Tourism has started the summer somewhat weaker than last year. Farm prices have turned up after declining for several months, and a good wheat harvest is in progress. Although cattle prices have improved, producers still face a rocky road in the period ahead. Production by manufacturers still is limited primarily by the availability of materials, which remain scarce and are increasingly expensive. Deposits and loans at Tenth District commercial banks increased less than seasonally during June. Most bankers do not want Regulation Q rate ceilings removed at this time, although they would favor removal as a long-run objective.

The tourist season has started slowly in western Tenth District states this summer. State travel commissioners in Colorado, New Mexico, and Wyoming report fewer out-of-state visitors this June than last. Traffic and spending are down at small motels and other tourist-related businesses near several popular vacation areas. While some tourist spots and certain businesses may be doing better than last year, the tourist industry as a whole needs a strong July and August to finish even with the summer of 1973, much less approach the 1972 peak.

Farm prices have generally strengthened following four months of steady declines. Compared to a year ago, the farm-price index was off 4 percent as of June 15, marking the first time in three years that this measure had fallen below year-earlier levels. The recent turnaround has been broadly based with price increases occurring in both the livestock and crop sectors. Contributing to the run up in grain prices have been growing concerns over weather problems in the cornbelt and a smaller-than-expected winter wheat crop. The rise in livestock prices apparently has been triggered by a decline in beef and pork slaughter which, in the case of hogs, has been significant. Nevertheless, most cattle feeders still face serious financial problems because of current losses and uncertainty about the future, despite recent price improvements. On this note, the emergency credit bill before Congress has elicited a mixed response within the cattle industry. While some groups obviously favor the bill, several feeder associations have taken a neutral position. Finally, the wheat harvest in the District is winding down as nearly ideal weather conditions have permitted rapid progress in most areas. However, the crop—while good by most standards—is apparently falling below anticipated levels.

Purchasing managers throughout the District continue to complain of tight supplies and rising prices. A few feel the worst is over, as indicated in the national survey, but most see no let up in the months ahead. "We've got nothing but problems, problems, problems," said one agent. Two respondents said that their firms' expansion plans were canceled because of materials shortages. Two others reported going to the black market to get around allocations. But a buyer for a major tire manufacturer feels that some raw materials are more easily obtainable, at much higher prices, since controls were lifted.

Major producers of agricultural supplies report good business, but they, too, are held back by shortages. Agricultural industries enjoy some priority for certain raw materials, but their businesses still are limited by available supplies. Although strong, demand is somewhat weaker than last year because of lower farm income. In particular, the market for products for the cattle business has dried up in recent weeks.

Total deposits at District weekly reporting banks increased less than seasonally during June, as a slight decline in time deposits was more than offset by an increase in demand deposits. None of the banks contacted noted a significant difficulty in issuing large CD's, although several did report that national corporations were limiting their CD acquisitions at regional banks to specified percentages of a bank's capital. All agreed that the recent ability of Federal savings and loans to issue negotiable CD's has had little direct effect.

While banks felt that loan demand was still very strong, total loans increased substantially less than seasonally during June. The strongest demands were noted for commercial and industrial loans and for installment loans. The strength in business loans was primarily to finance inventories, accounts receivable, and oil and gas exploration or refining facilities. Agricultural credit demands were mixed, reflecting the reduced number of cattle on feed and the sharp increase in the credit needs of grain firms. The demand for real estate credit was generally weak throughout the District. About half the banks noted that loan delinquencies had risen over the last three quarters, but all agreed the level was low and several reported delinquencies were now declining.

In view of the capital note offerings of two New York banks aimed at consumers, reporters were asked about the desirability of lifting or removing Regulation Q interest rate ceilings. While most felt these ceilings should be removed over the long run, a strong majority felt this was not an appropriate time to make any significant change. However, the survey did turn up two interesting developments. One bank reported that it had recently initiated an arrangement under which individuals purchasing small CD's would receive maximum interest rates and also have an additional 1 per cent donated to the charity of their choice. Another indicated that a national insurance company was considering pooling the funds of small savers, and for a small fee, would invest these in large CD's.