July 9, 1975
"Improving" seems to be the key word in most sectors of the Sixth District economy. The agricultural outlook is bright with bumper crops expected. Car sales are showing some moderate strength in parts of the District. Inventories now seem to be at desired levels for most businesses, except primary metals manufacturing. Construction of single-family homes is improving; new defense contracts will also aid construction activity. Several District businesses are negotiating sizable contracts with Middle East oil companies. Tourist activity throughout the region continues to be strong.
Bumper crops are expected in many parts of the District. In Alabama, farmers are making good progress in planting and cultivating. Most crops, especially tomatoes, are very good. Florida's tomato crop is also very good this year, and prices are at high levels. However, in Louisiana, heavy rains and backwater flooding this spring have caused considerable damage to timber and pasturelands. Loss estimates run as high as $50 million. Tennessee crops are generally excellent, but there is concern over the current lack of moisture in this area. The high level of production costs continues to affect District farming. One report from an eastern Tennessee county indicates that the number of farm auctions has risen to between three and five per week.
New car sales, while improving, fail to show any substantial rebound. Reports from Alabama, Florida, and Louisiana, however, indicate that used cars are selling very well. Foreign car sales are also brisk. The Jacksonville Port Authority reports foreign car imports continuing at a rapid rate. New car sales are reported as spotty in Tennessee. However, in Nashville, a Cadillac dealer sold 25 cars in 7 days; he reports that May was his third best month since he has been in business. Used cars are reportedly selling at a fantastic rate in the Nashville, Tennessee, area.
Tennessee informants report that retail sales of both high-priced and low-priced items are doing well. The slack seems to be in the middle-priced items. Several Tennessee manufacturers report orders up and are now rehiring. However, farm machinery, glass, and industrial lighting manufacturers continue to cut back their work forces because orders remain at low levels and inventories are still excessive. Most retail stores appear to have inventories back to normal levels but remain conservative in restocking because of uncertainties over the strength in retail sales. One director voiced apprehension over the impact on retail sales of the expiration of unemployment compensation benefits later this fall.
Directors were asked to make a special survey of inventory conditions of local businesses. For the most part, businesses now say that inventories are at desired levels and no further reductions are anticipated. Some believe that inventories are too low. However, steel manufacturers' inventories are cited as being too high. No expectations of renewed materials shortages in the near future were voiced by the directors.
Deposit inflows at savings and loan institutions continue to accelerate in most parts of the District. More importantly, mortgage commitments are now on the rise. Most parts of Alabama report substantial gains in building permits, and real estate dealers report continued increases in sales of current housing inventories. For the first time in over a year, there appears to be a definite upturn in single-family housing activity on the lower western coast of Florida. Several Government defense contracts will also give a boost to construction activity. Government funds of over $66 million are expected to be approved for housing construction projects at Georgia's Fort Stewart complex. Louisiana's Fort Polk is to receive over $100 million for permanent housing; the funds have already been approved by the U.S. Armed Services Committee. As strange as it seems, Florida's housing industry may receive a boost from Middle East oil countries. Deltona's "component homes" plant in South Florida is now closed down, and this has added to the region's unemployment. This company is now working on a new home line for overseas shipment to the Middle East. If the project materializes, the plant will soon reopen. An Alabama company has also recently completed a $42 million contract with Saudi Arabia to build 1,000 modern prefabricated townhouses.
Foreign oil money will also give a boost to the economies of Birmingham and Mobile, Alabama. A Birmingham-based firm is in final contract stages with the Arabian Sheikdom of Abu Dhabi for a $52 million water pipeline project. The 33,000-ton pipe order will be shipped through the Mobile, Alabama, port. Martin-Marietta Corporation of Orlando, Florida, has received a $30 million Air Force contract. Three Alabama Army bases are to receive nearly $60 million in Government funds in fiscal 1976. Several construction projects at medical complexes in New Orleans and Atlanta should give a boost to these cities' economies. However, in Atlanta, construction laborers went on strike July 1, stopping construction on $150 million worth of downtown hotel projects.
Tourist trade remains very strong in Florida, Georgia, Louisiana, and Tennessee. Reports from Tennessee indicate a record year for tourism. Tourist traffic is particularly strong in Nashville. The new Nashville Hyatt Regency is already booking conventions through 1981. Tourist traffic in Georgia, according to travel statistics, is up nearly 20 percent from a year ago; and, as mentioned in earlier reports, tourist activity on the western coast and central parts of Florida remains up 50 to 80 percent from last year.