July 9, 1975
At midyear, the economic decline in the Ninth District appears to be ending. Consumer spending has picked up recently, and tourist spending has been strong throughout the District this summer. Automobile and truck sales, on the other hand, continue below year-earlier levels. District construction activity picked up modestly in the second quarter. Despite localized damage from recent rains, early July's overall District crop conditions can be termed good to excellent. District farm income, however, could suffer if large harvests depress prices.
After a poor first quarter, District consumer spending has started to revive. Several large District retailers reported that sales began to pick up in late spring, and one large firm termed recent business as "excellent." However, others indicated that their sales had been just matching or falling below year-earlier levels. Several retailers felt that favorable weather had helped to boost their sales, and opinions were mixed concerning the tax rebates. One large firm stated that the tax rebates and earlier tax refunds combined with the favorable weather had helped sales along, but concern was expressed that these factors had merely shifted some July-August spending to the May-June period. Other firms stated that the rebates had no effect, and one retailer reported that his company's rebate check-cashing promotion was a failure. A survey by a local market research firm indicated that 63 percent of Minnesota residents either saved rebate money or used it to pay old bills. With regard to the current situation, regional retailers were satisfied with their inventories; the consensus was that business should gradually continue to strengthen during the last half of 1975.
In contrast to some pickup in general merchandise sales, District automobile and truck sales continued to be down from a year ago. However, some sentiment was expressed that business had started to improve, and regional sales offices indicated District auto inventories were in good shape.
The tourist business was thriving throughout the District, from the Upper Peninsula of Michigan to Montana. In the Upper Peninsula, Northwestern Wisconsin, and Minnesota, reservations were up from a year ago; and resort owners were looking for a very good tourist season. In the western part of the District, visits to Mount Rushmore National Memorial in South Dakota in early June were up 27 percent from a year ago, and travel to Yellowstone National Park was greater than it was last year. No single explanation for the improvement was given, but many expressed the opinion that tourists have had more interest in seeing America this year. Reports from North Dakota and the Upper Peninsula indicated that many Canadians were expressing interest in vacationing in those areas.
Conditions have improved slightly in the District's construction industry. Although still below a year earlier, District housing unit authorizations strengthened in May and April. Also, outstanding mortgage loan commitments in May moved sharply upward in District savings and loan associations, and savings inflows to District thrift institutions had been quite strong through the first two quarters of this year. In addition, a large thrift institution in the Minneapolis-St. Paul area recently reported that loan demand for mortgages was strong. District nonresidential building had also shown some signs of improvement. However, recent District construction activity had been weaker than that of the nation.
District prospects for the small grain, corn, and soybean crops were reported to be surprisingly good, considering the late planting season and persistent June rainstorms. In most cases, the crops were somewhat behind what is considered normal, although some corn in Southeastern Minnesota was already four feet tall by the beginning of July. But the recent heavy rains have created a number of problems. Many fields were flooded and washed out in Minnesota and North Dakota. Wet weather also ruined the first cutting of alfalfa hay and hampered both the cultivation of corn and soybeans as well as the spraying of small grains. What is needed now to hasten crop development and bring out maximum yield potential is a period of dry, sunny weather.