Aggregate demand has continued to increase in recent months but less rapidly than in 1965 and early 1966. Prices have risen more slowly, and interest rates have declined. Economic stabilization policy continues to combine an expansionary fiscal situation and restrictive monetary developments.
Economic activity in the Central Mississippi Valley advanced at a brisk pace during 1966, with regional gains roughly paralleling those in the nation. Population increased only slightly, but employment and personal income in Arkansas, Kentucky, Mississippi, Missouri, and Tennessee combined were well above year-earlier levels. In the metropolitan areas of the region (Eighth Federal Reserve District), employment, spending, and banking activity moved strongly upward, with largest increases occurring in the first half of the year.
Consumer food prices rose about 5 per cent and accounted for about one-third of the 3.7 per cent increase in the consumer price index during the year ending in October 1966. Food prices in 1967 are likely to continue to rise, but their upward thrust on consumer prices will be less than in 1966, according to the United States Department of Agriculture.
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