October 13, 1971
The improved economic expectations voiced last month by the directors of this Bank and of the Buffalo Branch and by other business leaders continue to be in evidence. A better outlook was seen in the retail trade sector, including automobiles. The employment picture was mixed, with some slight improvement in certain areas. Compliance with the "freeze" was reported to be very good, despite some wage dissatisfaction and some price evasion.
The great majority of the directors of this Bank and of the Buffalo Branch felt that the 90-day wage-price freeze had been very well received. One director, the chairman of the board of a large manufacturing concern, did feel that a "head of steam" was building up on wage demands, resulting from contractual obligations and cost-of-living increases that had been set aside during the freeze.
Two directors referred to the growing bitterness of teachers whose wage increases were denied just as the new school year began. Most respondents felt that the wage-price freeze had been very effective, with nearly 100 percent compliance. However, a director of the Buffalo Branch mentioned that an apparel retailer had told him that some manufacturers are "violating the spirit, if not the letter" of the freeze by making minor style or lot number changes, accompanied by increases in prices.
The majority of the directors and retailers believed that consumer spending was on the rise. Most respondents felt that consumer confidence had improved as a result of the new economic program, although this reportedly was not much in evidence in upstate New York owing to unemployment, prison riots, and other "depressing news."
A number of the directors, particularly those of the Buffalo Branch, attributed at least part of the improvement in retail sales to a temporary bunching of purchases owing to anticipation of price increases at the, end of the freeze. One director, the president of a Rochester bank, indicated that retail sales in the city had been adversely affected by bad weather, and an official of a New York City "quality" department store felt that unseasonably warm weather had slowed down apparel sales, even though his store's sales had improved. Three large New York City auto dealers who were contacted reported that the strength in auto sales that had emerged in September had continued into October. "Significant gains" in auto sales were also reported to have taken place in the Buffalo area.
Notwithstanding the improved retail sales picture, most respondents believed that retailers and jobbers were continuing to maintain a cautious inventory policy. Some exceptions were noted, accounted for by special circumstances such as the dock strikes and the seasonal build-up of auto dealers inventories. In general, the trend toward relying on manufacturers to maintain stocks apparently was being maintained.
Most directors did not feel that the present employment situation was "overly bright," but some improvement was reported to have taken place in the Rochester and Buffalo areas, and payroll rosters in western New York are expected to expand with an increase in the economic pace. On the other hand, the president of a well-known research organization reported that the unemployment picture in the "nonprofit" and teaching fields was "bad" and was likely to get worse.