Beige Book Report: Atlanta
December 14, 1977
Optimistic reports of consumer activity highlight economic news in the Southeast. The employment situation is still troubled by strikes, and crop farmers' revenue losses have been brought to the nation's attention. Inventories appear generally in balance. Housing continues to set post-recession records, while commercial and industrial development shows moderate gains. There's been no slackening of loan growth, but deposit inflows have tapered.
Reports of day-after-Thanksgiving retail sales have been almost universally glowing, fueling merchants' expectations of an excellent holiday season and extra-seasonal sales gains. Heavy advertising, special sales, and the recent opening of new shopping centers in many areas have helped stimulate sales. One director notes that the dock strike has created shortages of electronic products, such as TVs, radios, and stereos, and of some soft goods from the Far East in his area. Despite their optimism, retailers in several cities have expressed concern that their large preseason stock build-ups won't be entirely worked off.
Sales of new and used cars and trucks have varied widely in strength, by location and by make. Though December is typically a slow month for them, many dealers expect sales tallies to surpass last December's. Inventories of 1978 models seem short to adequate, with deliveries quickening. However, a few scattered dealers have substantial supplies of slow-moving 1977 models.
Indications are that producers' inventories are generally stable and under control, with finished goods stocks in a slight downtrend and raw material supplies holding. However, cold, wet weather has delayed fertilizer applications and driven up stocks of phosphate products. Producers (mainly in central Florida) had been working down excess stocks for several months, and the latest setback prompted them to cutback production, close several small plants, and lay off some workers.
The biggest inventory story is coal. Electric utilities have been stockpiling for weeks in anticipation of the U.M.W. strike and are carrying supplies adequate for roughly four months of normal winter service.
Gas utilities and fuel dealers continue measures to ensure supplies through the winter. Gulf States Utilities has announced a three-year, $750 million investment program to convert its gas-burning plants to coal or nuclear power.
Settlement of several large strikes has sent thousands of workers back to their jobs. But 5,000 Lockheed workers in Atlanta and 2,000 Pullman-Standard employees in Birmingham were still striking when the U.M.W. pulled coal miners off the job.
Abnormally heavy November rains put harvests even further behind schedule and damaged crop quality in many areas. Cattle prices have risen slightly; one director remarks that a spring swell in beef cattle herds is in the making. Orange and concentrate prices remain at an all-time high, with excellent harvest conditions, unusually strong post-Thanksgiving demand, and heavy out-of-state shipments.
An estimated 5,000-8,000 farmers from Georgia and neighboring states tractored to the State Capitol in Atlanta this weekend, peacefully protesting low prices of farm products and income losses (particularly pronounced in the Southeast because of production shortfalls) and demanding 100 percent parity. They say they will join a nationwide strike to begin Wednesday. More ominous than this threat has been the rumor that the Teamsters may support them with a boycott of farm products; at least one importer of feed from the Midwest has arranged for advance deliveries. Residential construction and housing sales show no signs of letting up, other than or in spite-of the usual seasonal slackening. Nonresidential gains continue to be less spectacular but moderate. Recent building plans announcements have included sizable portions of medical facilities and public construction. Private investment plans are by-and-large for smaller, less costly additions and short-lived equipment, though several major investments are on the horizon.
>Strong, broad-based loan growth has continued. Bank investments have been virtually flat. While savings deposit growth has diminished at member banks, demand deposits have expanded notably and large banks' outstanding large-denomination CD's have risen. At savings and loan associations, deposit inflows have moderated; though rates are generally stable, some increases in rates on mortgages and certificates have been reported in Atlanta and Birmingham.