Boston reports some postponing of capital spending because of anticipated declines in interest rates. Materials shortages are curtailing capital spending in the San Francisco District. Inventory building because of materials scarcities is not as widespread as earlier reports indicated. Atlanta and New York note that high financing costs may be inhibiting inventory investment in many areas. Cleveland also finds some signs of inventory investment abating, and responses to Richmond's survey of manufacturers suggests that inventories may be higher than desired.
Views are mixed on the effects of record-high interest rates on loan demand.
Philadelphia, Cleveland, Minneapolis, Dallas, and San Francisco indicate little letup in loan demand. However, Boston, Richmond, St. Louis, and Kansas City note a slight reduction, particularly in demand for business loans. A pickup of deposit growth at commercial banks was also observed in several Districts. Richmond's survey of large District banks, as well as information from other Districts, reveals that firmer credit standards are being applied to loan requests. Several Districts also indicate that an increase in loan delinquencies and a rise in bankruptcies are a matter of growing concern.