February 9, 1972
There has been a noticeable increase in optimism among businessmen and bankers throughout the District, and this more confident mood has spread to consumers. Retailers surveyed have a more optimistic outlook now than they had last year at this time. The tempo of manufacturing and the rate of capital spending also appear to have picked up. On the other hand, there is a glut of apartments and retail selling space in Atlanta. In banking, scattered reductions in rates paid on consumer time and savings deposits have been the most notable development.
The Florida tourist industry has benefited from the increased consumer spending. Attendance at Disney World has exceeded expectations, and attendance at several other Florida attractions is up. Because of Disney World, motel occupancy in several tourist areas has greatly increased. During the holidays, motels along Florida's main north-south artery were unable to accommodate the influx of tourists. One central Florida attraction reports attendance 30 percent above a year earlier.
Atlanta is reported to be overbuilt, at least temporarily, in apartments and retail store space. A surplus of space in office parks was reported earlier. A very large increase in the number of apartments coming onto the market is occurring in Atlanta. The glut of apartments has prompted two large mortgage banking companies to discontinue financing additional multifamily housing in Atlanta. There has been one foreclosure on a new complex in the Atlanta area. It is also reportedly difficult to place participations in mortgages on Atlanta apartment complexes. However, there seems to be no glut in single family housing in Atlanta. Retail store space has also increased sharply in Atlanta in the past year. Existing space, according to a major retailer, is sufficient for at least five years. On the other hand, apartment building is strong in the Birmingham area, where construction was recently started on a $100 million planned community. A shortage of apartments is reported in the Jackson, Mississippi area.
A pickup in the pace of manufacturing is occurring. Increased production and employment is reported in industries such as apparel, automotive and trucking, boating, and health equipment. There also appears to be an increase in the number of plant expansions and new plant locations. Reports have reached us that the Huntsville, Alabama area has more prospects for new industry than ever before. New plants and plant expansions are reported for industries such as furniture, mobile homes, chemicals, and small aircraft. A large increase in capital outlays is accompanying oil exploration in southeast Alabama and northwest Florida.
Banks in Nashville and Knoxville have generally cut time and savings deposit rates by 1/2 percent. The largest savings and loan association in Knoxville announced plans to reduce its passbook rate from 5 percent to 4 1/2 percent on April 1. One Birmingham bank has reduced its savings deposit rate from 4 1/2 percent to 4 percent. Three banks in Jacksonville and two in New Orleans have shaved time deposit but not savings deposit rates. One other New Orleans bank has discontinued accepting deposits with over one year maturity. Isolated reductions in some consumer time deposit rates have been detected in Tampa, St. Petersburg, and Miami. However, the movement to lower rates does not seem to be gaining momentum, and there evidently is no rush by savers to extend maturities on time deposits in order to lock in high rates. Several bankers mentioned that they would like to cut rates but could not for competitive reasons. Bankers in Jackson, Mississippi and Atlanta have no plans to reduce rates.
Inflationary pressures currently seem the greatest in telephone and other utility rates and in real estate in south Florida.