Beige Book Report: Atlanta
January 15, 1975
While the Sixth District economy remains below par, several bright spots have appeared. Pre-Christmas retail sales were reported as very good in many areas of the District because of successful sales campaigns and advertising. Tourist activity was very brisk during the holiday season. A number of Government contracts have been awarded to District industries. Some savings and loan associations indicate that they now have mortgage money available. Jacksonville, Florida, and the Mobile, Alabama, area have maintained strong economies during the present economic sluggishness. However, layoffs and a sharper than national rise in unemployment continue in the region, and loan delinquencies and bankruptcies remain at high levels.
On the bright side, retail sales responded to pre-Christmas sales and did well. In Jacksonville, Florida, sales turned around completely in the pre-Christmas week; heavy advertising, promotions, and price cuts worked. In Tennessee, retail sales also did better than expected, as retailers held their January sales before Christmas. Only furniture and large appliance sales did not respond to price cuts. Louisiana retail sales did very well, except for New Orleans where a strike of bus and street-car personnel a week before Christmas depressed sales. Whether the strong Christmas sales will take away from early 1975 sales is still an unanswerable question.
Besides pre-holiday price reductions on many retail items, there is evidence of price pressures easing in other areas. Price cuts of 10 to 15 percent have been passed from cotton to worsted and synthetic fabrics into wholesale apparel and finished goods; it remains to be seen whether retailers will pass these cuts on to the consumer. A Florida director reports that at the wholesale level, there are widespread and significant "deals" on tires and other items, which are not represented as a price decrease. Fleet purchases of trucks are also encountering substantially lower prices in the form of grossly inflated trade-ins. In central Florida, apartment complexes are lowering rents because of an oversupply of apartments.
Tourist activity turned unexpectedly brisk during the holiday season; Florida's tourist trade was the biggest in history. Disney World had to close its gates twice because it was too full. The highways to the Florida keys were "bumper to bumper". It was theorized that with the economy turning down, a lot of tourists came because they were not sure how long it would be before they could make it back again. The economy of central Florida has some other bright spots. The citrus crop is expected to be good, and the industry is hiring many additional workers from the ranks of the unemployed. The large phosphate industry is also booming, with the demand for fertilizer and other phosphate products at high levels.
Reports indicate that funds are rapidly becoming more readily available for the housing industry. Florida's largest savings and loan association, located in Miami, plans to accelerate its mortgage lending in response to an improving inflow of savings dollars. A Tampa-Saint Petersburg savings and loan association is running advertisements indicating that it has a million dollars of mortgage money to lend. In Georgia, the loan picture is looking up, the director of Georgia's Savings and Loan League notes. If the present trend toward savings continues, loan applications will be taken on a fairly normal basis by the year's end.
The Mobile, Alabama, area economy has remained healthy as a result of construction on several new plants. Some more good news for the area was recently announced: favorable tests were received on a new oil well in southeastern Alabama. It is expected to be the largest producer on the Gulf Coast in twenty years. The new well was confirmed as producing 1,425 barrels of crude oil and 4.38 million cubic feet of natural gas per day.
Job layoffs continue to be reported around the District. Magnavox has laid off 5,000 workers for one month in Tennessee. Ingalls Shipyards in Pascagoula, Mississippi, is laying off 500 of its 5,500 salaried employees; 13,000 workers are out on strike at the shipyard. Utilities throughout the District have laid off thousands of workers; Florida Power Company has laid off 1,350 people and cut their 1975 construction budget by $189 million. In Florida and Southern Georgia and Alabama, more than 8,000 lumber mill workers have lost their jobs in the prolonged home construction slump, which has hit the South harder than any other region. Lumber production has been cut 30 percent, and 50 mills have closed. Several District apparel manufacturers recently have closed their doors.
Alabama bankers report a continuing rise in loan delinquencies, and new loan applications are being screened more closely. Contractors and suppliers note that payments are slow. An upward movement in delinquencies on installment credit was reported in the Nashville, Tennessee, area. In the past five months, bankruptcy filings have increased sharply in eastern Tennessee. An Atlanta-based credit counseling agency has seen an increase in requests for its services since last May. At first, new clients came mainly from households affected by the inflationary squeeze on their budgets. Since last October, however, increased counseling has been attributable to the effects of layoffs and increased unemployment. The director of the agency mentioned that requests for assistance are coming from people of all economic and social levels, including professional people, and that the people waiting for counseling "looked like Kiwanis Club meeting".
A survey of 318 Georgia industries indicates that only 67 expected
profits to improve this year; two thirds of those surveyed were
either putting off or cutting back on
capital-spending plans.