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FEDERAL RESERVE BANK OF CLEVELAND

1971
ANNUAL REPORT

GETTING THE MOST FROM MONEY
The text paper used in this Annual Report was produced from recycled
money. Worn paper currency, which formerly would have been burned, was
shredded by a paper disintegrator at the Federal Reserve Bank of Dallas. The
money pulp was mixed with equal parts of other paper waste-used milk and food
cartons, paper cups, and waste bank check paper-to produce Ecology Currency
Bond. This two-toned paper carries tiny bits of bills and has a shade reminiscent of
its valuable ancestry. About 60 bills (of varying denominations) were used to
produce the paper for each report.

To the Banks in the Fourth

Federal Reserve

District:

It is with great pleasure that we present the 1971 Annual Report of the Federal
Reserve Bank of Cleveland. This year, the report focuses on recent economic 'developments
in
the Fourth District. The experience of the Dist.rict during the 1969-1970
recession once again
demonstrated
the vulnerability
of this area to business contractions.
It is important
to note,
however, that certain long-run tendencies point toward a better distribution
of resources and
activity; if these trends continue,
the impact of business contractions
on the Fourth District
should be reduced.
These are exciting
times for a Federal Reserve i3~nk and; in particular., for a
President who has recently
taken office. The implementation
of an incomes policy and a
realignment
of international
currencies are among the fundamental
economic "changes that
occurred during 1971, In addition,
important: financial
developments
that affect market
structure
and operating
practices of financial
institutions
are now underway.
As central.
bankers, we remain concerned
with domestic and international
issues; however, our energies
must be increasingly
devoted to coping with changes in financial institutions.
Hopefully, the
management
of this Bank <can move forward
with commercial
banks and other financial
institutions
to capture the maximum
benefits of these changes for individual institutions
and
for society. From our side, we offer full commitment
of our resources in a spirit of openness
and cooperation.
Finally,
we thank
the many people
who have helped us fulfill our varied
responsibilities,
especially the directors, officers,' and staff of this Bank, and ask for continued
assistance in accomplishing
the many complex tasks that are ahead. We must be mindful that, in.
the broader context, this Bank has a commitment
to the people of the Fourth District, for it is
through our combined efforts that the District will prosper.

.
r

tJ4j-~

CHAIRMAN

OF THE BOARD

PRESIDENT

RECENT CYCLICAL FLUCTUATIONS

AND LONG-RUN TRENDS

IN THE FOURTH FEDERAL RESERVE DISTRICT
•

Nineteen seventy-one was a year of transition
nation's economy-a
economic
output

for the

year characterized by a resumption of

growth

following a moderate

decline in total

during the 1969-1970 recession. There were major

disappointments,
unemployment
balance

of international
limited
economic

expectations

including

rate to decline, further

freeze-only
nation's

however,

the
..• failure
deterioration

trade, and-until

success
recovery

in curbing
in

1971

of the
in the

the wage-price
inflation.
fell

short

The
of

and must be ranked as the weakest of the five

longer-term

perspective,

the report analyzes changes that

have occurred in industrial structure, employment, income,
and population.
The -econornic experience of the Fourth District during
the most

recent

vulnerability

recession
the

has again demonstrated

District

to business

the

contractions.

Compared with the nation, the Fourth District was mote
severely

affected

because

of the

composition

of its

economic base. Continued weakness in the goods-producing
industries during 1971, reflecting the lack of strength in

recoveries during the post-World War II era, when measured

business-fixed

by practically any standard, such as change in real GNP,

impeded

industrial production,

Moreover, special factors (discussed below) prolonged the

unemployment,

or corporate profits.

On the other hand, the New Economic Policy and a
generally expansive monetary and credit posture have set
the stage for a more vigorous recovery in 1972. Economists
generally

expect

simultaneously
inflation,

that

progress

reducing'

will be made

unemployment,

the

toward
rate

and the deficit in the balance of payments. The

Fourth District's economy, which experienced a significant
readjustment

in 1971, is also poised for a considerable
describes

economic contraction
impact

the nature

of the 1969-1970

in the Fourth District-including

on major metropolitan

areas-and

its

appraises the

extent of the economic recovery as of yearend 1971.ln

and

the

inventory

of employment

accumulation,
in the District.

recession and delayed recovery in many metropolitan

areas"

of the District.
On the encouraging

side, however,

there

are some

long-run tendencies in the District toward a better balanced
distribution
trend

of resources: Specifically,

toward

a greater

there has been a

share of employment

in the

faster growing and more stable service-producing industries
_and away from the slower growing and more cyclically
sensitive

improvement during 1972.
- This report

investment

the recovery

goods-producing

continue,

employment

during economic
employment.

industries.

declines in the

contractions

recoveries

should

these
Fourth

trends
District

be lessened, and

in the region during economic

expansions should improve.

TABLE I
Nonagricultural
United States,
1970

Payroll Employment
and Percent Distribution
Fourth District and Selected-Metropolitan
Areas
ServiceProducing

. Goods-Producing
Employment

(000)

Sources:

Total

70,616
5,413
245
137
510
859
379
331
244
197
98
875

Uni ted -Sta tes
Fourth District
Akron, Ohio
Canton, Ohio
Cincinnati,Ohio-Ky.-Ind.
Cleveland, Ohio
Columbus, Ohio
Dayton, Ohio
Toledo, Ohio
Youngstown-Warren,
Ohio
Erie, Pa.
Pittsburgh, Pa.

U. S. Department
of Labor; U. S. Department
Bureau
of Employment
Services;
Pennsylvania
Service

Recent

in'Perspective.ifixcept

Experience

War period,
smaller

the Fourth

growth

expansions

than t~e nation

con trac tions.

This

reflects

industries

than

the nation's

industries

have

typically

resources

sector

declines

not

during

recoveries

(Table

borne

only

has resulted

with

in the District's
in manufacturing,

in durable

the national

. with a composition

goods

average

in relatively

steeper

of industries

durable

of the Fourth

.goods

industries
were

business

is the

in the Fourth

best alternative
District.

Regional

indicator

1969

sector

of overall

Among

during

equipment

declined
Output

automotive
both

the

payroll
economic

(By

the

high

was

particularly

goods

recession
electrical

metals.

Output

for Fourth
15

during

durable

District

percent

from

recovery

output

and household

relatively

employment

when a sustained

9 percent

and

1969-1970

market

of consumer

products

1969

machinery,

contrast,

only

classical

the durable

and fabricated
major

began.

recession.)

to business

Product,

industries,

to mid-1971,

coupled

to amplify

economy

impact

nonelectrical

and primary

Economic
a

resembled

industries-declined

business

the 1960-1961

goods-especially

appliances,

importance

which
the

are'.

Fourth

••
2The National
is widely

Bureau

recognized

of Economic
by economists,

officials as being the "official
traction"

on Gross

affected

vehicles,

November

recession

as its

equipment-sa

expansions

1
. In the absence of a measure

most

motor.

machinery,

The

manufacturing.

among the most

has tended

District

1970}

September

compared

II). This factor,
generally

between

manufacturing

industries

when

experienced

why

recessions.

employment

contraction

Bureau

States

than

have been weaker

wi th a disproportionately

(Table

sensitive. to business fluctuations,
responsiveness

.activity

economic

National

in goods-producing

larger share of the

industries,

the
United

insofar

have tended

goods-producing

to
the

that

is concentrated
large

According
Research,

concentrated

the nation's.
Employment

67.0%
58.8
57.1
51.3
62.6
61.3
71.3
58.0
62.7
51.8
51.9
62.3

.•

contractions

but also helps to explain

employment

of the

of economic

industries

Total

4.7%
4.3
3.5
3.9
A.I
4.1
4.6
3.6
3.9
4.4
4.0
4.9

November

1).1 Goods-producing

the burden

0.9%
1.2
0.["
0.3
0.1
0.2
0.2
0.2
0.1
0.2

during

to goods-producing

The District's

contractions,

in overall

business

proportion

devoted

while service-producing

to be less severely affected.
goods

experienced

during

the higher

physical

Construction

of Commerce;
Ohio
State Employment

and more severe declines

District's

con tractions,

activity

Mining

27.4%
• 35.7
39.3
44.5
33.3
34.5
23.8
38.2
33.3
43.7
44.2
31.8

for. the Korean

Distric] has historically
economic

Manu facturi ng

33.0%
41.2
42.9
48.7
37.4'
~8.7
28.7
42.0
37.3
48.2
48.2
37.7

and

"recession."
tentative

The
and

November

subject

with

the

a private

businessmen,

scorekeeper"

contractions.

is synonymous

Research,

for defining periods called

NBER
more

terminology,
commonly

1969 and November

to '~evision

institution,

and government

as more

a "conused

term

1970 dates are

information

becomes

available.

TABLE II
Distribution of Manufacturing Employment
by Durable Goods and Nondurable Goods Industries
United States,
1970

Fourth

District

and Selected

Metropolitan
. Percent

Areas
of Manufacturing
Major
Industries'

Nondurable
Goods

Durable
Goods
United. States

57.8%

42.2%

Nonelectrical
machinery,
electrical machinery,
transportation
equipment,

Fourth

District

73.1

26.9

Primary metals, nonelectrical
machinery, electrical
machinery, transportation
equipment

Akron,

Ohio

46.5 .

53.5

Rubber, fabricated metals
nonelectrical
machinery

~ 80.2

19.8

Primary metals, nonelectrical
machinery

55.3

44.7

Transportattt
nonelectrical
chemicals

Canton,

Ohio

Cincinnati,

Ohio-Ky.-Ind.

food

equipment,
machinery, food,

Cleveland,

Ohio

73.6

26.4

Nonelectrical
machinery,
fabricated metals, primary
metals, transporjation
equipment,
electrical machinery

Columbus,

Ohio

70.0

30.0

Electrical machinery,
transportation
equipment,
fabricated metals

Dayton,

Ohio

71.3

28.7.

Nonelectrical
machinery,
electrical machinery,
transportation
equipment,
printing

Toledo,

Ohio

77.3

22.7

Transportation
equipment,
Stone-clay-glass,
nonelectrical
machinery

92.2

7.8

78.9

21.1

Transportation
equipment,
electrical machinery,
nonelectrical
machinery

83.3

16.7

Primary metals,
electrical machinery

Youngstown-Warren,

Ohio

Erie, Pa.

Pittsburgh,

Sources:

Pa.

U. S. Department
of Labor;
Pennsylvania State Employment

District-leveled

off

early

Ohio Bureau
Service

in 1969

and began

of Employment

to decline

sharply late in the year.

In some respects,
the Fourth
in

other

recessions,

District
respects

manufacturing.

atypical

the impact

goods-producing

worsening

the character

of the recent
of previous

(Table

III).

on employment

industries,

was concentrated

particularly

declines

in durable

relative

~n
and

in previous

On the other hand, the District's

in employment

recession

experience,

goods

progressive

to the nation

Services;

, was stemmed
result

was typical

Primary metals,
. transportation
equipment

during
the

growing

service-producing
services,
These

finance,
industries

the latest

importance

industries
government,
have

contra.ction.

shown

(broadly

By contrast,

during

in the District's

declined.

the

defined

transportation,
continued

recent years at a rate slightly greater

employment

This is partly a
District's
as

trade,

and utilities).
growth

than the national

each of the thcee previous
service-producing

during
rate.

recessions,
industries

TABLE III
Percent Change in Nonagricultural Payroll Employment,
Service-Producing Industries, and Goods-Producing Industries
Economic Expansions and Contractions
J.
United Stites and Fourth District
1950-1971
Percent Change in
Service-Producing
.Industries

Percent Change in
Total Employment
United
States

Fourth
District

United
States

. Percent Change in
Goods-Producing
Industries

Fourth
District

United
States

Fourth
District

Expansions

11.1%
7.9
5.6
30.1

12.8%
6.6
3.5
25.8

9.2%
9.1
6.1
34.6

9..6%
9.1
4.2
28.9

-2.5
-3.0
-0.4
0.6

-4.8
-7.4
-3.6
-1.0

0.4
-0.3
1.1
4.7

-0.6
-1.8
-0.8
5.0

1950-1953
1954-1957
1958-1960
1961-1969

13.9%
6.1
4.7
22.2

15.9%
4.0
2.6
21.8

Contractions

1953-1954
1957-1958
1960-1961
1969-1971

-8.4
-12.4
-6.7
-9.1

-6.3
-6.9
-2.8
. -7.2

\iii

-.'

NOTE: The period, 1969 to 1971, is more representative
of the recession's impact
on employment
than the period 1969 to 1970. Although
a year of
recovery,
1971 is included in the most recent contractionary
phase'
because employment
in the goods-producing
industries declined for the
second consecutive
year (both in the United States and the Fourth
District).
Sources:

U. S. Department
of Labor; Ohio Bureau
Pennsylvania Bureau of Employment
Service

•.

of Employment

autumn of 1971.3

Much of the national decline in the goods-producing
sector was concentrated
Output and employment
than 30 percent

in defense-aerospace

Services;

industri~s.

The impact of these events on the Fourth District and

in these industries declined more

between mid-1968 and mid-197 I. The

areas can be observed in Charts 1-5.4

selected metropolitan
Manufacturing

employment

in the nation and the Fourth

District's employment decline in goods-producing industries

District began to decline sharply in November 1969, which

was mitigated

~arked

Fourth

District

relative to the United States because the
is less dependent

on defense-aerospace

3More than one-third

employment than the nation as a whole.

from

Distortions in Economic Activity. For the District, 1971
:,

was a period

of continued

stagnation

rather

the onset of both the recession and the first full

than of

mild recovery. Labor-management
disputes-actual
or
anticipated-significantly
influenced both the nature of the
recession and the District's economic performance in 1971.
Among the most important developments were: the strike

the Fourth

District
Ohio,

employment
Eastern

Pittsburgh

centers

manufacturing

Nationally,

the' strike

percentage

against General Motors

Corporation

in the

...

autumn of 1970, the possibility of a steel industry strike in
mid-summer of 1971, and the coal miners' strike in the

District,
inversely

areas of Southeastern

Virginia

to the District's

metropolitan
employees).

The insured

and

the

ten largest manufacturing
unemployment

covered

is considered

rate

the insured

for

rate, which

under state unemploy-

to be more reliable .than the

states

unemployment

and

metropolitan

rate averages about
'

points below the total unemployment
is slightly

with general

ment rate is plotted

Panhandle,

areas with 40,000 or more

statistical

of workers

programs,

the margin

comes
Fourth

area.

unemployment

1969, the Teamsters' strike beginning in the spring of 1970,

West

coal output

strike affected

in the nonurban
the

unemployment

ment insurance
total

mainly

is confined

(standard

bituminous

The coal miners'

Kentucky,

metropolitan

4The 'analysis

measures

against. the General Electric Company beginning in late

of the nation's

District.

business

less. Because
conditions,

areas.

1.5 to 2

rate; in the Fourth
unemployment

the insured

moves

unemploy-

•

on an inverse scale.

TABLE IV
Percent Change in Nonagricultural Employment and
Manufacturing Employment Between Peak and Trough Months
United States, Fourth District, and Selected Metropolitan Areas
"1969-1971
•

...•

Manufacturing Employment

Nonagricultural Employment
Peak

Percent Change

Peak

Trough

3/70
3/70
3/70
10/69
9/70
10/69
1/71
10/69
1/70
10/69
5/70
11/69

United States
Fourth District
Akron, Ohio
Canton, Ohio
Cincinpati,Ohio-Ky.-lnd.
Cleveland, Ohio
Columbus, Ohio
Dayton, Ohio
Toledo, Ohio
Youngstown-Warren, Ohio
Erie,.Pa.
Pittsburgh, Pa.

Trough
1l/70
10/71
8/71
11/71
7/71
8/71
8/71
12/71
1l/70
11/70
6/71
'8/71

-1.6%
-3.1
-2.4
-4.0
-1.8
-4.7
-1.8
-8.5
-3.3
-7.9
-3.0
-3.1

7/69
10/69
1l/69
10/69
10/69
8/69
8/69
8/69
10/69
8/69
3/70
11/69

8/7 J
10/71
12/71
11/71
8/71
8/71
12/71
11/71
11/70
10/70
12/71
8/71

Percen t Change
- 8.9%
-12.3
-10.7
-14.8
-11.6
-16.1
-11.8
-24.4
-13.8
-22.3
- 6.7
-13.0

NOTE: The peak and trough months are based on seasonally adjusted
employment data. December 1971 was designated as the trough month in
several metropolitan areas because it is the latest month available for
regional employment data. The actual trough month may prove to be
later than December 197 i.
Sources: U. S. Department of Labor; Ohio Bureau of Employment
Pennsylvania State Employment Service

Services;

In early 1971, steel-using industries began stockpiling

month of the General Electric strike. During the spring and
early summer of 1970, the Teamsters' strike caused a sharp

inventories

cu tback

August

in nonmanufacturing

effects

that

manufacturing
receive

firms,

supplies

employment

dampened
either

or. to

ended

although

Secondary

operations

through

ship

in manufacturing

several months,
strike

strike

employment.

in some

their inability

products.

• As

was further depressed for

it began to recover when

in mid-summer

a result,

1970.

Shortly

the

thereafter,

in anticipation

of a possible steel strike on

1, 1971. Announcements

of forthcoming

price.

increases helped speed up the inventory accumulation.
. June, most steel consumers had stockpiled
inventories

Consequently,
continued

steel

mill

steel production

products

they

desired.

began to decline in June,

down in July, and dropped precipitously

the labor-management

all the extra

settlement

with

in August. (Although a

however, the economy of the Fourth District (and that of

strike was averted, basic steel ingot production, seasonally

the United States as well) experienced a severe jolt with the

adjusted, declined more than 50 percent between May and

strike

against

September

General

Motors

and November

manufacturing

Corporation.

Between

1970, the percent decline in

employment was almost twice as large in the

Fourth

District as in the nation, reflecting the District's

heavy

concentration

automotive

production.

industries

Settlement

associated

August 197J.) Steel ou tpu t began to recover In September,
but

throughout

the

of economic recovery in the- nation. Thus, the 1969-1970

buildup

essentially

began with

the start

of a major

depressed

level

industrial

disputes,
inventory

than others. In some metropolitan

major industrial strike.

Table

Areas. Certain

areas in the Fourth District felt the impact of

and subsequent

recession-for

a relatively

the remainder of 1971, as steel users continued

recession,

U;dustrial strike and ended with the termination of another
•

Prolonged Sluggishness in Metropolitan
metropolitan

strike in December 1970 coincided with the first full month'
recession

were

to work down their excess inventories.

with

of the automotive

operations

and the
adjustments

far more

areas, the 1969-1970

all practical purposes-lasted

IV summarizes

1971 steel

the employment

well into 1971.
impact

of the

•
"

recession
From

and the weak economic

peak

trough,.

the

performance

Fourth

percent

District

experienced

twice

employment

in manufacturing
total

Chart

rate.

manufacturing

areas

(Erie

that

the

employment

situation

nonmanufacturing

declined

severely

year.

following

The

employment

the 1970-1971

The

period.

Akron

District's

and

Canton-the'

t was reached

nondurable

goods

cutbacks

and

recession

represents

a 'llttle

manufacturing

.each

the

industry

three

accounted

manufacturing

beginning
goods;

MANUfACTURING
EMPLOYMENT

120

FOURTH

above

100

which
4

6
120
,

fabricated

of the

industry,

AKRON,O,

area's

the

110

100

for less than

By contrast,

recessions,

Akron's

during
rubber

of the decline

4
1969

in Canton's

area's share of manufacturing
in durable

of the recession
chiefly

primary

goods

average.

manufacturing,

industries,

The

employment

can be attributed
metals

..... .......

......

which

one-third

the national

.......................

110

of the decline in

tube

for well over half

particularly

DISTRICT

and electrical

and

industries-in

was responsible

metropolitan

employment,

decline

""_~\~~~~~:~~~ __-_ 2

employment.

The Canton

considerably

TOTAL NONAGRICULTURAL

100

Employnient

goods

in that sector.

leading

since the beginning

than

employment,

of the decline

area

70 percent

tire

one-third

is the nation's

machinery

The

areas of the District.

durable

employment

1969.

and

behavior

predominate.

for roughly

total manufacturing

STATES

was also a

the

such as ordnance

metals-accounted

months

metropolitan

production

equipment

area

area's

11 0

a year or so

of tires and tubes and the Fourth

industries

the

defense-related

trough

metropolitan

major

UNITED

NON MANU fACTURING
C.M~.~O:M.E~~.

peak in

areas=Cinsinnati

highlights

metropolitan

only

scale)

120

In the

section

for the production

center

(Inverted

areas-Dayton,

for the

in selected

. Percent

1967=100

by the fact

either

prior to the peak in the leas~affected
range

the overall

off or

total no~agricultural employmen
The

UNEMPLOYMENT

as a whole.

areas,

leveled

Cleveland,

Columbus.

metropolitan

during

affected

Youngstown-Warren,

largest

declines

aggravated

employment

moderately

most

ten

the nation

In many

was further

Index

and the insured

greater

than

pattern

District's

registered

was the sole exception.)

employment

the

employment

Nine

EMPLOYMENT
developments

influenced

payroll

unemployment

in nonagricultural

areas of the District,

significantly

nonagricultural

manufacturing

decline

as a whole

as did the United States.

In most metropolitan'

during 1971.

and

entire

SEASONAllY

is
net

since the

last

entry:

Sources:

1970

. 1971

ADJUSTED-MONTHLY

Dec. '71
U. S. Department
of Employment
Bank

of labor;
Ohio Bureau
Se rv i c e s : and Federal
Reserve

of Cf e ve l c n d

to durable
nonelectrical

machinery. As of yearend 1971, Canton was beginning to
show signs of reversing its steep decline in manufacturing

Cha rt 2

EMPLOYMENT
Index

employment.

UNEMPLOYMENT

1967=100

Percent
(Inverted

130

Cincinnati is a prominent machine tool center, although

CANTON,

scale) "

nondurable

employment is above average in

goods industries.

At the onset of the latest

recession, the area's economy was temporarily depressed by

the General Electric strike. The General Motors strike in

120

its share of manufacturing

late 1970 also had a marked influence ,on manufacturing
employment

in the area.

Three 'durable

110

tries-nonelectrical
transportation

equipment=accounted

100

area's decline

in manufacturing

machinery,

electrical

goods indus-

equipment

for most

employment

and

the

from the

beginning of the recession to late summer 1971, when
recovery in the area began.

Cleveland

was

metropolitan

among

the

most

seriously

affected

areas in the Fourth District during and after

the recession.

Manufacturing

employment

declined

percent from its cyclical peak in August 1969 to its trough
two. years later.
metal-producing

The decline was concentrated

in the

and 'metal-using industries and, in large

part," reflected the area's heavy dependence on the market
for producers'
declined

120
. CINCINNATI,

metropolitan
greater

110

goods. Total nO.{l<fgriculturalemployment
in Cieveland

than in most

other large

areas. (Only Dayton and Youngstown

employment

unemployment

declines.)

Cleveland's

had

insured

rate, which had been averaging about 0.1

percent prior to the recession, rose to a peak of 3.9 percent
100

in September

•

was, of

1971. (The area's total unemployment

course,

much

higher.)

rate

Since last September,

employment" has been recovering,. and unemployment

has

bee-n declining.
Columbus has a below-average share of manufacturing
employment and-as
6
1970

1969

1971

the State capital and the site of Ohio

State

high proportion

University-a

government
despite

SEASONAllY

Dec.

entry:

Sources:

the

'71

Ohio

-Bv r e c u "of Employment

and

Federal

Reserve

a sharp

decline

of relatively stable

and supporting

services. Thus,

in manufact~ring

employment

during the J 970-1971 period, total nonfarm employment in

ADJUSTED-MONTHLY

last

employment

Bank

Services
of

Cleveland

Columbus

unemployment

area

changed

"rate

little,

increases

manufacturing,

and

rose" moderately

other

the

insured

compared

with

metropolitan

the largest employment

areas.
reductions

Within
were

partly defense-related and occurred in electrical equipment,

transportatiorr equipment, and machinery.
The Dayton metropolitan 'area has beer more severely

Cha rt 3

affected by the recession than any other area in the Fourth
District. During the 1960's, Dayton was among the most

EMPLOYMENT

rapidly growing areas in the District; but in recent years,

Index 1967=100

the area has encountered serious economic dislocations, not
all of which are attributable

to cyclical forces. Durable

goods industries have experienced' significant employment
losses since the beginning of the recession, In addition,
there were notable. employment
nondurable

goods industries,

reductions

particularly

employment.

scale)

CLEVELAND, O.
..,

110

...............

········f·············

...

NONMANUFACTUR'ING
EMPLOYMENT

•

100

of the General

Motors strike in late 1970 did little to stem the downward
trend in manufacturing

Percent
(Inverted

in Dayton's

i~ printing and

rubber and plastics products. Termination

'120

UNEMPLOYMENT

By late summer of

1971, there were some sigris that the decline was in the
process of leveling out; but beginning in October, a strike at
National Cash Register caused another sharp dent in the
area's' employment .. With the settlement

120

!=OLUMBUS,

of that strike in

early 1972, Dayton's economy should begin to recover.
0

The Toledo metropolitan area has an above-average share
of manufacturing

employment

(more than .two-thirds in

durable goods industries). The net'reduction

10
2

in the area's

since ,the beginning of the

recession 'stemmed entirely from the durable goods sector.'

120

manufacturing

employment

3
DAYTON,

The area's economy is geared largely towards the motor
vehicle industry, both as a producer and supplier. Thus, the

. .. ... ... .....

110

1970 au to strike had a significant impact on manufacturing
employment

and

the insured' unemployment

rate.

Following the rebound from the auto strike, manufacturing
employment

in Toledo remained on a plateau throughout

1971.
The Youngstown-Warren
manufacturing
because
percent

employment

goods industri.es account
its

manufacturing

for over 90 .

employment.

patterns in. Youngstown-Warren

employment and is vulnerable to recessions

durable
of

area is highly concentrated

100

The

6
1969

during recent

1971

1970

years largely reflect economic activity in the area's two
.

predominant

industries-steel

and motor vehicles. Over the

past two years, the primary metals industry has accounted
for practically all of the net loss in Youngstown-Warren's
manufacturing

employment,

while

the

motor

vehicle

SEASON1'llY

ADJUSTED-MONTHLY

Last

Dec.

entry,

Sources:

Ohio
and

'71

Bureau
Federal

Employment

Reserve

Bonk

Services
of

Cleveland

industry has si~nificantly expanded its employment in the
area. In addition to the recession that began in late 1969,

••

employment

was affected by the auto strike in the fall of

1970 and by jhe steel inventory buildup and subsequent
Chart

EMPLOYMENT
'I n d ex 1967

liquidation in 1971.

UNEMPLOYMENT

= lOOP

ere e n t .
(Inverted

120

scale)

employment-mostly
General

industries.

~he

Electric

in durable
strike

in late

r
'

area. Manufacturing

.. ...

':.~:~.>~'~.~.~

110

share of manufacturing
goods

1969-early 1970 had a major impact on employment in the

TOLEDO,
NONMANUfACTURING
EMPLOYMENT

The Erie, Pennsylvania metropolitan area has a very high

employment

rebounded

after

the

settlement of that strike and reached a new cyclical peak in
March 1970. Since then, manufacturing

100

been

drifting

down.

However,

important manufacturing
2

has experienced

em-ployment has

among

the

ten

most

areas in the Fourth District, Erie

the Jmallest

decline in manufacturing

employment.
tIfI

Pittsburgh is the Fourth District's largest metropolitan
area and has long been one of the nation's most important
steel-producing

120

centers. Primary metals alone account for

40 pe,Lcent to 45 percent of the area's total manufacturing

......

YOUNGSTOWNWARREN, O

employment.

110

Employment

in the manufacturing sector was

in a declining phase throughout the recession year of 1970,
bu t the steel inventory buildup during the fi~st half of 1971-

100

temporarily

curbed the decline .• By late spring of 1971,

. however, the stimulus from the steel industry was largely
9()'

over, and manufacturing

employment

resumed its decline

for ,several months. From the beginning of the recession to
4

August

1971

Pittsburgh),

(the

trough

the· primary

month

for employment

metals industry

accounted

in
for

roughly two-thirds of the area's decline in manufacturing
6

employment.

Other industries

experiencing

employment

losses included electrical and nonelectrical machinery, glass,
8

fabrica ted metals, transportation

equipment, ordnance, and

miscellaneous manufacturi~g.
10

It should be noted that the Fourth District has a number
of smaller metropolitan

the preceding

areas tha t were not included in

discussion.

(Charts

for those areas were

SEASONAllY

Last

entry,

Sources:

1970

1971

Dec.
and

Federal

West Virginia

be mentioned

Two of the

and Lexington,

however,

because their

economies represent polar extremes. Although both areas

'71

Bureau

mainly because of data limitations.)
areas-Wheeling,

Kentucky-should

ADJUSTED-MONTHLY

Ohio

omitted
smaller

1969

Employment

Reserve

Bank

Services

of Cleveland

are surrounded by regions that, in general, are economically
depressed, Lexington has been a thriving, rapid growth area,
while economic performance in Wheeling has been sluggish.
Throughout

the

1960's,

and at the beginning

of the

1969-1970
Chart

metropolitan

EMPLOYMENT

UNEMPLOYMENT

areas in the District with the lowest rates of

scale)

unemployment

those

rates. During the recession,

rose moderately

. in Wheeling. Lexington's

in Lexington, but sharply

large share of employment

trade; services, and government helped to insulate the area

PA.

from
120

was', among

while Wheeling was among those

with the highest unemployment

Percent
(Inverted

ERIE,

Lexington

insured unemployment,

Index 1967=100
130

recession,

adverse

nonagricultural

NONMANUFACTURING
EMPLOYMENT

110

the

effects

the

recession.

Total

employment in Lexington has continued to

expand in recent years, although the manufacturing
temporarily

lost

its

upward

momentum

sector

during

the

recession. In Wheeling; as in most other metropolitan areas,

100

the impact
manufacturing

•

of the recession was concentrated

recovery in Wheeling was in progress.

A LONGER-RUN
4

PERSPECTIVE

The long-term employment
is depicted in Chart6.

in the

sector. By late 1971, there we!e signs that

performance of the District

From 1950 to 1971, the net percent

gain in the District's total nonagricultural employment was
only a little more than half the gain for the nation. The

120

PITTSBURGH,

PA.

District lost g!ound to the nation not only in the more
rapidly growing service-producing industries, but also in the

110

.....

slower -growing goods-producing

•

relative employment
100

" "..... _--,

0
'- ... ~

industries.

However, the

loss was considerably greater in the

goods sector.
. The reasons for the Fourth District's comparative lag in

----\
\_~- ,
A

employment
both durable

over the long-run include slow growth in
and nondurable

goods manufacturing

differences in industrial composition

and

between the Fourth

District and the United States.
6
8

1969
SEASONAllY

lost

entry,

Sources:

1970

1971

ADJUSTED-MONTHLY

Dec.'71
Pen n sylvc n ic State Employment
Service
and Federal
Reserve
Bonk of Olev e lc n d

Significant

differences

in the distribution

of major

industries within the District and the nation, and in the
.employment changes within those industries between 1960
and 1970, can be seen in Table V. The Table also helps to
pinpoint the major manufacturing industries that are largely
responsible for the overall performance

of the District's

manufacturing sector.
Sl~w growth ir:.,durable goods industries is the primary
reason that total manufacturing employment has grown less
rapidly in the District
1960's,

the

manufacturing

percentage

than in the nation. (During the
increase

durable

goods

employment was almost twice as large in the

Chart 6

••.. PAYROLL EMPLOYMENT

In SERVICE-

and GOODS-PRODUCING

INDUSTRIES

UNITED STATES and FOURTH DISTRICT
Index
TOTAL

NONAGRICULTURAL

1950=100
160

EMPLOYMENT

140

.,120

100
SERVICE-PRODUCING

200

INDUSTRIES

180
160
140

120

GOODS-PRODUCING

100
160

INDUSTRIES

140

120

100

80
1950
RATIO

'52

'54

'56

'58

'62

'60

'64

'66

SCALE

ANNUAL

last

entry,

Sources:

1971
U. S. Department

State

12 •

Emp'loyment

of Lobor;

Service;

Ohio

and

S·ureau

federal

Employment

Reserve

Bank

Service~;
of Cleveland

Pennsylvania"

'68

'70

TABLE V
Percent Change and Percent Distribution in Manufacturing Employment
United States and Fourth District
1960-1970
Percent

Change

Percent

of Manufacturing

1960-1970
United
States

15.3%
lS.4
10.0
-S.7
20.1
5.7
6.S
21.5
33.7
31.1
15.2
29.4
9.2
11.4
-0.5
-13.1
5.S
11.3
17.5
21.5
26.9
-10.2
53.1
-11.4

All Manufacturing
Durable goods industries
Ordnance and accessories'
Lumber and wood products
Furni ture and fix tures
Stone, clay and glass 'Products
Primary metal industries
Fabrica ted metal' products
Nonelectrial
machinery
Electrical machinery
Transportation
equipment
Instruments
and related products
Miscellaneous manufacturing
Nondurable goods industries
Food and kindred products
'Tobacco
Textile mill products
Apparel and other textile product;
Paper and allied products
Printing and publishing
Chemicals and allied products
Petroleum and coal products
Rubber and plastic products
Leather and leather products
Sources:

Fourth
District

1970
... ~

United
States

9.1%
9.5
23.6
6.S
-9.5
-6:S
-5.5
10.4
26.8
23.2·
10.1
60.6

Fourth
District

100.0% .
57.S
1.2
3.0
2.4
3.3
6.S
7.1
10.2
9.9
9.3
2.4
2.2

7 ..5 .

S.2
-7.3
-25.0
-7.1
~ -3.5
16.0
12.9
23.6
-0.819.1
:-10.S

100.0%
73.1
0.5
0.7
1.2
4.9
16.9
10.7
14.3
11.1.
9.S
1.5
1.4

42.2
9.2
0.4
.5.0
7.1
3.6
5.7
5.4
1.0
3.0
1.7

26.9
5.S
0.2
0.6
1.3
2.9
4.6
4.0
0.7
6.3
0.6

U. S. Department
of Labor; Ohio Bureau of Employment
Services;
Pennsylvania
State Employment
Service; Kentucky
Departmentof
Employment
Security
•

United States as in the District.)

The District achieved

Differences

between

the

national

and

regional

higher growth rates than the nation in only three of the

compositions of certain major industries partly explain why

eleven

employment 'changes have been relatively less favorable, or

major

durable

goods

industries-ordnance

accessories, lumber and wood products,
and related

products.

and

and instruments

These three industries,

however,

adverse, in most of the District's manufacturing
Primary metals, the largest manufacturing

industries.

industry in' the

constitute less than 3 percent of the District's manufacturing
"employment. By .contrast, employment changes in the

District, is a conspicuous example. In terms of employment

other eight major durable goods industries, which account

showed slow growth in the nation, but a decline in the

for over 70 percent

Fourth District. A major reason for .this situation is that the'

employment,

of Fourth

District manufacturing

were relatively poorer in the. District .. That is,

within each industry, either the growth in the District fell

performance

since

of the industry-blast

products-than

compared with an increase in the nation.

In nine out of the ten major nondurable industries, the
Fourth District's employment

performance during the past

the

the nationas

District's

. concentrated

furnaces and basic steel

a whole. More than two-thirds

primary

metals

parts

nonferrous

exception

metals employment in the District than

petroleum

and

coal

products,

which

in blast furnaces and basic steel products,

same' degree as in the durable goods industries. The sole
was

employment

compared with less than one-half nationally. The expanding

decade fared worse than the nation's, although not to the

accounts for less than 1 percent of the Fourth District's
employment.

metals. industry

Fourth District is more heavily weighted with the declining
portion

short of the national gain or an outright decline was posted,
.

1960, the primary

the. industry-iron
metals--constitute

and

steel

foundries

and

a smaller share of primary

Over the long run, steel output

declined in relative importance,

in the nation.
in the District has

although the. decline has

Chart

Index

1967=100

140

RAW STEEL PRODUCTION
U. S. and Selected

Index

Geographic

PITTSBURGH

120

Centers

100

1967=100

140

UNITED

STATES
1950=24.2
1971=22.5

120
60
100
140
80

120
100

60
80
140
1950=12.1
1971=8.9

120
60
100
140
80

120
1950=44.0
1971=44.1

100

80
140
120

1950=4.6
1971=6.6

100
140
80

120
1950=52.9
1971=76.1

100

80
'
55

1950
RATIO SCALE
ANNUAL
last
entry:
"'Millions
t Average

Sources:

'65

'70
1950~3.1
.1971
=6.2

1971

of tons.
annual rote of change.
American

of Cleveland

'60

Iron

and

Steel

Institute

and

Federal

Reserve

Bonk

1950

'55

'60

'65

'70

been stemmed during the past decade (see Chart 7). The
four steel-producing centers located within the District
accounted ,for 45 percent of the nation's total steel output
in 1950. During the 1950's, steel output was in a declining
phase in the Fourth District, but growing moderately in the
rest of the na,tion. As a result, the" District's share had
dropped to 38 percent in 1960. Between 1960 and 1971,
however, 'growth of steel output in the District was resumed
and almost equaled that of the nation. Both the Pittsburgh
and Youngstown steel centers have reversed their previous
declining trends in steel ou tpu t. Compared wi th the trend
in steel centers outside the Fourth District, however,
Pittsburgh and Youngstown each has experienced a below
,average performance since' 1960, while output has grown
marginally better in the Cleveland center and at a
considerably faster rate in the Cincinnati center.P In 1971,
after two years of declining s!eel output, the District
produced the same steel tonnage as in 1950, but this
accounted for slightly less than 37 percent of the nation's
total.
Other major manufacturing industries in the Fourth
District are heavily concentrated in those subindustries that
-are experiencing declining 'or slow growth trends in
·\mployment. For example, electrical industrial apparatus
and household appliances constitute the slowest growing
,portion
of the electrical machinery industry. Those
subindustries account for only one-fifth of the electrical
machinery industry's employment in the nation, but nearly
one-half in the District. On the other hand, the most
ra~idly growing subindustries-communications
equipment
and electronic components
and accessories-represent
almost half of the electrical machinery industry in the
nation, but only one-fifth in the District.
The highest growth industry during the past decade,
rubber and plastics products (Table V), is another case
in which the compositional difference between the Fourth
District and the nation is a significant factor in explaining
the District's relafively poor performance. Virtually all of
the growth in this industry has been in plastics and
fabricated rubber products, which account for relatively
little employment in, the District. The District is heavily
concentrated in the tire ,and tube portion of the industry,
which has registered a substantial employment loss since
1960.
The Fourth District's relatively slower growth rate in
other
major
manufacturing
industries,
such
as

SThe

steel

American
Standard

centers

shown

Iron and Steel Institute
Metropolitan

Statistical

the

charts"

are

classified

and are not coterminous
Areas.

the

with the

transportation equipment, fabricated metal products, and
nonelectrical machinery, generally is less attributable to
compositional differences than to the fact that, product by
product or subindustry by subindustry, the District has
experienced employment changes less favorable than the
nation.
Favorable Long-Run Trends. During the past two
decades, there have been some favorable developments in
the District's employment growth patterns, although its
performance still falls short of the nation's. First, the
District has had a notable improvement in manufacturing
employment during the past decade. Specifically, from
1960 to 1970, manufacturing employment rose 9 percent,
in the District and 15 percent in the United States. During
the previous decade, manufacturing employment 'registered
no net increase in the District but grew 10 percent in the
nation. As a corollary of the above, the District has lessened,
its dependence on employment in the cyclically sensitive
durable goods manufacturing industries. The share of total
nonagricultural employment in the Fourth District claimed
by durable goods manufacturing has declined from 32
t

percent in 1950 to about 25 percent currently, compared
with about 15 percent currently for the United States
(from 18 percent in 1950).
Second,
there
have
been
favorable
l~ng-run
developments in the District's nonmanufacturing industries.
Unlike the manufacturing sector, the composition of the
nonmanufacturing
sector is essentially the same in the
District as in the nation. Moreover, growth rates in the
District's nonmanufacturi~g
sector have more closely
approximated national trends. Specifically, from 1960 to
1970, nonmanufacturing employment increased 30 percent
in the District and 37 per ent in the nation; during the
, previous decade, the gain was 19 percent.in the District and
25 percent in the nation. Services, government, finance, and
trade were the most rapidly growing employment categories'
during the 1960's, b oth in the District and' in the nation.
.•..
The net result of the foregoing is that the District's
~verall employment performance (in both absolute terms
and relative to the nation) was considerably better during
the 1960's than it was during the previous decade. From
1950 to 1960, total nonagricultural employment grew 10
percent in the Fourth District and 20 percent in the United
States. But during the following decade, 1960 to 1970,
nonagricultural employment grew 21 percent in the District
and 30 percent in the United States. Thus, from the decade
of the 1950's to the decade of the 1960's, the District more
than doubled its growth rate in employment, whereas the
nation bettered its rate by only half.
Trends in Metropolitan Areas. Important demographic
and economic changes have occurred in the Fourth District

TABLE VI
Population and Percent Change
United States and Fourth District Metropolitan Areas
1960-1970
Population
1970
(000)
United States
Fourth District
Akron, Ohio
Canton, Ohio
Cincinnati;Ohio-Ky.-lnd.
'
Cleveland, Ohio
Columbus, Ohio
Dayton, Ohio
Hamilton-Middletown, Ohio
Lima, Ohio
Lorain-Elyria, Ohio
Mansfield, Ohio
Springfield, Ohio
Steubenville-Weirton, Ohio-W. Va.
Toledo, Ohio-Mich.
Youngstown-Warren, Ohio
Erie, Pa.
Pittsburgh, Pa.
Lexington, Ky.
Huntington-Ashland, W. Va.-Ohio-Ky.
Parkersburg-Marietta, W. Va. -Ohio
Wheeling, W. Va.-Ohio

203,185
15,927
679
372
1,385
2,064
916
853
226
171
257
130
157
166
693
537
264
2,401
174
254
144
183

.•

Percent Change
in Popula lion
1960-1970
+13.3%
+7.1
+12.2
+9.4
+9.2
+8.1
+21.4
+16.9
+13.6
+6.6
+18.1
+10.4
+19.5
-l.3
+9.8
+5.3
+5.2
.-0.2
+32.2
-0.4
+10.7
-4.1

NOTE: Figures in parentheses represent the ranking among 20 Fourth District
jI1etropolitan areas.
r

Natural Increase
(000)
+1,560
+72
+34
+153
+200
+111
+99
-1)6
+19
+33
+14
+15
+13
+69
+47
+26
+163
+20
+23
+13
+8

( 7)
(11)
(12)
(13)
( 2)
( 5)
( 6)
(14)
( 4)
( 9)
( 3)
(19)
(10)
(15)
(16)
(17)
( I)
(18).
( 8)
(20)

Net Migration
(000)
-510
+2
-2
-36
-45
+50
+24
+1
-9
+6
-2
+11
-15
-7-20
-13
-167
+22
-25
+1
-16

Source: U. S. Department. of Commerce
i

during the past decade. For example, apart from the issue
of whether growth in population is a "favorable" or
"unfavorable"
development; .population increased about
half as much in the District as in the United States during
the 1960's, whereas employment-grew two-thirds as much
in the District as in the nation. Part of the reason why the
District's employment showed much faster growth than its
population, compared with the counterpart national rates
of increase, is that more than half a million people migrated
from the District between 1960 and 1970 (Table VI).
The net gain in the District's population was, of course,
attributable to the excess of the natural increase (births
minus deaths) Oyer the out-migration.
Out-migration
mainly
occurred
from
Western
Pennsylvania,
Southeastern
Ohio, the West Virginia
Panhandle, and rural areas of Eastern Kentucky. These
portions of the District generally have been characterized
by sluggish employment conditions and' low income
growth. In recent years, however, 1m element of prosperity
has returned to many of the long-depressed mining
communities in the District, reflecting a distinct turn for
the better in the output and employment of the bituminous
coal industry.

Of twenty metropolitan areas in the Fourth District.i'
only six had population gains above. the national average
over the 1960-1970
period, while ten have had
below-average gains. The remaining four metropolitan areas
experienced losses during the past decade-largely the result
of out-migration, which reflected unfavorable employment
opportunities. For example, population losses were heavily
concentrated
in the contiguous metropolitan areas of
Pittsburgh, 'Steubenville-Weirton, and Wheeling. Those areas
have had little or no growth in total employment and have
t!'xhibited
declining
tendencies
In
manufacturing
employment, particularly in the primary metals industry.
The nearby metropolitan area of Parkersburg-Marietta is an
unusual case in that it is a growing area in the midst of a
. generally declining region.
Expanding job opportunities attracted people to some
areas of the District. Lexington, Kentucky, in particular ;:
pxhibited exceptionally high growth in population during
6Actually, there are 21 SMSAs locates! par tiallyor entirely within
the Fourth District. Johnstown, Pennsylvania is excluded f~om the
tables on population and personal income because the overwhelming
share of that metropolitan area's population is in Cambria County,
Pennsylvania (part of the Third Federal Reserve District).

TABLE VII
Growth in Total Personal Income and Per Capita Personal Income
Metropolitan United States and Metropolitan Areas of Fourth District
1959-1969
.

Per Capita Personal

Income

Personal Income
Average. Annual Rate
of Growth

1959-1969
United States*
Fourth District*
Akron, Ohio
Canton, Ohio
Cincinnati,Ohio-Ky.-Ind.
Cleveland, Ohio
Columbus, Ohio
Dayton, Ohio
Hamilton-Middletown,
Ohio
Limav Ohio
Lorain-Elyria,
Ohio
Mansfield, Ohio
Springfield, Ohio
Steubenville-Weirton,
Ohio-W. vs.,
Toledo, Ohio-Mich.
Youngstown-Warren,
Ohio
Erie, Pa.
Pittsburgh, Pa,
Lexington, Ky.
Huntington-Ashland,
W. Va.-Ohio-Ky.
Parkersburg-Marietta,
W. Va.-Ohio·
Wheeling,
Va.-Ohio

yi.

Growth

Percent of
Metropolitan
.
United States Average

1959-1969

1969

5.9
5.9
5.9

(12)
(2)
(14)
(10)
( 5)
( 2)
(16)
( 3)

5.8
6.0

6.7
7.3

5.6
7.2
6.9
5.4
6.5
4.7
6.2

65
59

( 9)

(20)
( 9)

(10)
(8)
(18)
( 1)

5.7

(15)

6.7

( 5)

(19)

4.8

20 fourth

(6)

( 7)

4.9
9.4

(16)
(3)
(14)
(2)

60
86
73
73

(7)

( 4)

6.3

100%

.( 4)
(20)
( 1)
( 9)
(9)
( 7)
(16)
( 9)
( 8)
( 3)
(14)
( 2)
( 4)
( 4)

52
87
66
56

6.0

* Includes Standard Metropolitan Statistical Areas only.
NOTE: Figures in parentheses
represent
the ranking among
rnetr opolitan areas.
Source: ,U. S. Department

66%
64
59
63

6.9%

59
_.66
69
74

94
88

( 5)
(4)

( 4)

108

( 1)

( 9)

101
84·

( 3)
(7)
(1)
(5)

87
92
89

( 8)

(11)

( 5)

( 9)

105
87

94
89

.79
79
78

( 2)
(5)
( 5)
(11)
(8)
(18)
(20)

District
.

of Commerce

the 1960's, with more than half of the gain attributable to
in-migration. Areas in Central and Southwestern Ohio, such
as ' Columbus, 'Springfield, and Dayton, also experienced
favorable employment trends and net in-migra tion during
the same period.
In general, metropolitan areas with the slowest growing,
or declining, populations also have been areas with the
slowest growth rates in personal income (Table VII):
Conversely, areas with the most rapid growth in population
(and employment)
generally exhibited high personal
income growth rates.
The growth and level of per' capita personal income
provide better evidence of an area's past economic
performance and its current state of economic well-being
than aggregate personal income. In the metropolitan areas
of the Fourth District; taken together, growth of per capita
personal income during the 1960's was only marginally less
than the percent gain in all metropolitan areas of the
nation. But some' areas with the highest per capita income
growth (such as Lima, Ohio and Lexington, Kentucky)
registered gains over "a ten-year period-in the range of 30 to
35 percentage points above the increases in the slowest
growing areas (Mansfield, Ohio and Hamilton-Middletown,

Ohio);
Eight metropolitan areas in the Fourth District posted
larger gains' in per capita income than the average for
metropolitan United States. Most area's wi th rapid growth
in total personal income also exhibited high growth in per
capita income, but there were exceptions. For example,
Columbus was one of the fastest growing metropolitan
areas in terms of population and total personal income, but
.ranked low in terms of per capita income growth. On .the
,
other hand, Wheeling-with
the sharpest decline in
population among Fourth District metropolitan areas and
next to last in personal income growth-ranked
relatively
high in per capita income growth.
•
In terms of the level of per capita personal income, there
are sizable differences among Fourth District metropolitan
areas. For example, in the Cleyeland metropolitan area, per
~ capita personal income is almost 40 percent higher than in
Wheeling and 15 percent higher than inPittsburgh. In some
.

areas, the growth in per capita income during 1960's may
have represented in part a "catching up." Thus, despite a
decade of high growth rates in per capita personal income,
areas such as Lima, Lexington; Erie, Huntington-Ashland,
Parkersburg-Marietta, Springfield, and Youngstown-Warren

are still characterized by relatively low levels of per capita income.7

SUMMARY

AND CONCLUDING

COMMENTS

In the Fourth District, manufacturing activity should be
viewed as the barometer of the economy. Even though
manufacturing
accounts for only a little more than
one-third of total employment in the District, this sector is
largely responsible for determining the magnitude of
fluctuations in the region's economic activity. The Fourth
District has lessened its dependence on manufacturing
employment during the past two decades, but employment is still largely concentrated
in durable goods
manufacturing-particularly
in those industries that are
cyclically volatile and generally growing slower than their
national counterparts.
Consistent with previous recessions, employment during
the 1960-1970 recession declined considerably more in the
District than in the nation. After the trough of the
recession, nonagricultural employment recovered moderately in the United States, but on balance it continued to
decline in the Fourth District well into 1971.
Certain developments distorted the timing and rnagnitude of both the recession and the economic recovery in
1971. Strikes, 'actual, or anticipated,
caused serious
disruptions to economic activity during and since the
recession. Moreover, superimposed on the' twelve-month
recession was an extremely sharp cutback in the nation's
defense and aerospace programs, which aggrava ted the
recession itself-although more so in the nation than in the
Fourth District.
Additional ~omplicating fac~ors included the post-strike
rebound in motor vehicles and supplying industries during
early 1971 and the steel inventory stockpiling in
anticipation of a possible strike. When the strike did not
materialize, steel output was severely depressed during the
summer and early fall of 1971 and was recovering very
slowly during the last few months of the year.
Consequently, those Fourth District .rnetropolitan areas
. .
that are heavily dep.endent on the steel industry were just
beginning to show' signs of overall recovery towards the end
of 1971.
The result of the foregoing is that the Fourth District
did not exactly experience a twelve-month recession

7As of 1969, per capita personal income for all metropolitan areas·'
of the United States was 10 percent above the 'average for the entire
nation. Accordingly, the per capita income data for each Fourth
District metropolitan area shown in Table VII would be about 9
percentage points higher if taken is a percent of the national
average. For example, per capita personal income in Akron was 103
percent of the national average in 1969, but 94 percent (103/110)
of the average for all metropolitan areas of the United States.

followed by mild recovery. It would be more appropriate to
describe economic events of the past few years as .
constituting an extended business adjustment, concentrated
in durable goods manufacturing industries, lasting from
about mid-1969 to late 1971, and marked by intervals of
temporary stimulus.
As of early 1972, with manufacturing on the rise, the
overall economy of the Fourth District is showing positive
signs of recovery. Steel users have worked inventories to
minimum levels, and the steel industry is beginning to
return to more normal operating rates. Production of motor
vehicles; supplies, and parts is lending support to economic
activity. Further stimulus is expected from appliances and
household furnishings, reflecting the recent high rate of
housing starts in the Fourth District and elsewhere. Finally,
evidence, is accumulating that there will be a significant
increase in new plant and equipment expenditures during
1972-a factor that is of special importance to industries in
the Fourth District.
Looking ahead, it seems reasonable to expect some
mitigation of the Fourth District's cyclical volatility, given
the trend toward a smaller share of nonagricultural
employment in the goods-producing industries. At present,
the goods-producing industries account for about 40
percent of nonagricultural payroll employment in the
Fourth District, compared with 50 percent in 1950. The
more stable and faster growing service-producing industries
now account for about 60 percent of the District's
employment.
In the United States, essentially the same long-run
trend-away from goods-production and towards servicetype employment-has
occurred. However, the United
Sta tes now has more than two- thirds of nonagricultural
payroll employment in the service-producing industries, and
less than one-third in the goods-producing industries. Thus,
even though the Fourth District has lessened its dependence
on goods-producing industries, the region's economy is still
more heavily weighted than the nation's in the goods
sector-particularly
in those industries that are the most
seriously affected during recessions and the least responsive
to economic expansions. In absolute terms, the trend
.
toward a larger service-type economy should dampen
the District's overall employment d~clines dVriri-g future'
recessions and improve the employment performance
during expansions. Relative to the United States, however,
it seems likely that the District will con,tinue to be more
adversely affected during recessions and that its .recoveries
will continue to be of smaller magnitude than the nation's.

THEODORE S, TORDA and ROBERT A. McMILLAN

APPENDIX
Standard Metropolitan Statistical Areas - Fourth District
(counties iricluded)
Parkersburg-Marietta, W. Va.-Ohio
(Washington, Ohio)
(Wood, W. Va.)

Akron, Ohio
(portage, Ohio)
(Summit, Ohio)
Canton, Ohio
(Stark, Ohio)

Erie, Pa.
(Erie, Pa.)

Cincinnati, Ohib=Ky.v-Ind ..
(Dearborn, Indiana)
(Boone, Kentucky)
(Campbell, Kentucky)
(Kenton, Kentucky)
(Clermont, Ohio)
(Hamilton, Ohio)
(Warren, Ohio)
Cleveland, Ohio(Cuyahoga, Ohio)
(Geauga, Ohio)
(Lake, Ohio)
(Medina, Ohio)

Hami1ton-Middletown, Ohio
, (Butler, Ohio).
Huntington-Ashland, W. Va.-Ohio-Ky.
(Boyd, Kentucky)
(Lawrence, Ohio)
(Cabell, W. Va.)
(Wayne, W. Va.)
Lexington, Ky.
(Fayette, Ken tucky)
"

Columbus, Ohio
(Delaware, Ohio)
(Franklin, Ohio)
(Pickaway, Ohio)
Dayton, Ohio
(Green, Ohio)
(Miami, Ohio)
(Montgomery, Ohio)
(Preble, Ohio)

Lima, Ohio
(Allen, Ohio)
(Putnam, Ohio)
(Van Wert, Ohio)
Lorain-Elyria, Ohio
(Lorain, Ohio)
Mansfield, Ohio
(Richland, Ohio)

Pittsburgh, Pa.
(Allegheny, Pa.)
(Beaver, Pa.)
(Washington, Pa.)
(Westmoreland, Pa.)
.., Springfield, Ohio
(Clark, Ohio)
Steubenville-Weirton, Ohio-W. Va.
(Jefferson, Ohio)
(Brooke, W. Va.)
(Hancock, W. Va.)
Toledo, Ohio-Mich.
(Lucas, Ohio) .
(Wood, Ohio)
(Monroe, Michigan)
Wheeling, W. Va.-Ohio
(Belmon t, Ohio)
(Marshall, W. Va.)
(Ohio, W. Va.)
Youngstown-Warren, Ohio
(Mahoning, Ohio)
(Trumbull, Ohio)

Source: Office of Management and Budget'
Fourth District Steel Centers
(counties with raw steel producers)

Pittsburgh
(Cambria, Pa.)
(Washington, Pa.)
(Westmoreland, Pa.)
(Beaver, Pa.)
(Butler, Pa.)
(Allegheny, Pa.)
(Hancock, W. Va.)
(Jefferson, Ohio)

Cleveland
(Cuyahoga, Ohio)
(Lorain, Ohio)
Youngstown
(Lawrence, Pa.)
(Mercer, Pa.)
(Mahoning, Ohio)
(Trumbull, Ohio)
(S tark, Ohio)
(Richland, Ohio)
(Marion, Ohio)

Cincinnati,
(Cabell, W. Va.)
(Hamil ton, Ohio)
(Butler , Ohio)
(Scotio, Ohio)
(Boyd, Ky.)
(Campbell, Ky.)
(Daviess, Ky.)

Source: American Iron and Steel Institute

COMPARATIVE STATEMENT OF CONDITION
••

ASSETS
Dec., 31,1971

Dec.31,1970

f!S

Gold Certificate Reserves

$ 973,576,773

$1,095,005,800

Special Drawing Rights Certificates
Federal Reserve Notes of Other Banks
Other Cash

.
.
.

.33,000,000
68,968,775
26,968,862

33,000,000
67,230,331
24,815,354

.
.

-038,609,000

-0" -0-

.
.
.

2,400,494,000
2,830,231,000
261,605,000

2,025,545,000
2,592,801,000
229,377 ,000

5,492,330,000

4,847,723,000

5,530,939,000

4,847,723,000

.
.
.

980,806,076
24,256,207
55,860,563

Discounts and Advances
Federal Agency Obligations - Bought Outright
U. S. Government Securities:
Bills
Notes
','
Bonds
0

Total U. S. Government Securities
Total Loans and Securities

;

Cash Items in Process of Collection
Bank Premises
Other Assets
,

911,819,249
12,233,351 "
66,077,937

$7,694,376,256

$7,057,905,022

4,473,426,148

4,198,315,903

.
"

1,968,530,381
163,751,169
,25,200,000
34,049,712

1,813,296,320
76,407,271
11,125,000
23,383,994

2,191,531,262

1,924,212,585

.
.

846,792,417
46,862,629

763,832,390
45,324,844

$7,558,612,456

$6,931,685,722

Total Assets

LIABILITIES
Federal Reserve Noles

•

Deposits:
.
Member Bank - Reserve Accounts
U. S. Treasurer - General Account
Foreign
Other Deposits
Total Deposits
Deferred Availability Cash Items :
Other LiabilitiesTotal Liabilities

CAPITAL ACCOUNTS
Capital Paid In
Surplus

: ....•...

93,109,650
63,109,650

$7,694,376,256

Total Liabilities and Capital Accounts
Contingent Liability on Acceptances
Purchases for Foreign Correspondents

67,881,900
67,881,900

$7,057,905,022

.
.

22,941,000

22,258,900

COMPARISON OF EARNINGS AND EXPENSES
1970

1971
Total Current Earnings
Net Expenses

-.
.

$285,002,026
23,925,582

$300,486,897
21,231,405

261,076,444

279,255,492

. Current Net E.arnings ..........•.................
Additions to Current Net Earnings:

470,646

649,168
309,258
18,920

8,336,895

977,346

'..
.

736,336
96,102

121,108

Total Additions

.
.
.

Profit on Sales of U. S. Government Securities (Net)
Profit on Foreign Exchange Transactions (Net)
All Other

832,438

121,108

7,866,249

-0-

Deductions from Current Net Earnings:
Loss on Foreign Exchange Transactions (Net)
All Other
:
Total Deductions

NET DEDUCTIONS
NET ADDITIONS
·~
,

-0--':

-0-

.
.

Net Earnings before Payments to U. S."Treasury

Dividends Paid
Payments to U. S. Treasury (interest on F. R. Notes)
Transferred to Surplus
:
Total

-0-

7,504,457

$268,580,901

$280,111,730

.
.

856,238

3,957,512
259,851,139
4,772,250

3,666:823
273,227,057
3,2.17,850

$280,111,730

$268,580,901

DISPOSITIO'N OF GROSS EARNINGS
:4---TO U. S. TREASURY

88.8%
1.4

TING EXPENSES

8.2
1.6

As of February

1,1972

FEDERAL RESERVE BANK OF· CLEVELAND
DIRECTORS
Chairman
ALBERT G. CLAY, President
Clay Tobacco

Company,

Mt. Sterling,

Kentucky

Deputy Chairman
J. WARD KEENER, Chairman of the Board
The B. F. Goodrich

Company,

Akron,

Ohio

EDWARD W. BARKER

DAVID L. BRUMBACK,

President
First National Bank of Middletown
Middletown,
Ohio

President
Van Wert National
Van Wert, Ohio

JR.

A. BRUCE BOWDEN

JOHN L. GUSHMAN

DONALD E. NOBLE

Vice Chairman of the Board
Mellon National Bank and. Trust Company
Pittsburgh, Pennsylvania
.

Chairman of the Board
and Chief Executive Officer
Anchor Hocking Corporation
Lancaster, Ohio

President and Chief Executive
Rubbermaid
Incorporated
Wooster, Ohio

Bank

R. STANLEY

LAING

President
The National Cash Register
Dayton, Ohio

Company

Officer

HORACE A. SHEPARD
Chairman of the Board
and Chief Executive Officer
TRW Inc.
Cleveland, Ohio

MEMBER, FEDERAL ADVISORY COUNCIL
JOHN S. FANGBONER,
The National

Chairman of the Board and Chief Executive
City Bank of Cleveland, Cleveland, Ohio

(dfficer

OFFICERS
WILLIS J. WINN, President
WALTER H. MacDONALD,
ROGER R. CLOUSE
. Senior

Vice President

and Secretary

WILLIAM H. HENDRICKS
Senior

Vice President

JOHN J. HOY
Senior

Vice President

FRED O. KIEL
Senior

Vice President

CLIFFORD
•

Senior

G. MILLER

Vice President

GEORGE E. BOOTH, JR.
Vice President

and Cashier

PAUL BREIDENBACH
Vice President

and General Cdunsel

JAMES H. CAMPBELL
Vice President

ELMER F. FRICEK
Vice President

R. JOSEPH GINNANE
Vice President

First Vice President

• WILLIAM J. HOCTER
Vice President

MYRON R. MANN

and Economist

Assistant

HARR Y W. HUNING

Vice President

THOMAS E. ORMISTON,

Vice President

Assistant

FRED S. KELLY

Vice President

H. MILTON PUGH

Vice President

Chief Examiner

ELFER B. MILLER
General Auditor

LESTER M. SELBY

ROBERT E. SHOWALTER

Assistant Vice President
and Assistant Secretary

Vice President

HAROLD J. SWART

OSCAR H. BEACH, JR.
Assistant

Assistant

Vice President

DAVID A. TRUBICA

MARGRET A. BEEKEL
Assistant

Vice President

AssLstant

and Economist

Assistant

Vice President
Vice President

and Economist

Assistant

ANNE J. ERSTE

VIRGINIA

Assistant

Assista;U

Vice President

Vic'e President

DAVID J.. WEITZEL

JOHN J. ERCEG
Assistant

Vice President

DONALD G. VINCEL

GEORGE E. COE
Assistant

Vice President

General Auditor

L. WHITMER
Vice President

JR.

As of February

1, 1972

CINCINNATI BRANCH
DIRECTORS
Chairman

GRAHAM E. MARX, President and General Manager
The G. A. Gray Company,

Cincinnati,

Ohio

PAUL W. CHRISTENSEN, JR.

WILLIAM S. ROWE

CLAIR F. VOUGH

President

Vice President
Office Products Division
IBM Corp.
Lexington,
Kentucky

The Cincinnati Gear Company'
Cincinnati, Ohio

The Fifth Third Bank
"Cincinnati, Ohio

ROBERT E. HALL
President

PHILLIP R. SHRIVER

E. PAUL WILLIAMS

The First National Bank
and Trust Company
Troy, Ohio

President

Miami University
Oxford, Ohio

The Second National
Ashland, Kentucky

Bank of Ashla~d

OFFICERS
FRED O. KIEL

ROBERT D. DUGGAN

Senior

. Vice President

Vice President

and Cashier

DONALD G. BENJAMIN

CHARLES A. CERINO

JERRY S. WILSON

Assistant

Vice President

Vice President,

Vice President

PITTSBURGH BRANCH
DIRECTORS
Chairman

LAWRENCE E. WALKLEY, President and Chief Executive
Westinghouse

Air Brake Company,

Pittsburgh,

ROBINSON F. BARKER

RICHARP M. CYERT

Chairman of the Board and
Chief Executive Officer
PPG Industries, Inc.
Pittsburgh, Pennsylvania

Dean
Graduate School of Industrial
Administration
Carnegie-Mellon
University
Pittsburgh, Pennsylvania

JOHN W. BINGHAM

MERLE E. GILLIAND

President
The Merchants and Manufacturers
National Bank of Sharon
Sharon, Pennsylvania

Chairman

Office;
Pennsylvania

ROBERT E. KIRBY

of the Board and

Chief Executive Officer
Pittsburgh National Bank
Pittsburgh,

President
Westinghouse Electric Corporation
Industry and Defense Company
Pittsburgh, Pennsylvania

CHARLES F. WARD
President
Gallatin National Bank
Uniontown,
Pennsylvania

Pennsylvania

OFFICERS
JAMES H. CAMPBELL

CHARLES E. HOUPT

Vice President

and Cashier

PAUL E. ANDERSON

J. ROBERT AUFDERHEIDE

SAMUEL G."CAMPBELL

Assistant

Vice President

STANDARD METROPOLITAN STATISTICAL AREAS
FOURTH FEDERAL RESERVE DISTRICT
PENNSYLVANIA

WEST VIRGINIA

LEGEND

Fourth

District Boundary

State Boundaries-Ohio,

Pennsylvania,

Kentuoky , West Virginia

Counties

KENTUCKY

Full text of Annual Report of the Federal Reserve Bank of Cleveland : 1971 Annual Report

FRASER