Our Directors' outlooks remain mixed. Those close to primary products and producers goods see many lines as being "sold out forever," while Directors more familiar with retailing worry about the vitality of the economy. Whereas concerns last month focused on high interest rates, this month those expressing misgivings discussed layoffs and demand weaknesses as well.

We specifically inquired about discounting policies. Though most responses dealt with regional behavior, the experiences of certain firms dealing in a wide range of national wholesale markets were included. The picture is surprisingly uniform: there is very little discounting from list prices, with the possible exception of retail prices on expensive lines. Even in cases of improving supply and deliveries, lists seem to be firm. Industries facing softer demand prospects seem to do little more than offer better terms. One Director, however, anticipates discounts in textiles and home furnishings so that the goods keep moving.

All Directors entertain a gloomy outlook for general economic conditions. Nonetheless, metals, chemicals, machine tools, military-related hardware, producers' metal products, and diesel engines were lines singled out for their generally strong performance. With one exception, all Directors noted a worsening of unemployment in their regions, and all anticipate a deterioration of the situation in the future. In the Boston area, major employers are releasing significant numbers of employees, and one large firm servicing a national consumer market has just announced a 20 percent across-the-board lay-off. One telephone company is reporting furloughs of personnel while another faces historically high delinquency rates.

Income squeezes on firms and households are encouraging less wasteful practices. Supermarkets report that consumers are becoming more sophisticated in their purchasing behavior, paying closer attention to bargains and specials. Electricity consumption has declined 6 percent from the previous year. Firms are closely managing cash flows and money positions. Demand deposits have fallen behind those of a year ago according to two banking Directors. Firms are also learning to run their businesses more efficiently, and this development may soon affect purchase orders.

High interest rates still plague utilities. A state legislator has introduced a bill which would relegate one major utility to the status of a power distributor; the state would assume power generation responsibility. In any case, it is one Director's opinion that today's crunch may lead to a power shortage in the 1980's.

All of the academic correspondents contacted this month, Professors Eckstein, Samuelson, and Tobin note further deterioration in the economic outlook. Eckstein reports that businesses have universally adopted more cautious behavior with regard to inventories and hiring even in those industries where markets have held up. He now forecasts real growth to be less than 1 percent next year with no increase in constant dollar business fixed investment. Tobin points out that the weakening in the real economy, particularly in investment behavior, is consistent with his presentation to the Board last spring. Samuelson cited George Perry's forecast of a
7 percent unemployment rate by mid-1975 and Perry's statement that the major error of the Summit Meeting was not to have realized the severity of the current recession.