January 10, 1973
Economic activity is brisk in the District, and the outlook is optimistic. Numerous year-end newspaper articles and editorials highlighted the strong economic gains of 1972 and predictions of prosperity in 1973. A special survey of Tennessee businessmen shows an optimistic outlook for 1973. With wage and other cost pressures and labor shortages being major concerns, higher grain prices are increasing the cost of some food items. Many state and local governments in the District ran surpluses in 1972 and are flush with funds. Some feel that these funds will be expended in relatively short order, adding to demand and inflationary pressures.
The following is a sample of optimistic headlines appearing in local newspapers around the turn of the year: "Atlanta businessmen see strong 1973 economy", "Florida's economic picture is bright", "Dade County (Miami) economy still rising", "Mississippi economy is on the move with big gains indicated in 1973", "Major economic boom forecast", "Drop in unemployment and rise in income mirror state (Mississippi) gains", "Tampa jobless rate tumbles", "Unemployment is low in Meridian", and "Textile industry optimistic". These headlines both reflect and reinforce the optimistic mood of businessmen, bankers, and the general public.
The main concern of businessmen is that inflationary pressures will mount. There is a shortage of labor in Tennessee, and 70 percent of Tennessee businessmen participating in a recent survey think that wage demands in 1973 will exceed those of 1972. Corporate leaders expect many costs to rise, including costs of utilities and fuel, pollution abatement, taxes, and raw materials. For this reason, there is sentiment for the continuation of controls. Increases in the price of milk and bread in New Orleans are blamed on higher grain prices. A Louisiana egg and poultry producer says that his feed costs have risen by 180 percent in the past year. Three telephone companies and three other utilities have been granted rate increases in the past month. The foundry and coke industries in the Birmingham area are taxed to capacity. The demand for coal is also strong. Controls, however, are constraining the development of needed capacity in the coal industry.
Three New Orleans-area savings and loan associations report strong demand for mortgage funds and dwindling excess lending capacity. A similar sampling of New Orleans consumer finance companies indicates especially good business in November and December.
Retail and tourist activity is generally reported good, but the New Orleans hotel business is an exception. During November, occupancy in downtown hotels was as low as 50 percent. Occupancy at a recently opened hotel has been averaging a disappointing 83 percent.
Banks in New Orleans and Mobile report decided increases in demand deposits around the year-end.