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0? A w ss ★ A M Iu Review ten^ W ★ ALA > v ' LA A tla n ta , G eo rg ia A u g u st A ls o in • 1965 t h is is s u e : C H A N G IN G S E A SO N A L PATTERNS SIXTH IN FLORIDA D IST R IC T ST A T IS T IC S D IST R IC T B U S I N E S S C O N D IT IO N S Interest Rates at Home and Abroad O n e o f th e m a n y p ro b lem s w ith w h ich m o n eta ry p o lic y -m a k e rs m u st c o n cern th em selv e s is th e rela tio n b e tw e e n in terest rates in th e U n ited S tates and th o se abroad. If fo reig n in terest rates g et to o h ig h relative to th o se at h o m e , an in cen tiv e m a y arise fo r U . S. c itizen s and b a n k s and b u sin e sse s to sen d their d ollars ab road to earn th e ex tra in co m e; bu t this ten d s to add to ou r b a la n ce -o f-p a y m e n ts d eficit and m a y u ltim ately require rep u rch ase o f th o se d ollars w ith gold . In fa ct, o n e o f th e p rin ci p a l co n trib u tin g fa cto rs in our large b a la n c e -o f-p a y m e n ts d eficit o f the la st se v e n years h as b e e n th e trem en d o u s o u tflo w o f U . S. m o n e y to fo reig n co u n tries, p a rticu larly to E u ro p e and Japan. It w a s to m od erate th is o u tflo w th at P resid en t K en n ed y in 1 9 6 3 p ro p o se d th e In terest E q u a liz a tio n T a x and th at P resid en t J o h n so n ex te n d e d it early this year and, at th e sa m e tim e, in itia ted th e V o lu n ta r y F o r e ig n C red it R estra in t program . T h e so lu tio n to this p ro b lem m ig h t seem , o n its fa ce , to b e sim p le— if fo reig n in terest rates are to o h igh rela tiv e to U . S. rates, th en raise d o m e stic rates. Y e t su ch a so lu tio n is d ecep tiv e. It a ssu m es a relation b e tw e e n m o n e y flo w s and in terest rates th at a p p aren tly d o es n o t e x ist in m a n y c a se s, and it a ssu m es th at E u ro p e a n in terest rates w o u ld rem ain co n sta n t w h ile ours c lim b ed to m e e t th em , a resu lt th at m ig h t v ery w e ll n o t occu r. F u rth erm o re, it ig n o res th e rep ercu ssio n s su ch a p o lic y m igh t h a v e o n d o m estic e c o n o m ic activity. O n e o f th e h a rd est job s p o lic y m a k ers h a v e had in recen t years is to try to r e c o n cile th e g o a l o f re d u cin g th e b a la n c e-o f-p a y m e n ts d eficit w ith th e req u irem en ts o f d o m estic e c o n o m ic stab ility. I n te r e s t R a te M o v e m e n ts A n y a n a ly sis o f th e in terest rate p ro b lem m u st d istin g u ish ca refu lly b e tw e en in tern a tio n a l m o n e y flow s th at are sen sitiv e to in terest rate differ en tia ls b e tw e e n co u n tries and th o se th at are n o t, as w e ll as b etw e e n sh ort term rates and lo n g -term rates. T h ere are m a n y d ifferent in terest rates, a lm o st as m a n y as th ere are in d iv id u a l cred it tra n sa ctio n s, for ea ch lo a n or secu rity issu e is in so m e w a y differen t from all oth ers. S in ce w e c a n n o t co n v en ie n tly talk a b o u t su ch a m u ltip licity o f in terest rates, it is c o m m o n to sp ea k o f “th e ” sh ort-term in terest rate. T h e m ea su re m o st c o m m o n ly u sed for this c o n c e p t is th e rate o n 9 0 -d a y U . S. G o v ern m en t T rea su ry bills. N o t th at this is in an y se n se a “ty p ic a l” sh ort-term in terest rate. R a th er, it rep resen ts th e c lo s e st a p p ro x im a tio n to a rate o f in terest p ure and sim p le sin ce th e risk o f n o n p a y m en t o f th e G o v ern m en t’s sh ort-term o b lig a tio n s is so slig h t as n o t to b e rea lly co n sid ered b y p u rch asers. O th er sh ort-term in terest rates o n b an k lo a n s, co m m er cia l p ap er, and so o n g en era lly are h igh er, partly to c o m p e n sa te for so m e slig h t d eg ree o f risk. T h e U . S. T rea su ry b ill rate fe ll q u ite rap id ly in 1 9 6 0 un d er th e in flu en ce o f a m o n eta ry p o lic y th at w a s tryin g to co m b a t th e rece ssio n th at started in th at year. A s th e e c o n o m ic e x p a n sio n h as p ro c e e d e d , sh ort term rates h a v e g rad u ally e a sed u p w ard in r esp o n se to in creasin gly stron g p rivate d em a n d s fo r sh ort-term lo a n a b le fu n d s an d a heavier reliance b y th e T reasu ry o n sh ort-term fin an cin g. L o n g term rates, o n the oth er h an d , h a v e ch a n g ed h ard ly at all. T h e average rate o n lo n g -term G o v e r n m e n t b o n d s, for e x a m p le, is less than o n e -h a lf p ercen t h igh er th an it w a s at the b o tto m o f the recessio n in 1 9 6 1 . M o st foreign lon g-term in terest rates h a v e for years b een higher than th o se in this cou n try. In m o st o f th e w orld , cap ital is scarcer th an it is in th e U n ite d States. S aving, i.e., n o t co n su m in g part o f p resen t in co m e , is n ecessa ry to set asid e the reso u rces n eed ed to p ro d u ce th e cap ital g o o d s that w ill in crea se p r o d u ctiv ity in th e lo n g run. B u t savin g is m o re p a in fu l and difficult th e lo w er o n e ’s in co m e; and in c o m e s in th e rest o f th e w orld are low er, freq u en tly m u ch lo w er, th an in th e U . S. E v e n in E u ro p e, per cap ita in c o m e s are for the m o st part less than h alf the U . S. average. 1959 1960 19 6 1 1962 1963 1964 p en d in g o n w h eth er th e p ro ject to b e fin a n ced is ap p roved or n ot. A s a resu lt, u n fa v o red secto rs m a y at tim es b e starved fo r fu n d s, w ith resu ltin g u p w ard p ressu re o n in terest rates. (4 ) R e str ic tio n s o n m o v e m e n ts o f ca p ita l from o n e co u n try to a n o th er w ere in tro d u ced b y m a n y E u ro p ea n co u n tries du rin g W orld W ar II or e v e n b efo re. T h e orig i nal p u rp o se w a s u su a lly to red u ce th e d eficit in th e c o u n try’s b a la n ce o f p a y m en ts, fo r at th e tim e m o st E u ro p ea n c o u n tr ies’ reserv es o f g o ld an d fo r e ig n e x ch a n g e w ere very low . S o m e o f th ese restrictio n s h a v e b e e n reta in ed to th e p resen t tim e, e v e n th o u g h d eficits h a v e g iv e n w a y to su rp lu ses and reserv es are n o w v ery co m fo r ta b le. F o r all th e se rea so n s, lo n g -te rm in terest rates ab road h ave g en era lly b e en h igh er th a n in th e U . S. F o r e ig n sh o rt term rates h a v e freq u en tly , b u t b y n o m ea n s a lw ays, b e e n h igh er as w ell. S h ort-term rates are th e rates m o s t im m e d ia tely a ffected b y ch a n g e s in m o n e ta ry p o lic y , and the ch art sh o w s clea rly th e resu lts o f m ajor p o lic y ch a n g es. 1965 *Bonds of local authorities. All other countries, bonds of central governments. U. S. long-term interest rates are relatively low. Even Switzerland’s rate, for long the lowest in the world, has risen almost to the U. S. level. A n o th er factor h elp s to k eep E u r o p ea n lo n g -term in terest rates high. W ith th e e x c e p tio n o f L o n d o n , E u r o p e a n c ap ital m arkets d o not d o a very efficien t job o f m o b iliz ing and m ak in g a v ailab le to b orro w ers e v e n th e lim ited am ou n ts that are saved . M o re o f E u r o p e ’s sa v in g g o e s into ca sh and less into secu ritie s and m o rtg a g es th an is true in this cou n try. T h ere are sev era l rea so n s for this. ( 1 ) In the U . S., m o n e y flow s fairly sm o o th ly from areas that have a tem p ora ry surplus o f fu n d s to areas that are tem p orarily short. T h is d o e s n o t h a p p en as read ily in E u ro p e b eca u se fun d s p la ced in a fo reig n co u n try , e v e n a n eigh b orin g E u ro p ea n o n e , a lw ays run a risk o f lo ss if th e fo reig n cou n try sh o u ld d ev a lu e its cu rren cy. ( 2 ) M o st E u ro p ea n c o u n tries h a v e suffered at lea st tw o b ou ts o f seriou s in flation in the la st fifty years. T h is, u n d erstan d ab ly, has m a d e m a n y p e o p le relu cta n t to p u t their savin g in to a ssets to b e rep aid w ith a fixed a m o u n t o f m o n ey if th ey h ave m o re th an a very sh ort tim e to m aturity. ( 3 ) L aw s and cu sto m s th at d iscrim in a te a m o n g typ es o f b orrow ers are fairly c o m m o n in E u ro p e. E u r o p e a n cen tral gov ern m en ts so m etim e s in clu d e lo a n s to lo ca l g ov ern m en ts in the b u d g et and m a y g iv e p referen tial treatm en t to n a tio n a lized or fa v o red in d u stries b y in clu d in g lo a n s to or ap p rop riation s for th em in th e b u d get. T a x in cen tiv es m ay b e e sta b lish ed fa v o rin g in v estm en t in certain geog ra p h ica l areas, su ch as th e so u th in the ca se o f Italy. S everal E u ro p ea n g o v ern m en ts req u ire lic e n se s for n ew secu rity issu es and ca n grant or refu se lic e n se s d e ♦Average tender rate for 3-month Treasury bills. ** Average of daily or weekly call money rates. French and British short-term interest rates erally higher than U. S. rates. Except for a 1960, German rates have fluctuated near U. Sw iss rates have generally been the lowest in have been gen short period in S. levels, while the world. T h e B ritish b a la n c e -o f-p a y m e n ts crises o f 1 9 6 1 and 1 9 6 4 6 5 , for e x a m p le , p ro m p ted th e B a n k o f E n g la n d to restrict cred it sev erely . T h e F r e n c h a n ti-in fla tio n a ry p rogram in 1 9 6 4 raised sh o rt-term rates to h igh lev e ls. G erm a n y in 1 9 6 0 tried a restrictiv e m o n eta ry p o lic y to curb d o m estic in flation b u t fo u n d th at th e h igh in terest rates in d u ced su ch large in flow s o f sh o rt-term ca p ita l th at lo a n a b le fu n d s b ec a m e , n ot le ss, b u t m o re p len tifu l. S in c e th en , th e G er m an au th orities h a v e relied less o n straigh tforw ard cred it restriction s fo r a n ti-in fla tio n a ry m ea su res. S w itzerlan d is a sp ecia l c a se , its sh o rt-term and lo n g -term rates b o th b ein g a m o n g th e lo w e st in th e w orld . T h is is partly th e resu lt o f d elib era te p o lic y , p artly th e resu lt o f S w itzer la n d ’s attra ctio n as a sa fe h a v e n o f e c o n o m ic and p o litica l stab ility. P o lic y P r o b le m s T o return to our m u tto n s, as th e F re n c h so u n a cco u n ta b ly say, th ere are so m e ty p es o f ca p ita l o u tflo w s fro m th e U . S. th at are sen sitiv e to in terest rate d ifferen tials b e tw een this co u n try and ab road and o th ers th at are not. O n e typ e th at rather c lea r ly is se n sitiv e is w h a t is ca lled in terest arbitrage. T o illu strate, le t us a ssu m e th at an A m e r ic a n co rp o r a tio n h as so m e id le fu n d s to in v e st for . 2 • n in ety d ays (s a y until th e n ex t c o rp o ra tio n in c o m e ta x p a y m en t is d u e ) . It has a w id e variety o f c h o ic e s o f sh ort-term fin an cial assets it ca n b u y in th e U . S., b u t it also m igh t put the m o n ey in to sh ort-term d eb t in stru m en ts ab road if the return is higher. If it sen d s th e m o n e y abroad, h o w ev er, it m u st take a cco u n t o f a risk th at w o u ld n o t ex ist if it k ep t the m o n ey at h o m e — the risk o f a ch a n g e in the ex ch a n g e rate b etw een the d ollar and th e foreign cu rrency. It can p rotect itself again st this risk by h ed gin g in the forw ard ex ch a n g e m ark et, b u t u su a lly at a cost. In terest A rbitrage, New York and London Percent Percent T R E A S U R Y BILL R A T E S J r>V \ I / ' r B ritish I . 3 - M onth T r e a s u r y B ills y _____ ^ U nited S t a te s BILL R A T E D I F F E R E N T I A L ' _AND 3 - M O N T H F O R W A R D S T E R L IN G _ / J R ates, ' • - ^ S p r e a d in F a v o r o f L o n d o n / -^- — ^ ~ P rem ium ' D isco u n t- - 3 - M O N T H C O V E R E D R A T E D IFFE R EN TIA L N e t Incen tiv e to M ove F u n d s: T o L o n d o n * _ To New York 1965 British Treasury bill rates rose sharply in 1961 and 1964 in response to balance-of-payments crises. The resulting spread in favor of British bills was offset by higher costs of hedging ex change risks, however, so that the net incentive to move funds to London was small for most of the period. A net covered in centive of more than one-half percent is generally considered necessary to induce much flow of funds. F o r ex a m p le, su p p o se th at U . S. T rea su ry b ills are cu r rently y ield in g a 4 -p ercen t return and B ritish T reasu ry b ills 6 p ercen t. A U . S. co m p a n y c o u ld b u y B ritish b ills and gain 2 p ercen t in extra in terest. T h e B ritish b ills w ill b e red eem ed in sterlin g n in ety d ays later, h o w ev er, and in th e m ean tim e the sterling ex ch a n g e rate m ig h t d e clin e en o u g h to w ip e out this profit. T o m a k e sure this d o es n ot h ap p en , the co m p a n y c o u ld sell th e sterlin g for fu tu re d eliv ery at a price agreed u p o n n o w . T h e n n o m a t ter w h a t a ctu ally h ap p en ed to th e sterlin g ex c h a n g e rate, th e c o m p a n y w o u ld b e p ro tected . F o rw a rd sterlin g, h o w ever, m igh t very w ell b e sellin g at a p rice lo w er th an th at fo r sp o t sterlin g (i.e., for im m ed ia te d e liv e r y ). If th e “d is c o u n t on forw ard sterlin g” w ere, say, o n e p ercen t (c a lc u la ted as an an nual r a te ) , th e B ritish b ills w o u ld still b e p rofitab le, sin ce th e c o m p a n y w o u ld still retain h a lf o f its ex tra 2 -p e r c e n t in terest return. If B ritish in terest rates are h igh er th an A m e r ic a n , fo r w ard sterling w ill n o rm ally sell at a d isc o u n t sin ce th e p o ssib ility o f p rofitable in terest arbitrage w ill attract p e o p le to it. A s th ey h ed ge b y sellin g sterlin g forw ard , h o w ev er, th e su p p ly o f forw ard sterlin g w ill in crea se and its p rice w ill fall; this p ro cess w ill co n tin u e until th e forw ard d is c o u n t has grow n large en o u g h to o ffset, ro u g h ly , th e in terest differential. T h is p r o cess d o e s n o t alw ays w o rk sm o o th ly , h o w ev er, and there h a v e b e e n tim es, as in 1 9 6 0 , w h e n in cen tiv es to m o v e fu n d s ab road , e v e n after a llow in g for th e c o st o f forw ard co v er, h a v e rem a in ed su b stan tial for c o n sid era b le p erio d s o f tim e. T h ere are, o f cou rse, m a n y p o ssib ilitie s o f arbitrage o th er than b e tw ee n U . S. and B ritish T rea su ry b ills. B ritish lo c a l g o v ern m en ts and c o n su m er fin an ce (“hire p u rch a se”) c o m p a n ies b o rro w regu larly in th e L o n d o n m o n e y m arket at sh ort term . It also is p o ssib le for in v esto rs to em p lo y m o n e y for sh ort p erio d s in th e p rin cip al co n tin e n ta l m o n ey m ark ets, as w ell as th o se o f C a n a d a and Japan. O n e ty p e o f sh ort-term fo reig n a sset th a t d o e s n o t re quire h ed g in g for ex c h a n g e risk is th e “E u r o -d o lla r .” C er tain C an a d ia n and E u ro p ea n b a n k s, in clu d in g foreign b ran ch es o f U . S. b a n k s, are p rep ared to a c cep t d e p o sits o f U . S. d ollars th at carry an o b lig a tio n to rep ay in U . S. d ollars, n o t lo c a l cu rren cy. T h e y a c c e p t th ese d ep o sits, o f co u rse, w ith th e o b ject o f m a k in g a p rofit from len d in g them . T h e y m ay len d th em to co m p a n ie s en gaged in in tern a tio n a l trade or to b a n k s in oth er co u n tries, w h ich in turn m a y len d th em to p e o p le or firm s w h o n eed to m a k e p a y m en ts in dollars. T h is m a rk et in E u ro -d o lla rs o rigin ally c a m e in to b ein g b e c a u se E u r o p e a n (p rin cip a lly L o n d o n ) b a n k s w ere w illin g to p a y a slig h tly h igh er rate o f in terest th an U . S. b a n k s c o u ld p a y to o b ta in th e se d e p o sits and to len d th em at a slig h tly lo w er rate th a n U . S. ban k s w o u ld ch arge. S in ce this E u r o -d o lla r b u sin e ss w as o n ly a su p p lem en t to th e E u r o p e a n b a n k s’ regular b u sin ess and c o u ld e a sily b e seg reg a ted fro m it, th e y w ere w illin g to o p era te o n a sm aller m argin b etw e e n d e p o sit and lo a n rates th an w ere U . S. b a n k s. U n til tw o years ag o , th e m ar gin w ith in w h ich E u ro -d o lla r len d ers c o u ld o p era te w as co n sid era b ly w id er th an it is n o w , h o w ev er. U n til Ju ly o f 1 9 6 3 , all F D I C -in su r e d U . S. b an k s w ere lim ited to a m a x im u m o f 2Vi p ercen t in terest th at th ey c o u ld p a y for d ep o sits w ith a term o f n in ety d ays to six m o n th s. In July 1 9 6 3 , in co n ju n c tio n w ith P resid en t K e n n e d y ’s b a la n c e -o fp a y m en ts p rogram , th e m a x im u m p erm issib le rate w as raised to 4 p ercen t for all d e p o sits over n in e ty d a y s; and in N o v e m b e r 1 9 6 4 , rates for su ch d e p o sits w ere raised to 4 Vi p ercen t, w h ile th o se for d e p o sits o f less th an n in ety d ays w ere raised to 4 p ercen t. A s a resu lt, th e sp read b etw een L o n d o n n in ety -d a y E u r o -d o lla r rates an d rates p aid b y N e w Y o r k b an k s on their n in ety -d a y to six -m o n th s tim e certificates o f d ep o sit has n arrow ed irregularly from ab o u t o n e and o n e-fo u rth p ercen t in 1 9 6 2 to ab ou t o n eh a lf o f o n e p ercen t. S tatistical e v id e n c e as to th e effect o f in terest rate d if TI M E C E R T I F I C A T E S O F D E P O S I T , "NE W YORK, AND 3-M O N T H I EU RO -D O LLA RS, LONDON \ ___ „ .--A / London 3 - M o n t h E ur o -D ol l a r N e w York T i m e C e r t i f i c a t e s o f D e p o s i t, 9 0 -1 7 9 Days 1963 Interest rates on 3-month dollar deposits in London have con sistently been higher than rates paid on certificates of deposit in New York. The differential shrank in 1963 when the ceiling imposed by Regulation Q on these certificates was raised. •3 • feren tials o n ca p ita l m o v em en ts in to and o u t o f th e U . S. is n o t very clear, b u t th e stu d ies th at h a v e b e e n m a d e, p rin cip ally th o se o f P rofesso rs P h ilip B e ll and P eter K en en and o f B en ja m in C o h en o f th e N e w Y o r k F e d e r a l R e se r v e B a n k , d o seem to p o in t to a fe w fairly d efin ite c o n c lu sio n s. A s far as sh ort-term cap ita l m o v em e n ts g o , it seem s p ro b ab le th at trade cred it to E u ro p ea n s is in flu en ced b y in terest rate co n sid era tio n s. T h a t is, in th e c a se o f E u ro p e, b a n k lo a n s oth er th an th o se to o fficial in stitu tio n s and to b an k s and b an k c o lle c tio n s ou tsta n d in g see m to flu ctu ate w ith ch a n g es in in terest rate d ifferen tials b e tw ee n th is c o u n try and E u rop e. T h e sam e is n o t true o f th e u n d er-d ev elo p ed co u n tries, w h ich p resu m a b ly h a v e less fr e e d o m o f c h o ic e in fin an cin g their im p orts. T ra d e cred it to E u r o p ean cou n tries is n o t a large c o m p o n e n t o f U . S. ca p ita l ou tflow s, bu t an oth er co m p o n e n t, sh o rt-term d ollar cla im s o f n on fin an cial in stitu tio n s, is siza b le. T h e flu ctu a tio n s in this c o m p o n e n t seem to b e fairly c lo s e ly related to the d ifferen tial b etw een B ritish and U . S. T rea su ry b ill rates and to th e gap b etw een E u ro -d o lla r and U . S. T reasu ry b ill rates. T h is e lem en t co rresp o n d s fairly w ell w ith th e in terest arbitrage flow s d escrib ed earlier. S o m e U . S. ca p ita l o u tflo w s d o n o t seem to b e re sp o n siv e to in terest rate d ifferen tia ls, a cco rd in g to th e studies m en tio n ed a b ov e. In p articu lar, b a n k lo a n s to foreign b an k s and official in stitu tio n s and b a n k and n o n bank sh ort-term cla im s p a y a b le in fo reig n cu rren cies d o n o t seem to sh o w any se n sitiv ity to rate sp read s. P erh ap s the m o st sign ifican t e v id en ce , h o w ev er, is th at there seem s to b e n o c o n sisten t rela tio n sh ip b e tw e e n an y im p o rta n t typ e o f lo n g -term ca p ita l flo w in to or o u t o f th e U . S. and lon g-term in terest rate d ifferen tials b e tw e e n this c o u n try and th e rest o f the w orld . T h ere is so m e e v id e n c e th at the ab solu te lev el o f U . S. in terest rates m a y affect the tim in g, b u t n o t th e v o lu m e , o f U . S. p u rch a ses o f for- eig n b o n d s. T h is ce rta in ly se e m s to im p ly th at rela tiv ely little c o u ld b e a c c o m p lish e d to restrict th e o u tflo w o f lo n g -term ca p ita l fro m this co u n try b y tryin g to raise lo n g -term in terest rates m o d era tely . T h e sta tistica l e v i d en c e is n o t, o f c o u r se, c o n c lu siv e ; b u t ev e n if th ere is in fa ct m ore sen sitiv ity th a n th e a v a ila b le d a ta in d ica te, risin g U . S. lo n g -te rm in terest rates m ig h t n o t p ro vid e a la stin g so lu tio n . T h e In ter e st E q u a liz a tio n T a x , p ro p o sed in Ju ly 1 9 6 3 , w a s d e sig n e d to add a p p ro x im a tely o n e p ercen ta g e p o in t to th e in terest c o s t to fo reign ers o f o b ta in in g fu n d s in this co u n try . S in c e th a t tim e , lo n g -term in terest rates in m o s t E u r o p e a n co u n tr ie s h a v e risen alm o st en o u g h to r e -esta b lish th e o ld r e la tio n sh ip b e tw e e n U . S. and fo reig n rates after p a y m en t o f th e tax. In o th er w ord s, b e c a u se fo reig n rates h a v e risen , th e ta x is le ss o f a d e terrent to b o rrow in g h ere th an it w a s w h e n it w a s first p ro p o sed . T h e cu rren t b u sin e ss u p sw in g in th e U . S ., n o w in its fifty -fo u rth m o n th , has d e p en d e d h e a v ily o n b u sin ess sp en d in g o n p la n t and eq u ip m en t. T h e re is fa irly g en eral a g reem en t th at su ch b u sin ess o u tla y s are in flu en ced to so m e d eg ree at le a st b y lo n g -ter m in terest rate m o v em en ts. It is n o t hard to u n d ersta n d , th erefo re, w h y m a n y p e o p le are relu cta n t to se e lo n g -te r m in terest rates rise w h en ch a n ce s are p o o r th a t su ch a d e v e lo p m e n t w o u ld h a v e m u ch effect o n ou r b a la n c e o f p a y m e n ts and th ere is at le a st a p o ssib ility th at it w o u ld h a v e so m e d am p en in g effect on d o m e stic b u sin e ss e x p a n sio n . O th er p e o p le in sist, h o w e v e r , th at lo n g -te r m rates m u st rise e v en tu a lly if w e are ev er to so lv e ou r p a y m e n ts p ro b lem . In an y c a se, m o st rea so n a b le p e o p le are agreed th a t th ere is n o sim p le so lu tio n to th is v ery c o m p le x p ro b lem and th a t th ere is n o su b stitu te fo r g o o d ju d g m en t and g rea t ca re in w e ig h in g p o lic y d e c isio n s. L awrence F . M ansfield Changing Seasonal Patterns in Florida A c o m b in a tio n o f e c o n o m ic and c lim a tic fa cto rs c o n tin u es to k eep F lo rid a in th e ranks o f rap id ly ex p a n d in g region s. F o r in sta n ce, in the ten y ea rs b e tw ee n 1 9 5 5 and 1 9 6 4 , th e p o p u la tio n o f th e state in crea sed o v er 5 0 p ercen t. D u rin g th e sam e p erio d , o v er 5 6 0 ,0 0 0 n ew n o n fa rm job s P ercen ta g e C h an ges in S e le c te d E co n o m ic Indicators 1955-64 U. S. Population Nonfarm Employment Manufacturing Employment Nonmanufacturing Employment Farm Employment Personal Income Farm Cash Receipts Department Store Sales Bank Deposits Bank Debits n.a. + 15.9 + 14.8 + 2.5 + 21.0 — 27.1 + 59.1 + 25.5 n.a. + 58.8 + 102.6 Florida + 52.3 + 58.4 + 61.9 + 57.8 + 0.8 + 113.7 + 68.6 + 154.4 + 101.8 + 112.3 N ot available. w ere created . T h is rep resen ted an in crea se o f 5 8 .4 p er cen t, or a lm o st fou r tim es th e U . S. average. O v er 9 1 ,0 0 0 o f th ese n ew job s w ere in m a n u fa ctu rin g , w ith th e rem a in der in n o n m a n u fa ctu rin g ca te g o r ies. M o r e o v e r, w h ile farm em p lo y m e n t w a s reg isterin g a su b sta n tia l lo ss in m o st parts o f th e co u n try , F lo r id a a ctu a lly sh o w e d a sm all gain , and farm c a sh re ceip ts w e n t u p a lm o st 7 0 p ercen t. It is n o w o n d er, th en , th a t p e r so n a l in c o m e in F lo rid a in 1 9 6 4 w a s o v er tw ic e as la rg e as in 1 9 5 5 . B a n k in g fig ures sh o w th a t to ta l d e p o sits at all b a n k s grew fro m $ 3 ,1 0 7 m illio n in 1 9 5 5 to $ 6 ,2 6 9 m illio n in 1 9 6 4 , an in crea se o f ju st o v er 1 0 0 p ercen t. S u b sta n tia l g a in s a lso w ere record ed in su ch c o n su m er sp en d in g v a ria b les as d ep a rtm en t store sa les and b a n k d eb its, w h ic h grew 1 5 4 p e rcen t and 1 1 2 p ercen t, r esp ectiv ely . S h a rp Seaso n al P a tte rn s B e c a u se o f its fa v o r a b le w in ter clim a te , th e S u n sh in e S tate has lo n g b e e n a h a v e n fo r sn o w b o u n d citiz e n s o f north ern c lim es. In a d d itio n , th e w arm w in ter w ea th er m a k es F lo rid a an id ea l sp o t fo r th e p r o d u c tio n o f citrus and for w in ter tru ck fa rm in g a ctivity. A ll th is ten d s to q u ick en th e p a ce o f a ctiv ity d u rin g th e w in ter m o n th s an d to bring a b o u t a d e c lin e in th e su m m er m o n th s. T o g e t arou n d th e se a so n a l p ro b lem in a n a lyzin g e c o - •4 • C h a n g i n g S e a s o n a l P a t t e r n s in F l o r i d a Thousands of Psraons Thousands of Parsons Within tite year, wide swings in Florida’s economic activity occur because of seasonal forces. n o m ic a ctivity, e c o n o m ists o fte n reso rt to se a so n a lly ad ju stin g th eir data. T o d o th is, th ey ca lc u la te , o n th e b asis o f p a st d ata, se a so n a l fa cto rs th a t in d ica te w h a t th e se a so n a l flu ctu a tio n s are lik e ly to b e. T h e r e is a sea so n a l fa cto r fo r e a c h m o n th , an d th e avera g e fo r th e year is eq u a l to 1 0 0 . T h u s, if th ere w ere n o se a so n a l flu ctu ation s, e a c h m o n th w o u ld h a v e a se a so n a l fa cto r e q u a l to 1 0 0 . A fa cto r o f o v e r 1 0 0 in d ica tes th a t m o re th an th e yea rly a v erage o f a ctiv ity occu rred in th at m o n th , an d th e re verse is tru e fo r fa cto rs o f le ss th an 1 0 0 . W h en th ese fa cto rs are a p p lied to th e actu a l d ata, th e y p ro d u ce a series in w h ic h th e se a so n a l flu ctu a tio n s h a v e b e e n m in i m ized . T h e effects o f su ch an a d ju stm en t c a n b e se e n in th e series o n n o n farm em p lo y m en t. T h e d a sh ed lin e o f th e ch a rt rep resen ts th e actu a l d a ta b e fo r e ad ju stm en ts w ere m a d e, w h ile th e so lid lin e sh o w s th e sa m e d a ta after se a so n a l ad ju stm en t. E c o n o m ic G ro w th of an Changes th e S tru c tu re Econom y H a s th e su sta in ed e c o n o m ic g ro w th in F lo r id a b e e n a c co m p a n ie d b y structural c h a n g es th a t h a v e altered se a so n a l p attern s o f activity? T o find o u t, se a so n a l fa cto rs in 1 9 5 5 and 1 9 6 4 fo r sev era l e c o n o m ic tim e series w ere co m p a red . O n th e b a sis o f th is co m p a r iso n , it appears th a t th ere d efin itely h a s b e e n a le sse n in g in th e am o u n t o f se a so n a l flu ctu a tio n th a t o c cu rs in F lo rid a . C h an ges in th e se a so n a l fa cto rs fo r b a n k d e p o sits and n o n fa rm e m p lo y m e n t are g o o d ex a m p les. B a n k d ep o sits in F lo rid a are ty p ic a lly h ig h in th e w in ter, d rop off in th e sp rin g and su m m er, an d th en b eg in to b u ild b a c k u p in th e fa ll. H o w e v e r , th e size o f th e rise and fa ll h a s d im in ish ed o v er tim e. T h e sa m e te n d e n c y m a rk ed th e se a so n a l fa cto rs for n o n farm e m p lo y m en t. T h e 1 9 6 4 fa cto rs are n o t as large as th e 1 9 5 5 fa cto rs in th e w in ter m o n th s n o r as lo w as th e 1 9 5 5 fa cto rs in th e su m m er m o n th s, in d ica tin g th a t the m o n th ly d ifferen ce b e tw e e n th e le v e ls o f e m p lo y m e n t is d im in ish in g . W h y sh o u ld th is occu r? T w o ty p es o f c h a n g e s ap p ear to b e resp o n sib le. F irst, so m e o f th e a ctiv ity th a t m o v e d to F lo rid a d u rin g this p erio d w a s n o t as su sc ep tib le to se a so n a l flu ctu a tio n s as w ere th e o ld er in d u stries. S eco n d , so m e o f th e tra d itio n a lly se a so n a l ty p es o f a ctiv ity h a v e b e c o m e le ss se a so n a l th a n th e y w ere in earlier p eriod s. M o d e r a t in g However, the changing structure of Florida’s economy has caused the seasonal swings to become smaller. In f lu e n c e s T h e sh ifts th a t h a v e o ccu rred in m an u fa ctu rin g em p lo y m en t illu strate h o w se a so n a l flu ctu a tio n s in a b ro ad c a te g o ry m a y d im in ish as its v a rio u s secto rs grow . In 1 9 5 5 , m a n u fa ctu rin g w a s h e a v ily d o m in a te d b y th e p ro d u ctio n o f lu m b er an d w o o d p ro d u cts and fo o d p ro c essin g , b o th o f w h ic h are h ig h ly se a so n a l in n atu re. T h e se tw o c a te g o ries, ta k en to g eth er, a cco u n te d fo r a lm o st 3 6 p ercen t o f to ta l m a n u fa ctu rin g e m p lo y m en t in th a t year. T h e rela tiv e im p o rta n ce o f th ese in d u stries h a s d im in ish ed stea d ily o v er th e y ea rs, h o w ev er, so th a t in 1 9 6 4 th e y a cco u n ted fo r le ss th a n 2 3 p ercen t o f th e total. In co n tra st, th e in d u stries th at h a v e gro w n at th e fa stest p a ce , su c h as m a ch in ery , elec tric a l eq u ip m en t, an d tra n sp o rta tio n eq u ip m en t, h a v e b e e n le ss se a so n a l in nature. A s th ey h a v e b e c o m e rela tiv ely m o re im p ortan t, th ey h a v e c a u sed th e m o n th ly flu ctu a tio n s in m a n u fa ctu rin g e m p lo y m e n t to d i- •5 • m in ish . P ea k s still o ccu r in th e w in ter m o n th s and lo w s in th e su m m er, b u t th e d ifferen ces b e tw e e n th e h ig h s and lo w s are co n sid era b ly less in 1 9 6 4 th a n th ey w ere in 1 9 5 5 . T h e se c o n d typ e o f c h a n g e in F lo r id a ’s se a so n a l p a t terns results from sh ifts in th e v a ca tio n sch e d u le s o f visitors. O n ce, F lo rid a w a s c o n sid e r e d “ v isita b le ” o n ly during th e w in ter m o n th s w h e n p a lm trees and sa n d y sh ores h a v e an e sp ecia l ap p eal. In re cen t y ea rs, h o w e v e r , F lo rid a has b e e n able to a llev ia te th is im b a la n ce so m e w h at b y offering sp ecia l a ttraction s and red u ced rates during th e o ff-p ea k m on th s. T h is sh ift sh o w s u p very w ell in se a so n a l factors for e m p lo y m en t in h o tels and lo d g in g p la ces an d in p erso n a l serv ices, b o th o f w h ich are tou risto rien ted , as w e ll as h e a v ily se a so n a l in nature. T h e h igh w in ter-low su m m er p attern s still p ersisted in 1 9 6 4 , but the sw in gs w ere less sev ere in b o th c a se s th an th ey w ere in 1 9 5 5 . T h is d o es n o t m ea n th a t th e w in ter to u rist trade is fa llin g off. Q u ite th e con trary; it h as co n tin u e d to grow . W h at it d o es m ea n is th at th e n u m b er o f su m m er visitors has grow n rela tiv ely m o re rap id ly, and th is, in turn, has ten d ed to spread activity in th e to u rist trade m o re ev en ly over the year. M ore S ta b ility T h e n et o u tco m e o f th e g row th o f n o n se a so n a l in d u stries an d th e d im in u tio n o f th e sw in g s in se a so n a l in d u stries is a m o re stab le e c o n o m y . M o r e p e o p le are ab le to h o ld a job th e year rou n d , in co m e flo w s m o re ev e n ly , and co stly fa cilities ca n b e k ep t in u se. T h is co m e s as a w e l co m e relief for an area th at in th e p a st h as b e e n fa ced w ith ch ro n ic sla ck durin g so m e parts o f th e year. T h u s F lo rid a n o t o n ly has b en efited b y th e grow th in th e m a g n i tu d e o f e c o n o m ic activity but from a c h a n g e in th e tim e pattern o f this activity as w ell. N . D . O ’B a n n o n This is one of a series in which economic developments in each of the Sixth District states are discussed. Develop ments in Tennessee’s economy were analyzed in the June 1965 R e v ie w , and a discussion of Alabama’s economy is scheduled for a forthcoming issue. Bank Announcements A m e r i c a n B a n k & T r u s t C o m p a n y , Hartselle, Alabam a, a new ly organized nonm em ber bank, opened fo r business on July 1 and began to rem it at par fo r checks drawn on it when received from the Federal R eserve B ank. Officers are R . O. Camp, Chairm an o f the Board; H. A . Bartlett, P re s id e n t; and. M ilto n D . W o o d , C a sh ier. C a p ita l is $200,000, and surplus and undivided profits, $300,000. On July 23, T h e F i r s t N a t i o n a l B a n k o f T u c k e r , Tucker, Georgia, a new ly organized m em ber bank, opened fo r business and began to rem it at par. Officers are John H. Cunningham , Chairman o f the Board; B. Olin Cox, President; W. Clyde G reenway, Vice President; and W il liam H . W hite, Vice President and Cashier. Capital is $250,000, and surplus and other capital funds, $250,000, as reported by the C om ptroller o f the Currency at the tim e the charter was granted. The N a t i o n a l B a n k o f W e s t M e l b o u r n e , W est M el bourne, Florida, a new ly organized m em ber bank, opened fo r business on July 31 and began to rem it at par. Officers include T. E. Tucker, Chairman o f the Board; E. D. P ot ter, President; and E. G. Litka, Vice President and Cashier. Capital is $150,000, and surplus and other capital funds, $150,000, as reported by the Com ptroller o f the Currency at the tim e the charter was granted. Debits to Demand Deposit Accounts Insured Commercial Banks in the Sixth District (In Thousands of Dollars) June 1965 STANDARD METROPOLITAN STATISTICAL AREASf Birmingham . . . 1,276,430 56,013 Gadsden . . . . 162,717 Huntsville . . . . 421,586 Mobile....................... Montgomery . . . 272,265 Tuscaloosa . . . 76,745 Ft. LauderdaleHollywood . . . 495,642 Jacksonville . . . 1,357,589 1,815,956 M iam i....................... Orlando . . . . 411,838 Pensacola . . . . 192,522 1,050,594 Tampa-St. Petersburg W. Palm Beach . . 352,647 Albany ....................... 81,971 Atlanta . . . . 3,765,775 Augusta . . . . 184,019 Columbus . . . . 188,170 Macon....................... 189,916 Savannah . . . . 235,171 Baton Rouge . . . 416,086 Lafayette . . . . 108,337 Lake Charles . . . 112,749 New Orleans . . . 2,168,357 Jackson . . . . 486,540 Chattanooga . . . 483,467 Knoxville . . . . 365,576 Nashville . . . . 1,168,755 OTHER CENTERS Anniston . . . . Dothan....................... S e lm a....................... Bartow....................... Bradenton . . . Brevard County . . Daytona Beach . . Ft. MyersN. Ft. Myers . . Gainesville . . . Monroe County . . Lakeland . . . . O c a la ....................... St. Augustine . . St. Petersburg . . Sarasota . . . . Tallahassee . . . Tampa....................... Winter Haven . . Athens ....................... Brunswick . . . Dalton....................... Elberton . . . . Gainesville . . . G riffin ....................... LaGrange . . . . Newnan . . . . R o m e ....................... Valdosta . . . . Abbeville . . . . Alexandria . . . Bunkie....................... Hammond . . . . New Iberia . . . Plaquemine . . . Thibodaux . . . Biloxi-Gulfport . . Hattiesburg . . . La u re l....................... Meridian . . . . Natchez . . . . PascagoulaMoss Point . . Vicksburg . . . . Yazoo City . . . Bristol . . . . Johnson City . . . Kingsport . . . . May 1965 June 1964 1,226,447 55,094 159,645 405,997 269,212 77,090 1,145,964 55,409 167,730 396,215 230,733 77,566 +4 +2 +2 +4 +1 —0 +11 +1 —3 +6 + 18 —1 +11 +7 +8 +9 + 11 +5 456,315 1,300,402 l,676,648r 418,471 184,820 1,006,054 337,355 84,122 3,593,980 174,239 184,580 189,663 228,071 402,832 98,5% 107,925 2,053,227 483,712 447,948 405,148 1,145,514 425,242 1,173,684 1,573,560 422,068 177,714 962,606 305,797 68,770 3,317,396 195,609 183,206 187,880 230,597 362,531 84,635 99,753 1,952,309 435,464 441,079 370,018 996,880 +9 +4 +8 —2 +4 +4 +5 —3 +5 +6 +2 +0 +3 +3 + 10 +4 +6 +1 +8 — 10 +2 + 17 + 16 + 15 —2 +8 +9 + 15 + 19 + 14 —6 +3 +1 +2 + 15 + 28 +13 + 11 + 12 + 10 —1 + 17 +8 + 13 +8 +1 + 14 +7 +7 + 22 + 12 +2 +11 + 10 +4 + 19 + 19 +7 + 11 +11 + 10 +8 +9 +6 + 13 +4 + 19 55,057 50,801 35,334 32,064 54,975 204,151 78,729 52,120 49,667 35,858 30,552 46,091 199,940 73,726 51,892 44,883 34,018 26,878 54,303 184,544 71,411 +6 +2 —1 +5 + 19 +2 +7 + ii + 10 +5 + 10 +2 + 19 -J-l + 13 +4 65,912 70,128 29,634 104,256 50,821 19,486 253,936 87,956 100,138 593,841 55,268 65,159 38,078 78,465 11,373 64,803 28,485 20,430 22,378 62,947 47,065 10,034 110,335 5,595 29,498 30,341 8,369 24,417 80,827 44.867 34,054 56,645 29,290 61,148 67,804 26,223 101,840 48,304 16,333 242,779 85,038 102,564 573,010 57,517r 59,321 35,898 76,563 14,718 63,637 27,865 18,642 23,884 61,073 43,023 8,827 104,553 5,482 32,800 30,317 8,543 18,943 77,381 44,499 34,688 58,156 33,471 58,675 65,237 24,318 78,039 47,439 17,184 241,170 79,237 87,359 534,674 49,801 55,336 39,567 69,341 13,353 58,265 25,033 19,890 23,810 63,488 41,008 9,164 96,887 5,125 26,487 29,079 8,241 19,440 76,972 41,593 31,303 55,045 29,482 +8 +3 + 13 +2 +5 + 19 +5 +3 —2 +4 —4 + 10 +6 +2 — 23 +2 +2 + 10 —6 +3 +9 + 14 +6 +2 — 10 +0 —2 + 29 +4 +1 —2 —3 — 12 +12 +7 + 22 + 34 +7 + 13 +5 +11 +15 +11 + 11 +18 —4 + 13 — 15 + 11 +14 +3 —6 —1 + 15 +9 + 14 +9 +11 +4 +2 + 26 +5 +8 +9 +3 —1 +6 + 10 + 20 +12 +6 +1 +5 +3 + 14 + 11 +9 +15 +4 + 14 +8 +7 +11 +4 +1 +4 + 11 + 10 + 11 + 13 + 10 +1 +7 +7 +7 +8 +4 +4 +2 41,331 33,665 27,495 64,441 64,450 123,422 44,636 32,907 30,058 61,372 60,705 127,331 46,514 30,913 24,448 55,% 2 61,501 111,129 —7 +2 —9 +5 +6 —3 — 11 +9 + 12 +15 +5 + 11 +4 + 16 + 13 + 10 +8 + 14 +4 +11 +8 + 13 +12 + 12 +7 +8 + 10 SIXTH DISTRICT, Total 24,790,447 Alabamaf . . . . Floridaf . . . . Georgiaf . . . . Louisiana-?-* . . Mississippif* . . Tennesseef* . . Percent Change Year-to-date 6 Months June 1965 from from May June 1965 1965 1964 1964 3,266,802 7,617,345 6,147,229 3,512,161 1,089,733 3,157,177 23,877,104r 22,358,643 3,161,255 7,202,151r 5,920,186 3,351,435 1,088,584 3,153,493 3,022,881 6,766,166 5,493,787 3,135,313 1,017,445 2,923,051 +3 +6 +4 +5 +0 +0 +8 +9 + 13 + 12 +9 +7 ♦Includes only banks in the Sixth District portion of the state. tP artially estimated, r Revised. •6 • S i x t h D i s t r i c t S ta tis tic s Seasonally Adjusted (All data are indexes, 1957-59 = Latest Month (1965) One Month Ago Two Months Ago One Year Ago SIXTH DISTRICT June June 198 190 214r 188 220 185 179 173 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ M anufacturing.............................................. Apparel......................................................... Chemicals................................................... Fabricated M e t a ls .................................. Food............................................................... Lbr., Wood Prod., Furn. & Fix. . . . Paper ......................................................... Primary M e t a ls ........................................ Textiles......................................................... Transportation Equipment . . . . Nonmanufacturing........................................ Construction.............................................. Farm Employment.............................................. Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Construction Contracts*.................................. R e sid e n tia l................................................... All O th e r......................................................... Industrial Use of Electric Power . . . . Cotton Consum ption**.................................. Petrol. Prod, in Coastal La. and Miss.** June June June June June June June June June June June June June June June June June June June Apr. June June 122 122 149 116 129 107 100 110 111 99 143 123 120 80 2.3 41.1 147 162 134 128 111 178 122 121 149 115 129 108r 99r 109 112 98 144 122 121 76 2.3 41.4r 147 155 139 126 113 176 122 121 148 115 130 108 100 108 112 98 142 122 119 73 2.4 41.5 181 174 188 127 115 175 118 116 140 112 121 105 96 106 106 96 124 118 113 87 3.0 40.6 147 159 136 123 106 169 July July 206 189 206 189 203 184 178 166 July July June 160 148 163 161 151 166r 158 146 164 143 133 147 Bank D e b it s * / * * .............................................. May 46,165 46,965r 46,503r 42,927 157 144 June 157 158 124 132 May 125 125 May 144 157 158 158 116 122 114 May 108 July 148p 139 143 133 IMCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . May Manufacturing P a y r o lls .................................. June Farm Cash R e c e ip ts ........................................ May Department Store S a l e s * * ............................. June FINANCE AND BANKING Member Bank L o a n s ........................................ Member Bank D e p o s its .................................. Bank D e b its * * ................................................... One Month Ago Two Months Ago One Year Ago May June May June 8,563 157 122 135 8,731r 157 125 144 8,690r 157 116 139 7,% 9 144 109 143 June June June June June June June 122 119 123 134 68 1.7 40.5 121 118 123 135 67 1.7 40.9 121 119 122 129 64 1.8 40.8 117 114 119 125 80 2.1 40.3 July July June 214 173 177 213 174 179 208 171 172 183 149 158 INCOME AND SPENDING May Personal Income, (Mil. $, Annual Rate) Manufacturing P a y r o lls .................................. June Farm Cash R e c e ip ts ........................................May May Department Store Sales*/** . . . June 6,878 141 115 125 7,055r 138r 137 127 6,985r 143 113 132 6,274 128 122 118 June June June June June June June 114 109 115 125 81 3.0 42.3 114 109 115 124 77 3.2 42.2r 114 109 115 125 69 3.1 41.5 108 104 109 106 87 3.3 41.3 FINANCE AND BANKING Member Bank L o a n s*........................................July July Member Bank Deposits*.................................. July Bank D e b it s * / * * ..............................................June June 192 141 150 190 139 149 187 139 143 163 128 134 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) PRODUCTION AND EMPLOYMENT Avg. Weekly Hrs. in Mfg., (Hrs.) FINANCE AND BANKING LO U ISIA N A PRODUCTION AND EMPLOYMENT Nonmanufacturing Avg. Weekly Hrs. in Mfg., (Hrs.) . . MISSISSIPPI ALABAM A PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ Manufacturing.............................................. Nonmanufacturing........................................ Construction.............................................. Farm Employment.............................................. Insured Unemployment, (Percent of Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Latest Month (1965) G EO R G IA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Manufacturing P a y r o lls .................................. Farm Cash R e c e ip ts ........................................ C r o p s ............................................................... Livestock ......................................................... Department Store S a l e s * / * * ....................... Instalment Credit at Banks, *(Mil. $) New Loans ......................................................... Repayments.................................................... 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......................................................... 100, unless indicated otherwise.) 6,156 147 127 111 6,303r 145 126 114 6,245r 148 117 110 5,710 131 118 120 115 115 115 113 78 2.5 41.7 115 114 115 113 79 2.3 41.5 115 114 115 113 76 2.5 42.1 111 108 113 113 82 3.2 40.8 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Manufacturing P a y r o lls ....................... Farm Cash R e c e ip ts ............................. Department Store Sales*/** . . . May June May June 3,569 166 118 99 3,517r 174 121 100 3,550r 169 134 101 3,324 152 139 109 . . June June June June June June June 126 134 122 126 83 2.4 40.2 126 133 123 127 68 2.4 41.6 125 132 122 128 62 2.8 41.2 121 124 119 130 89 3.4 40.4 FINANCE AND BANKING Member Bank Lo a n s*............................. Member Bank Deposits*....................... Bank D e b its * / * * ................................... July July June 220 169 161 217 168 170 220 168 164 197 158 151 May June May June 7,378 152 107 120 7,512r 152r 107 129 7,452r 150 111 120 6,858 141 103 124 June June June June June June June 122 126 121 141 79 2.5 40.9 122 125 121 144 80 2.6 41.3r 122 125 120 136 80 3.0 41.0 117 120 116 134 93 3.3 40.3 FINANCE AND BANKING Member Bank L o a n s*........................................July July Member Bank Deposits*...................................July July Bank D e b it s * / * * .................................. June 203 158 168 203 164 181 203 159 186 177 141 155 PRODUCTION AND EMPLOYMENT June June June June June June June July July June 197 160 154 200 160 155 197 157 158 175 144 142 Avg. Weekly Hrs. in Mfg., (Hrs.) FLORIDA TENNESSEE INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Manufacturing P a y r o lls .................................. Farm Cash R e c e ip ts ........................................ Department Store S a l e s * * ............................. May 13,621 June 190 May 142 June 174 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Manufacturing P a y r o lls ....................... Farm Cash R e c e ip ts ............................. Department Store Sales*/** . . . PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ Manufacturing.............................................. Nonmanufacturing........................................ Construction.............................................. Farm Employment.............................................. Insured Unemployment, (Percentof Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . June June June June June June June FINANCE AND BANKING Member Bank L o a n s ........................................ Member Bank D e p o s its .................................. Bank D e b its * * .................................................... July July June 132 132 132 109 92 2.2 41.8 211 162 160 13,847r 13,581r 12,792 188r 193 176 164 150 150 173 171 179 132 132 132r 109r 97 2.1 41.6r 211 162 162r *For Sixth District area only. Other totals for entire six states. 130 132 130 109 96 1.9 42.6 206 158 163 128 128 128 104 86 2.7 41.1 182 145 142 * * Daily average basis. PRODUCTION AND EMPLOYMENT Nonfarm Employment............................. M anufacturing.................................. Nonmanufacturing............................ Avg. Weekly Hrs. in Mfg., (Hrs.) r Revised. . . p Preliminary. 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; industrial use of elec. power, 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 IS T R IC T B U S IN E S S I—........ ............I ......................I...................... I Billion* of Dollars _Annual Rot* S«as. Adj. _ C O N D IT IO N S It w a s a n o th e r m o n th o f e c o n o m i c e x p a n s io n in t h e D istr ic t, a lth o u g h a s o m e w h a t s lo w e r p a c e p r e v a ile d th a n e a r lie r in t h e y e a r . N o n fa r m e m p lo y m e n t g a in s in J u n e w e r e t h e s m a l l e s t s o fa r in 1 9 6 5 , a n d t h e in s u r e d u n e m p lo y m e n t r a te d id n o t d e c lin e a n y fu r th e r . C o n s u m e r s a re s t ill b u y in g , b u t n o t a t t h e e x u b e r a n t p a c e o f A p ril. L o a n s s lo w e d d o w n in J u ly a fte r t h e ex tr a o r d in a r ily ra p id M a y -J u n e p a c e . C o n tin u e d h ig h liv e s t o c k p r ic e s a n d g o o d c ro p p r o s p e c t s a r e e n c o u r a g in g t h e r e g io n ’s fa r m e r s . C o n s tr u c tio n o u tla y s a n d e m p lo y m e n t r e m a in o n a h ig h p la t e a u . is G a in s in e m p lo y m e n t s lo w e d in J u n e . N o n a g r ic u ltu r a l e m p lo y m e n t sh o w ed th e sm a llest g ain o f th e y ear, w ith o n ly slig h t in crea ses o ccu rrin g b o th in n o n m a n u fa ctu rin g and m a n u fa ctu rin g e m p lo y m en t. T h e rate o f in su red u n e m p lo y m e n t rem a in ed u n ch a n g ed . A v e ra g e h o u rs w o rk ed in m a n u factu rin g c o n tin u e d to d ec lin e from th e D e c e m b e r 1 9 6 4 h ig h , y e t in crea ses in m a n u fa ctu rin g em p lo y m e n t in all six sta tes w ere su fficien t to m a in ta in p ayrolls u n ch a n g ed . P e r s o n a l in c o m e a p p a r e n tly r e c o v e r e d in J u n e . T h e M a y d e clin e w as w id esp rea d , w ith o n ly M ississip p i sh o w in g an in crea se. In c o m p le te d ata in d ica te th at reta il sa les d ip p ed further in Ju n e. Ju n e d e c lin e s in d eb its to d em a n d d e p o sits, fu rn itu re store sa le s, and d ep a rtm en t store sa les ten d to con firm th e w e a k n e ss in retail sa les. C o n su m er s a p p a ren tly ad d ed to their sa v in g s at a so m e w h a t m o re rap id p a c e in Ju n e th a n in th e p rev io u s tw o m o n th s and w ere so m e w h a t m o re ch a ry o f ta k in g o n in sta lm en t d ebt. A u to m o b ile sa les in M a y set an a ll-tim e record . Cotton C onsu m p tio n T o ta l b a n k c r e d it e x p a n d e d s lig h tly fu r th e r in J u ly . L o a n s w ere virtu ally u n ch a n g ed . B a n k s in lea d in g cities reg istered further g a in s in real esta te and b u sin ess lo a n s; co n su m er lo a n s sh o w e d a n o ta b le d eclin e. In v estm en ts rose so m e w h a t at all m em b er b a n k s, w ith a d d itio n s to U . S. G o v er n m e n t secu rities e x c e e d in g red u ctio n s in h o ld in g s o f o th er secu ritie s. T o ta l d e p o sits d eclin ed fo llo w in g sharp ga in s in th e tw o p r ev io u s m o n th s. V* V* T h e a g r ic u ltu r a l e c o n o m y , b o ls t e r e d b y h ig h e r p r ic e s a n d a fa v o r a b le c ro p o u tlo o k , c o n t i n u e s s t r o n g . G e n e r a l c o n d itio n s fo r all m ajor crop s are g o o d th ro u g h o u t th e region . H a r v e stin g o f rice is u n d er w a y in L o u isia n a , and o v er h a lf o f th e G eo rg ia and F lo r id a to b a c c o c ro p has b e e n h a rv ested and cu red . P rices rec e iv e d b y farm ers fo r liv e sto c k rem a in h igh fo llo w in g th e sh arp Ju n e in crea se. T h ro u g h th e first th ree w e e k s o f Ju ly, h o g p rices c o n tin u ed to a d v a n ce, w h ile p rices fo r c a ttle, b ro ilers, an d eg g s rem a in ed e sse n tia lly u n c h a n g ed fro m m o n th -ea rlier lev els. T o ta l c a sh r eceip ts fro m farm m ark etin gs th ro u g h M a y are w e ll a h ea d o f la st y e a r ’s reco rd lev e l. -P E R C E N T OF REQUIRED RE SERV ES ~ _ B o r r o w i n g s f r o m F. R. B a n k s 6.0 \ Excess Reserves V. __ * A a 4 - r < r r T T > r r / .............V 7 . . . I ........... i 1963 1964 1965 O v era ll c o n s t r u c tio n c o n tr a c t v o lu m e c h a n g e d little d u r in g J u n e , fu r th e r e x t e n d in g t h e d o w n tr e n d o f t h e fir st fiv e m o n t h s o f 1 9 6 5 . N o n r e sid e n tia l and resid en tia l b u ild in g b o th sh o w e d an in crea se in Ju n e o v e r M a y . T h e m ain w ea k n e ss in to ta l c o n tra ct v o lu m e th is y ea r h a s b e e n in n o n -b u ild in g p rojects, i.e., ro a d s, b rid g es, and sp a c e -m issile p ro jects. M o rtg a g e fu n d s c o n tin u ed to b e rea d ily a v a ila b le fro m b o th lo c a l and o u tsid e so u rces. "Seas. adj. figure; not an index. N o t e : D a t a o n w h ic h statem ents are b ased h ave been adjusted whenever possib le to elim in ate se ason al influences.
@FedFRASER