Regional Update (July-September 1998)

Index The State of the States Views From the Region Southeastern Manufacturing Survey Southeastern Economic Indicators

Cover Story - What Is Fueling Atlanta's Housing Growth?

Homebuilder John Wieland Assesses Housing Industry Developments

Gulf of Mexico Oil Companies Gush Over New Drilling Technology

Views From the Region

T he Federal Reserve Bank of Atlanta periodically polls business representatives throughout the Southeast about their opinions on economic trends. Their observations are published in the Fed's Beige Book. In the Beige Book issued Aug. 5, business representatives' comments suggested that the region was continuing its moderate and stable expansion. Here is a summary of their views.

Consumer Spending

  • Most retail contacts reported June sales were up slightly compared with last year, while sales results in early July were mixed.
  • Merchants continued to report balanced inventories and expect third quarter 1998 sales to be slightly larger than last year.
Construction
  • Real estate contacts indicated that home sales during June were generally above year-ago levels in the majority of the region. Most builders reported that new home construction was up slightly during June and early July with no signs of slowing.
  • Commercial real estate markets remained strong in most areas. Office development also continued its strong pace, but some markets showed signs of slowing.
  • The industrial market remained stable, and retail markets were sound in most areas.
  • Multifamily construction continued its strong pace despite rising vacancy rates in several key markets.
Manufacturing
  • The factory sector weakened slightly, with some slowing in current output and new orders.
  • The General Motors strike, which was recently settled, adversely affected parts suppliers in Alabama and Tennessee.
  • In the cyclical paper industry, several Alabama mills shut down temporarily because of high inventories and decreasing sales.
  • Shipyards in New Orleans continued to thrive, and chemical plants elsewhere in Louisiana expanded.
Tourism and Business Travel
  • Florida wildfires during the early summer resulted in a temporary setback for the state's tourism and hospitality industry.
  • Riverboat gambling revenues were up from a year ago in Louisiana. In Mississippi, however, labor shortages constrained the expansion of casinos along the Gulf Coast.
Financial Services
  • Overall loan demand continued to expand moderately throughout the region. Contacts indicated that consumer, commercial and automobile loan activity remained healthy, and mortgage and refinancing activity was brisk.
Wages and Prices
  • Contacts noted some escalation in wage and benefit costs, but competition continued to restrain businesses from passing along higher costs to consumers.
  • Because of labor shortages, production at certain Tennessee companies was reportedly slower than expected. Some hotel operators in the region are recruiting employees from other countries under special temporary visas.
  • Productivity enhancements have reportedly nearly peaked at some firms, and profits are expected to begin to suffer.
Agriculture
  • The drought in the Southeast has caused a great deal of distress to crops, resulting in significant losses to farmers in the region.

The full text of the Beige Book is available on the Internet.