June 11, 1975
The economic news is spotty this month. Unemployment seems to have stabilized, and a number of district industries appear to be growing increasingly optimistic. Car sales have improved slightly, and new truck sales are reported as strong. One Atlanta bank indicates that credit card losses are running four to five times above normal levels. Crop plantings in the district have progressed rapidly during recent favorable weather conditions. While residential construction continues at low levels, announcements of commercial and industrial projects remain brisk.
Reports from Louisiana and Florida suggest the rise in unemployment has halted. In Florida, the northern part of the state around Jacksonville and the Panhandle apparently is already improving, and central Florida is starting to show a pickup; but south Florida around the Miami area remains depressed. Public works jobs along with high levels of car imports at the Jacksonville port seem to be adding strength to Jacksonville's economy. Activity at the port in Mobile, Alabama, also is at a high level. A central Florida director indicates that several local businesses are now placing orders to build up inventories. Directors in southern Alabama and Mississippi report an improving job outlook, with new hiring expected in the shipbuilding, pulp and paper, furniture, and chemical industries. They report that skilled job positions are still going unfilled in many job categories. Several businessmen in Georgia's textile and carpet industries report business improving and some rehiring. A Georgia apparel manufacturer notes a sudden increase in new orders, indicating an improvement in business conditions.
All the news isn't good, however. U.S. Steel shut down its Ensley mill near Birmingham, Alabama, to meet the May 31 air pollution abatement deadline; the closing will cost 2,000 jobs and result in a $60 million annual loss to the area's economy. Honeywell Aerospace, in St. Petersburg, Florida, will lay off over 100 workers after failing to win a government contract. Several Georgia paper manufacturers have recently scaled back their labor forces because of a drop in demand for paper products.
Automobile manufacturers' representatives in various areas report that dealers have benefited greatly from reduced borrowing costs and from the sales increases of the past few months. However, there has as yet been no noticeable impact on car sales from the tax rebates. Also, no noticeable shift in car size preference has taken place. Representatives indicate that orders from dealers are strong and that dealers are now much more optimistic. Truck sales are reported as very strong now, possibly because of the investment tax credit. One Florida director notes that auto dealers are now looking for new salesmen. Used car sales are reported as exceptionally strong in his area.
An Atlanta bank reports that its bank credit card losses are running about five times above normal. It is also getting hit very hard this year with defaults on small consumer loans. As a result, it is reevaluating its consumer lending practices. However, even with more rigid lending practices, it estimates that 40 percent of the defaulted loans would still have been made. A mid-Louisiana director indicates that bank loan demand remains down and that little effort is being made to compete for certificates of deposit. The S&Ls in this area have dropped mortgage rates below 9 percent and reduced in half the points charged to close loans; but mortgage lending has not responded.
While crop plantings have benefited from a period of good weather, over 50 percent of Louisiana's and 20 percent of Mississippi's cotton acreage remained unplanted at the end of May; this is an unusually late date for planting cotton. Soybean planting also trails normal progress in these two states. District farmers seem concerned over the threat of further fuel price increases. Wind damage to Louisiana's state and national forest lands is estimated at more than 20,000 acres. The forestry services are making plans to attempt to salvage as much as 40 million board feet of prime timber felled by storms. Florida's tomato crop was excellent. Citrus prices are reported as poor except for grapefruit, where Japanese buying held up prices.
Residential construction has not as yet developed a noticeable recovery, despite large inflows at S&Ls. As reported last month, the housing tax credit is apparently having only a slight impact on reducing the stock of unsold houses. A large Florida housing builder reports a large inflow of new orders recently. Residential construction in the St. Petersburg area has improved slightly; but in the Miami area, the housing situation is still bleak, and many construction workers have moved out of the area.
Commercial and industrial construction projects continue to be announced. IBM has announced plans to build an 11-story office building in the Atlanta area. The Coca-Cola Company has announced plans for a $50 million expansion project that will include a 20- to 30-story office building. Republic Steel Corporation has recently announced plans to spend $350 million at its Gadsden, Alabama, plant; the project will increase the plant's raw material output by more than 1 million tons annually. Dow Chemical will build two new petrochemical plants in Louisiana at a cost of $25 million. The German chemical firm, Degussa, announced another $10 million plant in their Mobile, Alabama, complex. This brings the grand total of their investment to over $100 million thus far.