‹ Back to Archive Search

Beige Book Report: Atlanta

August 6, 1985

Despite areas of continuing strength, higher unemployment rates throughout the Southeast offer evidence of some recent weakening in the regional economy. Mixed retail sales behavior in June and a continued dim outlook for crop farmers are also indications of economic malaise. Much of the economy, however, continues to move along at a brisk pace; residential and office construction are quite active; the volume of car sales remains strong; retail sales reportedly improved in early July. Loan growth accelerated in June and is thought to be continuing apace in July. Signs indicate strengthening in the tourist industry, while lower costs may improve profitability in the livestock and poultry industries.

Employment and Industry
Labor market conditions weakened recently, with unemployment rates turning up throughout the region. However, with the exception of a sharp jump in Florida's unemployment rate, from 5.2 to 6.9 percent, joblessness in District states rose only moderately.

Louisiana's chemical industry continues its pattern of no growth.

The forest products industry remains weak; however, some bright spots appear on the horizon. Furniture makers and paper producers are looking forward to increased sales, and the transportation equipment industry is expanding. The optimism of regional furniture producers results from lower raw material prices and falling mortgage interest rates. Although regional paper mills continue to furlough workers in light of depressed domestic and international demand, spokesmen feel that the long-term outlook is bright. Ground was recently broken in Georgia for a $1 billion paper plant that will eventually employ 1,000 workers. It is the largest single capital investment in the state's history. The strongest component of manufacturing job growth in the region has been the transportation equipment sector, which has grown over 5 percent since last year. General Motors Corporation's recent selection of a site in central Tennessee for its Saturn automobile production project bodes well for continued growth in the sector. The project will eventually employ 6,000 people.

Consumer Spending
June sales behavior was mixed, according to District merchants, with over half of the retailers reporting volume slightly below year-ago levels due to somewhat sluggish consumer demand and cooler than normal temperatures during the month. More recent activity in early July was reported to be better than the same period in 1984. Inventories are at desired levels and merchants project fall sales to be 3 to 8 percent above last fall.

Car sales activity in the District through mid-July remained strong despite a sluggish performance in some localities. Some recent weakness is blamed on the ending of manufacturers' incentive programs in June and an insufficient supply of best-selling models. Overall, the region's sales volume continues to run above 1984's high levels.

Construction
Robust residential construction and sales activity characterize the region. The Jacksonville and Atlanta markets continue strong with manageable inventories, while Nashville contacts report that demand for single-family homes exceeds the supply. Multi-family construction is also strong in major District cities with the exception of New Orleans.

Office construction shows no signs of slowing as of late July, even though office vacancy rates increased from the first to second quarter. Atlanta is the only major District city with a lower-than- national-average metropolitan vacancy rate.

Financial Services
All three major lending segments—business, consumer, and real estate—experienced on acceleration in total loan growth in June. Real estate lending is the most vibrant of the major lending segments, with refinancing comprising a significant portion of recent real estate lending. Bank contacts report the lending upturn continued in July, although concern is growing that high debt levels will eventually soften consumer loan demand.

With announced plans to acquire a small Atlanta bank, a North Carolina-based bank holding company became the first with announced holdings in all states from North Carolina to Florida.

Tourism
The tourist industry shows signs of strengthening as the summer season reaches its midway point. Except in Georgia, attraction attendance showed healthy increases over year-ago levels. State parks showed mixed attendance patterns, but most national park sites report positive growth.

Major District-based air carriers show record-breaking increases in passenger traffic. Deplanements are substantially up in almost all Southeastern airports.

Agriculture
Favorable growing conditions throughout the District indicate crop yields should be normal this season. The prospect of ample supplies and uncertainty over government farm programs pushed most District crap prices lower, with corn, cotton, and soybean prices down by one-fifth since a year ago.

Weak crop prices mean lower feed costs for the animal products industry, enhancing the possibility of profit. While livestock and poultry prices are moderately lower than last year, prices of eggs, pork, and broilers increased in recent weeks as production declined.