March 13, 1984
Business activity in the Tenth District continues to improve in early 1984. Price increases, bath at retail and for materials inputs, remain moderate. Inventories of both retail goods and industrial inputs are generally regarded as satisfactory. Input availability problems are only spotty and are not regarded as serious. Housing starts are expected to remain strong throughout the year, as are both the demand for mortgage funds and the inflow of savings to savings and loan associations. Loan demand at commercial banks has recently increased somewhat, with lending rates generally unchanged. Adequate credit for spring planting appears to be available to creditworthy farm borrowers.
Retail trade
Virtually all retailers surveyed report that sales for 1984 continue
to be up over the same period last year. Appliances and electronic
merchandise have been selling particularly well, while most
categories of apparel have been somewhat weak. In general, most
respondents are holding to normal seasonal patterns for clearance
sales and most are satisfied with present inventory levels. Although
the majority of respondents are optimistic about sales for the
remainder of the year, many indicate a cautious approach to
inventory accumulation for the second half of 1984. Wholesale and
retail prices have remained flat over the past three months, and few
retailers expect any significant price increases in the near future.
Automobile sales
All automobile dealers associations contacted report that sales are
higher in 1984 than in the same period last year. Financing is
readily available for all dealers. Potential buyers are able to get
loans, most of which are made directly with banks. Inventories of
domestic cars are either being maintained or replenished as the
recent surge in demand continues. Stocks of imported autos are low,
and many dealers are making a high percentage of orders after sales.
All respondents expect sales growth to be maintained or to
accelerate this year.
Purchasing agents
Purchasing agents in the Tenth District report stable to moderately
increasing input prices during the past year, generally in the zero
to 10 percent range. In the past three months input prices have been
stable to 6 percent higher. Half of the agents foresee stable prices
for the remainder of 1984 while the rest are predicting increases of
5 to 10 percent.
Some minor difficulties are being experienced in getting materials, as some firms seek to expand inventories. However, troubles are spotty with most agents anticipating only slight problems for the remainder of the year. Materials inventory levels are generally satisfactory with little change expected.
Housing activity and finance
Home builders report that housing starts in January and February
exceeded year ago levels, especially in the multifamily category.
Starts are expected to remain strong throughout 1984. Sales of new
homes have changed little from last year, while inventories have
increased. Prices of new homes range from unchanged to 8 percent
higher than a year ago. Home builders report that construction
materials are general readily available at steady or moderately
increasing prices.
Savings inflows at savings and loan associations are up from last year and respondents expect inflows will continue to increase through the balance of 1984. Virtually all institutions surveyed report a strong demand for mortgage funds, which is expected to continue. Mortgage interest rates are steady and are expected to remain unchanged to down slightly through 1984.
Banking
Most Tenth District banks surveyed experienced some increase in loan
demand in February. Commercial and industrial loans and consumer
loans showed the strongest growth. Deposits rose moderately or
remained unchanged at slightly more than half of the surveyed banks,
and fell somewhat at the remaining banks. The strongest deposit
categories were Super-NOW's, MMDA's, and IRA's. In those banks in
which total deposits fell, demand deposits and conventional NOW's
accounted for the decline. The prime rate ranged from 11 to 14.3
percent, with most banks charging between 11 and 11.5 percent. Both
prime rates and consumer lending rates were unchanged from last
month and the surveyed banks expect no changes in the near future.
Agriculture
Adequate credit for spring planting appears to be available to
qualified farm borrowers throughout the Tenth District. However,
fewer farmers than normal are considered creditworthy, because of
increased cash flow problems and stricter credit standards.
Financial pressures are causing some farmers to liquidate assets and
the number of farm auction sales is much higher than usual. Although
the quantity of land being offered for sale is up sharply, many
attempts to sell land have been unsuccessful due to a soft market.
Winter feed supplies are short in Colorado, Wyoming, western Kansas,
and central Nebraska. As a result, some calves and cattle are being
sold earlier than planned. Other parts of the district have good
supplies of winter feed. Profits from wintering stocker cattle,
especially those grazed on wheat pasture, are expected to be quite
favorable. Many farmers in Kansas and New Mexico are participating
in the 1984 wheat program, but there is little interest in
participation throughout the rest of the district. Interest in the
1984 feed grain program is high in Nebraska and the 1984 cotton
program is popular in Oklahoma. Most grain received by district
farmers under the 1983 Payment-In-Kind (PIK) program has now been
sold.