October 13, 1971
Businessmen in the Eighth Federal Reserve District are increasingly
optimistic as to the business outlook. Most of those interviewed
report that conditions are improving at the moderate rate of recent
months. Retail sales in the suburban areas continue to expand, but
central city sales have remained unchanged from the relatively low
spring and summer levels. Major gains from a year ago in residential
construction continue. Construction-related manufacturing firms,
likewise, report sales gains and prospects for even larger sales in
early 1972. Inquiries to industrial development agencies relating to
investment opportunities have increased in recent months. Savings
flows through financial institutions have accelerated in recent
weeks. Interest rates on mortgages remain relatively stable,
indicating that
demand for savings has, likewise, accelerated.
One comment frequently heard in recent discussions with business leaders is that people are becoming more optimistic. One businessman suggested that confidence was the major problem with the economy and that the President's program will serve to restore it. Some, whose business is primarily agriculturally related, have expressed apprehension about the 10-percent surcharge in the President's new economic program. They fear foreign retaliation to this increased trade restriction. Other reports indicate that some of the enthusiasm expressed immediately following the wage-price freeze has moderated, but these reporters remain mildly optimistic.
Retail sales have generally continued to expand. Automobile sales are reported to be either good or excellent. Reports from department stores in the larger cities indicate that sales have continued moderately expansive in the newer outlying stores but that little change was noted in the older inner city stores. Those firms which are located entirely in the older sections of the city often report no recovery since the beginning of the year. Over the last few years, several retail stores have closed in downtown St. Louis, including one of the three largest department stores. Also, a major department store in downtown Louisville recently announced the intention of closing.
Residential construction has continued strongly upward. Since
January 1, the number of one-family units built in the St. Louis
area is 50 percent greater than in the same period last year. Multi-family units constructed and mobile homes sold are, likewise, up but
at a somewhat slower rate than
single-family homes. Reports given at
directors' meetings in the three branch cities indicate a similarly
strong residential construction trend throughout the District.
Interest in investment opportunities by Eighth District businessmen is apparently reviving. A St. Louis industrial development agency reported that the number of inquiries by both national and local firms concerning plant locations has increased in recent months. Reports from Louisville, likewise, indicate that more potential new plant sites are being studied than during the past two years.
Savings flows into financial agencies have remained at the high rates of a month ago, following the midsummer dip. One of the larger St. Louis savings and loan associations reported that both gross and net savings in September were the largest on record. Interest rates on mortgages are relatively stable in the St. Louis area, but some savings are being channeled to other areas of the country where demand is rising more rapidly.