travelers coming into Tennessee has dropped approximately 20 percent so far this year, according to state officials. The Chattanooga area is the hardest hit.

Florida's economy appears to be weaker than at any time in the recent past. On top of sluggishness in tourism and residential construction, the Cape Kennedy area is again in the doldrums as a result of the end of the Skylab project. Layoffs will involve 1,816 workers, and by midyear the work force at the Cape will be down to slightly over 9,000 workers. While a definite slowdown is in progress in other areas of Florida, the Jacksonville area is booming with a wide range of commercial and industrial projects under way. New commercial and industrial projects were also announced in other areas of the District. The latest commercial project in Atlanta is a 24-story Federal office building to be jointly developed by Government and private interests.

District bankers give a mixed view on strength in loan demand. A report from the Nashville area indicates continued strength. Areas of Louisiana, however, report a sharp decline in loan demand. One banker notes that for the first time in eight months his bank is not in the Federal funds market. Deposit inflows are picking up at both commercial banks and savings and loan associations. One Tennessee banker believes that the increase in deposits is a result of a more conservative stance by consumers, who are now saving more out of their incomes.

Flooding and fertilizer shortages may well affect agricultural output this year. In Louisiana, nearly two million acres have been flooded at a loss of between $2 million and $3 million, part of which represents damage to the sugarcane crop. No one as yet seems to know how serious the fertilizer shortage is. One Tennessee director believes that because of the shortage of fertilizer, ammonium nitrate, and phosphates the soybean crop, which requires little or no nitrogen, will increase and the corn crop will decrease.