PDF《CONFIDENTIAL (FR)》

CONFIDENTIAL (FR) CURRENT ECONOMIC COMMENT BY DISTRICT Prepared for the Federal Open Market Committee by the Staff June 16,

1976 TABLE OF CONTENTS SUMMARY page i First District-Boston page

1 Second District-New York page

4 Third District-Philadelphia page

8 Fourth District-Cleveland page

13 Fifth District-Richmond page

18 Sixth District-Atlanta page

22 Seventh District-Chicago page

26 Eighth District-St.

Louis page

30 Ninth District-Minneapolis page

33 Tenth District-Kansas City page

37 Eleventh District-Dallas page

41 Twelfth District-San Francisco page

46 SUMMARY* [Asterisk: Prepared by the Federal Reserve Bank of Atlanta.] Continuing expansion at uneven rates characterizes this month'

s economic reports. Although capacity utilization is high in several major in- dustries, shortages of raw materials, components, and finished goods remain the exception. The pace of consumer spending slackened somewhat in most areas in late April and May. However, opinion varies widely concerning the implica- tions of this tendency. A positive outlook persists but is heavily tempered by caution in inventory building and capacity expansion. Price behavior appears fairly normal for a cyclical expansion;

increases are primarily in sectors where spot shortages or a need to adjust to rising costs exist. Demand for business loans is flat or increasing slightly. Adverse weather conditions have affected yields of several major crops. Major industries report generally high capacity utilization rates. Yet, capacity is regarded as adequate for the next

6 to

12 months in almost all industries. Shortages are expected to be temporary in most cases or confined to a relatively limited sector affected by unique conditions. With some exceptions, and a caveat concerning comparability of reports, high utili- zation rates are found in paper (90 to

100 percent), wood products, steel (80 to

90 percent), textiles (85 to

100 percent), apparel, chemicals (80 to

100 percent), oil refining (85 to

90 percent), and automobiles (80 to

100 percent). Low utilization rates are confined to furniture, aluminum, machine tools, and agricultural chemicals. In each industry, however, a more meaningful impression is obtained by differentiating between particular products. In the steel industry, for example, flat-rolled steel used in consumer durable goods is in fairly tight supply, as are foundry products such as castings. Abundant capacity and supplies exist of other products used for capital goods and heavy construction. Current shortages are few, across the board, and generally reflect special conditions. Foundry products, for example, are frequently mentioned as an area of potential shortages. Both Chicago and Kansas City note that closing of foundries because of EPA regulations is reducing capacity in this industry. Other facilities which are similarly affected are coke ovens and forging operations. Several responses indicate that coke supplies are a potential raw material problem for steel producers. The primary current bottleneck in most Districts is the supply of natural gas to users on interruptible contracts. Uncertainty concerning natural gas supplies is widespread and has resulted in substantial capital investment in stand-by energy systems. Concern also exists about the re- liability of natural gas liquids used as feedstocks in chemical processes. Slackening consumer spending, beginning in about mid-April, is noted in a number of reports. In most areas, durable goods sales, especially auto- mobiles, remain strong;