Economic conditions in the Tenth District continue to be somewhat better than in the nation. Unemployment figures are lower and more stable than those observed nationally. District savings and loan associations are beginning to see a return to "black ink." The District is sharing the problems of the automobile industry, both in reduced output and employment at assembly plants and in lagging sales. Area new car dealers cite higher prices and economic uncertainty for a marked fall-off in sales. Recent rains have resulted in a significant improvement in the condition of the District's winter wheat crop. Overall loan volume at District banks is generally flat, while deposit growth has remained strong.

The Tenth District unemployment situation continues to be relatively stable in contrast to the recently observed upward movement in the national figures. On a seasonally adjusted basis, District unemployment in September was 4.2 percent of the civilian labor force, compared with 4.1 percent in August and 3.8 percent in September 1973. At the national level, the rate climbed to 5.8 percent in September from 5.4 a month earlier and 4.7 a year earlier.

District construction employment continues to suffer. In September, construction employment—which has been declining since early 1974—dropped 0.6 percent below the August level and 5.5 percent below September 1973. The decline was most severe in Colorado and Oklahoma. With the normally slow season fast approaching, the outlook is not bright for District construction employment.

Savings and loan associations in the Tenth District reported a slightly brighter deposit picture for the end of October and early November. While net inflows have not been strongly positive, all institutions surveyed showed a return to "black ink" in November. On the mortgage front, there was some indication of a downward movement in rates in states without usury ceilings. Except for Wichita, housing expectations were generally pessimistic, at least through the first half of 1975. One negative factor mentioned was a large backlog of unsold homes, many of which have been on the market for a year or more. On the positive side, an Oklahoma City association states, "The demand is there. It all depends on whether or not we start getting more deposits."

"Slow across the board" and "off considerably on sales" are typical responses obtained in our survey of Tenth District new car dealers. Among domestic car dealerships, a trend away from smaller models appears to be materializing. In many cases, a large backlog of 1974 cars still exists. Some foreign car dealers, who have not as yet introduced their 1975 models, report a severe drop-off in sales from last year and a serious problem of overstocking.

While higher prices, new equipment, and financing difficulties were sometimes cited as reasons for the sales fall-off, the most strongly voiced reason was a f ear of the general economic situation. One dealer stated, "President Ford's speaking made an eerie marked difference in sales." Expectations for calendar 1975 sales ranged from a substantial fall-off to a pickup in the spring, as more people simply have to buy. To date, very few longer-term financing contracts (42-48 months) are being seen, though dealers expressed a willingness to accept them if they were available.

The condition of the District's winter wheat crop has improved in the last month, despite heavy rains which caused some flooding in a few areas. The prospects in Oklahoma look very good, and cow-calf producers are beginning to place animals on wheat for pasture. Recent floods in the state caused little damage to the new crop. Due to earlier dry weather, wheat stands in Kansas and Nebraska are spotty and stunted in many areas. However, sharp improvement either has occurred or is expected as a result of the recent rains.

The change in weather has obviously slowed the fall harvest, which had been progressing very well. Feed grain yields are sharply lower this year, but soybean yields seem to be holding up a little better than expected. Reports on fertilizer supplies are mixed, with prices sharply higher. Generally, however, farmers who are willing to pay the price have been able to meet most of their fertilizer needs.

Overall loan volume in Tenth District banks is reported as generally flat. Nearly all banks contacted indicated that they were making new loans reluctantly and then only to old customers. On the demand side, cancellations of plans for residential and commercial buildings have reduced requests for construction loans. In New Mexico, Oklahoma, and Nebraska, businessmen were reported to be attempting to decrease inventory holdings and accompanying financing, but banks in Kansas City and Denver saw no clear inventory pattern among their customers. Declines in loans for consumer durables were being offset by increases in credit extended through bank credit cards. Several bankers were worried about delinquencies in their consumer loan portfolios.

Deposit growth has remained good at the District banks contacted. Private demand deposit behavior was felt to reflect the general strength of the District economy relative to that of the nation. An increase in deposits has been noted as a result of seasonal inflows into agricultural banks. Consumer time deposits have begun to increase again as rates on government securities have fallen. Banks have maintained recent levels of negotiable CD's outstanding. Goals for the CD maturity structure seem largely unaffected by the recent change in reserve requirements, as expectations of substantial rate declines are so strong that CD's are being kept as short as possible.