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Atlanta, Georgia August • 1963 Also in this issue: M IS S I S S I P P I'S ST IL L ON S IX T H ECONOM Y THE MOVE D IS T R IC T S T A T IS T IC S D IS T R IC T B U S IN E S S C O N D IT IO N S New Dimensions in the Mortgage Market M o rtg a g e m a rk ets, b o th n a tio n a l and reg io n a l, are ta k in g o n n e w d im en sio n s in th e cu rren t reco v ery . M o rtg a g e d eb t co n tin u e s to e x p a n d v ig o r o u sly , ex te n d in g th e p er io d o f g ro w th th at b eg a n 3 0 m o n th s ago after th e b u sin e ss-c y cle trou gh o f F eb ru a ry 1 9 6 1 . H e r e to fo r e, la rg e e x p a n sio n s h a d o ccu rred m a in ly in th e la te sta g es o f r e ce ssio n s an d in the early sta ges o f r e co v eries. A lo n g w ith th is su sta in ed m o rtg a g e cred it ex p a n sio n , co n tra ct term s, in clu d in g rates o f in terest and o th er ch a rges o n lo a n s, h a v e b e c o m e in crea sin g ly g en ero u s. M o reo v er, in an effort to u tilize a g ro w in g v o lu m e o f h ig h -c o st fu n d s, c o m m e r cia l b a n k s h a v e a p p a ren tly d e cid e d to p a rticip a te m o re in b o th d irect m o rtg a g e le n d in g an d in th e field o f m o rtg a g e b a n k in g . S p ecia liz ed m o rtg a g e len d ers, su ch as sa v in g s an d lo a n a sso cia tio n s an d m u tu a l sa v in g s b a n k s, h a v e a lso b e e n u n d er g ro w in g p ressu res to in crea se th eir len d in g v o lu m e to o ffse t risin g ta x es, h igh er o p era tin g c o sts, and a sh arp ly e x p a n d in g v o lu m e o f len d a b le fu n d s. S o m e o b serv ers v iew th ese d e v e lo p m en ts as ev id e n c e o f su cc e ss in stim u la tin g c o n tin u e d e c o n o m ic e x p a n sio n th ro u g h e x te n d ed e a sy m o n e y p o lic ie s. O th ers w e lc o m e th em as a sign th at th e fin a n cia l sy ste m is n o w serv in g h o u sin g n e e d s h ereto fo re n o t fu lly m e t e v e n in th e m o st b u o y a n t p h a se s o f m o rtg a g e cred it availa b ility . A n d , still o th ers ra ise d isq u ietin g q u estio n s b ea rin g u p o n th e q u ality o f m o rtg a g e cred it. H o w e v e r v ie w ed , th ese fin a n cia l tren d s h a v e h a d su b sta n tia l im p a ct u p o n th e o u tp u t o f n ew h o u sin g , b o th n a tio n a lly an d in th e S ix th F ed e ra l R e se r v e D istrict. B e fo r e su rv ey in g D istric t h o u sin g tren d s, le t’s lo o k at so m e o f th e m ain d ifferen ces b e tw e en th e cu rren t reco v ery and th o se o f th e re cen t p a st. The P a s t ... S e d e ra f ffy s e r w IB j a n lt g f 7$ t/ a r ? ta T h e c y c lic a l b eh a v io r o f resid en tia l b u ild in g and m o rtg a g e cred it e x p a n sio n fo llo w e d a rather w ell-d e fin e d p a th d u rin g th e 1 9 5 0 ’s. R e d u c e d to its sim p lest term s, b u ild in g and m o rtg a g e cred it w ere sh arp ly re stricted w h en o th er secto rs o f th e e c o n o m y w ere at ex p a n d e d le v e ls and b ein g restrain ed b y tigh ter m o n eta ry p o lic y . W h en m o re stim u la tive m o n eta ry m a n a g em e n t rep la ce d restraint, p rev io u sly cu rta iled n e e d s for co n stru ctio n cred it w ere a m o n g th e first to b e m et. T h u s, resid en tial b u ild in g ro se d u rin g recessio n s and d ec lin ed w h en o th er ty p es o f e c o n o m ic a ctiv ity w ere b o o m in g . T h e se sharp sw in gs in m o r tg a g e -m o n e y availa b ility , occu rrin g in re sp o n se to c h a n g in g p ressu res o f o th er secto rs u p o n th e su p p ly o f cred it, se rio u sly im p e d e d p la n n in g an d co n tin u ity o f o p era tio n s in th e b u ild in g in d u stry. T h u s, m a n y b u ild ers co u ld n o t stren gth en th eir ca p ital p o sitio n s or p lan fo r ord erly e x p a n sio n o f their o rg a n iza tio n s. A s a re su lt, n e w cro p s o f b u ild ers sp ran g u p lik e m u sh ro o m s in th e larger m etro p o lita n areas at th e b eg in n in g o f a g en era l re c o v ery p erio d and w ilted w ith th e return o f cred it restriction s. M e a n w h ile , “m ista k e s” o f p lan n in g, lo c a tio n , an d c o st-to -v a lu e ratios o f n ew h o u s in g u nits co u ld be and o fte n w ere a b so rb ed by c o n tin u e d stron g d em a n d and risin g resa le p rices. D u rin g p erio d s o f cred it restraint, n o n -sp e c ia liz e d m o rtgage len d ers fo u n d g ro w in g a ttraction in fin an cial a ssets o d ier than m o rtg a g es. A t th e lo c a l le v e l, this m ean t that co m m ercia l b an k s, as a ru le, w ere a g g ressiv e m o rtg a g e len d ers o n ly o n a tem p o ra ry b asis. A t th e n a tio n a l m o r t g age m ark et le v e l, it m ea n t th at re d u ced in ter-reg io n a l Hows o f m ortgage cred it su p p lies w ere c o n fin ed to the stron gest ex istin g ch a n n els. I n e s e c o n siste d o f m o rtg a g e b an k in g firm s, b o th sp e c ia liz e d an d o th erw ise, th at w ere geared to serve m erch a n t build ers p rim arily th rou gh F H A v A m ortgages. T h e se builders w ere co n cen tr a te d m a in ly in the larger m etro p o lita n cen ters. M o re o v e r , it w a s p r e c isely in th ese cen ters th at the su p p ly o f lo c a l sa v in g s h e ld by sp ecia liz ed fin an cial in stitu tio n s, su ch as sa v in g s an d lo a n a sso c ia tio n s, w as g row in g m o st rap id ly. H o w e v e r , fe w o f th ese lo c a l in stitu tio n s w ere ab le to p u sh o u t in to le ss-c o n ce n tr a te d areas o f h o u sin g d em a n d b e ca u se o f h ig h er len d in g and servicin g c o sts, trad ition , an d reg u la tio n . T h ere w ere ex c e p tio n s to this g en era l p attern , o f co u rse. S o m e m o rtg a g e b an k ers b eg a n o p e n in g p erm a n en t branch offices in sm aller cities as ea rly as th e m id -fifties an d c o n tin u ed to se e k p rofita b le o u tle ts. T h e y also co o p e r a te d in th e V o lu n ta ry H o m e M o rtg a g e C red it P ro g ra m . G o v e r n m en ta l a g en cies also e x p a n d e d d irect len d in g fa cilities. D u rin g th e latter p art o f th e d e ca d e , th e F e d e r a l H o m e L o a n B a n k S y stem in a u g u ra ted th e M o rtg a g e P a rtic ip a tio n P rogram fo r its m em b ers. Its m ajor o b je c tiv e w a s to p ro v id e ad d itio n a l fa c ilitie s fo r a d ju stm en ts in th e su p p ly o f and d em a n d fo r m o rtg a g e cred it b e tw e en sp ecific lo c a tio n s. W h ile th ese efforts to e x te n d th e d istrib u tio n ch a n n els fo r m o rtg a g e cred it w ere o f so m e sig n ifica n ce, th ey w ere largely co u n tered b y o th er tren d s. In sp ite o f th e in n o v a tion o f u p w ard flex ib ility in F H A m o rtg a g e c o n tra ct rates in the late 1 9 5 0 ’s, m a n y n a tio n a l m o rtg a g e len d ers b eg a n to shu n this m ajor m o rtg a g e m a rk et in stru m en t. M o rtg a g e b an kers rea cted b y in crea sin g their o u tp u t o f co n v en tio n a l m ortgages o n resid en tia l an d co m m e r c ia l p ro p erties. T h e search for larger lo a n s and lo w er c o sts o f serv icin g led m a n y o f th em to in crea se their se rv ices b y d iv ersify in g the ty p es o f m o rtg a g es o rig in a ted rather th an b y e x p a n d in g their territories. T h e p attern o f m etro p o lita n co n cen tra tio n o f m o rtgage cred it su p p lies w a s th u s m a in ta in ed . . . . a n d the Present S avers in the p resen t r e c o v ery h a v e fa c e d a m a rk ed slo w in g o f final d em a n d fo r fu n d s. F in a n c ia l in stitu tio n s, a ct ing as m id d lem en in th e a ctiv e e m p lo y m e n t o f m o n ey , h a v e seen their ran ge o f c h o ic e o f ea g er b o rro w ers n ar row ed . B u sin e ss cred it n e e d s fo r w o rk in g c a p ita l, as w ell as for m ore p erm a n en t fa c ilities, h a v e gro w n m o re slo w ly th an in th e 1 9 5 0 ’s. C o n su m er b o rro w in g s h a v e also put less p ressu re o n th e to ta l flo w o f sa v in g s. A lth o u g h recen t ex p a n sio n o f co n su m e r cred it h as b e e n stron g, th e return flow o f n e t n ew savin g s fro m c o n su m ers o u t o f cu rren t in c o m e s h a s also grow n . L ik e b u sin e ss, co n su m ers h a v e p ro v id ed a gro w in g flow o f fu n d s th rou gh am o rtiza tio n p a y m en ts o n d u rab les and h o u sin g . T h e g ro w in g p referen ce o f in d iv id u a ls fo r fix ed d o lla r-v a lu e fo rm s o f savin gs also h a s stim u la ted in cr e a se d sa v in g s flo w s to fin a n cial m id d le m en . M o r e o v e r , b o rro w in g b y th e g o v e r n m e n t secto r for n ew sp en d in g , th o u g h in crea sin g , h a s n o t o ffset th e slack ca u se d b y a sw e llin g v o lu m e o f fu n d s an d le ss aggressive u se o f th em . T h e se co n tin u in g tren d s h a v e c a u se d fin a n cia l m id d le m en to m a k e m o re fu n d a m en ta l a d ju stm en ts th an th ey did d u rin g th e sh orter c y c le s o f th e r e ce n t p a st. A s it h a s b e c o m e m o re e v id e n t th at th e cu rren t p er io d is lik e ly to c o n tin u e fo r so m e tim e as a “b o rr o w e r’s ” rath er th an a “le n d e r ’s m a r k e t,” p r e v io u s le n d in g an d in v e stm e n t p a t terns o f fin a n cia l in stitu tio n s h a v e b eg u n to ch a n g e. T h e m o rtg a g e m a rk et h a s fe lt th e im p a c t o f th is ch a n g e to a greater e x te n t th an p erh a p s any o th er m ajor fin an cial sector. Effects o n H o u s in g a n d M o r t g a g e D e v e lo p m e n ts in the S ix th District Previous Recoveries M o s t area e c o n o m ie s serv ed by m em b er b an k s in this F e d e r a l R e se r v e D istrict en jo y ed su b sta n tia l gro w th d u rin g th e 1 9 5 0 ’s. A lm o s t all o f th em , h o w e v e r , c o u ld h a v e u se d m o re fu n d s th an th eir lo c a l sa v in gs p o o ls p ro v id ed . T h eir resu ltin g ca p ita l-d eficit status n o t o n ly d icta ted th e m o st efficien t u se o f sca rce lo c a l fu n d s, but also m a d e th e im p o r ta tio n o f sa v in gs d esirab le. M a n y fin a n cia l in term ed ia ries, in clu d in g co m m ercia l ban k s, h a d ab u n d a n t g ro w th o p p o r tu n itie s thru st u p o n th em in their p u rely lo c a l ro le. O th ers w ere activ e in im p ortin g fu n d s fo r b u sin e ss an d in d u stria l u ses and for fin an cin g e sse n tia l G o v e r n m en t-p u r c h a se d serv ices. Still oth ers h e lp e d to im p o rt th e su p p lies o f m o rtg a g e cred it n e e d e d fo r a d eq u a te b u sin ess, c o m m e r c ia l, and fa m ily h o u sin g . A su b sta n tia l ca p ita l im p o rt gap rem a in ed , h o w ever, p articu larly in r esid en tia l h o u sin g n e e d s. T h is gap w as filled by th e sp ec ia liz e d m o rtg a g e b a n k er th ro u g h h is su c c e ssfu l m erch a n d isin g o f F H A - V A m o rtg a g es to a w id en in g c lie n te le o f in v esto rs. M o rtg a g e b a n k ers, w h eth er o p e r a tin g as sp ecia lists or as m o re d iv ersified fin a n cia l m id d le m e n , serv ed as the c y c lic a l buffer in th e im p o r ta tio n p r o c e ss. E x p a n sio n o f n a tio n a l cred it d em a n d s d id n o t p r o c e e d v ery far b efo re F H A - V A resid e n tia l m o rtg a g es e n c o u n te r e d an in terest ceilin g barrier. In th e D istr ic t, th e p a ttern o f d isco u n ts, in cr ea se d b o rro w in g co sts, r e d u ce d p rofit m argin s, and sh rin k age o f b u ild e r s’ m a rk ets p a r a lle led n a tio n a l trends. T h e c h ie f e ffect w as ra tio n e d cred it flo w s in to th e D istrict, w h ich se v e r ely lim ite d all e x c e p t th e la rg est, b o ld e st, and m o st efficien t m er c h a n t b u ild ers in o u r larger m etro p o lita n cen ters. A s th e rela tiv e ly sh o rt c red it c y c le s to p p e d o u t and d isc o u n ts w ere red u ced u n d er g ro w in g flo w s o f im p orted m o rtg a g e cred it, th e se larger m e tr o p o lita n cen ters still b en efited m o st fro m th e b la n k et len d er p r o tectio n o f fered b y th e F H A - V A m o rtg a g e. T h e y a lso c o u ld attract fu n d s fo r e x p a n d in g th e v o lu m e o f c o m m e r c ia l an d apart m en t b u ild in g s. M a n y u rb an and sm a ller c o m m u n ities in this D istr ic t w ith g o o d gro w th r e c o rd s and p r o sp ects w ere thus fa c e d w ith a c o n tin u in g b ra k e o n fu rther h o u sin g ex p a n sio n . Present Recovery R e sid e n tia l c o n str u c tio n co n tra cts in this D istrict h a d d ec lin e d m o re sh arp ly th an th e n a tio n a l avera g e b e tw e e n 1 9 5 9 and 1 9 6 0 . T h e o u tlo o k fo r r e c o v • 2 • ery seemed somewhat bleak. Metropolitan mortgage lend ers and major mortgage bankers, replying to a survey con ducted by this Bank in the autumn of 1960, expected the usual reversal from scarce, high-priced mortgage money to more abundant supplies. However, one significant dif ference in opinion was prevalent, namely that lack of housing demand, in spite of more available mortgage money and gradually declining rates, would bar rapid re covery. As it turned out, however, by autumn of 1961 the District’s level of construction contracts had recouped the deep decline of late 1960. A major feature of this recovery was a pronounced swing within the District toward multi-family housing, which increased about 35 percent from 1960 to 1961, compared with a 2-percent rise for one- and two-family housing units. This pattern continued during 1962, as multi-family contracts gained about 44 percent, compared with 10 percent for total residential contracts. By the end of 1962, however, the volume of multi family construction had begun to diminish, and a new trend appeared. This latest trend has been toward a sharp renewal of growth in total construction volume, with major gains in one- and two-family units. Some prominent metropolitan areas of the District, however, have been exerting a net drag on total contract volume. For example, housing contract totals through June 1963 in the nine largest metropolitan areas of the Sixth District were down 9 percent over the same period in 1962. In contrast, hous ing contract volume outside these metropolitan areas was up 35 percent from the previous year. However, a strong surge of multi-unit contracts occurred within the District in June, restoring this type of construction to growth-rate leadership. Total construction contracts for the six months through June of this year were in excess of $ l 3 billion /4 or 18 percent higher than for the same period of 1962. The District picture may be summarized as follows: As a whole, the District states are in the midst of a boom year in residential construction. Many large metropolitan centers appear to have matched or exceeded current demand for new housing, both in individual units and in multi-family structures. Areas formerly leading in housing production have relinquished the leadership to areas that are less popu lous, less concentrated in large metropolitan centers, and less able to finance their needs from local flows of savings. Why the Difference? Strengthened housing demand in many small urban communities that are responding to continued economic growth is one important reason. Greater availability of less expensive mortgage funds, both from the national capital markets and from local savings flows, is another. Closely associated with this factor is the increased competition of mortgage lenders and the broad ening of mortgage banking channels, which is bringing more and more capital importing communities in contact with outside capital flows. Opposing these factors, which have tended to stimulate the rate of real estate activity, potentially less favorable factors have had to be dealt with. FHA and VA mortgages, the chief instruments of inter-regional, mortgage credit flows, have carried a triple burden. First, the maximum contract rates were lowered early in the current recovery. Fortunately, adjustment to this change was rapid because rates on alternative investments also came down. Second, the impact of the Executive Order of November 24, 1962, was concentrated upon these instruments of national hous ing credit flows and required rapid and continuing adjust ments. Finally, rising delinquencies and foreclosures have appeared to be most pronounced in FHA-VA financed residential properties. Some of this differential between FHA and conventional delinquency rates is more illusory than real because of the ease with which a delinquency on an open-end conventional may be cured by increasing the loan. Moreover, the FHA insurance program has built up substantial reserves capable of coping with a higher rate of foreclosure on high loan-to-value and longer-term mortgages. And, although a few of the District’s major metropolitan areas have experienced difficulties with fore closures, the District as a whole appears to have held FHA-VA delinquencies and foreclosures well in line with national rates. Adjustments of savings flows within the District to changing types and locales of housing demand have also presented difficulties. This shifting demand has made it necessary for many local mortgage-lending institutions to extend their lending and servicing territories. Others have had to increase their buying of mortgage participations and whole mortgages to employ their growing flows of savings and repayments. In still other instances, increased competition for available mortgages and higher operating costs have forced many institutions to reduce rates paid for savings and to accept a potentially slower rate of growth. Implications for the Future Some of the new mortgage market dimensions that are currently visible may be summarized as follows: 1. Growing availability of locally generated funds. 2. Broadened and apparently more permanent access to national savings pools. 3. Mortgage bankers’ growing backlog of experience in making rapid adjustment to changes in type or location of housing demand and in redirecting flows of mortgage funds. 4. Experience in and awareness of the continuing need for minimizing deterioration of existing values in real property and in mortgage obligations through better underwriting and servicing of mortgage loans. 5. Higher cost levels for mortgage intermediaries and lower financing costs for builders and borrowers. These developments, if carefully husbanded, have the potential for further stimulating sustainable growth in this region. As the search proceeds for new equilibrium of costs and interest rates, sector allocation of funds, and competitive position among mortgage market institutions, some of these trends will intensify. If our overall economy succeeds in achieving a more dynamic rate of growth in investment, employment, output, and consumption, the problems of a relative oversupply of mortgage funds should quickly recede. The experience of the 1950’s might then furnish the most likely guide to probable developments. If it does not, then a better guide to the nature of potential problems might be found in the longer history of real estate and mortgage credit cycles in this country. But that, hopefully, is another story. T T T T T ^ j H ir a m •3 • J. H o n e a Economic Indicators —Mississippi 1111m1111111111i i 11111111111111i i 11111111111i i 11111111111111 L 1 9 5 7 - 5 9 = IOO 1 ' * J Mississippi’s Ecom Mississippi’s economy has pushed ahead rapidly during the past year. The advance, moreover, has been broadly based. Although many forces have contributed, some ob servers are citing continued strength in manufacturing activity as one of the highlights of the overall expansion. This, they argue, is especially encouraging in view of the critical role that manufacturing must play in the state’s long-run economic development. M fg . P a y r o l l s Manufacturing Employment Strong Manufacturing, which is gaining on agriculture in the number of workers employed, accounted for 30 percent of the 10,600 new non agricultural jobs added in the last year. This brought total nonagricultural employment to 436,300 at the end of June. Sparked by strength in manu facturing, nonagricultural employment, after adjustment for seasonal variation, has chalked up gains in seven of the last twelve months. Apparel, the largest manufacturing employer, con tinued to be the standout performer. Employment in ap parel manufacturing during June was 6 percent higher than a year ago and has moved up 3 percent since the end of 1962. Gains in both men’s and women’s clothing have contributed to the overall increase. Food processing and lumber, Mississippi’s other two large industrial employers, have not enjoyed such growth. Employment in food processing during June closely ap proximated the level of the corresponding period in 1962, and gains since the end of 1962 have been no more than would be expected on seasonal grounds. Lumber and wood products manufacturing, consisting principally of logging and sawmill operations, employed slightly fewer workers in May than they did a year ago. Outside manufacturing, construction employment has added substantially to the state’s wage rolls. The number of persons engaged in construction activity rose 2,700 in the past year, representing an increase of 11 percent. The bulk of this increase occurred in the Pascagoula area. In addition, several other nonmanufacturing types added jobs during the past year: Government employment rose 2.6 percent; retail trade, 1.6 percent; and employment in ser vices, 2.9 percent. M fg . E m p l o y m e n t P e r s o n a l In c o m e B a n k D e b its D e p a rtm e n t S to re * # S a le s * M e m b e r B a n k Lo an s* M e m b e r B a n k D e p o s it s F o r Sixth D istrict portion of state only. Income and Spending Rack Up Gains Sizable advances in personal income, perhaps the best overall measure we have of economic activity, testify to the state’s economic improvement. After modest declines earlier in the year, the index of personal income (on a 1957-59=100 base) rose to 134.6 percent in May. This represented a solid 7-percent gain over the year-ago level, although per capita income is still low, relative to that of other states. One source of the increase in personal income was, of course, the earnings of new jobholders. This is illustrated by the rise in total payrolls of manufacturing industries, which during May were 7 percent higher than in May 1962. The gain resulted from higher hourly pay and a longer workweek for employees, as well as from a larger number of workers. . 4 . Still on the Move Farmers’ incomes have also contributed to strength in personal incomes. As illustrated by the chart showing farm cash receipts, farm income fluctuates widely from month to month, but the total has been averaging near the high levels of the past two years. According to most measures, total spending has added its thrust to the state’s economy. Bank debits, or check payments, have risen irregularly since the middle of 1961. The total so far this year has been 7 percent higher than in the comparable period last year. While suggested by the debits figures, the increase in total spending is con firmed by the 9-percent rise in sales tax receipts by the state of Mississippi. Sales tax receipts, of course, repre sent a measure of spending, as well as a source of reve nue for the state. Mississippians not only spent some of their higher in comes but, like citizens throughout the country, supple mented these earnings by borrowing for the purchase of autos and other durable goods. Instalment loans outstand ing at member banks in the state were 20 percent higher at the end of March, the latest month for which data are available, than they were a year earlier. Loans for the purchase of automobiles increased 35 percent over this period, and loans for purchasing other durable goods, such as refrigerators, rose 29 percent. Activities at the state’s banks have mirrored the rise in general business activity. Both loans and deposits of mem ber banks have risen sharply and steadily for the past two years. Loans, for example, were 9 percent higher in March than in March 1962. Deposits increased 11 per cent over the same period. Judging by monthly data available for member banks in the District portion of the state, both loans and deposits continued to rise sharply through June. How Local Areas Have Fared The rate of economic advance has varied from one part of the state to the other, although most areas appear to have shared in the increase. Judging from available em ployment data and banking information, the Pascagoula area has experienced the fastest rise. Much of this in crease stemmed from several large construction projects, some of which are nearing completion. Most notable was a large refinery built by the Standard Oil Company. The accompanying map illustrates how the gain in nonfarm employment was distributed among the local-office areas of the Mississippi Employment Security Commis sion. This agency is the source of employment information for the state. Although falling short of Pascagoula’s rapid pace, the Tupelo and Corinth areas in the northeastern corner of the state have enjoyed substantial increases in employ ment. Gains in both areas were slightly over 10 percent. In each case, expansion in manufacturing activity sparked the increase. Four of the local areas reported fewer persons em ployed in nonfarm jobs during May than in May 1962. All of the declines were smaller than 2 percent, however. The Vicksburg area, comprising four counties, reported Changes in Nonagricultural Employment, by A re a ’ [Corinth] Oxford jClarksdale West! Point: Cleveland [GreenII wood A berdeen Columbus: ILexing" iton* KosciBusko IvicksV burg Louisville Newton M e r id ia n Jacksoni Hazlehurst • Laurel Natchez Brookhaven Hattiesburg McCombs Percent Change, May 1963 from May 1962 m feU i +5.!%-+IO% jf lU Picayune More than +10% 0-+5% I Gulfport I -0.1% --2% ♦Local office areas of Mississippi Employment Security Commission. the largest decrease, most of which reflected a cutback in Government employment. The decrease may be temporary, however, since a pickup in Government employment is anticipated in the next few weeks as revetment work on the river gets underway. Prospects How Mississippi’s economy fares in the future depends, in part, on how well business activity in the nation holds up. The strength of national demand for apparel is espe cially critical, since apparel manufacturing is an important segment of the state’s manufacturing industry. Future growth in the state’s economy also depends heavily on a continued expansion in new manufacturing jobs. Some indication of future trends in manufacturing is given by the volume of current announcements of new plants and expansion of existing ones. The Mississippi Agricultural and Industrial Board keeps track of such plant announcements and has reported that 32 new plants and 20 expansions were announced during the first half of 1963. This number represents a dollar investment of $32 million and a potential source of about 5,100 new jobs. The economic future is never clear, but judging from the visibility that exists, the outlook for continued ex pansion in the state’s economy is good. W . M. D a v i s This is one of a series in which economic developments in each of the Sixth District states are discussed. Develop ments in Georgia’s economy were analyzed in the May 1963 R e v i e w , and a discussion of Louisiana’s economy is scheduled for a forthcoming issue. •5 • Debits to Individual Demand Deposit Accounts In su re d C o m m ercial B a n k s in th e S ix th D istrict (In Thousands of Dollars) A REVIEW OF MISSISSIPPI'S ECONOMY, 1960-63 A compilation of articles devoted to Mississippi's economy June 1963 May 1963 June 1962 2,646,812 47,396 981,516 39,505 40,583 111,343 319,435 197,370 28,570 62,374 2,964,430 51,267 1,087,413 43,471 41,545 113,831 375,300 228,007 32,447 73,628 2,432,898 46,855 900,857 39,446 37,438 82,344 295,028 180,519 27,508 60,822 — 11 —8 — 10 —9 —2 —2 — 15 — 13 — 12 — 15 +9 +1 +9 + 0 + 8 +35 +8 +9 +4 +3 +10 +6 +9 +6 + 10 +27 + 11 +13 +8 +9 FLORIDA, Totalf Bartow* . . . . Bradenton* . . . Brevard County* Clearwater* . . . Daytona Beach* Delray Beach* . . Ft. Lauderdale* Ft. MyersNorth Ft. Myers* Gainesville* . . . Jacksonville . . . Key West* . . . Lakeland* . . . M ia m i...................... Greater Miami* Ocala* . . . . Orlando . . . . Pensacola . . . St. Augustine* . . St. Petersburg . . Sarasota* . . . Tallahassee* . . Tampa . . . . W. Palm-Palm Bch.* Winter Haven* . . 6,039,000 21,875 45,746 125,426 61,862 63,161 22,551 218,302 6,742,818 27,594 49,256 134,044 71,956 68,142 24,528 235,954 5,715,794 n.a. 50,460 n.a. n.a. 57,374 n.a. 206,362 — 10 — 21 —7 —6 — 14 —7 —8 —7 +6 n.a. —9 n.a. n.a. + 10 n.a. +6 +8 n.a. n.a. n.a. n.a. + 10 n.a. + 2 50,080 59,744 858,539 17,216 78,375 968,736 1,410,304 42,488 288.171 95,675 14,618 204,391 79,515 75,786 446,093 154,524 38,820 58,859 56,590 966,221 19,070 92,936 1,101,376 1,612,979 43,244 313,197 97,362 15,032 222,645 81,487 85,289 508,960 164,706 45,611 n.a. 48,980 824,453 15,179 84,909 961,671 1,399,464 n.a. 267,603 89,264 n.a. 215,484 79,128 65,886 440,503 154,065 n.a. — 15 +6 — 11 — 10 — 16 — 12 — 13 —2 —8 —2 —3 —8 —2 — 11 — 12 —6 — 15 n.a. +22 +4 + 13 —8 + 1 + 1 n.a. +8 +7 n.a. —5 +0 + 15 + 1 +0 n.a. n.a. +14 + 1 +3 +5 + 5 +5 n.a. + 11 + 7 n.a. —4 + 15 +10 + 5 —1 n.a. GEORGIA, Totalt • • Albany . . . . Athens* . . . . Atlanta . . . . Augusta . . . . Brunswick . . . Columbus . . . . Dalton* . . . . Elberton . . . . Gainesville* . . . Griffin* . . . . LaGrange* . . . M acon ...................... Marietta* . . . Newnan . . . . Rome* . . . . Savannah . . . . Valdosta . . . . 4,766,336 60,334 46,524 2,660,797 137,005 30,208 120,275 58,159 10,663 56,793 21,583 16,453 144,709 42,686 22,120 51,565 179,539 3 2 ,8 24t 5,116,364 65,349 50,649 2,845,110 144,455 38,534 135,017 62,647 12,263 59,623 22,241 16,811 152,444 44,952 20,700 54,528 201,938 37,278 4,406,968 57,694 44,178 2,445,592 126,448 31,171 118,268 52,922 12,254 53,836 21,219 17,866 139,389 36,345 22,460 48,584 179,977 31,759 —7 —8 —8 —6 —5 — 22 — 11 —7 — 13 —5 —3 —2 —5 —5 +7 —5 — 11 — 12 +8 +5 +5 +9 +8 —3 + 2 +10 — 13 +5 +2 —8 +4 +17 —2 +6 —0 +3 +11 +5 + 1 + 16 + 11 +7 +2 n.a. +4 +5 +6 —5 +8 + 18 —1 +3 +5 + 0 LOUISIANA, To talt** Abbeville* . . . Alexandria* . . . Baton Rouge . . . Bunkie* . . . . Hammond* . . . Lafayette* . . . Lake Charles . . New Iberia* . . . New Orleans . . . Plaquemine* . . Thibodaux* . . . 2,787,840 7,081 85,235 309,240 4,657 23,428 76,666 82,091 22,903 1,504,836 6,676 15,572 3,108,333 8,013 88,092 363,305 4,701 27,800 86,351 93,837 26,397 1,663,264 6,881 15,209 2,640,573 n.a. 81,616 289,462 4,724 n.a. 68,657 88,093 n.a. 1,499,848 6,981 14,119 — 10 — 12 —3 — 15 —1 — 16 — 11 — 13 — 13 — 10 —3 +2 +6 n.a. +4 +7 —1 n.a. + 12 —7 n.a. + 0 —4 + 10 +9 n.a. + 5 + 11 n.a. n.a. + 11 +1 n.a. +4 n.a. n.a. 866,096 65,063 37,331 348,781 27,199 46,659 27,360 998,136 71,368 39,879 413,668 31,492 58,049 27,128 853,096 58,128 39,322 347,487 28,776 46,817 24,909 — 13 —9 —6 — 16 — 14 — 20 + 1 +2 + 12 —5 + 0 —5 —0 + 10 +6 + 11 —2 + 4 + 1 + 10 +9 35,463 23,427 23,050 40,260 27,918 21,568 n.a. 23,136 n.a. — 12 — 16 +7 n.a. +1 n.a. n.a. +8 n.a. 2,480,262 54,492 382,851 50,746 86,405 270,929 900,328 2,582,355 60,206 381,869 52,529 96,494 289,713 937,435 2,330,712 56,325 344,743 50,015 93,171 270,188 826,295 —4 —9 + 0 —3 — 10 —6 —4 +6 —3 + 11 +1 —7 +0 +9 +7 +3 +8 +8 —1 +5 +8 SIXTH DISTRICT, Total 19,586,346 11,792,357 Total, 32 Cities 21,512,436 12,958,789 18,380,041 11,239,524 —9 —9 +7 +5 +9 +8 299,600,000 318,100,000 291,800,000 —6 +3 +8 that a p p e a re d in this Bank's M onthly Review during 1960-63, together with revised monthly figures of major business in dica tors for Mississippi. The articles em phasize various aspects of Mississippi's economic scene and often consider longer-run developm ents. Copies of this booklet, as w ell as copies of A Review of G e o rg ia 's Econom y, 1960-63, the first publication in this series, a re a v a ila b le upon request to the Research Departm ent, Federal Reserve Bank of A tlan ta, A tlan ta, G e o r gia 30303. B a n k A n n o u n c e m e n ts On July 1, the First National Bank of Margate, Mar gate, Florida, a newly organized member bank, opened for business and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Officers are Walter A. Hobbs, Jr., President; M. G. Sanchez, Vice President and Cashier; and G. Russell French, Vice President. Capital is $400,000, and sur plus and other capital funds, $200,000, as reported by the Comptroller of Currency at the time the charter was granted. The Bank of Nor cross, Nor cross, Georgia, a non member bank, began to remit at par on July 1. Officers include Clifford Jones, President; Allen M. Johnson, Vice President; and J. S. Nesbit, Cashier. On July 12, The Bank of Central Florida, Haines City, Florida, a newly organized nonmember bank, opened for business and began to remit at par. Officers are E. E. Martin, Chairman of the Board; R. M. Willingham, President; R. V. Phillips, Vice President; and Franklin L. Vaughan, Cashier. Capital is $360,000, and surplus and undivided profits, $180,000. The Pineland State Bank, Metter, Georgia, a non member bank, began to remit at par on July 15. Offi cers include G. H. Rountree, President; K. L. Kendrick, Vice President; and Richard N. Marsh, Cashier. On July 27, the Indialantic Beach Bank, Indialantic, Florida, a newly organized nonmember bank, opened for business and began to remit at par. Officers are James H. Pruitt, Chairman of the Board; William Fletcher, President; Harry E. Reichart, Executive Vice President; A. T. Rossetter, Vice President; and Bobby Sullivan, Cashier. Capital is $250,000, and surplus and undivided profits, $100,000. Percent Change Year-to-date 6 Months June 1963 from 1963 from June May 1962 1962 1963 ALABAMA, To talt Anniston . . . . Birmingham . . Dothan . . . . Gadsden . . . . Huntsville* . . Mobile . . . . Montgomery . . Selma* . . . . Tuscaloosa* . . . . . . . M ISSISSIP P I, T o talt** Biloxi-Gulfport* . Hattiesburg . . . Jackson . . . . Laurel* . . . . Meridian . . . . Natchez* . . . . PascagoulaMoss Point* . . Vicksburg . . . Yazoo City* . . . TEN N ESSEE, To talt** Bristol* . . . . Chattanooga . . . Johnson City* . . Kingsport* . . . Knoxville . . . . Nashville . . . . UNITED STATES 344 Cities . . . *Not included in total for 32 cities that are part of the national debit series main tained by the Board of Governors. fPartly estimated. n.a. Not available. **Includes only banks in the Sixth District portion of the state. •6 • Sixth District Statistics Seasonally Adjusted ( A ll d a t a a r e in d e x e s , 1 9 5 7 - 5 9 = Latest Month (1963) One Month Ago Two Months Ago 39,861r 122 131 115 130 125 39,384r 127 153 110 123 122 37,533 106 101 108 118 117 June June 165 151 153 148 169 149 156 134 June June June June June June June June June June June June June June June June June April April April May June June 111 109 131 104 112 102 93 107 98 94 114 111 101 87 3.9 40.7 131 139 132 146 136 99 164 111 109 132 104 111 102 93 107 lOOr 94 113 111 103r 89 3.8 40.9r 131 141 129 150 134 98 r 163 111 109 131 104 111 103 93 105 99 95 115 111 101 84 3.7 40.7 131 124 122 125 131 98 158r 109 107 127 102 106 104 93 104 96 97 106 109 96 88 4.1 40.9 126 139 116 158 130 104r 144 June July 154 145 150 147 149 142 136 131 June July June 133 125 143 130 128 135 130 123 140 Bank Debits** 7,480 128 123 7,390r 109 112 112 108 114 108 114 112 7,023 111 107 Nonfarm Em ploym ent.......................................June M an u fa c tu rin g ............................................ June Nonmanirfacturing...................................... June C o n stru ctio n ............................................June Farm Em ploym ent............................................ June Insured Unemployment, (Percentof Cm . Emp.) June Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . June Manufacturing P a y r o l l s ................................. June 112 108 114 114 72 3.0 39 8 129 2.7 39.9 128r 2.9 39.9 129 155 138 152 153 134 141 151 135 152 112 68 112 68 109 105 111 108 80 3.3 39.9 121 FINANCE AND BANKING Member Bank L o a n s ...................................... June Member Bank D e p o s i t s .................................June Bank D e b i t s * * ................................................. June 144 128 133 LO U ISIA N A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) May May June 5,959 116 113 5,956r 104 111 5,909r 113 109 5,564 110 100 June June June June June June June June 102 99 103 95 96 4.3 41.8 123 103 99 103 97 95 4.2 41.9r 123r 102 100 103 94 77 43 42.3 124 100 94 102 82 101 4.7 41.2 111 June June June 147 121 134 139 118 126 142 119 127 132 113 124 May May June 3,089 150 107 3,035r 117 105 2,992r 123 98 June June June June June June June June 114 116 113 117 77 4.0 40.4 135 115 118 114 120 79 4.2 40 5r 137r 115 117 114 121 79 4.3 40.5 135 112 114 111 105 74 4.1 39.9 128 June June June 172 150 142 170 146 143 168 143 137 152 130 137 May May June 6,419 103 114 6,468r 119 111 6,395r 112 100 June June June June June June June June 111 112 110 125 95 4.6 40.1 130 111 111 110 131 98 4.6 41.0 128 111 111 110 124 94 4.5 41.2 128 109 111 108 123 93 4.9 40.3 126 June June June 159 136 147 151 129 135 150 131 136 135 119 129 PRODUCTION AND EMPLOYMENT FINANCE AND BANKING INCOME AND SPENDING 5,152 122 102 May May June 5,481 127 113 5,508r 120 103 5,372r 119 97 June June June June June June June June 107 102 109 94 82 4.1 40.3 121 107 102 109 94 104 4.1 40.8r 122 107 102 109 94 90 4.0 40.3 122 105 100 107 96 88 4.9 40.7 117 June June June 154 133 139 153 131 134 150 128 132 136 121 126 Personal Income, (Mil. $, Annual Rate) 2,894 116 99 PRODUCTION AND EMPLOYMENT Nonfarm Em ploym ent....................................... M an u fa c tu rin g ............................................ Nonmanufacturing...................................... C o n stru ctio n ............................................ Farm Em ploym ent............................................ Insured Unemployment, (Percent of Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o l l s ................................. FINANCE AND BANKING Bank D ebits*/** TENNESSEE FLO RIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Farm Cash R e c e i p t s ....................................... Department Store S a l e s * * ............................ May 11,045 May 88 June 160 PRODUCTION AND EMPLOYMENT Nonfarm Em ploym ent....................................... M a n u fa c tu rin g ............................................ Nonmanufacturing....................................... C o n stru ctio n ............................................ Farm Em ploym ent............................................ Insured Unemployment, (Percent of Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o l l s ................................. June June June June June June June June 117 119 116 93 127 3.3 40.9 157 116 119 116 94r 113 3.3 40.4r 155r 116 120 115 94 111 3.4 40.8 155 116 121 114 90 120 3.3 41.6 157 June June June 151 134 141 150 131 136 147 132 143 131 122 128 ll,3 6 9 r 133 151 ll,3 2 6 r 154 147 10,856 99 140 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e i p t s ............................ Department Store Sa le s*/** . . . 6,049 98 99 PRODUCTION AND EMPLOYMENT FINANCE AND BANKING Member Bank L o a n s ...................................... Member Bank D e p o s i t s ................................. Bank D e b i t s * * .................................................. 7,525r 114 115 One Year Ago MISSISSIPPI FINANCE AND BANKING Member Bank L o a n s ....................................... Two Months Ago PRODUCTION AND EMPLOYMENT 122 118 129 INCOME AND SPENDING PRODUCTION AND EMPLOYMENT Nonfarm Employment Manufacturing . Nonmanufacturing Construction . Farm Employment . Insured Unemployment, (Percentof Cov. Einp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o l l s ................................. Personal Income, (Mil. $, Annual Rate) . . May Farm Cash R e c e i p t s .......................................May Department Store S a l e s * * ........................... June Avg. Weekly Hrs. in Mfg., (Hrs.) A LABAM A Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e i p t s ............................ Department Store Sales** . . . . One Month Ago INCOME AND SPENDING May 39,473 May 109 May 100 May 116 July 128p June 127 FINANCE AND BANKING Member Bank Loans* All B a n k s ....................................................... Leading C i t i e s ............................................ Member Bank Deposits* All B a n k s ....................................................... Leading C i t i e s ............................................ Bank D e b i t s * / * * ............................................ Latest Month (1963) G EO R G IA INCOME AND SPENDING PRODUCTION AND EMPLOYMENT Nonfarm Em ploym ent....................................... M a n u fa ctu rin g ............................................ A p p a re l....................................................... C h e m ic a ls .................................................. Fabricated M e t a l s ................................. F o o d ............................................................. Lbr., Wood Prod., Furn. & Fix. . . . Paper ....................................................... Primary M e t a l s ....................................... T e x tile s....................................................... Transportation Equipment . . . . Nonmanufacturing....................................... C o n stru ctio n ............................................ Farm Em p loym ent............................................ Insured Unemployment, (Percent of Cov. tm p j Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o l l s ................................. Construction C o n t r a c t s * ................................. Residential .................................................. All O t h e r ....................................................... Electric Power P r o d u c t io n * * ...................... Cotton C on su m p tio n **/***............................ Petrol. Prod, in Coastal La. and Miss.** o t h e r w is e .) One Year Ago SIXTH DISTRICT Personal Income, (Mil. $, Annual Rate) . . Farm Cash R e c e i p t s ....................................... C r o p s ............................................................ L iv e s t o c k ....................................................... Department Store S a l e s * / * * ...................... Department Store S t o c k s * ............................ Instalment Credit at Banks, *(M il. $) New L o a n s....................................................... R e p a y m e n ts.................................................. 1 0 0 , u n le s s in d ic a t e d Farm Em ploym ent...................... Insured Unemployment, (Percent o Avg. Weekly Hrs. in Mfg., (Hrs.) Manufacturing Payrolls . . . FINANCE AND BANKING Member Bank Loans* . . Member Bank Deposits* . . . Bank D e b i t s * / * * ...................... *For Sixth District area only. Other totals for entire six states. **Daily average basis. ***Figures reflect revision of the seasonal adjustments. p Preliminary. r Revised. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U.S. Bureau of Mines; elec. power prod., Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. •7 • D I S T R I C T B U S I N E S S C O N D I T I O N S I I I I I | I I I I B illio n s o f D o lla rs A n n u a l R a te S e a s . Adj. O is t r ic t business activity continues to exp and , although at a decidedly slow er pace than last spring. Bank credit rose sh arp ly, and retail spending also edged upward. Rising farm activity, output, and prices recharged the farm economy. How ever, em ploym ent changed little, and insured unem ploym ent rem ained at an uncom fortably high level. Personal Income Nonfarm Employment U* Average Weekly Hours * W o r k e d in M fg. Mfg. Payrolls Construction Contracts I 4 District retail spending edged upw ard, but the rate of expansion w as slow er than in previous months. Preliminary figures indicate that m o v in g avg. department store sales declined slightly during July, following a sharp upturn in June. Final figures for June reveal that among major District cities large gains were reported for Atlanta, Baton Rouge, Birmingham, Chattanooga, Jacksonville, Miami, and Tampa-St. Petersburg. Bank debits rose sharply in June. While sales at household appliance stores remained unchanged, sales at furniture stores advanced slightly. Personal income dipped in May, but the year-to-date income gain for the six-state area continues to outstrip that of the nation. Consumer credit outstanding at District commercial banks expanded moderately during June. The net increase in debt, reflecting primarily a higher level of personal loan extensions, was larger than the amount registered in the previous month. IS Electric Power Production Cotton Consumption Heightened activity is giving the farm economy a lift. Favorable weather brightened crop prospects generally, and harvests now underway in many areas are progressing satisfactorily. Pastures, with the exception of those in dry southwestern areas, are providing more grazing than in earlier months. With crops maturing, harvests gaining headway, and shipments of livestock holding at advanced levels, total farm marketings have increased in recent weeks and exceed year-earlier volumes. Spurred by rising prices for hogs, eggs, and citrus, the index of prices received by District farmers rose further in June. Prices for poultry products and beef cattle have also strengthened in recent weeks. The market value of farm real estate advanced further during the year ended in March 1963. Gains exceeded those for the nation, principally be cause of marked increases in Florida, Alabama, and Tennessee. v* \S Bank Debits Farm Cash ' Receipts j 3 - m o . m o v in g a v g . An uninspiring stab ility characterized the District's em ploym ent picture, although some production indicators continued their upward trend. The total number of nonfarm jobs remained virtually unchanged in Member Bank Loans Member Bank Deposits PERCENT OF REQUIRED RESERVES 4.1 . |> H Borrowings from F. R. Bank n| 1rl n >1 1 I rv i rr I 1962 h ♦Seas. adj. figure; not an index. 1961 IS Bank credit at District member banks rose sharply in June. A rise in the volume of investments dominated the gain in bank credit, but loans also showed a substantial increase. Deposits climbed in June, more than recov ering the decline recorded in May. Weekly reports from member banks in leading cities indicate moderate increases in investments, very little change in loan volume, and a reduction in the rate of deposit expansion through July. Effective July 24, the Federal Reserve Bank of Atlanta raised the discount rate from 3 to 31 percent. /* U* U* u* Mfg. Employment N IS ^ ^ 1.4 i .............. I 1963 1 June, as employment declines in Mississippi and Louisiana were offset by slight gains in the other District states. The District’s manufacturing enter prises also failed to expand their employment rolls. Declines in apparel and primary metals, together with losses in paper and lumber employment, were almost evenly balanced by gains in other manufacturing types. Despite a shorter-than-average workweek and a standstill in manufacturing employ ment, higher hourly earnings boosted manufacturing payrolls. Insured unem ployment, following successive declines earlier in the year, remained virtually unchanged. Following the recent upward trend in construction employment, a slight decline occurred in June. Cotton consumption, after expanding sharply since January, leveled off; petroleum production climbed further; and steel production in July declined less than nationally. N o t e : Data on which statements are based have been adjusted to eliminate seasonal influences.