The economic picture in the Seventh District is mixed, both among industries and localities. Capital goods producers continue to push output against limits imposed by availability of resources. Nonresidential construction remains generally strong. On the other hand, output of autos, small trucks, and recreational vehicles remains well below the levels of last year, and there is scant hope for an early revival in the severely depressed housing industry. Shortages of material remain widespread, although easing in supplies is reported in some sectors. Inflation is a constant sore point with almost everyone. Announced increases in wages and salaries are running in the 9- to 12-percent range and some are higher. Prospects for the corn crops, so optimistic in early May, have been seriously altered by heavy rains.

There is no longer any serious concern that fuel shortages will hold back activities in the next several months. A question of the availability of power supplies has developed, however, because of difficulties with the operation and construction of nuclear plants in Michigan and Illinois.

A great contrast exists in the Seventh District between Michigan, where insured unemployment is at the highest rate since 1961, and Iowa, where labor shortages "run the gamut." The situation in Michigan should improve relatively in the summer. Auto output is scheduled at a third quarter record, except for 1973. (Hopes have faded for any significant improvement in auto sales until 1975 models come on the market.) In Illinois and Wisconsin, insured unemployment is above the year-ago level but well below the rates of 1971 or 1972. Strongly influenced by demand for auto components, Indiana is in an intermediate position.

Announced increases in wages are substantial, as pressures mount to offset two-digit inflation. The "revelation" that the auto workers' gain last fall was valued at 11.6 percent has set a mark for other bargainers. Nonunion employees of the nation's largest airline (headquartered in Chicago) will get increases totaling 11 percent this year. A number of municipalities have granted "across-the-board" increases of 9 percent. Union supermarket clerks in Detroit obtained a 14-percent boost in May to $5 per hour. Demands are being enforced by strikes, many of short duration, in various sectors.

The District's capital goods producers, without exception so far as we can determine, are going all out to try to contain mounting backlogs. Many have modified their methods of accepting and booking orders to hold down the "water" in their backlogs and to get scarce equipment direct to customers. Several producers of equipment for farming, construction, and mining have announced large, new expansion programs of their own in recent weeks. Along with producers of machine tools, these firms, increasingly, look upon demand for their products as basically strong through 1980 or beyond.

The end of price controls on April 30 probably loosened supplies of some raw materials and components, as market forces were allowed to operate more freely. Because of adjustments of production schedules to higher profits lines during the control period, however, the process will take some time. Steel is now the most commonly mentioned item in short supply and substitutes are seldom possible. Output will be down in the third quarter, and imports are available only in limited amounts and at extremely high prices. Castings and forgings frequently are cited as bottlenecks, partly because some shops have been shut down in recent years. Most nonferrous metals, many chemicals, and paper remain on the typical shortage list. Cement capacity is said to be down because plants have been taken out of production for environmental reasons and for needed maintenance.

District housing experts do not expect any large benefits from the Administration's proposals to inject funds into the mortgage market. This is, partly because of specified restrictions on the mortgages to be financed and partly because it is believed that a substantial portion of the funds would be diverted to other markets. Savings outflows continue at S&Ls, and loan commitments have been at very low levels. Pressures to lift the 8-percent usury ceiling in Illinois have not been sufficient to date. Chicago SS&Ls are reported to be charging fees of 7 or 8 percent on new loans, with interest rates at 7.5 percent. Assuming an average loan life of 8 to 12 years, effective rates on such loans can be 9 percent or more.

Extremely wet weather in the corn belt in the past four weeks has restricted field work and has left water standing in fields already planted. Corn plantings, which had been well advanced in early May, are now only equal to last year's slow pace. Soybean plantings also are far behind their normal schedule. Continuing heavy rains in recent days may have caused some farmers to switch acreage to soybeans. Yields on corn already planted will be reduced, partly because of hampered weed control. Heavier-than-expected marketings of cattle and hogs suggest that the number of animals on feed, especially hogs, had been underestimated. Stocks of meat in cold storage are very large. Lower wholesale meat prices have been accompanied by sharp declines in cheese prices, much to the dismay of the State of Wisconsin.