Beige Book Report: Atlanta
May 20, 1970
The mood of our directors varies from pessimism to optimism. If any consensus exists, it is that business activity in the Sixth District will continue to weaken slightly. Many major economic indices should drift downward or mark time for the next two months at least.
In the pessimistic vein, a leading department store recently informed us that their sales are even with a year ago, but only because of the addition of branches; unit sales, of course, are lower. The store reported that labor costs were up 8 to 10 percent and profits were off. They were pessimistic about future department store sales and did not anticipate a quick economic recovery. A telephone survey of department stores indicates this conclusion is shared by many retailers throughout the Southeast.
According to directors' reports, retail sales in some areas have been adversely affected because of a diversion of purchasing power to private schools which have sprung up in response to integration orders. Lumber mills in many areas have not been operating at profitable levels, and one major mill is planning to close down operations for three to six weeks to adjust inventories. A recovery in this industry is anticipated by the end of the year. The coal industry in Tennessee is also stymied at the Mine Safety Act, with which the industry claims it is impossible to comply.
The temporary closing of oil leasing in the Gulf because of
oil-slick problems continues to cause a slump in the Louisiana Gulf
Coast area. The outlook for the immediate future is pessimistic.
Difficulty in obtaining insurance will also continue to hold up
construction in the wake of Hurricane Camille. Also, a strike by
2,600 workers at Gulf States Power is hamstringing new construction
in Baton Rouge and other areas served by this utility.
The employment outlook remains bleak at the large number of military and aerospace installations in the South. Financial districts of major metropolitan areas are expected to continue to experience a reduction in employment occurring throughout the brokerage business, and there has been some reduction in employment at a large bank.
A recent canvass of institutional mortgage lenders indicates pessimistic outlook for single- and multi-family housing starts. Atlanta and Miami were the only moderately bright spots.
Higher prices of vegetables, peaches, and other agricultural commodities may be in prospect because of lower crop estimates and delayed plantings. Production estimates of citrus fruit, however, remain bullish despite a mild drought.
On the optimistic side of the ledger, many new plant locations and large-scale construction projects have been reported recently. For example, central Alabama will be receiving a modular home plant, a poultry plant, and a foundry for production of parts for automobiles and other products. In southern Louisiana, a new chemical plant has been announced and a large addition to an existing plant is planned. In the Birmingham area, a rash of construction projects has been announced. In the New Orleans area, plans for a new shopping center and another large motel have been announced. Potential public construction in that area includes a large bridge, an airport, and a stadium.
One director has reported a sizable increase in new orders because of a revival of capital projects that had been postponed last year.
A real bright spot in our District has been the Orlando area, where construction should continue to boom as Disneyworld gains momentum. Construction will soon be commencing on a very large residential project south of Orlando.
If a tentative wage settlement is ratified by ground workers of National Airlines this week, it will provide a stimulus to activity in southeast Florida in the coming weeks.