Beige Book Report: Atlanta
August 11, 1976
Developments in the Southeast furnish evidence of continuing economic growth. Convention and tourist expenditures, spurred by the opening of a new convention center, are expanding in the Atlanta area. A survey of District businessmen and bankers finds the outlook for shortages unchanged. Inventory policies remain cautious and fairly stable. Plant and equipment additions are concentrated in the District's capital-intensive industries. Bank loan demand is expected to remain slight to moderate. Labor supply shortages are foreseen in certain skilled trades. Rising prices are foreseen for energy-related products. In Southeastern agriculture, cattle and calf inventories are declining. Application of a new irrigation technology is changing the crops grown in parts of Georgia.
Atlanta's economy is benefiting from expanding convention and tourist trade. Transient spending is a key explanation given for retail spending gains at rates which exceed state and national advances. Convention patronage of hotels, restaurants, and retailers is expected to receive a major boost in September, when about 20,000 persons will attend an apparel industry exhibition, the first to be held in a large, new convention facility now nearing completion. Another major development affecting retailing is the opening of a 1 million square foot regional shopping mall which includes four major department stores.
A new survey of businessmen and bankers finds few changes in their views concerning current and prospective shortages. Natural gas, both as a fuel and as a raw material, and tires are mentioned most frequently. A variety of metal products, including pipe, castings, forgings, alloy steel, bearings, and fabricated pressure vessels, is also cited. Some concern exists about current and future availability of crossties, creosoted lumber, and other lumber products.
Inventory policies remain cautious, but changes are slight. Stock reductions by wholesalers and retailers of furniture in Florida and major appliances in Tennessee may reflect slowness in sales gains for these items. Deliberate reductions in inventories by wholesalers of lumber, paper, and steel are indicated, and excessive stocks of nylon, rayon, and wool are being reduced.
Major current plant and equipment additions are concentrated in capital-intensive industries, including chemicals, fabricated metals, paper, and glass in Alabama and Tennessee and petrochemicals in Louisiana. Increases are also noticeable among several manufacturers of precision equipment. Prospective increases are centered in the chemicals, primary and fabricated metals, pulp and paper, and building materials industries. Upward revisions in spending plans are reported in chemicals and in textiles and related industries. One source states that far more work on projects of all sizes is going on in company engineering departments, compared with four months ago, but that the number of these plans which will be translated into actual additions is difficult to assess. Despite considerable investment activity, expected demand for bank loans in the next six to twelve months is fairly evenly divided between "slight" or "moderate". None of those surveyed expect loan demand to be "substantial" or "strong".
Shortages of labor are expected to appear in certain skilled categories, including machinists, toolmakers and diemakers, metal workers, welders, chemical and apparel workers, nurses and medical technicians, and data processing specialists. These anticipated shortages closely parallel the industries in which significant labor-force additions are expected to occur.
Major price increases are widely anticipated for fuels, including natural gas, coal, petroleum products, and electric power. Products for which significant increases are expected include paper and paper products, various metals, and any product using natural gas as a raw material, such as chemical fertilizers.
Inventory numbers of cattle and calves in the southeastern states showed a sharp decline from the previous year. As of July 1, the District drop amounted to 9 percent; Alabama's loss of 13 percent was the largest in any District state. Breeding herds are being reduced to the same degree as the total cattle inventory.
Center pivot irrigation systems, visible in increasing numbers in southwest Georgia, are producing marked changes in crop yield and type of crops by alleviating the problems posed by sandy soils with poor water retention. The center pivot device employs a "spoke" of twelve-inch pipe with sprinklers attached which radiates from a water well. The sprinkler travels on wheels driven by electric motors. A radius as large as 1,500 feet is used in presently existing systems. Even distribution of water and fertilizer is achieved by gradual rotation of the sprinkler. Remarkable increases in yields of corn and peanuts have resulted from use of this device; vegetable farming, an industry new to the area, has begun. A capital investment of at least $60,000 is required but, according to agricultural extension service studies, is quickly recouped as a result of increased yields.