April 6, 1971
Leading businessmen and bankers around the district seem to have become somewhat more optimistic about the economic situation-present as well as future. A growing number feel that the business picture has brightened somewhat and note a pickup in announcements of capital spending plans. Scattered declines in consumer CD and passbook rates are expected to spread. The outlook consensus of several economists in our region corresponds more closely to those of private economists than that of the Council of Economic Advisers.
Businessmen have specifically described business as "good" in such
cities as Baton Rouge, Jackson, Orlando, and Knoxville. Recently
started and prospective construction projects are a common cause for
optimism. Included in such projects are a convention center,
shopping mall, and bank building in Knoxville and a shopping center
and retail distribution facility elsewhere in Tennessee; a school,
apartment complex, and bank building in Birmingham; and a $100-
million power plant in Mississippi. In the Jacksonville area, it has
been reported that "A tremendous number of large real estate
developments have recently been announced or are in the immediate
planning stages." These include two large office buildings, a
residential complex for retired persons, and a high-rise apartment.
It was also predicted that ten new plants would be under
construction in the Jacksonville area by the end of the year.
A rash
of plant announcements are also expected in central and east
Tennessee. In the New Orleans area, a $100-million expansion of a
medical complex is starting and construction is expected to begin
shortly on a domed stadium. Construction of a basketball coliseum
has started in Atlanta, and a large air freight center has been
announced. Also, two modular home plants have been announced, one on
the Gulf Coast and one in South Georgia. Resumption of full
production has occurred at a textile plant in Tennessee and at tire
plants in Tennessee and Alabama.
On the other hand, businessmen are reported to be very profit conscious and are making every effort to reduce work forces. Further layoffs have recently been announced in the aerospace industry. Industrial growth has reportedly ceased along the Mississippi River. Three textile mills have closed. A continuing inability to obtain long-run contracts for natural gas is reportedly hindering plant location in the New Orleans area.
Recent price increases have occurred in hospital and auto insurance and water rates, but the incidence of price increases seems to have lessened.
The largest savings and loan association in Florida and a savings and loan in Nashville have reduced their peak rates on certificates. Three banks, one in Miami and two in Nashville, have reduced their passbook rates from 4 1/2 percent to 4 percent. Rate reductions are expected to become general in the Nashville area.
A group of academic and professional economists in the Atlanta region expects about a $1,045-billion GNP this year, a 5.8 percent average unemployment rate, and more than a 4-percent increase in prices. All of the economists thought that at least a 9-percent expansion of the money supply would be required to achieve a $1,065-billion GNP, but none advocated that large an increase in the money supply because they considered it inflationary.