Generally speaking, economic conditions in the Tenth District increasingly are coming to resemble those of the nation at large. At the retail level, many of the larger retailers in a number of the District cities report a growing weakness in the physical volume of sales, particularly for hard goods. In addition, evidence of involuntary inventory accumulation appears to be increasing, and the Christmas sales prospects are quite muted relative to a year ago. The cattle industry remains in a depressed state, and while total cash receipts from farm marketings in the District for the January-October period are about equal to the same period a year ago, the rising cost of farm inputs has adversely affected net farm income. Loan volume is reported as steady or declining by many of the District's large commercial banks, and deposits have declined in a number of banks, with lower demand deposits reflecting a softening economy and continued response to high interest rates.

On the retail front, large department stores in major Tenth District cities were asked to compare sales so far in 1974 with the same period a year earlier. Although an improvement in dollar volume has been seen in most cases, all stores reported a falloff in physical units. Stores in suburban areas, however, were generally felt to have performed better than those downtown.

Hard goods were the most frequently cited area of weakness, though the degree of weakness varied widely. In most cases, inventories were reported as being larger than desired. Various methods are being pursued to reduce them. These include reducing purchases, cutting prices, and where possible, either returning slow moving items to manufacturers or cancellation of existing orders.

Sales expectations for this Christmas season varied among the stores surveyed. Few merchants anticipated any marked improvement over last year in dollar volume, and even where some increased nominal sales were expected, real sales were viewed as lower than last year's. Shopper consciousness of bargains and response to advertised specials was repeatedly mentioned. One controller reported "People are more selective in their purchases. They're buying what they can use and watching their dollars more."

Led by decreases in the prices of cattle, corn, and soybeans, prices received by farmers fell 1.5 per cent in the month ended November 15. Compared to a year ago, the index was virtually unchanged. However, prices paid for production inputs continued their upward trend, rising another 1 per cent from mid-October to a level 17 per cent above November 1973. Despite a year of downward trending prices-especially for livestock-and poor weather for crop production, total cash receipts from farm marketings in the District during January-October are nearly the same as in 1973. However, the distribution of receipts has changed in the past year as crop income is up about 18 per cent while livestock receipts are 8 per cent lower. The cattle industry continues in a depressed state with cow-calf operators now facing many of the same financial problems as the feeder a few months ago.

Loan volume is reported as steady or declining by many of the District' s large commercial banks. Virtually no new construction loans are being made, with the Denver banks in particular noting cancellations of previously scheduled projects. Decreasing numbers of cattle on feed and sales of previously stored grain are depressing the demand for agricultural loans. In the consumer sector, increases in bank credit card loans are partly offsetting a sharp drop-off in loans to finance durables purchases. Business loan demand has been mixed with some strength derived from energy-related industries, the involuntary accumulation of inventories, and the stretching out of accounts receivable. These last two factors, which threaten the profitability of business borrowing, coupled with the generally gloomy outlook for the economy, have caused many banks to intensify their efforts to restrict credit and upgrade its quality. Credit standards have been tightened for business and consumer loans and business customers have been urged to improve their liquidity and reduce their inventories. Banks are turning away new customers, refusing to loan for such nonproductive purposes as business mergers and stock or commodity speculation, and are confining new loans to their local areas. In line with this policy, several banks were eliminating some national credit lines or trying to limit borrowing against them-especially for finance companies.

Deposits have declined in many banks, with lower demand deposits reflecting a softening economy and continued response to high interest rates. In part, cautious loan policies are being matched by less aggressive marketing of large CD's. Many banks reported they were attempting to stretch their time deposit maturities to take advantage of the lower reserve requirements.