Districts commenting on the auto market indicate that the decline has ended. Nonautomotive retail trade is generally described as having been soft during most of the first quarter. Pre-Easter sales, however, appear to be better than expected by retailers in some Districts. Minneapolis attributes good first quarter sales partly to the high level of farm income. On the other hand, Richmond says that consumers are becoming more cautious about discretionary spending, while Cleveland suggests that it is too early to conclude whether a significant pickup in general merchandise trade is underway.
Business fixed investment continues to be an important source of strength.
Atlanta notes that the volume of plant announcements is once again on the upswing and emphasizes substantial spending for pollution control. Chicago sees no letup in demand for all types of capital goods, and adds that the farm equipment industry will be hard pressed to increase shipments over last year because output is at capacity and finished goods inventories are down sharply. St. Louis, San Francisco, and Philadelphia all see signs of further strength in capital spending. Shortages and long delivery time continue to be serious economic problems, although of less importance than inflation. Almost every District's report includes some comment on the difficulties in obtaining materials and parts and, in some cases, skilled labor and transportation.