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FEDERAL RESERVE BANK OF RICH M ON D MONTHLY REVIEW TIME AND SAVINGS DEPOSITS OF INDIVIDUALS, PARTNERSHIPS, AND CORPORATIONS COMMERCIAL BANKS IN THE FIFTH DISTRICT $ B illi o n SAVINGS IN THE BANK June 1961 1962 D ec. 1963 1964 J u n e D ec. J u n e D ec. J u n e 1965 1966 [§g ^ O t h e r T im e D e p o s it s A d j u s t e d f o r C o m p a r a b i l i t y . N o te : Iii recent years the private sector of the economy has put an unprecedented amount of money into interest-bearing bank deposits. Savings and time deposits of individuals, partnerships, and corporations at commercial banks in the Fifth District increased at a compounded annual rate of 15% from mid1961 to m id-1967. The big “ happening” in savings, however, oc curred in the past year and a half. During most of this period, a number of District banks actively promoted consumer-type instruments, such as savings certificates and other small denomination certificates of deposit (C D ’s ), and business-type instruments, negotiable and nonnegotiable C D ’s in denominations of $100,000 or more. Businesses and individuals re sponded enthusiastically to these investment offerings, the terms of which varied considerably among areas within the District and among banks within the same area. Savings Trends Passbook savings accounts of in dividuals and nonprofit organizations, which amount to around seven-tenths of Fifth District commercial banks’ holdings of total savings and time deposits, increased from $3,315 million in June 1961 to a total of $6,086 million in June 1967, or at a com 2 1967 P a s s b o o k S a v in g s . D a ta f o r J u n e 3 0 , 1 9 6 7 E s tim a te d . pounded annual rate of 11%. During this period, however, “ other” time deposits of individuals, part nerships, and corporations (I P C ) increased from $296 million to $2,458 million or at an annual rate of 42% . Much of this increase in “ other” time deposits, IP C can be attributed to the rise in maximum allowable interest rates. These ceiling rates for member banks are specified by Regulation Q which is issued by the Federal Reserve. Maximum rates that may be paid by insured nonmember commercial banks are established by the Federal Deposit Insurance Cor poration, and since 1936 have been the same as those in effect for member banks. The maximum allowable rate for passbook savings deposits has been 4 % since January 1, 1962 except that a Sy2% rate was effective from January 1, 1962 to November 24, 1964 for savings deposits held less than 12 months. Savings deposits as distinct from time deposits have no specified maturity and can usually be withdrawn on demand. Ceiling rates for time deposits effective in January 1962 ranged from 1% to 4 % depending on the ma turity of the contract. On July 17, 1963, rates for deposits with maturities from 90 days to 12 months were raised from a 2}4-3^4% range to 4 % . In N o vember 1964, the rate was raised to 4 ^ % for those held 90 days or more, and to a 4 % maximum, up from a 1% ceiling, for instruments with 30 days but less than 90 days maturity. On December 6, 1965, the ceiling was increased to 5^2% for all time deposit contracts of 30 days or more maturity. The December 1965 change in Regulation Q per mitted banks to continue issuing market instruments competitive with other short-term money market in vestments, such as Treasury bills and commercial paper. A lso the new ceilings gave banks the op portunity to compete more vigorously for cash balances of the small businessman and for savings of the small investor. In the six months prior to the December 1965 change in Regulation Q, savings accounts held by District commercial banks increased 8 % and time deposits of businesses and individuals rose 18%. In the six months following this change, savings accounts increased only 3% in contrast to a rise of 28% for time deposits, IPC. The drop in the growth rate for savings deposits and the substantial increase in IP C time deposits were caused partly by indi viduals shifting from passbook savings accounts to the new investment instruments offered in small de nominations at higher rates. The growth rate of total time and savings deposits, however, was actually somewhat less in the first half of 1966 than in the preceding six months. In the second half of 1966, the rate of savings growth for District commercial banks again declined slightly. Total time and savings deposits increased 6 % compared with a 7% increase in the first half. The growth rate for savings deposits was approxi mately the same as in the preceding six months. The increase of time deposits, however, was somewhat below that registered in the first half of the year. The decline in growth rate for these latter de posits was caused partly by the July and Septem ber changes in Regulation Q. On July 20, the maximum allowable rate on multiple maturity con tracts was changed from 5^2% to 5% for those 90 days or more and to 4 % for those under 90 days. The ceiling for single maturity contracts under $100,000 was dropped to 5% on September 26. The dampening effect of these changes in Regula tion Q, however, was short lived. By June 30, 1967, IP C time deposits at District commercial banks had risen to $2.5 billion, up 29% from the December 1966 level. This growth rate was slightly greater than that experienced in the six months following the December 1965 hike in ceiling rates. Passbook sav ings in the first half of this year increased at twice the 1966 rate but only half that for the last six months of 1965. Area Variations T his general pattern, a rapid rise in time deposit contracts accompanied by a slower growth rate in savings deposits, was charac teristic of commercial banks’ holdings in the District of Columbia and each of the five States in the Fifth District. The rates of change within the six-year period, however, varied considerably among the Dis trict areas. From June 1961 to June 1967, the growth rate in total savings and time deposits of individuals and businesses at commercial banks in North Carolina was greater than that registered in other District areas. Passbook savings almost doubled and other time deposits increased ninefold, the big spurt oc curring in the six months following the December 1965 change in Regulation Q. The commercial banks in the District of Columbia followed closely on the heels of those in North Caro lina in attracting personal and business savings. Passbook savings accounts were twice as high in m id-1967 as in m id-1961, after registering a decline TYPES OF TIM E A N D S A V IN G S DEPOSITS OF IN D IV ID U A L S , PARTNERSHIPS , A N D C O R P O R A T IO N S (IPC) F ifth D is tric t M e m b e r B a n ks, 1967 Num ber o f Is s u in g T y p e o f D e p o s it Am ount Banks ( M illio n s o f D o lla rs ) J a n . 31 A p r. 28 396 392 391 13 97 12 453 392 207 508 208 62 61 90 432 452 458 222 180 29 218 201 33 218 206 34 T o ta l tim e a n d s a v in g s d e p o s its S a v in g s d e p o s its C o n s u m e r- ty p e d e p o s its — less t h a n $ 1 0 0 ,0 0 0 S a v in g s b o n d s S a v in g s c e r tific a te s O th e r n o n n e g o t ia b le C D 's N e g o t ia b le C D 's T im e d e p o s its , o p e n a c c o u n t 179 128 100 182 125 10 90 196 117 117 115 109 B u s in e s s -ty p e t im e d e p o s its — $ 1 0 0 ,0 0 0 o r m o re N e g o t ia b le C D 's N o n n e g o t ia b le C D 's T im e d e p o s its , o p e n a c c o u n t 59 49 59 67 28 31 59 72 29 C h ris tm a s s a v in g s a n d s im ila r a c c o u n ts , d e p o s its a c c u m u la te d f o r p a y m e n t o t p e r s en http://fraser.stlouisfed.org/t. E x c lu d e s a f e w b a n k s w h ic h h a d d is c o n tin u e d is s u in g c e r ta in in s tr u m e n ts Federal Reserve Bank of h e ldLouis in iin s tr u m e n ts a t z e r o in te r e s t r a te . D e ta ils m a y n o t a d d to to ta ls St. c e r ta J a n . 31 A p r . 28 J u l. 31 5498 3936 5718 4005 5924 4122 1130 J u l. 31 1261 19 13 4 3 9 465 508 559 17 176 o f b a n k 's M.y. In - during 1966. Time deposit contracts showed a five fold increase during the six-year period. Virginia banks ranked third in the rate of increase in total holdings of savings and time deposits. The rate of increase for passbook savings, however, was the smallest of the District areas. In the first six months of this year, these accounts actually declined in contrast to a tremendous advance of 45% in time deposits, I PC. For the entire period, time deposit contracts advanced nearly tenfold. By m id-1967, time deposit contracts held by South Carolina banks were eleven times as great as in mid1961. This was the largest rate of increase registered by District areas and represented a steady uptrend from a small base of $10 million in June 1961. Pass book savings increased around 70% . Individuals increased their holdings of passbook savings at banks located in the Fifth District portion of W est Virginia by around 85% , a higher rate of increase than that for the District as a whole. Time deposit contracts at these banks were eight times greater in m id-1967 than in m id-1961, despite the fact that the increase during 1966 was negligible. The Maryland banks registered the smallest per centage gain in total savings and time deposits, I PC. Time deposit contracts were a little less than five times as great in June 1967 as in June 1961. Pass book savings rose by 90% . Consumer-Type Time Deposits in Fifth T h e recent rise District commercial banks’ holdings of time deposits was caused primarily by sales of con sumer-type time deposits, as indicated from the results of special surveys conducted by the Federal Reserve System in December 1965, May 1966, and quarterly since January 31, 1967. On July 31, 1967, Fifth can not be made for December 1965 and May 1966 since the earlier surveys did not distinguish other nonnegotiable C D ’s and time deposits, open account, by size of account. The 1967 surveys, however, in dicated that roughly seven-tenths of these types of instruments were under $100,000. Using this pro portion to split the reported amounts into consumertype and business-type, total consumer-type in struments held by District member banks rose from December 3, 1965 to May 11, 1966 at a compounded annual rate of 91% . The rise from May 1966 to January 31, 1967 was at an annual rate of 58% . Most of the growth during the past year and a half was in savings certificates and other small de nomination nonnegotiable C D ’s. Savings or invest ment certificates amounted to around two-fifths of all consumer-type instruments, increasing by 83% during the period. Other nonnegotiable C D ’s, how ever, gained in relative importance, from one-fifth to two-fifth’s of all consumer-type instruments. The proportion of small denomination C D ’s in negotiable form declined from around one-fifth to one-eighth. Business-Type Time Deposits A m o n g the large denomination instruments issued by District banks, the nonnegotiable CD gained in importance at the expense of the negotiable CD. By July 1967, there was very little difference in the relative importance of the two. Business-type contracts amount to around one-fourth of all time deposit instruments in the District. In Virginia and W est Virginia this proportion was less than 10% . In contrast, the District of Columbia member banks held around three-fifths of time deposit contracts in large de nomination form. Interest Rate Patterns On July 31, 1967, a large District member banks held approximately three times majority of District member banks offered the Regu as much in consumer-type time deposits, defined as lation Q maximum of 4 % on passbook savings and instruments under $100,000, as in business-type time of 5% on small denomination time deposit contracts, deposits, those instruments $100,000 or more. except open accounts. Consumer-type time deposits at District member banks increased at an annual rate of 41% January 31 to the end of July. from An exact comparison The maximum rate for these latter time deposits typically ran 1% below the 5% ceiling. The pattern for District areas varied. Over half of the banks in the District of Columbia, South TYPES OF TIM E A N D S A V IN G S DEPOSITS O F IN D IV ID U A L S , PARTNERSHIPS, A N D C O R P O R A T IO N S F ifth ________ S a v in g s D e p o s its ______ T o ta l T im e D e p o s its A re a J a n . 31 J u l. 31 ($ m illio n s ) F ift h D is tr ic t D is tr ic t o f 5 ,4 9 8 C o lu m b ia M a r y la n d N o r t h C a r o lin a S o u th C a r o lin a V ir g in ia W e s t V ir g in ia N o te : See t a b le o http://fraser.stlouisfed.org/ n p a g e 3 Federal Reserve Bank of St. Louis 5 ,9 2 4 780 833 1 ,0 0 4 179 833 872 1 ,1 1 3 2 ,1 5 2 200 2 ,3 1 6 550 590 D is tric t M e m b e r B a n ks, Change % 8 7 5 11 12 8 7 J a n . 31 J u l. 31 ($ m illio n s ) 3 ,9 3 6 505 767 553 141 1 ,5 0 6 464 Change % 1967 C o n s u m e r- ty p e D e p o s its J a n . 31 J u l. 31 ($ m illio n s ) 4 ,1 2 2 5 1 ,1 3 0 1 ,3 4 3 538 7 4 7 9 3 101 39 311 34 113 44 364 39 568 6 78 696 87 800 590 153 1 ,5 4 9 494 C hange % 19 12 13 17 15 23 12 f o r c o v e r a g e o f d e p o s its a n d d e f in it io n s o f c o n s u m e r - ty p e a n d b u s in e s s -ty p e d e p o s its . B u s in e s s -ty p e D e p o s its J a n . 31 J u l. 31 ($ m illio n s ) 432 174 27 140 5 77 8 C hange % 458 6 1 82 29 5 7 159 14 8 72 9 60 6 12 M A X IM U M IN T E R E S T R A TE P A ID O N T IM E A N D S A V I N G S D E P O S IT S , IP C , J U L Y 3 1 , 1 9 6 7 Carolina and W est Virginia paid less than the 5% ceiling on the smaller denomination time deposit in strument. A lso over one-fourth of the member banks in South Carolina and W est Virginia paid less than the 4 % ceiling on passbook savings. The general trend throughout the District has been an upping of the rate paid on passbook savings with the increased popularity of small time deposit in struments at a higher return. From December 1965 to May 1966, approximately 15% of District member banks raised the rate on savings accounts. These were joined by another 10% of banks by July 1967. On this date 8 out of 10 District banks were paying the maximum. On time deposit contracts the following number of banks raised rates between December 3 and May 11: 5 of the 10 banks issuing savings bonds; 87 of 219 banks issuing savings certificates; 38 of the 89 banks issuing other nonnegotiable C D ’s ; 28 of 95 banks holding time deposits, open account; and 45 of the 108 banks issuing negotiable C D ’s less than $100,000. In the period from May 11, 1966 to January 31, 1967, 161 of the 253 banks issuing savings certificates and other nonnegotiable C D ’s increased the maximum rate paid on these instruments, despite the fact that the ceiling had been rolled back during the period. Only five lowered these rates. From January 31 to July 31, 1967, the number increasing the rate on small denomination time deposit contracts again outnum bered those decreasing the rate, pushing a greater number of District banks to the Regulation Q ceiling. Although Regulation Q allows a 5 ^ % maximum rate on time deposit instruments of $100,000 or more, few banks in the District issued these instruments at the ceiling rate on any of the survey dates. The prevailing rate for each type of instrument was 5% throughout 1967. The large denomination CD in negotiable form is a different breed from the non negotiable instrument. Its rate is generally influenced by yields on competing money market instruments and is extremely volatile. In the May 1966 survey, over one-half of the 47 District banks issuing large denomination negotiable C D ’s indicated a rate ad vance since the ceiling was raised in December. The prevailing rate, however, remained 1% below that permitted. Between May 1966 and January 31, 1967, 42 of the 46 issuing banks had increased their maxi mum rate. By April, a few additional banks were issuing these instruments; some banks had reduced, others had increased the maximum rate from that in January. In the next quarter, there was again some maneuvering of rates but the prevalent rate remained 50 basis points below the ceiling. Elizabeth W . Angle SAV IN G S DEPOSITS In te re st Rate (%) N o. o f Banks U nder 3.0 3 .0 4.0 3.5 (N um b e r o f Banks) 35 29 311 5 6 43 2 1 1 24 4 5 161 2 5 6 148 103 7 19 16 61 391 16 D istrict o f C o lo m b ia 12 .... M a ry la n d 55 1 N o rth C a ro lin a 28 S outh C a ro lin a 32 F ifth D istrict V irg in ia W est V irg in ia 12 23 CONSUMER-TYPE TIME DEPOSITS, IPC T o ta l No. o f Banks Savings Bonds and C e rtifica tes In te re st Rate (%) U nder 4.0 4.0 5.0 4.5 (N um b e r o f Banks) 95 Fifth D istrict D istrict o f C olu m b ia M a ry la n d 6 3 21 53 18 1 1 1 2 3 2 ..... 4 N o rth C a ro lin a 5 1 S outh C a ro lin a 11 1 3 5 2 V irg in ia 52 2 7 43 W est V irg in ia 19 1 15 3 .... O th e r N o nn e g o tia b le CD's 196 F ifth D istrict D istrict o f C olu m b ia 48 38 103 1 7 8 7 10 5 8 17 2 2 13 S outh C a ro lin a 15 3 9 3 V irg in ia 91 3 19 69 W est V irg in ia 40 5 30 2 3 117 4 32 19 62 6 1 .... M a ry la n d 13 .... 6 1 6 N o rth C a ro lin a 12 .... 2 10 M a ry la n d 25 N o rth C a ro lin a 2 N e g o tia b le CD's F ifth D istrict D istrict o f C olu m b ia 5 8 1 1 4 2 V irg in ia 51 1 5 7 38 W est V irg in ia 27 1 20 5 1 109 22 45 16 26 7 .... 2 2 3 22 6 12 1 .... — 3 10 South C a ro lin a O pen Account Fifth D istrict D istrict o f C o lu m b ia M a ry la n d N o rth C a ro lin a 3 South C a ro lin a 3 V irg in ia 51 6 18 W est V irg in ia 23 10 3 'r 3 17 13 BUSINESS-TYPE TIME DEPOSITS, IPC T o ta l N o. o f Banks Inte re st Rate (%) U nder 4.5 4.5 5.0 5.5 (N u m b e r o f Banks) O pen A ccount 29 10 5 12 D istrict o f C o lu m b ia 3 .... 1 2 M a ry la n d 3 3 .... N o rth C a ro lin a 3 .... — 2 1 South C a ro lin a ___ V irg in ia 18 5 4 8 1 2 2 72 8 16 41 7 1 5 3 F ifth D istrict W e st V irg in ia 2 N o n n e g o tia b le CD's Fifth D istrict D istrict o f C o lu m b ia M a ry la n d N o rth C a ro lin a South C a ro lin a V irg in ia W e st V irg in ia 9 11 2 4 4 1 8 .... 2 5 1 27 2 3 1 2 36 2 5 5 3 2 59 13 14 4 1 N e g o tia b le CD's Fifth D istrict D istrict o f C o lu m b ia M a ry la n d N o rth C a ro lin a South C a ro lin a V irg in ia W est V irg in ia N o te : 24 8 3 11 3 3 4 1 7 .... 1 3 3 16 1 2 1 26 2 7 9 6 3 1 Inte re st ra te is in per cent per annum . The fe w banks p a y in g a rate b etw e en those listed a re in clu de d in the lo w e r ra te ca te g o ry. CLEAR! D I S T R I C T NAL I N C O M E 19 6 6 Personal income in the United States and in the Fifth District reached new highs during 1966. The District scored a slightly larger advance than the country as a whole. Total personal income in the nation rose to $580 billion while in the District it advanced to $47 billion. Nationally, the increase from 1965 to 1966 was 8.5% and that for the District was 9.3% . Per capita income also made advances in the nation and in the District. For the country as a whole, per capita personal income was at a record high of $2,963 in 1966. This represented an increase of nearly 7.5% over the 1965 average of $2,760. In the District per capita income rose to $2,565 in 1966— an increase of 7.8% . Income in the Fifth District A ll Fifth D istrict states showed considerable gains in total personal in come. South Carolina made the greatest improve ment with an increase of 12.2% while W est Virginia recorded the smallest with an increase of 6.7% . The remaining states all had gains greater than the na tional average except for the District of Columbia. Increases in per capita income for all the Fifth Dis trict states were in line with the national gain of 7.4% . Maryland had the smallest change with an increase of 6 % while South Carolina once again led the District with an increase of 10.6%. The Dis trict of Columbia had the largest per capita income in the District. W ith an average income of $3,948, the District of Columbia even outstripped Con necticut, the next highest in the country, which had an average of $3,690. For the first time, average per capita income in the District exceeded $2,000. Major Sources of District Income T h e largest contributors to District income were wages and salaries paid to Federal and state and local govern ment employees. W ith a total of $9,813 million paid, this category represented 20.9% of total per sonal income in the District and 29.3% of total 8 wages and salaries. The rapid expansion in de fense establishments was a major influence affecting changes in income. A $10 billion increase in de fense spending directly affected the 1966 income distribution through three major income com ponents: C H A N G E S IN IN C O M E A N D P O P U LA TIO N 19 6 5 -1 9 66 U n ite d S ta te s F if t h D is t r ic t D is tric t o f C o lu m b ia M a r y la n d N o r t h C a r o lin a S o u th C a r o lin a V ir g in ia W e s t V ir g in ia __L -2 0 2 4 6 8 Per C e n t C h a n g e 11 S o u rc e : P o p u la tio n 0 T o ta l 10 P e rs o n a l In c o m e 1 Per C a p ita P e rs o n a l U. S. D e p a r tm e n t o f C o m m e rc e . In c o m e 12 military payrolls, Federal civilian payrolls, and factory payrolls in defense-oriented industries. Sig nificant gains were also made in wages and salaries paid in the construction, manufacturing, and trade industries within the District. Contract construction wages and salaries rose to $1,988 million from a level of $1,775 million in 1965— representing an increase of 12%. Manufacturing wages and salaries increased $871 million over the 1965 level and represented 27.1% of total wages and salaries distributed in 1966. Wholesale and retail trade wages and salaries rose to $4,767 million from $4,317 million— a gain of 10.4%. Farm wage and salary income decreased in all District states except North Carolina. Declines ranged from 23.5% in South Carolina to 8.2% in Virginia. Although farm wage rates have continued to rise in the District, this decline in 1966 can be mainly attributed to a decrease in the number of farm workers, particularly hired workers. For the country as a whole, however, farm income rose 0.6% from 1965 to 1966. This was the only area where the nation made a gain and the District did not. Proprietors’ income, property income, and transfer payments all made significant gains in the District. Earnings of self-employed people and owners of un incorporated enterprises, known as proprietors’ in come, grew by $141 million, with $90 million of that amount coming from non-farm activities and ap proximately $50 million arising from farming. The gain in proprietors’ income for the country as a whole, however, did better than the District with a gain of 4.6% while the District had a gain of 3.6% . Property income, which includes dividends, rents, and interest, also made significant gains. W ith an absolute increase of $431 million and a percentage in crease of 8.1% , the District made a slightly better relative showing than the nation which had an in crease of 8 % . Government transfer payments, which consist of unemployment compensation, social se curity benefits, and veterans’ pensions, made a gain FIFTH DISTRICT IN C O M E BY M AJO R SOURCES 1 9 6 5 -1 9 6 6 D is tr ib u ti on o f T o ta l Am ount S o u rce 19 6 5 W ages P e rs o n a l 196 6 and C h a n g e , 1 9 6 5 -1 9 6 6 In c o m e S a la rie s Per C e n t Per C e n t $ M illio n $ M illio n 4 2 ,9 6 1 4 6 ,9 6 4 4 ,0 0 3 9 .3 10 0 .0 W A G E S A N D SALARIES 3 0 ,2 5 5 3 3 ,4 7 9 3 ,2 2 4 10.7 7 1 .3 10 0 .0 FARM S M IN IN G C O N T R A C T C O N S T R U C T IO N 204 425 1,7 75 8 ,1 9 9 4 ,3 1 7 189 446 15 21 7 .4 4.9 0 .4 1,9 8 8 9 ,0 7 0 4 ,7 6 7 213 871 0 .6 1.3 5 .9 450 12.0 10.6 10.4 0 .9 4.2 19.3 10.2 27.1 14.2 1,1 6 2 1,2 5 8 96 8 .3 2.7 3 .8 2 ,0 9 2 3 ,2 9 6 8 ,7 2 0 3 ,8 9 7 2 ,2 6 3 3 ,6 1 9 8.2 9 .8 12.5 6 .9 2 4 .9 4.8 7 .7 2 0 .9 8 .9 5 .0 10.8 2 9 .3 12.4 63 3 ,2 8 0 70 171 323 1,093 270 471 351 7 12 .0 11.1 7 .0 0.1 1 ,3 8 7 1 ,5 4 9 162 11.7 3.3 8 .7 $ M illio n PERSONAL IN C O M E M A N U F A C T U R IN G TR ADE F IN A N C E , IN S U R A N C E , A N D REAL ESTATE T R A N S P O R T A T IO N , C O M M U N IC A T IO N & PU BLIC UTILITIES SERVICES GOVERNMENT F e d e ra l, c iv ilia n F e d e ra l, m ilit a r y S ta te & lo c a l O THER IN D U S TR Y OTHER LABOR IN C O M E PROPRIETORS' IN C O M E FARM NONFARM 1,8 9 3 2 ,9 2 9 9 ,8 1 3 4 ,1 6 7 2 ,3 6 4 - Per C e n t 3 ,9 6 8 4 ,1 0 9 141 3 .6 1 ,0 7 9 1,1 2 9 50 4 .6 2 ,9 8 0 90 3.1 7.1 9 .8 0 .2 2.4 2 ,8 9 0 6 .7 6.3 PROPERTY IN C O M E 5 ,3 0 7 5 ,7 3 8 431 8.1 12.2 TRANSFER PAYM ENTS 3 ,1 7 9 3 ,5 7 9 400 12.6 7 .6 LESS: C O N T R IB U T IO N S FOR SO C IA L IN SU R AN C E 1 ,1 3 8 1,491 353 3 1 .0 3 .2 D e ta ils m a y n o t a d d to to ta ls d u e to r o u n d in g . S o u rc e : U. S. D e p a r tm e n t o f C o m m e rc e . 9 of 12.6% while the nation recorded a rise of 10.6%. Transfer payments had the largest percentage in crease of all the components of total personal income in the District. Income by States A ll D istrict states had gains in the major sources of personal income. Wages and salaries, representing 71.3% of total personal in come in the District, was the highest in Virginia with a total of $8,606 million. Maryland followed Virginia with a total of $8,536 million. The greatest percentage increase among the District states was made by South Carolina with a gain of 14.4% over 1965. There were notable gains in income from contract construction in all the District states except the Dis trict of Columbia. The Carolinas showed the greatest percentage increase in contract construction wages and salaries. South Carolina showed a gain of 24% and North Carolina had a 20.3% increase, while the District of Columbia had a decrease of 2.8% . The government, both Federal and state and local, is one of the largest employers in the District. This is especially true of Maryland and Virginia since many of the workers in those states are employed in the nation’s capital. M ore and more government employees, however, are increasing in the other Fifth District states. South Carolina made the greatest gain in wages and salaries paid to government work ers— a rise of 20.8% . North Carolina followed with a gain of 15.3%. W ages and salaries of District military personnel had the greatest percentage in crease among all government workers with a rise of 24.9% . State and local government employees had an increase of 12%. As factory payrolls have increased in the District, manufacturing wages and salaries have subsequently risen. In 1966 manufacturing income represented 19.3% of total personal income in the District. W ith C H A N G E S IN IN C O M E BY M A JO R SOURCES 1 9 6 5 -1 9 6 6 T o ta l P e rs o n a l In c o m e many new jobs becoming available, North Carolina led the other District states with manufacturing wages and salaries reaching $7,754 million— a 13.3% in crease over 1965. South Carolina followed with an increase of 1 2 % ; Maryland, 9 .5 % ; Virginia, 8 .9 % ; District of Columbia, 7.4% ; and W est Virginia, 6.2% . W a g e s a n d S a la rie s P r o p r ie to r s ' In c o m e P r o p e rty In c o m e T r a n s fe r P a y m e n ts O th e r L a b o r In c o m e 0 2 4 6 8 Per C e n t C h a n g e H S o u rc e : 10 U n ite d S ta te s | 5 th D is tric t U. S. D e p a r tm e n t o f C o m m e rc e 10 12 Summary Personal incom e and per capita in come reached new highs in the nation and in the District during 1966. A ll the Fifth District states made significant gains in all the maj or components of personal income as can be seen in the charts. Dis trict gains exceeded those for the nation as a whole during the period 1965-1966 in most of the major areas of personal income. Indications are that this pattern of growth will continue. Priscilla A . Gowen THE FIFTH What economic conditions can residents of the Fifth District expect to be enjoying by 1975? H ow will their economy compare with that of other areas in the country? The long-range nature of such questions obviously prohibits precise forecasts. Usually forecasts are made for only a year or two into the future, but the National Planning Associa tion’s Center for Economic Projections has recently published, as a part of its Regional Economic P ro jection Series, a report making long-range economic projections for 224 metropolitan areas. These projections give some idea of the state of the overall economy since metropolitan areas are closely tied to all areas of the nation’s economy. Using the figures in the above report, the June 1967 issue of Looking Ahead, a monthly publication of the National Planning Association, forecasts that by 1975 “ 60 per cent of the nation’s population will be concentrated in the 25 largest metropolitan areas,” and that “ the share of employment and personal income for these 25 metropolitan areas will be greater than their 60% share of the population.” Excerpts from these figures, presented in the accompanying table for Fifth District metropolitan areas, provide the basis for this article. The N P A Study T h e cities surveyed in the study are Standard Metropolitan Statistical Areas, grouped according to eight multistate regions. T w o of the 20 Fifth District cities included are in the Middle Atlantic region, which stretches from Maryland to New York. The other 18 are classified in the Southeast group, which encompasses cities from V ir ginia to Florida in the South and to Arkansas in the W est. For each of the 20 metropolitan areas, a 1975 estimate is presented for population, employ ment, personal income, and per capita personal in come. These projections are then used as a basis for calculating annual growth rates for the period from 1962 to 1975. Population P rojections for the tw o geographic areas which include Fifth District cities present con trasting rates of urban population growth. O f the between 1962 and 1975 ( 2 .3 % ), while the Middle Atlantic region is projected to realize the slowest growth (1 .2 % ). A s a result, the percentage of the Middle Atlantic region’s total population in metropo litan areas is expected to remain approximately un changed at 86% while the fraction of the Southeast’s population living in urban areas is forecast to grow from 43% to 55% . This growth in the Southeast generally characterizes regions whose metropolitan areas have grown relatively late. An annual metropolitan growth rate of 2.0% is forecast for the Fifth District as compared with a rate of 1.7% for the 224 areas as a whole. Growth rates within the Fifth District range from 0.5% in Charleston, W est Virginia to 3.2% in Newport News. Washington and Baltimore, the two District cities classified in the Middle Atlantic region, have projected growth rates of 1.9% and 2.4% , re spectively, both considerably above the average of 1.2% for their region. The average for the 18 Dis trict cities in the Southeast, however, is somewhat below the 2.3% average for the Southeast as a whole. Employment A cco rd in g to the N P A study, em ployment opportunities seem to be the major factor influencing metropolitan growth. Areas of rapid employment growth exhibit high growth rates for population. The average annual rate of employment growth for Fifth District areas is projected at 2.4% , just above the 2.2% figure for all the metropolitan areas surveyed. Baltimore and Washington, with 2.8% and 2.1% growth rates, respectively, exceed the Middle Atlantic regional average of 1.6%, while Fifth District cities in the Southeast region are forecast to have employ ment growth rates generally below their 2.8% re gional estimate from 1962 to 1975. Baltimore and Washington are areas of large government employ ment. In addition, Baltimore has large industrial, financial, and shipping interests. Newport News, characterized by large Federal shipbuilding contracts, is forecast to have the greatest employment growth rate in the District through 1975, 3.5% per year. eight large regions included in the study, the South Per Capita Personal Income east region is expected to experience the fastest age annual growth rate for per capita personal in annual rate of increase of metropolitan population come of all Fifth District Metropolitan areas is 2.5% , The projected aver 11 1975 PROJECTIONS FOR FIFTH DISTRICT M E T R O P O LIT A N AREAS A v e r a g e A n n u a l R a te o f G r o w th 1 9 6 2 -1 9 7 5 (% ) 1 9 7 5 P ro je c tio n s E m p lo y m ent U N IT E D STATES M E T R O P O L IT A N P o p u la t io n P e rs o n a l In c o m e (0 0 0 ) A re a (0 0 0 ) (in m illio n s o f 1 9 6 0 d o lla r s ) Per C a p ita P e rs o n a l In c o m e ( in 1 9 6 0 c o n s ta n t d o lla r s ) 6 2 ,1 0 7 1 5 4 ,2 8 6 5 4 8 ,5 4 9 3 ,5 5 5 2 .2 1.7 4 .2 2 .4 3,3 9 1 2 .4 2 .0 4 .6 2 .5 3 ,8 0 4 1.6 1.2 3 .6 2 .4 E m p lo y m ent P o p u la tio n P e rs o n a l In c o m e P e r C a p ita P e rs o n a l In c o m e 4 ,4 0 8 1 0 ,7 2 5 3 6 ,3 7 2 1 6 ,6 5 2 3 9 ,4 6 2 1 5 0 ,1 0 9 B a ltim o re 1 ,0 1 3 2 ,3 8 2 8 ,2 3 8 3 ,4 5 8 2 .8 2 .4 4 .9 2 .5 W a s h in g to n , D. C. 1 ,1 8 6 2 ,7 1 5 1 1 ,2 5 7 4 ,1 4 7 2.1 1.9 4 .2 2 .3 8 ,8 7 0 2 3 ,3 6 0 6 8 ,3 6 1 2 ,9 2 6 2 .8 2 .3 5.1 2 .7 67 159 490 3 ,0 7 8 2.1 1.5 4 .6 3 .0 102 323 863 2 ,6 6 9 1.9 1.4 4 .5 3.1 * FI FTH D IS T R IC T M E T R O P O L IT A N A ll M id d le A t la n t ic M e tr o p o lit a n A ll S o u th e a s t M e tr o p o lit a n A s h e v ille C h a rle s to n , S. C. 97 273 929 3 ,4 0 0 0 .9 0 .5 3 .7 3.1 C h a r lo t te 1 90 475 1 ,5 4 5 3 ,2 5 0 2 .5 2 .7 4 .7 2 .0 C o lu m b ia 134 381 967 2 ,5 3 8 2 .7 2 .4 5 .2 2 .8 D u rh a m 62 145 429 2 ,9 6 9 2 .2 1.8 4 .2 2 .4 F a y e tte v ille 49 178 568 3 ,1 9 8 2 .9 0 .7 5 .2 4 .5 G re e n s b o r o 165 339 1 ,1 0 5 3 ,2 6 3 2 .4 2 .0 4 .5 2 .4 G r e e n v ille , S. C. 148 339 915 2 ,7 0 2 2 .3 1.8 4 .4 2 .6 H u n tin g to n 98 291 791 2 ,7 1 8 1.6 1.0 3 .7 2 .7 L y n c h b u rg 72 150 414 2,7 6 1 2 .9 2.1 5 .2 3 .0 C h a rle s to n , W . V a . N e w p o rt N ew s 133 368 1 ,0 7 8 2 ,9 3 4 3 .5 3 .2 6.1 2 .8 N o r f o lk 262 814 2 ,2 5 8 2 ,7 7 4 2 .7 2 .2 5.1 2 .8 R a le ig h 1 14 257 829 3 ,2 2 7 3 .2 2 .9 6.1 3.1 R ic h m o n d 267 566 1 ,8 4 6 3 ,2 6 3 2 .2 1.6 4 .0 2 .3 R oanoke 95 204 593 2 ,9 0 7 2 .4 1.6 4 .3 2 .7 W ilm in g t o n 45 126 404 3 ,1 9 9 2 .4 2 .3 6 .4 4 .0 109 240 853 3 ,5 5 7 1.9 1.4 4 .4 2 .9 W in s to n - S a le m * C a lc u la te d b y F e d e ra l R e serve B a n k o f R ic h m o n d . S o u rc e : N a t io n a l P la n n in g A s s o c ia tio n , " E c o n o m ic a n d D e m o g ra p h ic P ro je c tio n s f o r 2 2 4 M e tr o p o lit a n A r e a s , " M a y 1 9 6 7 . slightly above the national average. Although small, this differential suggests the continuation of a trend of recent years. Per capita personal income in Fifth District states has been moving closer to the national average, and the slightly larger growth rate forecast for the District through 1975 indicates this trend will continue, at least in metropolitan areas. The average annual growth rate for per capita in come of Fifth District cities through 1975 ranges from 2.0% in Charlotte to 4.5% in Fayetteville. a 2.3% annual growth rate. Winston-Salem, Balti more, and Charleston, W est Virginia, in that order, have the next highest levels. C o n c lu s io n A cco rd in g to the recent study o f the National Planning Association, residents of the Dis trict’s metropolitan areas can expect the growth rates for employment and income to compare favorably with those of the nation between now and 1975. Growth rates for income and employment in these areas are projected to exceed the national averages. Projected growth rates for personal income and per Joseph C. Ramage capita income in cities in both North Carolina and South Carolina suggest that those cities will continue their rising income levels. In absolute terms only four cities in the District are forecast to have a per capita income level of $3,400 or above in 1975. Washington has the highest projected level with $4,147 per person, equivalent to 12 CREDITS 6. & t io n ; 7. W r ig h t B r o th e r s ' p la n e — S m ith s o n ia n I n s titu H a n s P h a a l's B a llo o n b y G e r r y G e rs te n a n d L e o n a r d o d a V in c i's In c ., IM A G I N A T IO N . s k e tc h e s f r o m C h a m p io n P a p e rs ,