Inflation seems to be the top item of concern of most businessmen and directors in the District. Consumer spending is apparently holding up well. However, much of the increase in spending is related to higher prices. Record high interest rates are causing commercial banks' lending rates to bump up against state usury ceilings in some areas. Although some soft spots still exist, no new job layoffs of any consequence have been recorded. Tourism, particularly in Florida, is now beginning to improve as gasoline becomes more readily available. The volume of new and expanded plants announced during the past month was one of the largest ever recorded and reflects the pace of capital spending in the District. On the agricultural scene, bumper cotton crops are expected, although some crops are behind in their planting schedules.

Inflation is uppermost in the minds of many. An area businessman, who surveyed several of his associates, summed it up in typical fashion:

"The general consensus of most businessmen interviewed during the last thirty days is that they expect higher prices and more and larger wage demands. This they expect to lead to more and continued inflation. Most expressed concern for the condition, of the economy but were apprehensive of the ability of the nation to reverse the trend (i.e., inflation in a short period of time)."

Retail sales continue to expand as indicated by reports from Alabama, Florida, and Louisiana. However, most of these increases are related to higher prices. One Alabama businessman suggests that people are convinced that inflation will continue and, consequently, are purchasing now rather than paying higher prices later. The three largest department stores in the Birmingham area report that sales for the first quarter of 1974 are up by approximately 11 percent from the same period a year ago; but they indicate that price increases accounted for over one-half of these gains. Shortages of wool and wool-blend fabrics may raise apparel prices but depress overall sales. Auto sales, particularly in the mid- to-large size class, have apparently nearly recovered from their earlier slump, according to reports from around the District. Used car sales have also picked up.

Reports from central Alabama and mid-Louisiana indicate a continuation of strong loan demand. In Tennessee, rising interest rates have forced bank loan rates up against ceilings imposed by state usury laws. Alabama bankers indicate that mortgage loan delinquencies have increased and are now at record highs. Consumer installment loan delinquencies have also been on the rise in many parts of the District. Several automobile dealers have reportedly failed, and some banks are finding themselves in the car business.

Labor market conditions appear to have stabilized. Florida's and Georgia's mobile home and recreation vehicle manufacturers are beginning to note a pickup in sales and production. Some mobile home manufacturers forecast a bright future for their industry for the next ten years because of the skyrocketing cost of residential construction. In South Florida, one electrical parts manufacturer is expecting to add substantially to his labor force in coming months. However, in east Tennessee, several large nationally known television manufacturers expect a downturn in sales and some job layoffs. Tourist activity is showing a strong comeback as gasoline supplies become more available. In central Florida, Disney World, Cypress Gardens, and Circus World have reported increases in business in the last month. These attractions, as well as areas in south Florida, are forecasting a good business for the summer months. They reason that part of the business lost earlier will come this summer as a bonus. On a side note, Tampa has become the first city to receive an NFL football franchise since the AFL-NFL merger several years ago. City officials feel that this will provide a boost for the tourist activity. In Tennessee, however, attendance at the great Smokey Mountain National Park remains below par.

Announcements of new and expanded plants were at record levels. Apparently, the energy shortage has stimulated some of these announcements. A $3 billion nuclear power generating plant has been announced by the Alabama Power Company. Louisiana Power and Light Company announced plans for the construction of a $1.2 billion nuclear generating station, with initial operations scheduled for 1982. Gulf States Utilities announced plans to build Louisiana's first coal-fired electric generating plant. It will cost $150 million. Tennessee Valley Authority recently sold $100 million in five-year power bonds. The funds would be used for expansion of the TVA power system. Other new plant announcements are as follows: a $213 million container board mill in Mississippi; a $150 million cigarette manufacturing plant in Macon, Georgia; and a $96 million chemical plant in Mobile, Alabama. Two large plant expansions were also announced: a $160 million expansion of an Alabama aluminum manufacturer and a $100 million plant expansion of a Louisiana pulp and paper processing plant. Business investment in pollution control equipment continued to receive top priority in many instances. An Alabama paper company reported capital expenditures of $25 million in April. Of this total, $18 million is going into pollution control.

Bumper farm crops are expected in many areas of the District. In Tennessee, the largest cotton crop since 1954 is expected. Mississippi also expects a large cotton crop. Florida's sugar cane industry expects the second largest crop in the industry's forty-nine year old history. However, bad weather has delayed planting of crops in some areas of the District. One of Alabama's most prominent cattle dealers reports that there is a definite surplus of beef cattle, and the prices of live cattle are down nearly 30 percent from earlier highs.