Beige Book Report: Atlanta
August 5, 1980
Although economic weakness still characterizes business activity in the District, record-setting temperatures and the effects they have caused received the most attention this month. Consumers are holding spending only to items needed. Residential housing construction is still weak; however, savings and loans report renewed consumer interest in loan applications. Manufacturers of carpet, steel, and aluminum have had substantial layoffs. Parts of Georgia and Mississippi were declared disaster areas due to drought-caused losses by farmers.
Layoffs and threat of layoffs, declining real incomes, and very high energy bills have all led to cautious consumer spending. Department store sales are about even with year-ago figures, implying a decline in real terms. Durable goods sales for the most part remained weak; however, purchases of window air conditioners and fans are up sharply. Several movie theaters reported long lines as patrons seek refuge from record-setting temperatures. Television sales and servicing were thriving as more people stayed home in an attempt to avoid the heat and conserve money. Consumers continued to search for bargains and limited their use of credit cards. Sales promotions are becoming more prevalent in an effort to reduce inventories.
A spokesperson for the Southern Company, a holding company for utilities in the Southeast, said that electricity demand was expected to reach a new high for the entire system in July. Generating capacity was said to be adequate, with most generating plants in good condition.
Automobile sales are still very weak. However, our central Florida, eastern Tennessee, and central Alabama directors reported recent improvement in sales. The used car market has become more active, with heightened demand for both small- and large-sized used cars.
At least temporarily, the downturn in residential housing has bottomed out. Home sales have turned up in various parts of the District. Applications are increasing considerably at savings and loans, particularly in Florida, but builders of single-family houses are not yet convinced that the housing slump is over. Residential construction is especially weak in areas with rising unemployment such as central and northern Alabama.
Loan demand is soft at many banks due to uncertainty about the duration and severity of the current recession. Delinquency rates are rising but not enough to warrant concern. There appears to be a discernible effort by businesses to reduce their outstanding loans and refrain from borrowing new money.
A substantial weakening in employment has become evident throughout the District. The latest declines have been concentrated in manufacturing, but slower growth and declines are also occurring in other sectors. Layoffs have been high in the North Georgia carpet industry, which has been harder hit than in the 1974 recession because of the construction and credit squeeze. Sixty-five percent of carpet sales are on credit. In addition to the steel plant cutback, northern Alabama has had recent layoffs in its aluminum industry due to declining demand for aluminum from the auto industry. Jobless claims have accelerated rapidly in most District states but seem to be leveling off.
The tourist trade can be characterized as mixed. While attendance at state parks is booming, more expensive commercial campgrounds are almost empty. Traffic counts along major tourist arteries have sunk appreciably since last summer. Occupancy rates at a chain of "economy motels" are only matching that of last year, and a higher priced chain reports lower occupancy rates. More families are driving at night and lodging during the day because of the heat and lower day rates.
Capital spending projects of note include plans for "Little England," a huge tourist attraction reproducing English history from the Stone Age to modern time. The $500-million complex will be constructed near Disney World and is expected to attract more than 9 million visitors per year and employ more than 10,000 workers by completion in the late 1980s.
An expansion of the Port of Miami, announced recently, is one of the largest projects in South Florida history. By doubling its size, the estimated direct and indirect economic effect of the port will ultimately add about $3.8 billion of income to the port.
Lockheed-Georgia Company was selected as the primary contractor for retrofitting the wings of C-5A "Galaxy" transports. A spokesman for Lockheed- Georgia reported that the retrofit program will permit the "rolling over" of 2,000 company employees currently working on the C-141 program.
The Federal Farmers Home Administration declared parts of Georgia and Mississippi disaster areas because of the heat and drought damage in June and July, making farmers eligible for low interest loans. Georgia crop losses are valued at $450 million. Hay and pasture suffered the largest losses, followed by corn, soybeans, and peanuts. Record temperatures and high humidity have also damaged the poultry industry in Georgia and Mississippi. Broiler prices had just begun to climb to break-even levels in Mississippi before the bird losses began. The losses are expected to result in an increase in broiler prices at the retail level. A brighter picture is that vegetables in Florida have done very well; a record tomato and watermelon crop was harvested there.