Full text of Review (Federal Reserve Bank of St. Louis) : September 1954

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EIGHTH

D IST R IC T

RETAIL

TRADE

IN

1954

T

RENDS IN CONSUMPTION indicated by retail trade have far reaching
effects in the economy. District retail sales in the first seven months in
six lines surveyed remained close to last year’s level.
Influences upon trade reported by district retailers stressed changes in
income in Evansville, Little Rock, St. Louis, Louisville, Memphis, Paducah,
smaller centers, neighborhoods, and particular groups of people. Changes in
consumers’ assets and debts have affected purchasing power. Shifts in con­
sumer preferences occurred within the six lines surveyed in the district.
Of other indicators watched by retailers, unit volume and average gross
sale were not much changed from a year earlier, credit sales were considered
about normal, and inventories were about in line with sales at mid-year.

Few retailers reported commitments-to-buy larger than a year ago and
little change in the cost of goods is expected. Many retailers in all lines sur­
veyed expect to equal or exceed 1953 sales for the remainder of this year.
But the consumer is still boss.

F ederal 9 r

B a n k
of/St. Louis

Survey of Current Conditions— p. 10$







Trends in consumption indicated by retail trade
have jar reaching effects in the economy.
jR .E T A I L TRADE, besides being a major source
of employment in its own right, is closely watched
for indications of changes in amount and types of
consumption. Personal consumption expenditures in
1953 absorbed 63 per cent o f the dollar value of
the total output of goods and services o f the United
States economy, or $230 billion. Approximately threefourths o f this flow represents goods passing through
retail establishments on their way to the consumer.
Changes in consumer spending influence fluctu­
ations in business activity. A decline in consumer
spending for durable goods last year contributed,
along with the reduction in military outlays and
business inventory expenditures, to the downturns
in durable goods manufacturing and employment
which set in last summer. Willingness o f consumers
to increase total spending this year did much to
prevent a worsening o f the recent decline in business
activity.
To get a preview of consumer spending in the
Eighth District over the balance of the year, selected
retailers were queried as to their business results
so far this year and their expectations for the re­
mainder of 1954. This article reports on the observa­
tions of these retailers.
District retail sales in the first seven months in six
lines surveyed remained close to last year’s level.
The six lines o f trade covered—department stores,
wom ens specialty stores, men’s wear stores, furniture
stores, appliance stores, and automobile dealers—ac­
count for about one-third of the dollar volume of
retail trade. Food stores, including eating and drink­
ing places, account for about another third of retail
volume. Lumber, building, and hardware dealers,
gasoline stations, drugstores, liquor stores, and a wide
variety o f others make up the remainder. The six
lines covered in this article are important ones to
watch because they are particularly sensitive to shortrun changes in consumer spending.
The trade picture in district and nation is generally
favorable, considering the declines in nonfarm em­
ployment and in farm income which have occurred
in the past year. District sales during the first six
months of the current year in most of the lines
covered by the survey were approximately equal to
or slightly lower than sales in the same period a
year ago.
Total department store sales in the district for
the first seven months were 2 per cent lower than
in the same months a year ago, as were total retail
sales in the nation.




During July about one-half o f the dealers in all
six lines surveyed reported sales equal to or exceed­
ing those of July, 1953. The best experience was
shown by men’s wear stores, the least favorable by
automotive dealers. At men’s wear stores, two-thirds
of the dealers reported sales equal to or larger than
a year ago, while in the automotive line about twothirds of the dealers showed sales below those in
July, 1953. Extremely hot weather at mid-year
through much o f the district—coming a little later
than in 1953—apparently was responsible to some
extent for the gain in men’s wear sales from a year
earlier and was reported to have slowed down floor
traffic by automotive dealers. July sales volume of the
majority of women’s specialty stores was lower than
a year earlier. Department store experience was about
equally divided, one-third reporting sales larger, onethird reporting sales equal to, and one-third report­
ing sales below those o f last year. Total dollar vol­
ume in July was 5 per cent greater than a year
earlier.
However, the picture is more complicated than is
revealed by the summary figures of retail sales. Wide
differences in conditions among areas, particular
groups of consumers, and among lines of trade are
concealed within the totals.
Influences upon trade reported by district retailers . . .
District retailers suggested a wide variety of in­
fluences upon their individual performances this year.
Among the favorable influences were seasonal demand
for air conditioning equipment, additional TV broad­
casting facilities, availability of merchandise, and in­
creased promotion. Unfavorable influences upon sales
included drouth, greater unemployment, a belief that
consumers’ outstanding obligations were heavy,
tighter credit terms in some cases, customer expecta­
tions of price decreases, and “unseasonal” weather.
. . . stressed changes in income . . .
The first of three generally important influences
on consumer spending—available income, wealth, and
debt—accounts in part for the recent behavior of con­
sumers. Many of the influences mentioned by re­
tailers, such as drouth and increased unemployment,
have caused changes in income in district areas. Na­
tionally, consumer expenditures have been supported
by increased disposable income, i.e., income after
taxes. In the first half of 1954 increased interest in­
come, dividends, and transfer payments (mainly un­
employment compensation) more than offset a $2.3
billion decrease in the annual rate of wage and salary
income from the corresponding period a year ago. As
a result, total personal income in the first half of
this year was at a slightly higher rate than in the
first half of 1953. Tax cuts o f about $3 billion (an­

nual rate) at the first of this year provided the bulk
of the gain in disposable personal income.

. . . in Evansville, . . .
Monthly estimates of 1954 income are not avail­
able for the Eighth District as they are for the na­
tion, but some conclusions about income changes can
be drawn from conditions of areas within the dis­
trict. O f the five largest district urban centers,
Evansville department store sales have been most
affected by the downturn, as can be seen from the
charts of department store sales below.
Evansville is a manufacturing center with employ­
ment highly concentrated in the manufacture of re­
frigerators, automobiles, and other durable goods.
In May, 1953, about 57 per cent of all nonagricultural jobs in Evansville were in manufacturing, as com ­
pared with an average of 32 per cent for the other
four largest urban centers of the district—St. Louis,
Louisville, Memphis, and Little Rock. The recession,
which was characterized primarily by a reduction
in durable goods manufacturing employment, re­
sulted in a decline of one-third, or 18,000, in Evans­
ville manufacturing employment from the March,
1953, peak to June, 1954. Total nonagricultural em­
ployment in Evansville declined by 18 per cent. Bank
debits, another indicator of business activity, for the
first seven months of this year were 10 per cent be­
low debits for the same period last year, indicating
a reduction of expenditures, and hence of income.
Department store sales, however, did not fall much
below their 1952 levels until January, 1954, although
the employment decline began in April, 1953. In
the first seven months department store sales fell
10 per cent from the same months of 1953.

. . . Little Rock, . . .
The experience of Little Rock was quite different
from that of Evansville. In 1953 nonagricultural em­
ployment in Little Rock increased throughout the
year, reaching an all-time high in December. But
department store sales in the last half of 1953 failed
to show any growth over sales in the preceding year.
Then, in the first half of 1954, total employment and
manufacturing employment having declined by 6 and
12 per cent respectively from the 1953 high, depart­
ment store sales picked up, registering a gain of 2
per cent in the first seven months compared to the
same months last year. Bank debits through July were
2 per cent higher than a year ago. This apparently
contradictory behavior probably reflects the import­
ance to Little Rock retailers of their customers from
the farms and towns of the surrounding area. In the
1953 survey several Little Rock retailers mentioned
the drouth of that year as an influence expected to
limit sales in the second half.
. . . St. Louis, Louisville, Memphis, . . .
Other major centers, St. Louis, Louisville, and
Memphis, have had declines in total employment from
the 1953 peak ranging from 4 to 8 per cent, and in
manufacturing employment from 8 to 15 per cent. Yet
department store sales ran close to ’52 levels through
1953, and have not lagged much below the ’53 levels
this year. Absence of any significant change in debits
in these cities suggests that other sources of income
have at least partially offset the payroll declines, as
they have in the nation as a whole. However, par­
ticular stores and lines of trade in these centers have
felt losses in payrolls sharply.

Sales so far in 1954 have com pared more favorably with those of a year a go in St. Louis a nd
M em phis than in Louisville/ according to the unadjusted index of daily average department
store sales (1 9 4 7 -1 9 4 9 = 1 0 0 ).
210

ST. LO UIS

150

J

M

Page 100




. . . Paducah, . . .
Paducah is a special case in which a large decline
in employment is not related to the recession. In
Paducah retailers are adjusting to the end of a boom
as the nearby Atomic Energy Commission plant
nears completion. The departure of some 15,000 con­
struction workers has contributed to a 25 per cent
decline in department store sales in the first seven
months of this year compared to the corresponding
months of 1953. And bank debits in the same period
of this year were 9 per cent below those of a year
ago. After the windfall of the construction period,
retailers can look forward to the less spectacular but
substantial trade provided by increasing manufactur­
ing employment al the A.E.C. facility and neighbor­
ing chemical plants.

. . . smaller centers, neighborhoods, and particular
groups of people.
Trade in many smaller centers is especially sensi­
tive to changes in farm incomes. Particularly in
southwest Missouri retailers attributed declines in
sales to the drouth. On the other hand, a retailer in
a Kentucky community credited a sales increase to
a favorable growing season for the area’s main cash
crop, tobacco.
Within areas the impact of employment and in­
come changes upon sales has varied widely among
neighborhoods and classes of customers. For example,
in an urban center in which 1954 department store
sales have held up well, a dealer in medium-to-low
priced furniture reported first-half sales considerably
below a year ago. He commented that: “Traffic and
volume seemed affected by lay-offs and unemploy­
ment in the strata in which greater part of our

business is done . . . and we seemed to encounter
resistance in getting our customer to commit himself
loo far or too heavily in advance due to the some­
what pessimistic outlook during the first half of the
year.” In the same metropolitan area, an appliance
dealer in a suburban location reported increased
sales and a general willingness of customers “to pur­
chase luxury items for their own comfort.” These ob ­
servations illustrate the necessity of considering not
only the total income of an area but changes in its dis­
tribution as well. x\lthough total area income may be
stable or increasing, the incomes of a particular group
within the area may be declining.
Changes in consumers' assets and debts have
affected purchasing poner.
Consumer spending is not mechanically linked to
consumer income. Spending is determined by a
variety of influences—expectations as to prices, wars,
weather, and so on—which operate within limits or
conditions fixed not only by consumers’ income, but
by their accumulated savings and the level of their
indebtedness. It is in the timing of their spending,
particularly for durable goods, that consumer assets
and debts become significant. With accumulated sav­
ings or through current borrowing the consumer, if
he chooses, can spend part of past or future income
this year. Retailers in the six lines surveyed were
very much aware of the importance of changes in
their customers’ assets or debts because of the influ­
ence of these changes on consumer spending and be­
cause purchases of the products they sell are postponable. A number of respondents commented upon
the previously acquired debts of their customers
which they felt limited current sales.

1954 sales in Little Rock hove been slightly a h e a d of a year ago. In Evansville they have been
substantially lower until July. For the district, with the main selling season a pp roa ching, sales
are nearly equal to a year ago.

LITTLE R O C K

EVANSVILLE

1954




1953

Page 101

At district deportment stores consum er sp e n d ­
ing in the hom e furnishings divisions has been
som ew hat larger this year than in the first
seven months of 1953.

debts. However, lack of knowledge on how the pur­
chasing power is distributed or on the willingness of
consumers to use it, makes its influence on consumer
buying uncertain.
Shifts in consumer preferences occurred within the six
lines surveyed in the district.
In addition to his power to increase or decrease
his total spending, the consumer can change his
preferences among goods and services. In the nation,
consumers last year demonstrated their capacity for
major shifts between the second and fourth quarters
by reducing spending for durable goods by $2.3

Per Cent

Within the hom e furnishings division, major
a ppliances, housewares, radio, p h o n ogra p h
a n d television sales volume has been consider­
ably higher.
At the beginning of 1954, according to the Survey
of Consumer Finances, the general financial position
of the nation’s consumers appeared to have been well
maintained over the preceding twelve months.1
Consumer debt had increased to an all-time high in
December of 1953, but liquid assets had likewise
grown substantially and were broadly distributed
through the population. Total personal holdings of
liquid assets in the nation, according to preliminary
estimates by the Board of Governors of the Federal
Reserve System, increased by $8 billion in 1953,
while total short- and intermediate-term consumer
credit outstanding increased by $3 billion.2 Although
comparable data are not available for the Eighth
District, other information indicates that district con­
sumers added substantially to their liquid assets and
to their debts during 1953. At district member banks,
time deposits increased 5 per cent from December
31, 1952, to December 31, 1953, and loans to indi­
viduals increased about 8 per cent.
So far this year, Eighth District consumers are
apparently accumulating liquid assets somewhat
faster than they did last year, as indicated by growth
in time deposits in 31 district weekly reporting banks.
For the year through August 11, time deposits in these
banks increased by $27 million as compared to an
increase of $12 million in the same period last year.
Although district data on consumer debt are not avail­
able, the volume of consumer credit nationally de­
clined an estimated 4 per cent in the first half of
1954. If the trend in the district is at least in the
same direction as that in the nation, it would appear
that district consumers have accumulated purchas­
ing power—an increase in liquid assets relative to
1 19 34 S urvey o f C on sum er Finances,
Ju n e , Ju ly , 1 9 5 4 .
2 Estim ated

F ed eral

R eserve

B u lle tin ,

M arch ,

Liqu id A sse t H old in g s o f Individuals and Businesses, F e d e r a l
R e s e r v e B u l l e t i n , J u l y 1 9 5 4 , p p . 7 0 9 - 7 1 0 . L i q u i d a s s e t s i n c l u d e d in th e s e
e s t im a t e s a r e c u r r e n c y , d e m a n d d e p o s i t s , t im e d e p o s i t s , s a v i n g s a n d l o a n
s h a r e s , a n d U n ite d S ta te s G o v e r n m e n t se c u r itie s .

Page 102




Per Cent

billion at seasonally adjusted annual rates, or 8 per
cent, cutting spending for nondurables by $0.9 billion,
and increasing spending for services by $2.1 billion,
or 2 per cent. This shift was a major cause of the
industrial production decline which took place in the
third and fourth quarters of 1953 and the first quarter
of 1954.
In the durable goods lines, district household ap­
pliance stores achieved more favorable results in the
first half of 1954 than did furniture stores and auto­
mobile dealers. Almost one-half of the appliance
dealers surveyed reported that first-half 1954 sales
were larger than a year ago. In the furniture and
automotive lines about three dealers out of four re­
ported first-half 1954 sales from slightly under to
one-half lower than first-half 1953 sales.
In the nondurable lines, department stores reported
the most favorable first-half experience with about
one-half of the respondents reporting first-half 1954
sales larger than in 1953. Four men’s wear stores out
of five reported sales volume in the first half of 1954
as much as 40 per cent lower than in 1953. And al­
most three-fourths of the women’s specialty stores
reported lower sales in the first half of 1954 than a
year earlier. Among the factors reportedly influencing

sales of wearing apparel were unseasonal weather
during the first half of the year, a later Easter in
1954, shifts in consumer preferences for certain types
of men’s wear, and a lack of major changes in
women’s fashions.
Of other indicators watched by retailers, unit volume
and average gross sale were not much changed from
a year earlier, . . .
Only appliance and department stores of the lines
surveyed reported a larger unit volume of goods
(as compared to dollar volumes) sold so far in 1954,
than in 1953. In five lines (excluding auto dealers)
about one-fourth of the dealers reported unit volume
larger, about one-fourth stated unit volume was
equal, while slightly more than one-half reported unit
volume below that of a year ago.
Changes in average gross sales are of interest to
retailers as indicators of shifts in consumers’ prefer­
ences for high-priced or low-priced goods.
At mid-1954 the average gross sale of the majority
of retailers other than auto dealers was somewhat
lower than a year ago. Furniture and men’s wear
W o m en's a n d misses’ ready-to-w ear apparel
a n d accessories divisions, accounting for about
one-third of total department store sales vol­
ume,, have so far in 7 9 5 4 about eq ualed their
1953 sales record.
Per

Cent

. . . credit sales were considered about normal . . .
Over one-half of the dealers in all six lines con­
sidered their volume of credit sales about normal
for their line of business. Thirty-five per cent con­
sidered credit sales larger than normal, while about
15 per cent considered credit sales volume lower
than normal. A majority of automotive, men’s wear,
and furniture dealers considered credit sales larger
than normal. In the appliance lines the majority con­
sidered credit sales about normal with about the same
number considering credit sales larger than normal
as below normal. A larger number of department
stores considered credit sales normal than above
normal. The majority of women’s specialty stores con­
sidered their credit sales about normal.

. . . and inventories were about in line with sales
at mid-year.
Inventories held at mid-1954 in trade lines sur­
veyed (except automotive) did not appear to be ex­
cessive in view of current sales. At mid-year about one
dealer in four considered inventory a little too high
in view of sales during June. The majority of dealers
considered inventories in line with current sales, and
only a few dealers considered inventories too light.
In relation to sales, inventories of reporting depart­
ment stores at mid-1954 were at the lowest point
since mid-1950.
More than one-half of the automobile dealers re­
ported a larger number of new cars on hand at the
end of July than a year ago, some as much as twice
as large. About one-fourth of the auto dealers said
they had fewer new cars on hand than in 1953.
The number of used cars (trade-ins) held by onethird of the auto dealers was equal to last year; about
one-third reported the number of used cars higher
than last year; and one-third reported fewer used
cars on hand.
M en’s and b o y s’ wear divisions this year have

la g g e d slightly behind their 1953 perform ance
but have done better than in 1952.
Per Cent

stores reported the greatest change, about two-thirds
of the furniture stores surveyed reporting average
gross sale lower than in 1953, and more than one-half
of men’s stores reporting lower average gross sale.
In appliance lines the average gross sale for the
majority about equaled that in 1953. At department
stores average gross sale at one-half of the stores was
equal to that of a year ago; at the other half, more
stores reported lower than higher average gross sales.
Neither data of unit volume nor average gross sale
were established for the automotive line. The number
of autos sold apparently was lower than a year
ago—but still higher than in many postwar years.




U nadjusted index of monthly a v e ra g e sales, 1953 — TOO.

Page 103

Few retailers reported commitments-to-buy larger
than a year ago, . . .
With mid-1954 inventories considered by many in
the trade lines surveyed to be in line with sales, few
reported commitments-to-buy larger than a year ago.
About half of the dealers reported commitments equal
to last year, while almost half of them reported com­
mitments somewhat lower than a year ago. The ma­
jority of furniture, department, and men’s stores
reported commitments below last year, while the
majority of appliance stores reported commitments
equal to those in 1953. At women’s wear stores about
one-half reported commitments equal to last year and
the remainder reported them lower than a year ago.
. . . and little change in the cost of goods is expected.

The majority of dealers (except automotive) ex­
pect their buying prices to remain at about the July
30 level during the remainder of this year. There
was some feeling, however, in the furniture and ap­
pliance lines that buying prices would decline, about
one dealer in four in the two lines anticipating some
decline.
If there is any change in retailers’ cost prices, two
dealers out of three do not plan any change in their
pricing policies. However, some recent developments
indicate that competitive pricing may be extended to
types of stores other than the traditional “discount”
houses.
Many retailers in all lines surveyed expect to equal
or exceed 1953 sales for the remainder of this year.
For the last five months of 1954, nearly two-thirds
of the retailers expect sales will be larger than or
about equal to those in the like period of 1953, while
just over one-third anticipate a decline in sales vol­
ume. This optimistic attitude prevailed despite the
fact that adverse factors cited apparently outnum­
bered the favorable factors expected to influence
sales during the remainder o f the year. The effects
of the severe drouth were noted generally in all lines
surveyed as being a possible limiting factor. In dur­
ables lines high levels of production a year ago, in the
opinion o f retailers, brought on high-volume, though
low-profit, sales levels that will be difficult to match in
the remainder o f this year. Dealers in all lines, ex­
cept automotive, noted the fact that general business
conditions seemed to favor them. Local unemploy­
ment in all but isolated instances was believed like­
ly to diminish as the year progressed. In addition,
some improvement was seen in the amount of money
consumers would have to spend if more full-time
work becomes available.
The majority o f dealers o f nondurable goods ex­
pect sales to equal those of a year ago, with a larger
Page 104




number expecting sales gains than declines for the
remainder of 1954. Steadier employment is being
counted upon by men’s and women’s shops to keep
the last-half 1954 at a favorable level compared to
1953. Department stores expect a resurgence in con­
sumer buying.
In the durable goods lines automotive dealers
were pessimistic concerning the last five months of
1954. More than one-half of the auto dealers sur­
veyed expect sales will total substantially below those
in the the last five months of 1953, while about one
dealer in three expects that sales will equal those
for the same period a year ago. The majority of auto
dealers felt that production in the remainder of 1954
would be more than sufficient to meet consumer
demand. More than half of the dealers expect that
consumer resistance will increase further during the
remainder of the year.
Furniture store managers also expect difficulty
meeting last year’s figures. More than one-third of
them expect sales to drop below the 1953 volume,
and nearly half look for sales to be about equal to
last year. In the appliance line the majority of dealers
anticipate a sales level equal to or larger than a year
ago. In the furniture and appliance lines the large
number of new homes being completed is looked
upon as being favorable, although competitive price
discounting is expected to cause high-volume, lowprofit sales.
But the consumer is still boss.
The level of retail sales in the Eighth District and
in the nation during the remainder of 1954 depends
on many factors, few of which may seem apparent
at the present. Although many of the retailers sur­
veyed anticipate sales in the remainder of this year
to equal or be larger than those last year, the lack
of increase in their commitments to buy indicates
they are following a cautious inventory policy.
Within the memory of retailers sudden shifts of
consumer buying have quickly emptied their shelves
or left them with bulging warehouses. Unfavorable
headlines—international, national, or regional in scope
—and the consumer may head for the nearest retail
counter, or to the bank to lay away funds for a
future “rainy day.”
The nation has ample capacity to produce the
goods and services consumers demand. So, whatever
the consumers decide to do they will find retailers
ready, willing, but sometimes belatedly able to ac­
commodate their wants.
A . Ja m e s M e ig s
A lfred

C.

K earsch ner

OF CURRENT CONDITIONS

B u s i n e s s ACTIVITY in the Eighth District dur­
ing August remained close to its July level after
allowance for seasonal factors. Variations from the
July rate of operations reflected strikes, plant-wide
vacations or temporary closings for model changeovers rather than a reduction in basic economic
strength. The picture was mixed. Banking data indi­
cated some strength in the districts economy as
business loans rose. August rains improved district
pastures and expected crop yields recovered some­
what, but farm income continued below a year ago
reflecting the effects of acreage controls, July’s hot,
dry weather, and lower prices for farm products.
Curtailment of steel output indicated further weak­
ness in the regional steel market. Unemployment in­
surance claims in two large district cities rose from
mid-July to mid-August but declined in two other
cities. Department store sales, which have fluctuated
a great deal this year, rose less than seasonally in the
first three weeks of August.

Employment
During July and early August the national labor
market held fairly steady, after allowance for seasonal
factors. From June to July the nonfarm job total fell
by about 290,000 to 47.9 million, the decline being
only slightly more than seasonal. Unemployment held
steady for the third consecutive month in contrast to
an increase normally expected in those months. The
stability in the national labor market continued into
early August, as demonstrated by the decline in
insured unemployment and initial claims for state un­
employment insurance.
Despite the recent tendency to stabilize, the de­
mand for labor was less than a year earlier. Total
employment in nonfarm establishments was about 4
per cent less and unemployment at 3.3 million in
July was more than double the level of a year earlier.
The number of jobless has fallen off since the peak
reached in March, and in July was equivalent to 5
per cent of the civilian labor force.




The demand for labor in two major district labor
markets showed some tendency to ease further but
held steady in two others.
In Evansville the number of unemployment com­
pensation claims in early August was higher than a
month earlier, and subsequent developments indi­
cated continued increases during August. An auto­
mobile assembly plant shut down for an extended
model changeover period expected to last two
months, affecting some 2,400 workers. Refrigerator
plants shut down for their annual vacation and inven­
tory-taking periods, and workers not eligible for
vacation pay nor employed for taking inventory
swelled the unemployment rolls.
Unemployment compensation claims filed in Mem­
phis also rose from mid-July to mid-August to a
larger extent than during the comparable period of
1953. In addition to the rising unemployment total
in Memphis, about 3,600 workers at a rubber plant
were on strike during August.
In Louisville and St. Louis unemployment compen­
sation claims declined slightly from mid-July to midAugust. Several work stoppages occurred during
August in the St. Louis area.

Industrial Production
Industrial production in the nation, after allowance
for seasonal changes, remained virtually unchanged
in the three months ending in July. In August steel,
automobile and crude oil output were cut further.
Other indicators, however, were more stable: paper
and paperboard, and soft coal production showed
about the usual seasonal variations. Lumber pro­
duction remained at a low level during August due
to a work stoppage.
W hile over-all industrial production seasonally ad­
justed remained steady from May to July, it was
nearly 10 per cent below the peak level reached last
year. Most of the decline has centered in durable
goods output, largely reflecting cutbacks in military
Page 105

items and reduced demand for both producers’ and
consumers’ durable goods. New orders for durable
goods remained less than sales during the first half
of 1954. As a result, backlogs of durable goods pro­
ducers continued to decline and at the end of June
were one-third less than a year earlier.
Eighth District industrial output in August was
affected by strikes and temporary plant shutdowns.
In addition, steel output in the St. Louis area fell
from 61 per cent of capacity in July to 51 per cent in
the first three weeks of August.
Southern lumber production remained on a nearly
even keel for the past two months despite the pro­
longed strike of West Coast lumber workers. Crude
oil production so far this year has averaged 8 per
cent higher than in 1953. However, coal production
fell further into its summer slump.
Final figures for July show improvement in some
industries that was not reflected by early reports.
The shoe industry produced about 6 per cent more
shoes than in July a year ago, according to Tanners’
Council estimates. Also, industrial power consump­
tion figures for July showed a few signs of strength,
with an over-all gain in use of power of one per cent
from the June figures, after dropping 3 per cent be­
low May. On the other hand, the Kentucky distilling
industry, which had been running along with about
the same number of distilleries in operation this year
as last, cut back about one-half, with only 14 plants
operating on July 31, the lowest level since 1952.

Construction
Construction contract awards in the Eighth Dis­
trict have been maintained at high levels. During
the first seven months of 1954 they totaled $653 mil­
lion, 7 per cent more than in comparable months of
1953. According to F. W. Dodge reports for selected
district areas, the largest increase was in commercial
buildings, with awards during the first half up 127
per cent from a year earlier. Contract awards for
manufacturing buildings in this district increased 46
per cent from the same period a year earlier, in con­
trast to a 22 per cent decline in this category for the
rest of the nation. Residential construction contracts
in the Eighth District totaled $235 million in the first
seven months, up 14 per cent from a year earlier.
W hile the value of the contracts was substantially
larger, the 13,600 dwelling units included in resi­
dential contracts for the selected district areas
in the first half of 1954 were virtually unchanged from
the number in the same period last year. The in­
creased value of residential awards in the first six
months reflected primarily the higher average value
of the dwelling units—$13,100 this year as compared
with $11,900 a year earlier.
Page 106




Agriculture
Farmers in the Eighth District entered the heavy
fall marketing season with prospects of smaller cash
receipts than last year, reflecting primarily the effects
of acreage controls, drouth, heat and lower prices of
farm products.
Farm income in the district for the first half year
was 1 per cent below last year and is expected to re­
main below during the coming months, reflecting in
part the lower returns from alternative uses of over
2x/2 million acres in district states removed from pro­
duction of crops under acreage controls. Wheat acre­
age in the seven district states was 23 per cent be­
low last year; yields and prices received, however,
were above last year’s average. Land diverted from
wheat production was used primarily for small grains,
with generally lower returns per acre than if planted
to wheat.
Net returns (based on 1953 prices) after cash ex­
penses from cotton production in the Delta area are
estimated by a recent University of Arkansas study
to be about three times as high as from soybeans,
corn or oats, the most prevalent alternative land uses
in 1954. Thus the 19 per cent reduction in cotton
acreage in district states may result in a 10-15 per
cent drop in net cash income from acreage which was
in cotton in 1953.
Diverted tobacco acres generally have not had
alternatives which would make up to any great extent
incomewise for the 6 per cent acreage reduction in
district states. This will be reflected in about 5 per
cent less income from acreage planted to tobacco
in 1953.
Drouth and heat left severe paths of destruction in
large areas of the Eighth District states. Seventy-six
counties in Missouri and 37 counties in Arkansas
have been declared eligible for drouth aid by the
United States Department of Agriculture. In addition,
farmers in 41 counties in Illinois were declared
eligible for emergency credit on liberalized terms.
District pasture conditions as of August 1 were
considered as “very poor” to “extreme drouth” and
averaged 30 per cent worse than the drouth condi­
tions of a year ago. However, heavy August rains
improved fall pasture in many areas, Arkansas and
Mississippi being major exceptions. The corn crop
has been hardest hit by the drouth. Districtwise, as of
August 1, yields per acre were expected to be 12
per cent below the 1943-1952 average, with approxi­
mately two-thirds of the loss in Missouri. August
rains will cause no more than moderate recovery of
corn yields.

District states soybean yields were estimated at 20
per cent below the recent ten-year average. As with
corn, expected yields were reduced most severely in
Missouri. But, unlike corn, August rains will signifi­
cantly benefit soybean production.
Wheat, oats and barley, which were harvested be­
fore the adverse weather conditions in July, yielded
per acre well above the ten-year average. Rice, cot­
ton and tobacco yields are also expected to compare
favorably with the ten-year average.
District farmers are moving into their heavy mar­
keting season with prices averaging approximately
6 per cent below last year. Prices of major district
livestock and livestock products declined approxi­
mately 13 per cent during the last year, and the price
of rice is approximately 35 per cent lower. However,
cotton and tobacco are near the support level at prices
only slightly different from 1953, and the cash price
of soybeans is presently well above a year ago, with
a record crop expected.




Banking
District banking data indicated some strength in
activity from mid-July to mid-August. Although total
loans at district weekly reporting banks declined $54
million, the bulk of the decrease was the result of
the redemption by the Commodity Credit Corpora­
tion of outstanding certificates of interest (estimated
for the district in excess of $50 million). Business
loans and loans on real estate rose in the period.
Most types of borrowers shared in the growth in
business loans; sales finance companies and con­
tractors recorded the largest net expansion in bor­
rowings, primarily at banks in Memphis.
Despite the contraction in total loans, earnings
assets of these banks rose as they purchased a sub­
stantial amount of securities. The increase in the
security portfolio was largely made possible by both
the recent one per cent reduction in required reserves
on net demand deposits and the payments received
from the Commodity Credit Corporation.

Page 107

The
DISTRICT
RECORD

VAR IO U S IN D IC A T O R S OF INDUSTRIAL ACTIVITY
Industrial Use o f Electric P ow er (thousands o f K W H per working day, selected
industrial firms in 6 district citie s )........................................................................................
Steel Ingot Rate, St. Louis area (operating rate, per cent o f ca p a city )...........................
Coal Production Index— 8th Dist. (Seasonally adjusted, 1 9 3 5 -1 9 3 9 = 1 0 0 ).................
Crude Oil Production—8th Dist. (D aily average in thousands o f b b ls .)........................
Freight Interchanges at RRs— St. Louis (Thousands o f cars— 25 railroads— Terminal
R. R. A ssn .)......................................................................................................................................
Livestock Slaughter— St. Louis area. (Thousands o f head— w eekly a v e ra g e )..........
Lum ber Production— S. Pine (Average w eekly production— thousands o f bd. ft.)
Lumber Production—S. Hardwoods. (Operating rate, per cent o f ca p a city )............

'M

July
Percentage
1954
Change from
(In
June
July
m illions)
1954
1953
Six Largest Centers:
East St. LouisNational Stock Yards,
111.................................... $ 127.7
Evansville, Ind ..............
163.5
Little R ock, A rk............
156.9
L ouisville, K y ...............
739.4
M emphis, Tenn.
604.4
St. Louis, M o ................ 1,943.6
T otal— Six Largest
C enters...........................$ 3,7 35 .5
Other Reporting Centers:
A lton, 111......................... $
3 5.5
C ape Girardeau, M o. .
14.4
El D orad o, A r k .............
2 5.5
Fort Smith, A r k .............
48.1
Greenville, Miss..............
22.4
H annibal, M o ................
9.7
H elena, Ark.
7.1
Jackson, T e n n ................
19.2
Jefferson City, M o.........
6 6.9
O w ensboro, K y ...............
37.2
Paducah, Ky......................
29.8
Pine Bluff, A r k ................
28.2
36.1
Q uincy, 111........................
Sedalia, M o .....................
13.1
Springfield, M o ..............
74.3
Texarkana, A r k .............
17.8
T otal— Other
C enters........................ $ 4 8 5 .3
Total-—2 2 Centers . . 8 4,2 20 .8

— 5 %
-0 -%
-f- 3
— 6
— 6
+ 1
—0—
-j- 2
—0—
+ 3
— 9
— 7
—

5 % —

— 11%
+ 3
— 13
— 1
—• 5
+ 1
— 6
— 7
+12
— 2
— 8
-— 11
- 8
-0 — 3
— 6
—■3%
— • 5%

3 %

— 1%
— 1
—■ 5
+ 3
+ 5
— 2
+ 1
— 5
+10
—- 2
— 32
— 15
+ 6
+
— 29
—
—

3%
3%

IN D E X OF BANK D E B ITS— 22 Centers
Seasonally Adjusted (1 9 4 7 -1 9 4 9 = 1 0 0 )
1954
1953
July
June
July
142.5
145.2
147.6
1 Debits to dem and deposit accounts o f individuals,
partnerships and corporations and states and political
subdivisions.

9 6.8
86.0
186.7
89

+ 1%
— 20
+ 8
— 2

+ 1%
— 39
— 4
+ 8

— 1
+ 4
+ 1
-0 -

— 15
+ 10
— 3
— 4

June
1954
Arkansas . . . $ 21,181
Illin ois.........
141,291
Indiana.........
71,1 37
Kentucky
25,9 02
Mississippi.
17,807
Missouri
7 9,6 68
Tennessee
2 3 ,7 25
7 States
§3 80 ,71 1
8th Dist. . $159,091

Percentage Change
Jan. thru June
June ’54
1954
from
com pared with
June ’ 53 1953
1952
2%
+ 9
-j- 4
— 6
+ 1
+ 9
— 12
- 4"
b 4

+ 1 %
— 5
+ 2
+ 1
+ 5
+ 1

—

8%
8
10
9
■1
2

*
Not shown separately due to insufficient cover­
age, but included in Eighth District totals.
1 In addition to follow ing cities, includes stores in
Blytheville, Fort Smith and Pine Bluff, Arkansas; H op­
kinsville, Ow ensboro, Kentucky; G reenw ood, Missis­
sippi; and Evansville, Indiana.
2 Includes Louisville, Kentucky; and N ew Albany,
Indiana.
PE RC E N T AG E D IS T R IB U T IO N OF
FU RN ITU R E SALES
July, ’ 54
June, ’ 54
July, ’53
Cash S ales...................
14%
15%
15%
Credit S ales.................
86
85
85
T otal S ales..........
100%
100%
1 00 %

—

3%

+ 8
+ 10

— 7
— 24
+ 7

— 8
+ 2
— 1

—

6%

+ 2
+ 4
— 1
+ 3
+ 5
— 13

+ 1
-0-

(1 9 4 7 -1 9 4 9 = 1 0 0 )
Unadjusted

June 1954 M ay 1954 June 1953
183.4
Total
2 1 2 .7 p
205.9
174.0
237 .4 p
235 .5
Residential
192.2
187.8
201.2 p
A ll Other
asonally adjusted
154.0
182.2
178.9 p
T o t a l............
148.7
208.4
202.9 p
Residential
156.5
170.1
167.7 p
A ll Other
* Based on three-m onth m oving average
(centered on m id-m onth) o f value o f awards, as
reported by F. W . D od g e C orporation.
p Preliminary.

ASSETS A N D LIABILITIES OF EIGHTH DISTRICT MEMBER BANKS
(In Millions o f Dollars)
W eekly Reporting Banks
Change from
July 21,
Aug. 18, 1954 _____1954

Assets
Loans (Net)*
Business and A gricu ltu ral...................
Security......................................................
Real E state.................................................
Banks..........................................................
Other (largely con su m er)...................
U. S. Governm ent Securities...................
Other Securities............................................
Cash A ssets...................................................
Other Assets.................................................
Total Assets............................................

A ll M em ber Banks
July 28,
1954

Change from
June 30,
1954

$1,2 90
633
36
2 66
8
3 66
1,147
215
856
39
$3,547

$— 54
— - 43
-0 +
7
— 13
—
4
+115
+
1
—
2
—• 1
$ + 59

$2,144

$ + 3 8

1,994
444
1,396
67
$6,045

+ 37
-j2
— 110
+ 1
$— 32

$

$ + 36
+ 29
+ 4
—-12
+
2
$ + 59

$ 696
3,681
1,161
85
422
$ 6,045

$— 46
— 38
+ 7
+ 46
—
1
$— 32

Liabilities and Capital
Demand Deposits o f B anks......................
Other Demand D ep osits......................
Tim e D eposits..............................................
Borrowings and Other L iabilities..........
Total Capital A ccounts ...........................
Total Liabilities and C ap ita l..............

710
2,007
538
50
242
$ 3,547

1 Loan breakdowns reported gross for w eekly reporting banks, not available for all m em ber banks.

Percentage o f Accts.
and Notes R eceiv­
able,
Outstanding
Stocks
Stock
July 1, 1954, colNet Sales
on Hand
Turnover lected during July.
July, 1954
7 raos. ’54 July 31, ’54 Jan. 1 to
Excl.
com pared with
to same
com p, with July 31
Instal. Instalment
June, ’ 54 July, ’ 53 period ’53 July 31, ’ 53 1954 1953 Accounts Accounts

DEPARTMENT STORES

Net Sales
Inventories
July, 1954
July, 1954
com pared with
com pared with_
June, ’54 July, ’53 June, ’54 July, ’ 53
+ 8%
+*9
+ 3
+ 3
+24
+ 1
— 6

INDEX OF C O N ST R U C T IO N CO N TRACTS
AW A RDED EIGHTH FEDERAL RESERVE DISTRICT*

CASH FARM IN C O M E

(In thousands
of dollars)

RETAIL FURNITURE STORES

8th Dist. T otal1 . —- 7 %
St. L o u is ............ — 5
Louisville Area2 — 16
Louisville
. . — 14
M em p h is............ + 1 1
Little R ock . . . . — 18
S pringfield..........— 12

,155
57
117 p
325.9

* Percentage change figures for the steel ingot rate, Southern hardw ood rate, and the coal production index, show the
relative per cent change in production, not the drop in index points or in percents o f capacity,
p Preliminary.

BANK DEBITS1

.

Percentage Change*
June 1954
July 1953

July 1954

8th F.R. District T otal. . •
Fort Smith Area, Ark.i . .
Little R ock Area, Ark.
Quincy, 111..........................
Evansville Area, In d .........
Louisville Area, Ky., Ind. .
Paducah, K y .......................
St. Louis Area, M o., 111. .
Springfield Area, M o.
Memphis Area, T e n n .. . . .
All Other Cities2 ..............

— 17%
— 8
— 10
18
+ 7
— 21
— 16
— 21
— 9
— 9
— 16

+ 5%
+ 8
+ 9
+ 3
+ 17
+ 3
— 14
+ 5
+ 13
+ 7
— 6

— 2%
— 2
+ 2
-0 — 10
— 4
— 25
— 1
— 4
-0 — 14

— 1 1%
— 6
— 7
— 6

2.11
1.85
1.99
2.01

2.00
1.92
1.86
1.91

17%
13

47%
42
46

— 13

2.24

2.12

18

46

— 14
— 15
+ 3
— 10

2.18
1.18
2.13
1.45

2.02
1.74
2.08
1.54

19

54

15
09

33
43

IN D E XE S O F SALES A N D STOCKS— 8T H D IS T R IC T
July
1954
Sales (daily average), unadjusted3 ........................................................ 90
Sales (daily average), seasonally adjusted3 ....................................... 113
Stocks, unadjusted4 ................................................................................... 120
Stocks, seasonally adjusted4 .................................................................... 129

June
1954
110
122
119
119

May
1954
106
106
124
118

July
1953

86

107
121
130

3 Daily average 1947— 4 9 = 1 0 0
4 End o f M onth average 1947— 4 9 = 1 0 0
Trading days:
July, 1954— 2 6; June, 1954— 26; July, 1953— 26.

2
Fayetteville, Pine Bluff, Arkansas; Harrisburg, Mt. Vernon, Illinois;
1
In order to permit publication o f figures for this city (or area), a special
Vincennes, Indiana; Danville. Hopkinsville, M ayfield, O w ensboro, Ken­
sample has been constructed which is not confined exclusively to department
tucky; C hillicothe, Missouri; Greenville, Mississippi; and Jackson, Tennessee.
stores. Figures for any such nondepartment stores, however, are not used
in com puting the district percentage changes or in com puting department
Outstanding orders o f reporting stores at the end o f July 1, 1954, were
4 per cent smaller than on the corresponding date a year ago.
store indexes.
FRASER

Digitized for