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MONTHLY REVIEW IN THIS ISSUE: • Federal Aid: A Boost to the Southeastern Economy • Banking Notes • Bistrict Business Conditions FED ER A L RESERVE B ANK OF A T LA N T A A U G U ST 1970 Fe d e ra l A id : A B o o s t to th e S o u th e a s te rn E c o n o m y Cooperation between various levels of govern ment has long been an important element in the financial structure of our Federal system of gov ernment. Grants-in-aid from the Federal Govern ment to state and local governments are a crucial element of this cooperation, although grants and shared revenues from state governments to their local governments are of even greater dollar volume. The focus of this article, however, is con fined to Federal grants-in-aid to state govern ments, particularly those in the Sixth Federal Reserve District. B a c k g ro u n d Federal grants-in-aid to subnational governments are not a recent development. They may be traced back to the origins of the nation. Indeed, they even predate the Constitution. In 1785, Congress Monthly Review, Vol. LV, No. 8. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. 110 provided grants of Federal land for educational purposes in the Northwest Territory. Early in the nineteenth century, the Federal Government be gan various aid programs which resulted in our system of land grant colleges. Grants for forest fire protection, vocational education, and high ways first appeared between 1910 and 1920. A new period of growth in Federal aid began with the Depression in the 1930’s and continued through the Second World War. In the 1960’s, another period of growth for Federal aid coin cided with national concern over poverty and other social problems. Federal aid has grown until there are now about 500 separate grant programs. Although Federal aid historically has been granted to state govern ments, part of the recent aid for social programs has gone directly to local governments. Never theless, even today most Federal aid goes directly to the state governments, with only about 12 per cent granted directly to the local governments. Traditionally, Federal aid has been restricted to specific uses. By limiting the use of funds to only particular purposes or projects, the Federal Government has exercised considerable influence M O N T H L Y R E V IE W over the uses of a large part of our economic re sources. This is one of the primary purposes of aid programs. Indeed, there are good reasons to believe that had the various aid programs not been undertaken, many of the public services and facili ties we enjoy today might never have been pro vided. Federal aid has stimulated the provision of mass public education; it has helped to develop a unified national highway network; it has made better medical facilities possible; and it has pro moted the development of numerous other facilities. Although Federal grants-in-aid are given pri marily to the states, much of the aid emanating from the state governments to local governments is made possible by Federal aid to the states. Essentially, Federal aid frees other state reve nues that may then be passed on to local govern ments. One may be sure that if Federal aid to the state governments were discontinued, the various state governments would either be forced to cur tail their aid to local governments or to raise additional revenues by imposing higher taxes. In addition to specifying usage, Federal grantsin-aid often contain other conditions. For ex ample, suppose that a grant is made for a par ticular purpose. The Federal Government may impose the additional condition that the state or local government provide funds to match at least a portion of the grant. For example, out of a total of $100,000, the Federal Government might provide one dollar for every dollar pro vided by the subnational government. Thus, if the state or local government provides $50,000, the Federal Government would provide $50,000. For a a state with higher income, the Federal Gov ernment might require that the subnational gov ernment raise more matching funds, perhaps two dollars for every dollar the Federal Government provides.1 Differences between allocations and matching formulas among states are often deliberate and are usually intended to assist poorer states in achieving a minimum level of public services. In deed, one important purpose of many aid pro grams is the redistribution of economic resources from wealthier areas of the nation to poorer areas. Differences in the abilities of various states to tax equitably is taken into account so that at least a minimum program is possible in every state. A state with low per capita income might receive a larger allocation of funds or have a smaller matching ratio than another state with high per capita income. The method of achieving this equalization varies from one grant program to another. F e d e ra l A id in th e S ix t h D is t r ic t Federal grants-in-aid come in almost as many varieties as there are programs. Instead of de scribing in detail every type of grant, we may classify aid into six broad categories for high ways, education, public assistance, health and hospitals, employment security, and other mis cellaneous programs. Of these, public assistance, highways, and education are the most important and account for about 90 percent of all Federal aid to state governments. Federal aid has been an especially important source of funds to the state governments in the Southeast, primarily because these states typi cally have lower incomes. In 1968, Federal aid accounted for 28.1 percent of the combined gen eral revenues of state governments in the Sixth Federal Reserve District. For the nation as a whole, Federal aid accounted for only 22.3 per cent of the general revenues of all state govern ments. The relatively greater dependence of Southeastern states on Federal aid has lessened, however. In 1960, Federal aid accounted for 27.2 percent of the general revenues of District states but made up only 19.4 percent of all state govern ments. Thus, whereas aid is becoming a larger Federal aid to D istrict state govern m ents grows during the 1960's. M illio n $ 600 300 1There are several types of grants under various names. A grant might be referred to as a project grant, or a formula grant, or both, depending upon the conditions under which it is given. This article ignores technical nomenclature and refers to grants as either conditional, matching, or both. The reader should not attach any particular importance to these terms. A U G U S T 1970 0 E d u c a tio n H ig h w a y s P u b lic W elfare O ther 111 from their own sources. Federal aid, however, con tinues to be relatively more important to South eastern states than to all state governments com bined. Among District states in 1960, Louisiana re ceived the largest amount of total aid—$200.4 part of state revenues in the nation as a whole, it has remained a relatively constant part of state revenues in the District. This change, at least partly, reflects rapid income growth in District states and the increasing ability and willingness of District state governments to raise revenue TABLE I F E D E R A L A ID TO D IS T R IC T S T A T E S * 1960 Total E d u c a tio n A la b a m a 141.8 (43.40) 11.8 (3.62) F lo rid a 171.4 15.9 (34.61) (3.21) 153.2 12.8 (38.85) (3.24) G e orgia L o u is ia n a 2 0 0.4 (61.54) M is s is s ip p i T e n n e ss e e D istric t S ta te s 98.8 H ig h w a y s P u b lic W e lfare H e a lth and H o sp ita l E m p lo y m e n t S e c u r it y A d m in is tr a t io n O th er 50.7 (15.51) 64.7 (19.81) 4.6 (1.42) 4.5 (1.39) 5.5 (1.65) 80.4 (16.24) 4.3 (.88) 57.0 67.2 7.0 (14.45) (17.05) (1.78) 8.6 73.4 (2.64) (22.55) 9.3 61.8 (12.49) 105.7 (32.45) 5.1 (1.57) 37.7 39.0 3.8 (17.33) (17.92) (1.75) 6.1 2.9 (.98) (.81) 4.8 4.4 (1.23) 3.9 (1.10) 3.7 (1.21) 3.6 (1-12) 5.4 (1.66) (2.44) (45.38) (4.28) 140.3 11.4 (39.34) (3.20) (18.73) (12.09) (1.91) (1.23) 9 05.9 69.8 366.0 381.5 31.6 27.3 29.7 (42.80) (3.30) (17.29) (18.03) (1.49) (1.29) (1.40) 308.3 95.8 105.9 10.5 (29.69) (2.94) (2.46) (3.49) 102.3 19.3 11.9 11.7 (16.61) (3.13) (1.93) (1.90) 125.2 15.7 10.0 11.1 (27.29) (3.42) (2.18) (2.41) 168.6 10.5 (45.16) (2.81) 66.8 43.1 6.8 4.4 7.8 (2.18) 1968 A la b a m a (86.47) F lo rid a G e orgia L o u is ia n a 327.7 101.7 (53.20) (16.51) 3 60.9 100.0 (78.65) (21.80) 346.5 (92.86) M is s is s ip p i 2 03.2 (86.76) T e n n e ss e e 2 8 9.0 (72.69) D istric t S ta te s (26.86) 1,835.6 (75.33) 75.0 (21.03) 80.8 (13.12) 98.9 (21.55) 67.0 85.2 (17.96) (22.82) 71.4 (30.48) 86.1 42.6 (18.17) 88.5 60.9 (25.99) 80.1 (20.14) 8.8 (3.75) 10.1 (2.54) 8.8 12.3 8.6 6.6 (2.30) 6.8 (1.81) 12.7 (2.92) 8.4 (5.45) 15.8 (21.65) (22.26) 522.0 4 7 1 .0 643.0 7 4 .9 54.5 70.2 (21.42) (19.33) (26.39) (3.07) (2.24) (2.88) (2.11) (3.99) ‘ A m o u n t s of aid are in m illio n s of d ollars. P e r cap ita a m o u n ts, in p a re n th e se s, are in d olla rs. S o u rc e : F ed e ral R e se rv e B a n k of A tlanta 112 M O N T H L Y R E V IE W A ID T O E D U C A T IO N LEADS IN GROW TH 1968 Education H ighw ays Education H ighw ays Other P u blic Welfare million (Table I). Florida ranked second, and Georgia, Alabama, Tennessee, and Mississippi followed respectively. If converted to per capita terms, the ranking differs. Louisiana still received the highest amount—$61.54 per person. Missis sippi, however, received the second-highest figure, while Alabama, Tennessee, and Georgia followed. Florida ranked lowest in per capita terms. The growth of Federal aid is reflected by the 1968 total. In 1968, Georgia received the most aid—$360.9 million. But in per capita terms, Georgia, with $78.65, ranked fourth among Dis trict states. Louisiana received the second-highest total aid, but the highest amount per capita— $92.86. Mississippi again received the lowest total aid, but still this was enough to place the state second in per capita terms. In the 1960’s, not only the level but also the composition of aid to District states changed markedly. At the beginning of the decade, Federal aid for highways and public assistance accounted for over 80 percent of all aid received by the six state governments. These categories accounted for between 78 percent of all aid to Mississippi and 89 percent of all aid to Louisiana. Highway aid was largely concentrated on the interstate high way system. Public assistance aid was directed primarily to the aged, disabled, blind, families with dependent children, or to programs such as A U G U S T 1970 P u blic Welfare low-rent housing. By 1968, the picture had changed. Aid for highways and for public assistance declined in relative importance, so that it made up only about 60 percent of all aid to District state governments. Much of this shift in emphasis can be explained by the approaching completion of the interstate highway system. Of all District states, only Geor gia received more aid for highways in 1968 than it did in 1965. As a whole, the District received over $50 million less for highway purposes in 1968 than in 1965. During this period, aid for public assistance, on the other hand, continued to grow but not enough to offset the decreased aid to highways. With the reduced flow of aid to highways, resources have become available for other pur poses, particularly education. The Eighty-eighth Congress initiated several educational programs and expanded others. Vocational education, con struction of higher education facilities, and numerous other programs began to receive new or expanded Federal assistance in the mid-1960’s. Aid to education jumped from about $70 million in 1960 to $522 million in 1968. In 1960, aid to education accounted for only about 9 percent of all Federal aid to Florida—the highest proportion of any District state. By 1968, over 19 percent of all aid to Louisiana was earmarked for education, 113 and this represented the smallest proportion of any District state. In Mississippi, the state representing the highest proportion in 1968, over one-third of Federal aid was directed to education. The remaining aid categories have stayed fairly constant over the decade. Aid for health and hos pitals includes grants for construction of hos pitals and medical facilities for control of tuber culosis, cancer, heart disease, and communicable diseases. These programs amounted to 3.5 per cent of all aid to the District in 1960 and 4.0 per cent in 1968. Administration of employment security programs represented 2.9 percent of all Federal aid to the District in 1960 and 2.8 percent in 1968. All other aid programs constituted 3.5 percent of aid in 1960 and grew to only 4.0 per cent by 1968. A id a s an Im p o r t a n t S o u r c e of Funds Up to this point we have considered primarily the allocation of Federal aid. But how important is the aid as a source of funds to state govern ments? Does it finance a significant part of their expenditures in certain areas? To answer this, let us ask how much of a state government’s expendi tures are financed by Federal aid. It is helpful to make a distinction between types of state expenditures. Both direct and total expenditures must be considered. For example, direct expendi tures for education represent only expenditures made directly for educational purposes by the state government but do not include expenditures that are merely transfers to local governments. Total expenditures for education include direct TABLE II F E D E R A L A ID A S A S O U R C E OF F U N D S IN D IS T R IC T S T A T E S P e r c e n t a g e o f D ir e c t E x p e n d it u r e s I9 6 0 1968 Edu cation H ighw ays P u b lic W elfare Alabam a 20.3 44.9 79.7 41.1 45.2 74 .9 Florida 22.9 39.3 78.5 44.4 32.1 76.2 Georgia 18.9 54.6 76.0 36.9 57.0 80 .9 Lo u isia n a 10.7 43.4 65.0 29.8 38 .9 72.1 Ed u cation H ighw ays P u b lic W elfare M ississip p i 23.7 54.0 75.0 71.3 39.2 72.4 T e n n e sse e 25.8 51.0 73.0 44.6 51.5 73.3 D istrict S ta te s 19.4 46.0 73.1 43.2 43.5 74.5 P e r c e n t a g e o f T o ta l E x p e n d it u r e s 1960 Ed ucation H ighw ays 1968 P u b lic W elfare Ed u cation H igh w ays P u b lic W elfare Alabam a 6.8 33.8 79.7 20.0 35.1 74.9 Florida 6.1 36.6 78.5 15.1 29 .9 76.2 Georgia 6.3 43.4 72.7 16.6 44.0 75.3 Lo u isia n a 3.6 39.8 65.0 12.2 35.0 72.1 M ississip p i 7.5 40.5 75.0 27.1 30.1 72.4 T e n n e sse e 7.6 41.0 73.0 20.5 40.1 73.2 D istrict Sta tes 6.1 38.9 73.1 18.3 35.6 73.7 So u rce: Fed eral R eserve B a n k of Atlanta 114 M O N T H L Y R E V IE W expenditures and any transfers from a state gov ernment to local governments that are restricted for educational purposes. Even a cursory examination reveals that Fed eral aid constitutes a large portion of state ex penditures in the three major categories—educa tion, highways, and public welfare (Table II). For example, in 1968, Federal aid to education financed over two-thirds of all direct expenditures for education by the state government in Missis sippi. This was the highest percentage for any District state. Louisiana was the lowest state, with about one-third of direct educational expen ditures financed by Federal aid.2 When total educational expenditures are con sidered, Mississippi again relies most heavily on Federal aid, with over one-fourth of total state government expenditures financed by Federal aid. Louisiana is the least dependent of the District states. For the District as a whole, 43 percent of direct state expenditures and 18 percent of total expenditures were financed by Federal aid. For highways, Federal aid accounted for about 44 percent of direct expenditures by District state governments and for about 36 percent of total expenditures. The relatively small difference in these percentages indicates that transfers from state to local governments make up a smaller part of total highway expenditures than they do for other categories. Federal highway aid was most important to Georgia, where Federal aid was 57.0 percent of direct expenditures. Highway aid was least important to Florida, where payments of $81 million represented only one-third of direct expenditures. As a percentage of total highway expenditures, Georgia again was most dependent, and Florida was least dependent. When considering aid for public assistance, the distinction between direct and total expenditures makes little or no difference. Only in Georgia are there any significant intergovernmental payments which are earmarked for public assistance. In the District as a whole, Federal aid accounted for 74.5 percent of direct state expenditurers for pub lic assistance and 73.7 percent of total expendi 2These computations are based on educational expenditures by the state governments only. If expenditures by local governments were also included, the importance of Fed eral aid to education would be reduced considerably. This observation does not alter the obvious implication of the data that Federal aid payments are a significant source of financing for educational expenditures by the state govern ments in the Southeast. A U G U S T 1970 tures. Aid was most important in Georgia and Florida, where payments respectively represented 80.9 percent and 76.2 percent of direct expendi tures for public assistance. In Georgia this repre sented only 75.3 percent of total public assistance expenditures. Although aid payments for public assistance to Louisiana were larger in total ($168.6 million) than in any other District state, they accounted for the smallest percentage—72.1 percent—of expenditures for any District state. This reflects the strong welfare programs carried on by the Louisiana state government. F e d e ra l A id a s a S o u r c e o f In c o m e Clearly these figures indicate Federal aid is an important source of finances for District states’ expenditures in three major areas. But is it also a source of income to the District states? The share of expenditures financed by aid for any particular program is not a particularly good measure of the real impact of aid in a state. For example, if the Federal Government had never provided the aid, it is conceivable that state governments would have made the same expenditures themselves and financed them through higher state taxes. A much more accurate appraisal of the real initial impact of Federal aid would be to ascertain its direct effects on the levels of income in the various states. For every dollar of Federal aid granted, a dollar of Federal taxes must have been collected to finance the aid. The important question is whether the taxes collected in any state are the same as the aid which is given to that state. In the case of the District states, the answer is nega tive. Since District states are generally below the national average in income levels, they would more than likely receive more aid than they pay in taxes to finance the aid. What results is a geo graphical redistribution of income. This is in keeping with the objective of having at least a minimal program in every state. Presumably, poorer states would not be able to provide these programs without some outside assistance. Fed eral aid is the vehicle through which this is done. There are two effects which tend to redistribute income through Federal aid programs. Even if aid were paid on a strictly per capita basis, there would be some redistribution, since the Federal tax bill is not paid on a strictly per capita basis. Poorer states tend to pay less per person because the tax system is progressive. In addition, many aid programs allocate proportionately more funds to poorer states. This augments the redistribution 115 TABLE III N e t P e r C a p ita G a in s in 1 9 6 8 R e s u l t i n g F r o m F e d e r a l A id to : State D istrict State G overnm ents D istrict State and Local G overnm ents Com bined A la b a m a $ 3 8 .5 8 $ 3 4 .9 6 F lo r id a -1 5 .0 4 * -1 8 .6 0 * G e o r g ia 2 2 .2 7 1 7 .2 2 L o u is ia n a 3 8 .2 4 3 3 .6 1 M is s is s ip p i 4 8 .8 2 4 4 .6 5 T e n n e sse e 1 8 .2 2 1 6 .4 7 District state that does not gain from the pro grams. The average Floridian paid $18.60 more in taxes to finance the Federal aid programs than was returned to the state and local govern ments in aid payments. Preliminary estimates for the fiscal 1971 Fed eral budget indicate that these patterns should continue. Table IV shows the estimated tax bills paid by District states in order to finance Fed eral aid programs and the total grants which these states will receive from Federal grants-in-aid. Also shown is the amount of taxes paid per dollar of aid received. For every dollar of the $319 mil- * Net Lo ss TABLE S o u rc e : F e d e ra l R e s e r v e B a n k o f A tla n t a IV E s t im a t e d F e d e ra l A id a n d T a x B u r d e n s In F is c a l Y e a r 1971 effect resulting from the progressiveness of the tax system. As indicated in Table III, Federal aid pro grams resulted in gains to every District state except Florida. Consider Tennessee as an ex ample. The taxes required to finance the Federal Government’s aid programs in 1968 averaged $76.50 for every person in the nation. However, the average Tennessean paid $54.47 in taxes in order to finance Federal aid.8 The state govern ment in Tennessee received $72.69 per person in Federal grants. Thus, Tennessee’s average gain would be $18.22 per person because of the com bination of the progressive Federal tax system and the Federal aid programs to state govern ments. If Federal aid to local governments in Tennessee is also included, the gain is reduced to $16.47 per person. Of all the District states, Mississippi gains the most. Through either money income or through more or improved gov ernment services, an average Mississippian’s gain is increased by $44.65 as a result of Federal aid to state and local governments. This is the high est among District states. Florida is the only ’Computations are based on the per capita distribution of the Federal tax bill as computed by the Tax Foundation, Inc. For every dollar collected in Federal taxes, the average citizen of the nation obviously pays $1. However, the aver age Tennessean pays only 71 cents in taxes. The lower payment by the Tennessean results primarily from his lowerthan-average income. An average citizen in states with higher-than-average income would pay more than $1 in Federal taxes. 116 Tax Burden State Total Aid* $ m illio n A la b a m a $ m illio n 218 Ta x Burden P er $1 of Aid Received $ 416 .5 2 F lo r id a 562 427 1 .3 2 G e o r g ia 331 490 .6 8 L o u is ia n a 267 471 .5 7 M is s is s ip p i 116 319 .3 6 T e n n e sse e 278 385 .7 2 * I n c l u d e s a id to lo c a l g o v e r n m e n t s S o u r c e : T a x F o u n d a t io n , In c . lion in aid to Mississippi, taxpayers in Missis sippi would have paid only $.36 in Federal taxes. On the other hand, Florida taxpayers would have paid $1.32 for every dollar of the $427 mil lion in Federal grants to states and localities in Florida. C o n c lu s io n s As we have seen, Federal grants-in-aid to District states are primarily concentrated in three areas— highways, education, and public assistance. Re cently, the trend has resulted in increased empha sis on education and reduced emphasis on high way aid. In all categories, Federal aid is an im portant source of revenue to District state govern ments. State government expenditures in these M O N T H L Y R E V IE W areas depend substantially on this aid. Without Federal assistance, it is likely that both the qual ity and quantity of these vital public services would have been seriously reduced. In addition, we have noted that Federal aid contributes to the incomes of all District states except Florida. Obviously, one cannot expect that every citizen would gain $10 or $15 in either higher money incomes or improved government services. Some persons may gain nothing at all. Others—for example, the aged—may gain a great deal. Some benefit through direct payments such as those to the blind. Still others gain indirectly through a better educated citizenry or various general improvements. In most cases, however, it is clear that the impact of the Federal aid pro grams has been to inject more into the District states’ economies than is withdrawn in taxes to finance these programs. Finally, let us comment on the future of Fed eral grants-in-aid. There are renewed efforts to improve present aid programs. Efforts are under way to consolidate and restructure existing pro grams. New approaches to the welfare programs, such as the Family Assistance Program, have been proposed. Another important step is the proposal for unrestricted sharing of Federal rev enues with subnational governments. Hopefully, present efforts should enhance the value of these programs to our Federal system. R obert H. F loyd New and Revised Publications A R e v ie w of F lorida’s E c o n o m y 1960 -70 , revised July 1970 A R e v ie w of Georgia’s E co n o m y 1960 -70 , revised August 1970 A R e v ie w of L ouisiana’s E c o n o m y 1960 -70 , revised August 1970 D istric t M a n u fa c tu rin g In d ex : T echnical N o te and S ta tistic a l S u p p le m e n t. This supplement gives a detailed discussion of the methods used in computing the District’s new production index. It also contains monthly production indexes for the District’s individual industries. Now available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303 . A U G U S T 1970 117 B A N K IN G S T A T IS T IC S 9.8 9.2 5.0 4.6 4.0 1 1 D 1969 J J 1 D 1970 1 D 1969 l l D 1970 Last date plotted: June Note: All figures are seasonally adjusted and cover all Sixth District member banks. *Daily average figures. **Figures are for the last, Wednesday of each month. S IX T H D IS T R IC T B A N K I N G N D T E S * S ix t h D is t r i c t p o r t io n o n ly 118 M O N T H L Y R E V IE W For the last four months, it has been increasingly evident that Sixth District member banks are favorably responding to the modest easing since February in monetary conditions. Instead of ex panding loans, the banks have increased their liquidity. In 1969, liquidity, a term generally used to describe the proportion of the bank’s assets that are cash or can be readily converted into cash without loss, steadily decreased at Sixth District member banks. Deposits did not grow while loans were rising, with the result that there was a cor responding rise in the loan-deposit ratio. Since changes in deposits are generally accompanied by changes in liquid assets and, as a general rule, loans can be converted into cash less readily than many other bank assets, a rising loan-deposit ratio is one measure of reduced liquidity. Last year, the lack of deposit growth at District banks reflected a monetary policy that restricted reserve expansion. In addition, further pressure was caused by a substantial shift from time to demand deposits. Demand deposits carry about three times the reserve requirement of time and savings deposits. In particular, many of the larger banks in the District, as well as in the na tion, experienced just such pressures last year. Nearly 50 percent of the approximately one-half billion dollars in large-denomination certificates of deposit of District banks held by individuals and businesses were redeemed. The inability of many banks to roll over these instruments—in part due to the more attractive yields available to depositors on competing financial instruments —seriously strained the ability of the banks to continue lending in lieu of taking other actions to offset the deposit losses. For the individual bank, one common way to meet the difficulties occasioned by deposit losses is by selling securities, but this action often in volves the sale of securities at a capital loss. In 1969, the banks continued to make more loans. Some of them attempted to secure the funds by borrowing from other banks through the Federal funds market. Some used nondeposit sources such as loan sales to their subsidiaries and others. An increasing number of banks turned to borrowing at the Federal Reserve. Since February of this year the pattern has A U G U S T 1970 changed. Deposits have grown 4.9 percent and lending advanced much slower, 2.5 percent. As a result, the ratio of bank loans to deposits has declined, suggesting a rise in bank liquidity. In the five-month period that ended in June, the loan-deposit ratio for the District declined from 66.1 to 64.8. Not all banks in the District states have been affected to the same degree, although all six states did show some improvement. The greatest improvement occurred in Tennessee, Mississippi, and Louisiana, even though earlier in the year both Tennessee and Mississippi had loan-deposit ratios greater than the mean of the District. The deposit increases of recent months have not only eased some of the liquidity pressures on banks, but the particular makeup of these deposit increases have significantly eased the pressure on the banks in maintaining their reserve require ments. The major impetus in deposit inflows since the end of February has come from interestbearing deposits. Time and savings deposits are up $645 million, or nearly 7 percent. With the reserve requirement on time and savings deposits substantially lower than demand deposits, the District banks have been aided by the net inflow of deposits which are subject to lower reserve requirements. Thus, while the increase in de posits subject to reserve requirements has been large (up 3.9 percent), the reserves required to support these deposits have not increased propor tionally (up only 2.3 percent). Improved liquidity is also evidenced by District banks as a group being less dependent upon re serves borrowed overnight through the Federal NET FEDERAL FUNDS M illion $ - -400 Net S a le s A ■u _ N y X y Net Pu rchase s .400 D 1969 J 1970 119 funds market. Unlike last fall, District banks are no longer in the position where their pur chases of Federal funds exceed sales by $200 mil lion. At the time the larger banks were net pur chasers in the amount of nearly $400 million, the smaller banks were selling nearly $200 million more than they were purchasing. During the second quarter of this year, sales for the District averaged over $200 million more than purchases, since the larger banks’ deficit dropped $100 mil lion and net sales by the smaller banks advanced over $250 million. Borrowing—via the indirect method of selling loans to bank subsidiaries, who in turn issue com mercial paper—has also been falling off. Since mid-June, banks have been allowed to compete freely and directly for short-term funds through the sale of large-denomination certificates of deposit. As a result, banks can attract funds through more traditional banking sources. If this channel of acquiring funds is not made ineffective by the reinstatement of interest ceilings, we should expect to see further reductions in the use of nondeposit liabilities to support bank lend ing. Thus far in 1970, the level of borrowing by member banks from the Federal Reserve discount window has consistently averaged under $60 mil lion. In the last quarter of 1969, advances from discounting averaged nearly $90 million. The need of some of the large banks in Atlanta to ex- B 0 R R 0 W IN G S FROM FRB pand their lending to finance companies during the latter part of June and the first part of July resulted in a large jump in borrowing, but even this has now subsided. Although bank lending has not been expanding rapidly, banks have been adding to their other earning assets. District banks sold large amounts of securities from their investment portfolios last year to maintain lending in the face of deposit outflows. The larger banks—the ones that experi enced the greatest runoff of deposits last year— accounted for nearly four-fifths of the $550-million net decline in securities in the District. Now that there is easing, many banks are taking ad- ATLANTA Million $ -/ r ; ■ -125 \ -1.1 - 25 i i i i J i i I i D J 1969 120 i i i i i i i i i i i i i i i i I i J J 1969 D i i J J 1970 j 1970 Note: Data are not seas. adj. M O N T H L Y R E V IE W vantage of the slack to acquire securities with his torically high yields. As noted previously, the liquidity pressures eased more—and were, perhaps, less severe to begin with—at the smaller banks in the District than a t the larger banks. Since February, it has been the smaller banks that have added the bulk of the $300-million (not seasonally adjusted) ex pansion in investments to their portfolios. While there was some run-up in U. S. Government securities holdings around the May Treasury re funding. these issues have taken a back seat to the purchases of other securities. Municipal ob ligations have accounted for a large portion of the increases in investments. Should the current con ditions underlying the rise in liquidity be re versed, investment holdings could be liquidated again. Even now, after four months of deposit inflows, ndt all banks can report improvements in bank deposits from a year ago. However, the number in this category is declining. At the end of June, about 100 banks (approximately 20 percent of the member banks in the Sixth District) were re porting deposit totals below those of a year ago, B a n k The W ire grass B a n k & Trust Com pany, Headland, A la bama, opened for b u sin e ss a s a newly organized non m em ber bank on July 1 and began to rem it at par. O ffice rs are W illiam J. Parker, president; B illy J. W hiddon, vice president; and H. David Knight, cashier. C a p i J o h n M. G o d frey A n n o u n c e m On July 1, B a n k o f Terrebonne & T ru st Com pany, H ou ma, Louisiana, a nonm em ber bank, began to remit at par for c h e c k s drawn on it when received from the Fed eral Reserve Bank. A U G U S T 1970 whereas over 125 banks were similarly situated at the end of January. During this same time, the average deposit decline of these banks has fallen from nearly 8 percent to 5 percent. The banks in the District’s larger cities were hit the hardest by deposit declines, with twofifths reporting smaller deposit totals in January than a year ago. The number has decreased, al though one-third are still showing deposit de clines that average 6 percent. Most of these banks are located in Florida and Georgia, states that also posted only slight improvements in the loandeposit ratios. Although many banks have not completely recovered to their former deposit levels, they are at least in an improved position now. Reduced credit demands and renewed deposit inflows have left District banks in a more favor able position. Bankers have been able to reduce their dependence upon borrowed reserves and, at the same time, have built up a cushion of liquid assets in the form of increased investments in their portfolios. tal is e n t s $200,000; su rp lu s and other capital funds, $200,000. On July 22, a newly organized m em ber bank, South* east N ational B a n k of Orlando, Orlando, Florida, opened for business. O ffice rs are M elvin R. Ziegenfus, presi dent; Henry C. Lowery, III, and Vernon D. Sm ith, a s s is t ant vice presidents; and Hubert A. Creech, cashier. Capital is $1,000,000; su rp lu s and other capital funds, $1,000,000. 121 S i x t h D is tr ic t S t a t is t ic s Seasonally Adjusted (A ll d a t a a r e i n d e x e s , 1 9 5 7 - 5 9 = 1 0 0 , u n l e s s in d i c a t e d o t h e r w i s e . ) L a t e s t M o n th 1970 O ne M o n th A go Two M o n th s A go O ne Y ear A go L a t e s t M o n th 1970 O ne M o n th A go Two M o n th s A go O ne Y ear A go S IX T H D IS T R I C T IN C O M E A N D S P E N D IN G . Ju n e . M ay C r o p s .................................................................. . M a y L i v e s t o c k ............................................................ . M a y I n s t a l m e n t C r e d i t a t B a n k s * ( M il. $ ) . Ju n e EM PLO Y M EN T AN D 262 205 154 230 259 172 152 302 257 180 129 201 251 173 188 172 348 314 324 337 359 321 344 313 151 145 173 137 174 119 105 127 130 112 196 153 134 57 152 146 173 137r 175r 119 105r 128r 130r 112 198 154 137r 56 152 147 174 136 176 121 107 129 128 114 197 154 140 54 150 150 175 142 175 116 111 131 133 117 208 150 138 53 4 .3 4 .3 4 .3 3 .6 . Ju n e , M ay 370 176 366 164 356 125 338 204 June . Ju n e . Ju n e . Ju n e Ju n e 180 178 181 135 91 179 176 179 137 89 178 177 178 140 82 174 182 172 131 90 . Ju n e Ju n e 3 .3 4 1 .4 3 .3 4 1 .7 3 .2 4 1 .4 2 .6 4 1 .6 , Ju n e . Ju n e . June 395 267 300 398 266 306 391 260 303 366 264 287 M a n u fa c tu rin g P a y r o lls .............................. J u n e F a r m C a s h R e c e i p t s ...........................................M a y 271 227 263 170 260 188 259 163 152 139 158 141 51 152 140 158 143r 50 153 141 158 145 151 143 155 156 EM PLO Y M EN T N o n fa rm E m p lo y m e n tt P R O D U C T IO N U n e m p lo y m e n t R a te N o n f a r m E m p l o y m e n t t .................................... J u n e Ju n e M a n u fa c tu rin g .............................. June A p p arel ................................................ C h e m i c a l s ............................................................ J u n e F a b r i c a t e d M e t a l s ..........................................JJ u n e F o o d ..............................................................................JJ u n e Ju n e L b r ., W o o d P r o d . , F u r n . & F ix . P a p e r ........................................................................JJ u n e P r i m a r y M e t a l s ................................................ J u n e T e x tile s .................................................................. J u n e Ju n e T r a n s p o r ta tio n E q u ip m e n t . N o n m a n u f a c t u r i n g t .......................................... JJ uu nn ee n ee C o n s t r u c t i o n ...................................................... JJ u un F a r m E m p l o y m e n t ................................................ J u n e U n e m p lo y m e n t R a te ( P e r c e n t o f W o r k F o r c e J t ........................ JJ u u nn ee In s u re d U n e m p lo y m e n t ( P e r c e n t o f C o v . E m p . ) .............................. J u n e Ju n e A vg. W e e k ly H rs . in M fg . ( H r s .) . C o n s t r u c t i o n C o n t r a c t s * .............................. J u n e R e s i d e n t i a l ............................................................ JJ u un n ee A ll O t h e r .................................................................. J u n e M ay E le c tric P o w e r P r o d u c tio n * * C o t t o n C o n s u m p t i o n * * .................................... M M aa yy P e t r o l . P r o d , in C o a s t a l L a . a n d M i s s . * *>jJuu ly 'y M a n u f a c t u r i n g P r o d u c t i o n ........................ M M aa yy N o n d u r a b l e G o o d s .......................................... M a y M ay Food ................................................ T e x tile s ............................................................ M M aa y y A p p arel ............................................................ M M aa yy M aa y P a p e r ..................................................................M y M a y P r in tin g a n d P u b lis h in g . . . . M aa yy C h e m i c a l s ...................................................... M M aa y y D u r a b l e G o o d s ................................................M M aa y L u m b e r a n d W o o d ....................................M y F u r n i t u r e a n d F i x t u r e s ........................ M M aa yy S t o n e , C l a y a n d G l a s s ........................ M M aa yy M a y P r i m a r y M e t a l s ..........................................M a y M ay F a b r ic a te d M e ta ls . . . . M ay N o n e l e c tr i c a l M a c h in e r y E l e c t r i c a l M a c h i n e r y .............................. M M aa yy M ay T r a n s p o r ta tio n E q u ip m e n t F IN A N C E AND 2 .7 4 0 .4 242 228 255 165 lO O r 286 238r 205r 162r 231r 254 199 167r 251 278 166r 185r 168r 194 244 570 342 358r 2 .6 4 0 .6 249 262 238 162 105 284 241 206 162 230 258 200 169 257 284 171 185 172 200 247 569 355 369 1 .7 4 1 .0 215 253 183 159 104 272 226 196 153 223 244 194 164 256 263 164 197 164 189 233 527 347 332 350 290 350 295 348 293 322 265 235 190 234 194 231 194 230 190 ALABA M A IN C O M E M a n u fa c tu rin g P a y r o lls .............................. J u n e F a r m C a s h R e c e i p t s .......................................... M a y 222 220 163 180 122 F I N A N C E A N D B A N K IN G N o n fa rm E m p lo y m e n tt . . . . . Ju n e ................................................ J u n e M a n u fa c tu rin g N o n m a n u f a c t u r i n g .......................................... J u n e C o n s t r u c t i o n ................................................ J u n e F a r m E m p l o y m e n t ................................................ J u n e U n e m p lo y m e n t R a te ( P e r c e n t o f W o r k F o r c e J t .........................J u n e A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . J u n e 3 .7 4 0 .5 3 .7 3 9 .6 3 .6 4 0 .6 3 .0 4 1 .1 351 234 339 344 232 336 345 233 328 330 243 315 217 187 213 193 209 165 133 132 124 134 127 F I N A N C E A N D B A N K IN G . June . Ju n e . Ju n e L O U I S IA N A IN C O M E M a n u fa c tu rin g P a y ro lls .............................. J u n e F a rm C ash R e c e i p t s .................................... M a y E M PLO Y M EN T N o n fa rm E m p l o y m e n t t .................................... J u n e M a n u fa c tu rin g .................................................J u n e N o n m a n u fa c tu r in g .................................... J u n e C o n s t r u c t i o n .................................................J u n e F a r m E m p l o y m e n t ................................................ J u n e U n e m p lo y m e n t R a te Ju n e ( P e r c e n t o f W o r k F o r c e J t ........................ A v g . W e e k ly H rs . in M fg . ( H r s .) . . . J u n e F IN A N C E AND 132 122 134 135 128 47 4 1 .9 r 4 1 .6 286 187 213 290 188 218 287 182 215 261 180 203 286 268 286 189 282 231 277 195 149 157 146 157 48 152 159 148r 162r 49 152 159 149 166 46 148 161 143 151 41 4 .8 4 0 .0 5 .0 4 0 .2 r 5 .3 4 0 .0 4 .2 4 0 .1 427 291 285 420 289 294 421 283 282 385 260 264 131 120 133 116 122 122 6.1 B A N K IN G M e m b e r B a n k L o a n s * .................................... J u n e M e m b e r B a n k D e p o s i t s * ...............................J u n e B a n k D e b i t s * / * * ...................................................... J u n e 133 132 133 133 131 134 125r 52 IN C O M E 223 215 215 162 133 134 133 133 136 132 127 M a n u fa c tu rin g P a y r o lls .............................. J u n e F a r m C a s h R e c e i p t s .......................................... M a y EM PLO Y M EN T 121 4 .8 3 9 .6 4 .8 4 0 .3 317 219 239 314 219 247 121 3 .8 4 0 .7 F I N A N C E A N D B A N K IN G M e m b e r B a n k L o a n s .......................................... J u n e M e m b e r B a n k D e p o s i t s .............................. J u n e B a n k D e b i t s * * ...................................................... J u n e M f g . ( H r s .) M IS S IS S IP P I EM PLO Y M EN T N o n f a r m E m p l o y m e n t t .................................... J u n e M a n u fa c tu rin g ................................................J u n e N o n m a n u fa c tu r in g .................................... J u n e C o n s t r u c t i o n ................................................ J u n e F a r m E m p l o y m e n t ................................................ J u n e U n e m p lo y m e n t R a te ( P e r c e n t o f W o r k F o r c e J t ........................ J u n e A v g . W e e k ly H rs . in M fg . ( H r s .) . . . J u n e H rs . in EM PLO Y M EN T 2 .8 4 0 .4 230 247 214 167 99 283 242 205 164 237 255 197 167 253 287 169 182 166 198 242 600 354 379 B A N K IN G L oans* A ll M e m b e r B a n k s .......................................... J u n e L a r g e B a n k s ...................................................... J u n e D e p o s its * A ll M e m b e r B a n k s .......................................... J u n e L a r g e B a n k s ...................................................... J u n e B a n k D e b i t s * / * * ...................................................... J u n e A vg. W e e k ly N o n fa rm E m p l o y m e n t t .................................... J u n e M a n u fa c tu rin g .................................................J u n e N o n m a n u f a c t u r i n g .......................................... J u n e C o n s t r u c t i o n ................................................ J u n e F a r m E m p l o y m e n t ................................................ J u n e U n e m p lo y m e n t R a te ( P e r c e n t o f W o r k F o r c e J t .........................J u n e A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . J u n e F IN A N C E 315 218 255 288 215 239 AND B A N K IN G M e m b e r B a n k L o a n s * .................................... J u n e M e m b e r B a n k D e p o s i t s * .............................. J u n e B a n k D e b i t s * / * * ...................................................... J u n e M O N T H L Y R E V IE W L a te st Month 1970 One Month Ago Two M onths Ago One Y ea r Ago N o n m a n u fa c tu r in g .............................. C o n s t r u c t i o n ................................... F arm E m p lo y m e n t ................................... U nem ploym ent R ate (P ercent of Work Fo rceJt . . . . Avg. W eekly H ours in Mfg. (H rs.) . TEN N ESSEE M anufacturing P a yro lls . . . . Farm C a sh R e c e i p t s ................... . . . . . June . May 237 220 238 150 240 147 234 132 147 151 148 153 150 155 148 157 O ne Month Ago Two M onths Ago One Y ear Ago 145 146 58 146 156r 58 146 158 55 143 155 47 4. 4 39.7 4.4r 39.9r 4.6 40.1 3.5 40.4 337 220 293 344 219 286 344 219 307 305 203 276 L a te st Month 1970 . Ju n e F IN A N C E AND B AN KIN G E M P LO Y M E N T Nonfarm Em p lo ym en tt • • ■ M anufacturin g .................... *F o r Six th D istrict area only; other to tals for e ntire six state s M em ber B an k L o a n s * ......................... M em ber B an k D e p o s i t s * .................... B an k D e b it s * / * * ........................................ ‘ D aily average b a sis tP re lim in a ry data r-Revised N.A. Not ava ilab le S o u rce s: M anufacturin g production e stim ated by th is B an k; nonfarm , mfg. an d nonm fg. em p., mfg. p ayrolls and hours, and unem p., U .S . Dept, of Lab or and cooperating state a g e n cie s; cotton co n su m p tio n, U .S . B ureau of C e n s u s ; co n stru ctio n co n tracts, F. W. Dodge Div., M cGraw-Hill Inform ation S y ste m s Co.; petrol, prod., U .S . B u re au of M ines; ind ustria l u se of e le c. power, Fed . Pow er Com m .; farm c a sh re ceip ts and fa rm em p ., U .S .D .A . O ther ind ex es based on d ata co llected by th is B an k. All ind exes ca lcu la te d by th is B an k. D e b its to D e m a n d D e p o s it A c c o u n ts Insured Commercial Banks jn the Sixth District (In T h o u s a n d s o f D o lla r s ) Pe rce n t Change P e rce n t Change Ju n e 1970 May 1970 Ju n e 1969 STAN DARD M ETR O PO LITA N ST A T IS T IC A L A R E A S t Birm in gham H un tsville M obile . . Ju ne 1970 G a in e sv ille . . . . Lak elan d . . . . 115,902 + 9 + 8 + 11 156,858 + 7 + 8 + 13 1,878,404 + 4 + 4 + 6 69,278 + 7 + 4 + 4 O c a l a ......................... 100,191 90,428 83,056 + 11 + 21 + 22 214,103 + 5 + 2 + 10 St. A ugustine . . . 27,087 22,482 26,515 + 20 + 2 - 707,021 820,821 600,646 -1 4 + 18 + 23 St. . . 480,328 494,335 419,134 - + 15 + 12 Petersburg 397,672 396,908 + 2 + 2 + 5 127,540 117,885 122,203 + 8 + 4 + 4 T a m p a ......................... . 44,766 .................... 41,496 39,112 + 8 3 161,868 174,055 169,598 1,226,679 1,232,587 1,007,891 . 90,020 86,281 77,785 .................... 139,026 121,665 106,621 + 14 W inter Haven Orlando 114,768 157,731 66,924 404,444 . 125,010 169,001 209,914 Montgomery Miam i Ju ne 1969 71,769 T u scalo o sa Ft. Lau d erd ale Hollywood May 1970 219,436 1,882,139 . Sa raso ta Ja c k so n v ille May 1970 to d ate 6 m os. 1970 Ju n e from 1969 1969 Ju n e 1970 From Monroe County 1,958,362 G adsden Y ea r Y ea r to Ju n e date 1970 6 mos. From 1970 May Ju n e from 1970 1 9 6 9 '1 9 6 9 . . + 14 5 + 5 8 + 19 - 7 - - 0 + 22 + 22 + 4 + 16 + 16 1,140,942 1,085,562 1,030,219 + 5 + 11 + 10 Athens 2,113,882 1,921,990 2,042,540 + 10 B ru n sw ick 52,723 + 11 + 7 + 10 . 3,847,251 3,565,806 3,391,813 + 8 + 3 + 13 + 7 . + 12 Dalton .................... 115,745 114,772 113,920 + 1 + 2 - . . 834,660 793,493 743,030 + 5 + 12 + 14 E l b e r t o n .................... 19,154 19,123 17,258 + 0 + 11 + 12 . . . . 56,622 + 30 + 16 4 + 14 G a in e sv ille 100,871 85,127 225,559 189,415 192,314 + 19 + 17 + 14 G r i f f i n ......................... 45,307 43,491 39,737 + 4 + 14 + 16 2,230,375 2,233,668 1,904,333 - 0 + 17 + 17 LaG range . . . . 24,111 23,747 32,879 + 2 -2 7 -1 0 W. Palm B each 657,775 666,541 623,293 - 1 + 6 + 13 N ewnan .................... 31,552 28,849 25,707 + 9 + 23 + 23 R o m e ......................... 99,261 90,941 92,596 + 9 + 7 + 9 Albany 136,974 123,262 110,471 + 11 + 24 V a l d o s t a .................... 67,875 62,254 60,123 + 9 + 13 + 9 Atlanta 7,864,694 316,017 7,489,337 6,897,234 + 14 314,720 278,084 + 0 + 7 + 6 + 3 Abbeville A lexandria 13,143 161,546 11,939 163,923 14,149 + 10 - - 1 298,865 340,296 309,356 279,671 318,904 + 5 + 2 + 7 + 15 + 19 166,005 313,056 + 7 + 9 + 3 B un kie Sa v an n ah 328,448 332,271 350,228 - - 6,525 46,649 7,981 42,547 Baton Rouge 864,406 825,263 605,808 + 5 300,016 Pe n saco la T a lla h a s s e e T a m p a -S t. Pete Augusta C o lum bu s Macon 260,227 237,582 + 7 + 0 - 2,646,737 + 5 + 5 136,652 + 4 + 16 + 27 781,532 + 4 + 11 + 10 783,906 + 13 157,876 173,728 2,773,247 B ilo x i-G u lfp o rt 158,389 152,238 Ja ck so n 867,070 837,085 . . . Kn o xville . . N a sh v ille . 885,047 Chattanooga 786,057 618,189 582,943 2,113,293 1,904,189 + 2 + 43 + 5 160,737 161,168 New O rleans 6 + 8 + 0 168,939 Lak e C h a rle s 1 + 26 + 33 + 7 174,345 2,786,119 Lafayette + 15 1 .................... 85,623 82,411 Dothan 90,589 51,744 Bartow B radenton 1 - 3 - 7 + 14 - 6 - 6 . . . . - 1 + 9 + 6 . . . . 39,313 40,769 37,898 - 4 + 4 Plaq uem in e . . . Thibodaux . . . . 13,695 27,240 14,853 27,719 14,693 26,774 - 8 - 7 + 6 - 4 - 2 + 2 + 1 H attiesburg 62,655 50,241 58,964 68,004 - 50,747 75,671 45,755 81,601 43,218 + 6 - 1 + 10 -1 5 + 14 + 10 + 2 - 1 - 4 - 2 . . . L a u r e l ......................... M e r i d i a n .................... 82,934 42,922 + 12 + 6 + 4 + 4 V icksb urg . . . . 49,972 43,666 42,679 + 6 + 14 + 10 592,521 + 17 + 9 + 14 + 11 + 15 + 9 Yazoo C ity . . . . 38,772 42,642 29,473 - 9 + 32 - .................... 102,399 95,565 96,405 + 7 + 6 + 7 + 12 + 13 Kingsport . . . . . . . + 6 + 2 89,151 81,418 + 2 + 11 + 14 48,015 50,099 + 8 + 3 + 1 37,002 34,162 42,277 + 8 -1 2 - 97,509 98,256 93,396 - + 4 + 6 F l o r i d a * .................... - Georgia* 1 7 Brevard County 222,450 234,942 245,404 - Daytona B each 107,847 96,944 101,948 + 11 + 6 + 5 Ft. M yers— N. Ft. Myers 143,593 126,475 130,160 + 14 + 10 + 3 •Includes only banks in the Sixth District portion of the state 5 - 5 3 tPartially estimated SIX TH D IS T R IC T Total A labam a* . . . . 89,168 84,138 81,000 + 2 4 112,853 95,906 90,434 + 18 + 25 190,682 168,364 173,885 + 13 + 10 - + 5 + 10 + 11 43,574,334 . 42,252 8 l,8 4 2 ,6 7 9 r + 4 7 + 19 New Iberia 80,552 A U G U S T 1 9 70 - + 28 Ham mond Johnson City A nniston + 18 7,466 46,232 B ristol . . . . . . . . . 78,898 N a t c h e z .................... P a scag o u la— Moss Point . . . O T H ER C E N T E R S S e lm a . . . . 50,875r 5,068,139 41,439,647r 39,515,790r 5,030,761 4,835,717 + 1 + 5 3 + 8 . 14,277,320 13,555,197 13,014,868 + 5 + 10 + 12 11,772,065 ll,0 9 1 ,2 0 1 r 10,455,248 + 6 + 13 + 15 . . . . Lo u isia n a ** . . . 5,003,610 4,925,678 4,537,916 + 2 + 10 + 8 M is s is s ip p i* ■ • . . 1,921,495 1,850,387 1,701,818 + 4 + 13 + 10 T en n e sse e t* . ■ ■ . 5,531,705 4,986,423 4,970,223r + 11 + 12 + 8 . ^Estimated 123 D is tric t B u s in e s s C o n d itio n s T h e S o u th e a s t e r n e c o n o m y c o n t in u e s to v a c illa te w h ile c h a r t in g its fu tu re c o u rs e . A c c o r d in g la te s t a v a ila b le fig u r e s , e m p lo y m e n t w e a k e n e d fu rth e r b u t m a n u f a c t u r in g p ro d u c t io n s t r u c tio n c o n tr a c t a w a r d s d e c lin e d b u t are h o ld in g up s o c ia t io n s e x p e rie n c e d n e t s a v in g in flo w s in A p r il a n d and h o ld in g s o f in v e s t m e n ts c o n tin u e d to rise. be tter t h a n n a tio n a lly . M a y . A t c o m m e r c ia l S a v in g s ban ks, to in c r e a se d . and the Con lo a n a s le n d in g s la c k e n e d In Jun e, c o n s u m e r s w ere n o t q u ite a s c a u t io u s w ith th e ir s p e n d in g a s th e y h a ve been. R a in f a ll im p ro v e d c ro p p r o s p e c ts , b u t o v e ra ll p r ic e s e a s e d dow n w ard. L a b o r m a rk e t c o n d it io n s c o n tin u e d to w e a k e n in Nonfarm employment declined. Average weekly hours in manufacturing were unchanged, but payrolls edged upward. For the third con secutive month, the unemployment rate held steady. Manufacturing production increased in May, and labor productivity rose. Jun e. S in c e the la rg e in c r e a s e in le n d in g to n o n b a n k f in a n c ia l in s t it u t io n s in la te J u n e a n d e a rly July, b a n k le n d in g h a s s h o w n little c h a n g e . Many banks continued to add substantial amounts of munici pal obligations to their portfolios. Highlighted by the steady gains in large-denomination certificates of deposit, deposit growth expanded in July. C o n s u m e r s a p p e a r e d to b e h a v e le s s c a u t io u s ly C o n s tr u c tio n c o n tr a c t a w ards are h o ld in g up Large utility, industrial, and commercial projects, influential in the na tional index, helped push total dollar volume of awards in May considerably ahead of the com parable 1969 period. Large south Florida apart ment projects were instrumental in gains over last year’s level for residential contract awards. Savings and loan associations, as a whole, enjoyed sizable increases in net savings inflows in both April and May. These gains were largely centered in Florida and Georgia. Mississippi also experi enced a net gain, but savings growth rates in Louisiana, Tennessee, and Alabama were well below that of 1969. be tter th a n n a tio n a lly . 124 J u n e th a n in p re v io u s m o n t h s . Auto sales nudged ahead of a year ago, the first such gain this year. Substantial increases in new loan vol ume for autos and other consumer durable goods were largely responsible for the moderate gain in total consumer credit outstanding at commercial banks. Sales at nonauto outlets, however, still appear sluggish. in R a in f a ll a s s o c ia t e d w ith the t r o p ic a l sto rm B e c k y has im p ro v e d the S o u t h e a s t ’s c ro p p ro sp e c ts. June price increases for most crops did not offset v' price declines in the livestock sector. As a result, overall prices received by farmers resumed the downward trend that was interrupted in May. M O N T H L Y R E V IE W A U G U S T 1970
@FedFRASER