Full text of District Highlights : December 1982

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DALLAS
Federal Reserve Bank of Dallas

December 1982

Texas Defense Spending Strong In Dallas-Fort Worth
Texas is perceived to rank high
among states in terms of defense
manufacturing, but sales to the Depart­
ment of Defense (DOD) were a
significantly smaller proportion of
total shipments from manufacturers in
Texas in 1980 than in 1968, when
manufacturers’ orders for defense dur­
ing the Vietnam War peaked. Now, as
then, most of the firms in Texas who
sell to the DOD are in Dallas-Fort
Worth, and this gives a substantial
underpinning to that area’s economy.
In 1980 Texas ranked fourth in value
of shipments to the DOD, with sales of
almost $3.5 billion, or 6.3 percent of the
U.S. total. First-ranked California had
sales of almost $11.5 billion in 1980, or
23.8 percent of U.S. total. In 1968,
Texas ranked second with 12.1 percent
of the total, compared with California’s
share of 21.1 percent. In that year, 3.0
percent of nonagricultural employment
in Texas worked in defense manufac­
turing, compared with 0.7 percent in
1980. Of the seven states with
shipments to the DOD in 1980 ex­
ceeding $3 billion, Texas had the
lowest value of shipments per capita
($215, compared with $423 in California
and $213 in the United States).
Texas stands to benefit from the
much publicized and debated in­
creases in defense spending, but most
of the stimulus will be in Dallas-Fort
Worth. In 1978, the most recent year for
which the data are available, DallasFort Worth accounted for 17.8 percent

of the value of shipments from
manufacturers in Texas. A comparison
of DOD shipments with the total value
of shipments from Dallas-Fort Worth
manufacturers indicates that in that
year 9.3 percent of shipments in the
area was purchased by the DOD. This
compares with 0.2 percent in Houston,
2.2 percent in Texas, and 2.6 percent in
the United States. The concentration
of defense manufacturing in DallasFort Worth relative to the rest of Texas

has changed little from the late 1960’s.
In 1968, more than 23 percent of the
value of shipments from Dallas-Fort
Worth was purchased by the DOD,
compared with 1.6 percent in Houston,
13.8 percent in Texas, and 5.5 percent
in the United States.
The value of shipments data include
sales to the DOD by the prime defense
contractors (large defense manufac­
turers who negotiate directly with the
(Continued on back page)

Cheaper Peso Encourages Illegal Immigration
The 1982 peso devaluations have ag­
gravated wage differences between
Mexico and the United States. A record
number of apprehensions of illegal
aliens by the border patrol after the
August 1982 devaluation suggest that
more Mexican workers are entering the
U.S. than ever before.
Immigration and Naturalization Ser­
vice reports indicate that variation of
apprehensions is highly seasonal and
is related to U.S. agricultural produc­
tion. Apprehensions generally peak
between March and July and hit their
lowest point in December. The number
of U.S. wage and salary farm workers
also follows this pattern.
Apprehension patterns are different
among regions, however. The trend
over the last 10 years shows that the
region between New Mexico and the
Gulf has experienced only small
growth in apprehensions, while the

region between the Pacific Coast and
Arizona has been growing steadily.
Furthermore, as Charts 1 and 2
overleaf indicate, the region between
the Pacific Coast and Del Rio, Texas
had an observable growth in apprehen­
sions after the 1976 peso devaluation,
but the region from Del Rio to the Gulf
experienced little or no change.
Assuming that apprehension rates
accurately reflect illegal Mexican im­
migration, an increase in the number of
illegal aliens in the first and second
quarters of 1983 is likely. Mexican
workers will be lured by the seasonal
increase in agricultural activity and by
higher dollar wages relative to peso
wages induced by the 1982 devalua­
tion. But if the 1976 experience is
repeated, the increased entry should
be concentrated mainly along the
western section of the border.
—Alberto E. Davila

ELEVENTH DISTRICT CREDIT CONDITIONS

ALL MEMBER BANKS
Total Loan G ro w th ..........
Total Deposit G ro w th.. ..

1982
(9 Months)
Change*

1981
(12 Months)
Change*

1980
(12 Months)
Change*

(Percent)

(Percent)

(Millions $)

5.890.2
7.185.3

14.0
13.6

11,208.8
9,979.3

23.4
16.6

9,161.7
7,833.4

15.5
11.2

12.9
20.5
13.7
-2 .1

5305.7
4,543.5
747.6
-1 6 0 .4

25.8
45.4
20.7
- 8 .4

3,587.2
2,710.5
918.0
117.0

13.9
18.6
21.0
6.7

LARGE WEEKLY REPORTING BANKS
Total L o a n s .......................
2,343.0
1,703.1
B u sin ess.......................
435.3
Real E s ta te ...................
-4 0 .9
C o n s u m e r.........................

(Percent)

(Millions $)

(Millions $)

Dollar and percent changes are calculated using quarterly average figures from weekly reported bank data. For 1980 and 1981, growth
figures were calculated comparing fourth quarter figures to the previous year’s fourth quarter. For 1982, non-annualized growth
figures for the first nine months were calculated comparing the third quarter of 1982 to the fourth quarter of 1981.

NEW LOAN COMMITMENTS
AT FSLIC-INSURED S&L’S: TEXAS

LOANS CLOSED FOR CONSTRUCTION
AND PURCHASE OF REAL ESTATE
AT FSLIC-INSURED S&L’S: TEXAS

DISTRICT BRIEFS
The District economy remains stagnant, but not in all sectors.
• The Texas unemployment rate fell by 0.1 percentage
point in October, compared to a 0.3 percentage point
rise for the nation. Nevertheless, large employment
declines occurred in the oil field machinery, electric
and electronic equipment, fabricated metals, and
transportation equipment industries.
• The number of active drilling rigs has been rising
both in Texas and in the nation during the last few
weeks. So far, however, the increase has come large­
ly from seasonal factors.
• In construction, nonresidential activity continues to
slow, but residential activity has begun to quicken. In
October, the value of Texas’ seasonally adjusted
residential construction contracts rose 22 percent
over September, compared with a 3-percent decrease
in the U.S.
• Residential construction’s increase has brought
good news for related industries. Production of
lumber and wood products is climbing in the District.
Output of the stone, clay,and glass industry is also

rising.
• Retailing in the District is weak. Sales at surveyed
department stores for the four weeks ending
November 20th were up only 1 percent over a year
earlier. Sales for the year to date were 2 percent
greater than for the same period in 1981. If these
figures were adjusted for inflation, they would show
significant declines.
• Sluggishness in the District economy continues to
be reflected in weak loan and deposit growth. The
monthly average increase in loans and deposits at
District member banks slowed to a 0.7-percent pace
in the July through October period, down from over
1.0 percent during the first half of this year.
• Since mid-year, there has been a reallocation of
District member bank portfolios toward security in­
vestments. For July through October, the monthly
average growth in security investments was 1.5 per­
cent, up from a 0.8-percent average during the first
six months of 1982.

UNEMPLOYMENT RATE

HOUSING PERMITS: TEXAS

1. Louisiana, New Mexico, Oklahoma, and Texas.
SOURCES: U.S. Department of Labor, Bureau of Labor Statistics.
Texas Employment Commission.

SOURCE: U.S. Department of Commerce, Bureau of the Census.

CONSUMER PRICE INDEX

TEXAS INDUSTRIAL PRODUCTION
INDEX (TIPI): OLD VS. NEW

SOURCE: Federal Reserve Bank of Dallas.

Texas Industrial Production Index Revised
The Federal Reserve Bank of Dallas
has recently revised the Texas In­
dustrial Production Index (TIPI). The
revision adopts a new methodology for
constructing the index to reflect more
accurately the current level of value
added by manufacturing in Texas. In­
dustry weights in the index have been
revised to capture the change in com­
position of Texas manufacturing since
the last revision, and new weights have
also been assigned for industry inputs
to reflect the substitution between
capital and labor during the interim.
Unlike the 1975 version of TIPI, the new
index includes productivity factors
that reflect the impact of technological
change in the various industries in­
cluded in the index.
The new index is somewhat less
volatile than the old one. As the chart
on the previous page illustrates, the
old index shows current output to be
observably lower than the previous

trough in 1980, while the new one
shows current activity to be about the
same as in that year. And through
September 1982 the new index fell 6.9
percent from its August 1981 peak,
compared to a drop in the old index of
10.5 percent.
The new index is scheduled for
publication in February, along with a
monograph detailing the revisions.
District Highlights will provide infor­
mation on acquiring the monograph
when it is available.
—
Tom Fomby

D E F E N S E (cont.)
branches of the Armed Forces) and
sales by smaller manufacturers who
negotiate with the contracting agency
of the DOD. This latter group of
manufacturers includes a variety of

firms—from Texas Instruments, with
defense contracts of almost $2.8
billion in November 1982, to firms that
supply beverages and foods.
The DOD contracting agency for a
six-state region that includes Texas
reports recent significant increases in
obligational a u th o rity —the total
amount of contractual obligations the
agency can incur. The agency’s obliga­
tional authority in Texas has increased
120.1 percent in the last five years, and
54.5 percent in the last two years. Ap­
proximately 73 percent of the value of
the contracts that the agency ad­
ministers are with manufacturers in
Dallas-Fort Worth.
Not included in this obligational
authority are the prime defense con­
tractors in Texas—General Dynamics,
V ought C o rp o ra tio n , and Bell
Helicopter. These firms are in DallasFort Worth and report large and stable
long-run contracts with the DOD.
—Bronwyn Brock

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