Despite the real decline retail inventories are generally thought to be under control. Richmond, however, reports that a majority of their retailing respondents now feel stocks are too high. Domestic auto sales are continuing to decline. Cleveland and Atlanta attribute some of the weakness to the end of rebate programs. New York, Chicago, and Dallas report that the combined effects of weak sales and the record costs of carrying inventories are causing auto dealerships to close.
Residential construction is very weak.
However, Minneapolis finds that nonresidential construction is an important source of strength. Reports on manufacturing activity are highly varied. Weakness in construction and sales of domestic autos is now forcing production cutbacks in related manufacturing industries. According to Chicago and St. Louis, layoffs have increased again at the four major automakers and suppliers of brakes, auto bodies, and tires. Boston also reports further cutbacks in the tire industry.