January 10, 1973
An optimistic tone regarding the economic outlook characterized the views expressed by Second District directors and other leading businessmen contacted recently. Retailers enjoyed a very good Christmas season. Business confidence was reported to have strengthened further, but no signs of an emerging "boom" psychology were detected. Apart from isolated instances, industrial product markets have not tightened any further of late, and in general industrial prices have risen only in response to production cost increases. The unemployment picture has improved on balance, and growing shortages of skilled and semi-skilled workers were reported.
Most respondents reported that holiday sales in their area had been exceptionally good—well above year-ago levels and also generally well above earlier expectations. The president of a large retail concern with nationwide outlets said his firm's sales during this period had exceeded expectations which were already "very high to begin with". One director observed that sales during the week after Christmas were also unusually good, presumably indicating that consumers were still in a bargain-hunting mood.
The Buffalo branch directors felt the current well-balanced expansion has given businessmen an optimistic outlook, with expectations now widespread that growth would continue throughout 1973. A senior official of a large upstate manufacturer, who felt that business confidence had improved greatly of late, said this development was now being translated into increased orders, inventories and plant and equipment outlays. The president of a large retail firm also felt that strength in the overall business situation was likely to continue over the months ahead. Generally similar sentiments were expressed by other directors and business leaders. Concern, however, continued to be voiced by some of the respondents over the uncertainties surrounding wage-price controls and Government spending.
Regarding the raw materials and industrial products markets, a majority of the directors detected no widespread tightening in these markets at this time, although there were reports of scattered tight spots. However, the senior official of the large upstate industrial firm did state that while the most outstanding example of tightness so far was in the lumber industry, conditions in other industries might become tighter if price controls prevent normal market forces from expanding supplies. Several other directors also reported that building materials were in short supply, and an upstate owner-operator of a large agricultural enterprise commented that paperboard and some textile products seemed harder to obtain. It was also reported that delivery of raw materials in the automotive parts business has stretched out from the normal three to four weeks to seven to eight weeks. The New Jersey banker reported that several firms in his area were adding second and third shifts to keep output in line with incoming orders.
On the price front, respondents expressing an opinion stated that they were not aware of any increases in industrial prices which did not appear to be directly related to cost increases. With respect to agricultural prices, however, an upstate director engaged in agriculture noted that short supply and high demand had resulted in "drastically" increased prices for apples and for livestock and poultry feeds, the latter being reflected in higher milk and egg prices.
According to most respondents, there is no general shortage of labor in the Second District, but conditions are tight in scattered localities and widespread shortages of skilled workers exist. The labor market in the Rochester area was said to be quite tight, with a large number of vacancies open for skilled labor. Labor conditions in Albany also were described as tight, reflecting in part the continued growth in government-related employment. A New Jersey banker not only reported a shortage of skilled blue-collar workers in his area, but noted that there was some difficulty in obtaining employees in the banking field as well. Most other directors also mentioned shortages of skilled workers.