Beige Book Report: St Louis
August 14, 1974
The pace of economic activity in the Eighth Federal Reserve District has continued up in recent weeks. Retail sales at major department stores have slowed, but most of the decline has been offset by rising automobile sales. Manufacturing continues at a high level, and employment remains about unchanged. Loan demand remains at a relatively high plateau, following a sharp increase in the first half of the year. Agricultural conditions have improved in recent weeks as a result of rainfall over most of the District. Corn yields will be below average for recent years because of lack of moisture in July.
Consumer spending at major department stores has declined in recent weeks. Big-ticket items, especially those related to housing, are being hit the hardest, although clothing and shoe sales were also reported to be sluggish. Most of the decline has been offset, however, by a sharp recovery in automobile sales. One major St. Louis dealer reported that automobile sales were at record levels in July and that he cannot obtain a sufficient number of large cars to meet demand at current prices.
In general, manufacturing activity has continued at the high levels of recent months, but most firms report some increase in inventories. The steel industry and other capital goods industries not related to construction are still continuing to expand operations. A steel industry representative reported no letup in their orders backlogs, and firms which use steel noted the long delivery time. Aluminum is reported to remain in very "tight" supply. Delivery of some other metal products, such as brass, however, was reported to be substantially improved.
In general, the firms contacted reported that employment has been steady in recent weeks. Eighth District unemployment continued at a lower rate than the national average. However, a few manufacturers with rising inventories noted that operations may have to be curtailed and employment cut back.
Business loan demand continued up but apparently at a slower rate in recent weeks than heretofore. Total business and consumer loans for the District have continued to increase somewhat. Low yielding savings-type deposits at banks and savings and loan associations have remained virtually unchanged since last spring, but time certificates have increased, especially those denominations over $100,000.
The damage from the drought in the Eighth District is "spotty", and its impact on crop production is difficult to determine. Early corn yields have been severely damaged in some localities, but recent rains and cooler temperatures have increased prospects for soybean and late corn. Cotton and rice corps have not been significantly damaged by the dry weather.