The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
In T h i s Issue-.
Moderate Economic Expansion
Monetary Growth Objectives
Index for 1976
District Business Conditions
F e d e r a l R e s e r v e B a n k o f A t la n t a
Moderate Economic
Expansion............................... 167
The economy has been re
covering for 20 months; just
where do we stand now?
What is the outlook?
Fair Credit Billing
The Federal Reserve Bank
will soon have available for
distribution a new educa
tional leaflet entitled "Fair
Credit Billing." Requests
for supplies should be sent
to the Bank and Public
Services Department, Federal
Reserve Bank of Atlanta,
Atlanta, Georgia 30303.
Orders should specify
number of leaflets desired
and should include a com
plete mailing address.
166
Monetary Growth
Objectives
175
Since May 1975, the Federal
Open Market Commi ttee
has publicly announced its
longer-run monetary aggre
gate growth ranges. Have
these ranges been met?
Index for 1976 ....................... 173
District Business
C onditions............................. 184
There are signs that the
economy is still expand
ing.
Director of Research: Harry Brandt
Editor: Teresa Wright W iggins
Graphics: Susan F. Pope; Eddie Lee, Jr.
Monthly Review, Vol. LXI, No. 11. Free subscription
and additional copies available upon request to the
Research Department, Federal Reserve Bank of Atlanta,
Atlanta, Georgia 30303. Material herein may be reprinted
or abstracted, provided this Review, the Bank and the
author are credited. Please provide this Bank's Research
Department with a copy of any publication in which
^ ^ ^ ^ ^ ^ u d w iia te r ia M w e p i^
w
D EC EM B ER 1976, M O N T H L Y REVIEW
M o d e ra te E c o n o m ic E x p a n s io n
b y Harry Brandi
The last recession ended and the current
economic expansion began in the spring of
1975. Twenty months or so later, where does
this expansion stand compared to the recession
bottom and pre-recession high? Real output
(GNP corrected for inflation) is well above its
past peak. In other words, the recession loss
by this yardstick has not only been restored, but
the upswing was strong enough to carry the
nation's economy to a new high. Nonfarm
employment is also above its previous high,
and, after a severe decline, industrial produc
tion has bounced back to where it is nearly at
that point (see Chart 1).
But changes in the economy have taken
place so that there is still a long way to go
before it is truly on higher ground; moreover,
the pace of economic activity has slowed. One
of the most publicized statistics, the unemploy
ment rate, stood at 7.9 percent of the labor
force in October. This is a high figure when
compared to the 5-percent rate of 1973 and
early 1974. Moreover, the unemployment rate
has risen for three of the last four months.
Employment Paradox? The combination of
job growth and high unemployment may seem
like a paradox, but there is a partial explanation.
FEDERAL RESERVE BANK OF
ATLANTA
Job gains during the current economic expan
sion, although sizable, have been too small to
absorb the unusually large increase in women
and, to a lesser extent, youths seeking work.
The total civilian labor force, persons either
working or seeking work, grew at a faster rate in
this recovery than in previous ones. As a
result, the total number of people out of work
remained high, hovering around 71/ 2 million
(see Chart 2).
Yet layoffs have become less frequent during
the past year so that the number of job losers
among the unemployed has declined to nearly
50 percent. This is an improvement over the
almost 60-percent figure of mid-1975.
Interestingly, job gains for women during this
period have been greater than for men. But
since more women have entered the labor
force than men, the unemployment rate
for women has declined less.
So far, it's been largely a consumer recovery
(see Chart 3). Consumer spending surged
dramatically after the tax cut in early 1975;
residential construction has been a sporadic
but improving performer. More than anything
else, the change in inventories from liquidation
to accumulation may have been a driving
167
ECONOMIC EXPANSION
(1)
(2)
PARADOX?
C
ivilian labor
'Force
^UNEMPLOYEDS
Employed^
’75
Th Q
ird uarter*
76
O
ctober*
U ploym R
nem
ent ate
-W/ C ^ v v
T
J //M e n A y ^
'7
4
Septem
ber*
’75
'76
O
ctober*
Source: D p of Labor
e t,
SECTORS
’73
'74
76 T
hird ’7
3
Q
uarter*
75
76
Th Q
ird uarter*
Source: D p of Com erce
e t,
m
force in the recovery's early stages. Inventories
continued to add an important dimension to
overall demand until early 1976. Net exports
of goods and services also boosted the U. S.
economy's initial recovery considerably, but
faltered in 1976.
Business fixed investment, usually a slow
riser after a trough in general business activity,
is making its slowest postwar comeback of any
comparable period (see Chart 4). State and
local government, as well as direct federal
government spending on goods and services,
have increased only slightly. Federal outlays
in the third quarter, in fact, fell surprisingly
short of budget projections, contributing to
a slower pace in the economy.
168
Source:
D p of Com erce
e t,
m
Q
trs.from Trough
*Latest Plotting
One prominent signal of the economic
slowdown after a fast start was the declining
growth in industrial production (see Chart 5).
A retail-buying pause seemed largely
responsible, although strike activity also
influenced the August and September figures.
Retail sales, corrected for higher prices, grew
slowly in April and declined in May, July and
September. This flattening in retail sales slowed
the momentum of economic recovery as much
as anything else.
A Pause, Not a Stall. When placed in perspec
tive, such pauses in the recovery are common
(see Chart 6). Real GNP, on the average, has
risen at a faster rate in the first year of five
previous recovery periods than in the second
D EC EM B ER 1976, M O N T H L Y REVIEW
(5)
(6)
PAUSE
R GP
eal N
R GP
eal N
Industrial
Production
R Sales
etail
1st Year
jH ;,fl
10 2
no
% chg from previous m
onth
% chg.from previous m
onth
I
1st Year
■
Ii li
A
verage of F
ive
P
revious R
ecovery Periods
C rren R
u t ecovery
'2nd & 3rd Qtr.'76
.ill. J
jL
iillli. iiiii.i.ii
-
r
2Source: D p of Com erce
e t,
m
1375
1971
Septem
ber*
1975
1976
Source: Board of G
overnors, Fe eral Reserve System and D p o Com erce
d
,
e t, f
m
year. Correspondingly, real GNP increased
7 percent in the first year and slowed to a 4percent annual rate in the most recent two
quarters. So, recent performance is similar
to the past; it does not necessarily mean
the current recovery is about to abort. Only
in the recovery from the 1958 recession was
a year of sharp growth followed by low growth
and relapse into another recession.
Few experts think this will happen. Four
factors that have contributed, in varying degree,
to other downturns do not exist today (see
Chart 7). Inventories are not abnormally high.
Defense orders are on a slight uptrend. Interest
rates have been coming down and credit is
readily available. The rate of inflation,
measured by the broadest price measure
(GNP deflator), has decelerated from 12 per
cent per annum in late 1974 to 41 percent in
/2
third quarter 1976.
Although recession may not be in the nearterm economic outlook, prospective price
developments could be crucial to the life of
this expansion. Many believe double-digit
inflation was an important factor in the last
recession, since it cut into purchasing power
and then into spending. Price prospects may
therefore be a key to future consumer spending
and the ultimate staying power of the recovery.
In terms of total consumer prices, inflation
in recent months leveled off somewhere
between 5 and 6 percent, while food prices
moved unevenly (see Chart 8). They declined
in early 1976 and then rose slowly, leveling
off in September. The most recent Department
BANK OF ATLANTA
FEDERAL RESERVE
•Latest Plotting
of Agriculture report still forecasts a banner
year for corn production and a near record
for wheat, suggesting that the near-term out
look for food production and prices remains
favorable. But the lifespan of this trend is
unknown. The reduction in the cattle supply
is already exerting upward pressure on whole
sale beef prices.
Meanwhile, increases in nonfood commodity
prices speeded up this summer before slowing
in September. Consumer service prices
continued to rise at a moderately high rate,
partly because of increasing utility rates and
medical costs.
Prospects for consumer spending seem
favorable, as long as inflation is kept in check
and earnings keep rising. It is, therefore,
disappointing that per capita disposable income
(that is, income adjusted for taxes and inflation)
flattened in the third quarter (see Chart 9).
But on the plus side, consumer savings are still
rising, judging from the enormous savings flows
into nonbank thrift institutions. Consumers
have reduced their installment debt relative
to income, indicating that they can take on
more debt. Consumer sentiment has remained
fairly optimistic, further suggesting that con
sumer spending is likely to keep increasing,
but not necessarily at a rapid clip.
Car Sales A Key. Whether the economy
is about to regain some of its momentum
depends on several strategic sectors,
notably autos (see Chart 10). Domestic
auto sales in recent months have been
kept down by inadequate dealer supplies
169
CONSUMER PRICES, 1976
(8)
G in
allop g
■
Inflation?
'74
'75
'76
T ird Q arte
h u r*
Sou : D p o Com erce, an Board o G
rce e t, f m
d
f overn F d R
ors, e eral eserve System
(9)
Source: D p o Lab
e t, f or
STRATEGIC SECTORS
(10)
T ird Q
h uarter*
August*
H
ousing Starts
Single F ily
am
1
.2
-
0
.8
Mlti-F ily / _
u am
T h ird Q u a rte r
Septem
ber*
'73
Sou : M V
rce otor ehicle M D p o Com erce
frs., e t, f
m
of popular intermediate and large-size cars and
later by shortages caused by the Ford
strike, while smaller automobiles have
continued to sell slowly. Detroit's manufac
turers think the gas-saving 1977 models should
stimulate sales. They also hope that consumers
will like the trend toward less bulky auto
mobiles and not balk at the '77 models' price
boosts, which (for other than low-priced
models) were greater than the '76 increases.
Nondurable retail sales, such as food and
clothing, may be another important area to
watch for spending clues. These sales have
shown only moderate increases lately.
Single-family housing starts, meanwhile, have
170
'74
'75
'76
Septem
ber*
‘Latest Plotting
been rising from a low recession level,
although the high price of homes continues
to dampen demand. Construction has been
brisk in some parts of the country, weak in
others. Multifamily starts, on the other hand,
have remained in the doldrums, except for a
sharp increase in September, due to new
federal commitments for low-income apart
ments. Earlier overbuilding, lagging rents and
high construction costs have held down new
apartment building.
Business decision-makers have been watch
ing consumer spending trends, perhaps even
more closely than usual. Businesses have
recently been particularly cautious in their
D EC EM B ER 1976, M O N T H L Y REVIEW
(11)
C
orporate Profits
A T
fter axes
74
'75
'76
Second Q
uarter*
Source: D p o C m
e t, f om erce, Board o G
f overnors, Fe eral R
d
eserve System
Source: D p of Lab
e t,
or
(14)
Private N
onfarm Sector
Third Quarter*
Source: D p of Lab
e t,
or
inventory policies, adjusting stocks quickly as
consumer demand changed pace. They have
also been slow to increase their capital spend
ing.
Yet considerable evidence points to brighter
prospects for business spending over what it
was six months ago, especially for machinery
(see Chart 11). Contracts and orders for
plants and equipment, an early indicator of
business fixed investment spending, have been
on an uptrend since late 1975. Construction
contracts, representing commercial and
industrial floor areas to be built, have
moved up irregularly.
Rising corporate profits and a decrease in ex
FEDERAL RESERVE BANK OF ATLANTA
Septem (Com ercial P er)
ber*
m
ap
Source: Board o G
f overnors, F d ral R
e e eserve ‘Latest Plotting
cess plant capacity are other factors favoring
capital spending. In third quarter 1976, the
capacity utilization rate for materials industries
slightly exceeded 80 percent, compared to 70
percent in mid-1975, and a few industries are
already close to what they consider ideal
capacity. Nevertheless, the shortages of 1973-74
do not exist today, although bottlenecks in
the economy could develop rapidly if key
industries run out of excess capacity and
critical supplies from overseas become scarce
or are cut off.
The economy may be vulnerable to pressures
on prices of industrial commodities. Price
changes for this key group flared up briefly
171
CREDIT DEMAND AND LIQUIDITY
& FEDERAL RESERVE TARGETS
(15)
fl* )
Savings and loan
A
ssociations
L u ity
iq id
R
atio
Second Q arte
u r*
’73
'74
'75
'76
Septem
ber*
M Includes currency & private dem deposits.
]
and
M includes Mi plus bank tim & savings deposits, except large den. CD’s.
e
2
'From average of 2nd qtr.’7S
O
ctober* (Actual)
Source: Board of G
overnors, Fe eral Reserve System
d
last autumn, moderated this spring and
accelerated in recent months, even in the face
of soft markets (see Chart 12). Some of these
price hikes have recently been canceled.
But industrial prices could speed up if
producers succeed in passing more of their
cost increases on to their customers. Industrial
prices depend on many influences, including
OPEC's upcoming decision on oil prices, the
future strength of domestic and foreign
demand, fear of price controls, the speed with
which U. S. production approaches capacity
and labor costs.
So far, increases in hourly compensation
have not accelerated, despite boosts in some
large negotiated settlements (see Chart 13).
Unemployment has acted as a restraint,
especially in construction, where wage in
creases have been much less generous than
in previous years. Productivity, also crucial to
labor costs, showed good gains in the first
half of 1976. It typically slows as business
recoveries mature and production approaches
capacity. As a result, it is no surprise that
productivity gains slowed in the third quarter,
lr this development continues, unit labor costs,
which so far have risen modestly, are likely to
increase more rapidly. Then the upward
pressure of labor costs on prices would be
stronger.
172
*Latest Plotting
Credit Costs Drop. A surprising development
has been the continued decline in the cost of
credit. Atypical ly, interest rates now are lower
than earlier in the economic recovery (see Chart
14). Decreases have not been limited to short
term rates; they have extended to longer-term
rates as well, partly reflecting the reduction
in inflation and inflationary expectations.
Other developments contributed to this
downward pressure on interest rates. First, the
internal corporate cash flow has been large,
holding down short-term private credit
demands (see Chart 15). Largely for this reason,
the demand for commercial bank business
loans has been unusually weak for this stage
of the economic upturn. Credit demands from
other sectors, except the U. S. Treasury, have
been moderate. Second, the liquidity of
financial institutions has vastly strengthened,
permitting them to accommodate credit needs
at lower interest rates. Nonbank thrift institu
tions, including savings and loan associations,
have enjoyed sharply improving liquidity
ratios, as have commercial banks. Life insurance
companies and pension funds have also
experienced enormous cash flows. So, large
sums of loanable funds are available. Third,
the decline in interest rates partly reflects
monetary policy measures aimed at en
couraging sustainable economic recovery
D E C E M B E R 1976, M O N T H L Y REVIEW
without aggravating inflation (see Chart 16).
While the economy has lost some of its
momentum, the financial climate remains
conducive to a prolonged expansion.
In retrospect, the economy's slowdown
seems more like a pause than a full stop.
True, it remains vulnerable to sudden shifts
in expectations and influences abroad. How
ever, good progress has been made in
holding down inflation and should buoy
consumer spending. Capital spending and
housing should then add strength. Excessive
inventories are not currently a threat,
and financial conditions support continued
economic expansion.*
r
1
In d e x
January-February
March
..........
April
Mav
june
July
............ pages 1-16
.................... 17-32
............ ..........33-52
............
. . . 53-68
.......................69-84
.................... 85-100
fo 1 9 7 6
r
August ..................
September ............
October ................
November ............
December ............
. . pages 101-116
.............. 117-132
.............. 133-148
.............. 149-164
.............. 165-184
s
.J
AGRICULTURE
BANKING (see also BANKING NOTES)
Recent Changes in the Cattle Inventory
District Business Loan Inflows
Gene D. Sullivan, April, 47
Reshuffling 7.976's Planted Acreages to Increase
Crop Production Expenditures
Gene D. Sullivan, July, 91
APARTMENT BUILDING
Apartment Building in the Recovery
B. Frank King, June, 77
BANK ANNOUNCEMENTS
13,46, 62, 95,109
Joseph E Rossman, Jr., March, 26
.
The Growth of District M em ber Bank
Em ploym ent, Offices and Salaries
john M. Godfrey and Richard B. Lupton,
October, 135
Multibank H olding Com panies and Local
Market Concentration
David D. Whitehead and B. Frank King,
April, 34
A Profile of Alabama Banking Activity
William N. Cox, III, April, 44
Reserves Managem ent Strategy and
the Carry-Forward Provision
Stuart G. Hoffman, August, 102
Southeastern Banking in Recession
and Recovery
BANK LENDING
District Business Loan Inflows
Joseph E Rossman, Jr., March, 26
.
Loan Losses Surge in 1975
John M. Godfrey, November, 157
DigitizedFEDERAL RESERVE BANK OF ATLANTA
for FRASER
Stuart G. Hoffman and Richard A. Hendrix,
October, 141
Two Decades of Regional Participation in U. S.
Banking Activity
William N. Cox, III, March, 18
173
BANKING NOTES
HOLDING COMPANIES
Banks Reduce M unicipal Holdings
Multibank H olding Com panies and Local
Market Concentration
John M. Godfrey, September, 128
Changes in Time Deposits
John M. Godfrey, June, 80
David D. Whitehead and B. Frank King,
April, 34
Earnings Plunge in 1975
John M. Godfrey, July, 97
Treasury Securities Expand Rapidly
Richard Hendrix, May, 64
BANKING STRUCTURE
LABOR PRODUCTIVITY
Productivity and Change in the Southeast's
Manufacturing Sector
William D. Toal, September, 118
Multibank H olding Com panies and Local
Market Concentration
David D. Whitehead and B. Frank King,
April, 34
BOARD OF DIRECTORS
24-25
MANUFACTURING
Productivity and Change in the Southeast's
Manufacturing Sector
William D. Toal, September, 118
MONETARY POLICY
CATTLE
Recent Changes in the Cattle Inventory
Monetary Growth Objectives
Stuart G. Hoffman, December, 175
Gene D. Sullivan, April, 47
CONSTRUCTION
POLLUTION
Apartment Building in the Recovery
Sixth Federal Reserve District: Capital Spending
for Pollution Abatement
B. Frank King, June, 77
DEBITS TO DEMAND DEPOSIT
ACCOUNTS
15, 31, 51, 67, 83, 99,115,131,147,163,183
William D. Toal, August, 110
PORTS
Southeastern Ports
Brian D. Dittenhafer, November, 151
DISTRICT BUSINESS CONDITIONS
16, 32, 52, 68, 84,100,116,132,148,164 ,184
ECONOMIC CONDITIONS IN THE U. S.
The U. S. Econom y in Recovery
Harry Brandt, June, 70
RESERVES MANAGEMENT
Reserves M anagem ent Strategy and the
Carry-Forward Provision
Stuart G. Hoffman, August, 102
Moderate Econom ic Expansion
Harry Brandt, December, 167
RETAIL SALES
A Retail Sales Indicator for the Southeast
ECONOMIC AND FINANCIAL
CONDITIONS IN THE SOUTHEAST
Recession and Recovery in the Southeast:
A N e w Perspective
james T. Fergus, May, 54
Brian D. Dittenhafer, July, 85
SIXTH DISTRICT BANKING NOTES
See BANKING NOTES
The Southeast's Econom ic Review and Outlook:
A Slow Road to Recovery
William D. Toal and staff economists,
January-February, 2
174
SIXTH DISTRICT STATISTICS
14, 30, 50, 66, 82, 98,114,130,146,162,182
D EC EM B ER 1976, M O N T H L Y REVIEW
M o n e t a r y G r o w t h O b je c t iv e s
b y Stuart
G.
Hoffman
Recently, there has been considerable inter
est in monetary aggregate growth in relation to
the monetary growth objectives adopted by
the Federal Open Market Committee
(FOMC).1This article reviews the FOMC's
success in achieving its monetary growth
objectives since first publicly announcing
its longer-run monetary aggregate growth
ranges in May 1975. To make such an assess
ment, it is necessary to first distinguish between
the FOMC's longer-run and short-run
monetary growth intentions. To accomplish
this, we begin with a "primer" on the monetary
policy process. Its aim is to convey broadly
how the process works without delving
extensively into either the theoretical under
pinnings or technical details, both of which
’The 12-member FOMC consists of the seven members of the
System's Board of Governors, the president of the Federal Reserve
Bank of New York and four other regional Reserve Bank
presidents on a rotating basis. The seven nonvoting Reserve
Bank presidents participate fully in FOMC discussions.
FEDERAL RESERVE BANK OF ATLANTA
have been covered in other Federal Reserve
publications.2 This primer, just as any other,
runs the danger of making a complicated and
sophisticated process seem much simpler and
more mechanical than it really is. Monetary
policy involves much more than simply track
ing monetary aggregate growth, although
that is a very important part of the process.
An abstraction from many of the difficulties
and subtleties is made so that the basic
process is more understandable.
LONGER-RUN STRATEGY
This examination of the monetary policy
process begins with the Fed's longer-run
*For more technical descriptions of the monetary policy process,
see Raymond E. Lombra and Raymond G. Torto, "The Strategy
of Monetary Policy," Economic Review, Federal Reserve Bank of
Richmond, September/October 1975; William Poole, "The Making
of Monetary Policy: Description and Analysis," New England
Economic Review, Federal Reserve Bank of Boston, March/April
1975; "Numerical Specifications of Financial Variables and
their Role in Monetary Policy," Federal Reserve Bulletin, May
1974, pp. 333-37.
175
Figure 2
Figure 1
FOMC
L o n g e r-R u n
(4 Q ) G r o w t h R a n g e s *
(2Q’76-2Q'77)
Money Stock Definitions
M O N EY STO CK
C o n su m e r
T im e a n d S a v in g s
D e p o sits
GROW TH RAN G ES
M i
M
2
4 V 2 -7 %
7 1 /2 -9 V 2 %
@ N onbank T hrifts
Ms
C o n su m e r
T im e an d S a v in g s
D e p o sits
‘ A dopted by th e FOMC a t its July 1976 m ee tin g
M:
@ B anks
P riva te D e m a n d D e p o s it s
(SBanks
9 -1 1 %
M;
“ Mi
C u rre n c y
L o n g e r - R u n (4 Q ) M i G ro w th P a t h s
(2Q’76-2Q'77)
330
320
310
IQ
strategy for monetary growth. Since May 1975,
in accordance with House Concurrent Resolu
tion 133, Chairman Burns has been testifying
quarterly to Congress about the longer-run
monetary growth ranges adopted by the FOMC
for the period four quarters ahead. At ap
proximate quarterly intervals, therefore, the
FOMC reviews its longer-run monetary growth
ranges in light of interim economic and
financial developments. The Committee is
aided in its discussion by staff projections of the
likely differential effects of alternative monetary
growth paths on the rates of unemployment,
inflation and real economic growth four to six
quarters into the future. After thorough
Heliberation, during which any FOMC member
may question the staff's projections and put
forth his own, specific longer-run monetary
and credit growth objectives are adopted. The
selected growth ranges reflect the FOMC's
best assessment of the ranges most consistent
at that time with the nation's broad economic
goals of price stability, low unemployment and
sustained real economic growth. The monetary
and credit objectives are expressed as per
centage growth rate ranges for the Mi, M 2 and
Ms definitions of the nation's money stock
176
2Q
19 7 7
and for the bank credit proxy for the up
coming four-quarter period. (See Figure 1 for
definitions of Mi, M 2, Ms.)
The top box in Figure 2 shows the longer-run
monetary growth ranges adopted by the FOMC
at its July 1976 meeting for the second quarter
of 1976 to the second quarter of 1977 period.
The Mi range was set at 4 V2 to 7 percent; M 2
at 7V2 to 91 percent; Ms at 9 to 11 percent;
/2
and the bank credit proxy at 5 to 8 percent, all
based on their second-quarter 1976 averages.
The bottom panel in Figure 2 illustrates the
growth range for Mi with a "growth ray." The
upper path represents a 7-percent growth, and
the lower path a 41
/2-percent growth in Mi
from its second-quarter 1976 average of
$303 billion (the apex of the ray). The FOMC
expected actual growth of Mi to fall some
where between the upper and lower growth
paths, implying that the level of Mi should
average somewhere between $316 billion and
D EC EM B ER 1976, M O N T H L Y REVIEW
$324 billion in the second quarter of 1977.
Similar growth rays are constructed for M 2 M 3
,
and the bank credit proxy.
SHORT-RUN STRATEGY
Having selected a set of longer-run monetary
objectives thought to be consistent with its
broad economic goals, the FOMC must then
develop short-run operating instructions
for the Open Market Trading Desk, located
at the Federal Reserve Bank of New York.
These instructions are designed to achieve
the Committee's longer-run monetary
growth ranges with a minimum of short-run
interest rate variability. Meeting each
month, the FOMC reviews recent economic
and financial developments, both domestically
and internationally. The Committee also
considers the likely influence of transitory
factors, such as Treasury cash management
behavior, on near-term monetary growth
and the current levels of Mi and M 2
relative to their respective longer-run growth
paths. The FOMC discusses several alterna
tive short-run Mi and M 2 growth ranges, each
consistent with the ultimate attainment of
the Committee's longer-run growth objectives
for Mi and M 2, but following different nearterm growth patterns. Combining judgmental
evaluations with econometric estimates of the
past relationship between monetary
aggregate growth and money market condi
tions, the Committee's staff estimates a
federal funds rate range it believes is
consistent with each alternative set of Mi
and M 2short-run growth ranges. At the
conclusion of these discussions, the FOMC
selects a preferred set of short-run Mi and M 2
growth ranges, often somewhat different
from the alternative short-run monetary
growth ranges presented by its staff. The
short-run growth ranges are expressed as
two-month average growth bands covering
the month of the meeting and the following
month. The FOMC then directs the Desk
Manager to conduct open market operations
aimed at maintaining the Federal funds
rate within the range associated with the
selected set of short-run Mi and M 2 growth
ranges3. If it subsequently becomes apparent
that the short-run monetary growth and Federal
BAN K OF ATLANTA
FEDERAL RESERVE
funds rate ranges are turning out to be in
consistent, the Desk Manager notifies the
Committee Chairman. If an intermeeting
change in the funds rate range seems necessary,
the Chairman will resolve the question with
other FOMC members in a special telephone
conference or by telegram. Intermeeting
adjustments of this type occur infrequently.
FOMC DIRECTIVE
The Fed funds rate is the "handle" the FOMC
uses to try to achieve its short-run monetary
growth targets. The Desk will ordinarily be
directed to hold the funds rate near its prevail
ing level so long as Mi and M 2 are projected by
the staff to grow within their specified twomonth ranges. If, as the intermeeting period
progresses, the projected Mi and M 2 growth
rates appear to move above (below) the
upper (lower) ends of their respective twomonth tolerance ranges, the Desk would ordi
narily adjust reserve availability consistent with
pushing the funds rate toward the upper
(lower) end of its target range. However,
the FOMC may instruct the Desk to maintain
the prevailing funds rate even when projected
monetary growth is outside its short-run growth
range if (1) the Committee prefers to give
priority to money market conditions or (2)
the Committee questions the accuracy of the
two-month Mi and M 2 projections and prefers
to wait for more confirming data on monetary
growth.
Desk open market operations— primarily
purchases or sales of U. S. government
securities— affect the amount of reserves
available to the banking system and, thereby,
influence movements in the Federal funds
rate. Other policy tools, such as reserve
requirement ratios and the discount rate,
are available and are used occasionally, but
open market operations provide the most
flexible and frequently used means for imple
menting policy.
An example illustrates how this process
3As an example, at the September 1976 meeting, the FOMC
specified that Mi should grow between 4 and 8 percent and
M 2 between 8 and 12 percent at an annual rate in the
September-October period. A funds rate between 43 and 5 2
/<
V
percent in the intermeeting period was considered to be
consistent with those short-run monetary growth bands.
177
Figure 3
FOMC Short-Run (2-Mo.) M i Ranges
_____ R a n g e
A c tu a l G row th
- 15
— 10
-
5
-
0
(+)
{-)
J
J
J
D
J
J
J
D
J
J
J
J
J
FOMC Short-Run (2-Mo.) M 2 Ranges
J
J
J
N
FOMC Short-Run Fed Funds Ranges
J
J
1975
works. Assume that Mi and M 2 are projected to
grow within their respective two-month
tolerance ranges and the Desk is instructed
to maintain the funds rate at about its
prevailing level. If other factors, such as
178
19 7 6
changes in float or U. S. Treasury cash balances,
are draining reserves from the banking system
and putting upward pressure on the funds rate,
the Desk would buy U. S. government securi
ties from U. S. government securities dealers,
D EC EM B ER 1976, M O N T H L Y RE V IEW
a so-called open market purchase .4The Fed
normally pays for the securities with im
mediately available funds, which the selling
bond dealer deposits in his bank, increasing
the bank's reserves and, in turn, reserves in
the commercial banking system. This mitigates
the reserve drain from other sources and
helps relieve the upward pressure on the funds
rate. In the opposite case, where changes in
these other factors are supplying reserves to
the banking system and putting downward
pressure on the funds rate, the Desk would sell
U. S. government securities to the dealers, a
so-called open market sale.5 When each dealer
pays for his acquired securities, this decreases
the dealer's bank's reserves and thus decreases
reserves in the commercial banking system.
This helps offset the reserves supplied by
other factors and tends to relieve the down
ward pressure on the Fed funds rate.
SHORT-RUN GROWTH RANGES
The top panel in Figure 3 illustrates the
actual growth in Mi and its short-run (twomonth) growth bands specified by the FOMC
since early 1975. The height of each vertical
bar represents the annualized two-month
growth in Mi during the two months in which
that bar is centered. The dashed horizontal
lines illustrate the upper- and lower-tolerance
boundaries set by the FOMC for each twomonth period. The middle panel shows similar
information for M 2. These charts clearly show
that the Fed has had some difficulty achieving
its two-month monetary growth ranges. In
the 21 two-month periods since the beginning
of 1975, Mi and M 2 growth fell within their
respective ranges only eight and 12 times,
respectively. The Fed has undershot its shortrun Mi range in 10 of the other 13 bimonthly
periods, while the nine other two-month
periods for M 2are nearly evenly split between
4The Desk often buys U. S. government securities under the
condition that the dealers agree to buy the securities back within a
short time period. Such an arrangement is referred to as a
Repurchase Agreement (RP). It has the advantage of temporarily
supplying reserves to the banking system when the Fed feels
those reserves are needed for only a short period of time.
■If the Desk agrees to buy the securities back from the dealers
"
’
after a short period of time, this transaction is referred to as a
matched sale-purchase transaction.
FEDERAL RESERVE BANK OF ATLANTA
over-and undershoots. The Desk's success has
been much greater in achieving the FOMC's
Federal funds rate range, as the bottom panel
in Figure 3 clearly shows. Almost without
exception, the weekly average Fed funds rate
has been within its tolerance range since the
beginning of 1975.
Although the Desk has consistently achieved
the FOMC's prescribed funds rate range,
monetary growth has more often than
not been outside the FOMC's short-run ranges.
These monetary-growth misses have at least
two different causes. First, the FOMC and
Desk Manager must act on preliminary money
stock data available to them at the time.
Subsequent data revisions and benchmarks
sometimes change the Mi and M 2 growth rates,
causing them to fall outside their respective
short-run ranges. Second, and more important
ly, the relationship between the Fed funds
rate and monetary growth is not precise over
periods as short as two months. Other factors
influencing monetary growth, such as the
national income growth and Treasury cash
balances, shift erratically during such a short
period of time. Additionally, changes in the
Fed funds rate are generally thought to affect
growth in Mi and M 2 with a lag that runs
beyond the two-month control period. Closer
short-run control could probably be exercised
over monetary growth if the FOMC were will
ing to tolerate larger and more erratic
intermeeting movements in the Fed funds
rate by establishing a wider range of tolerance
for it. However, the greater variation in the Fed
funds rate would likely contribute to
greater interest rate variability in other financial
markets as well, in conflict with the FOMC's
desire to avoid widely fluctuating money and
capital market conditions in the short-run.
LONGER-RUN GROWTH RANGES
The method used here to assess the degree to
which the Federal Reserve has achieved its
longer-run monetary objectives is to compare
the levels of Mi, M 2 and Ms to those implied
by their respective upper and lower growth
paths at the end of the period to which those
growth ranges apply. This allows an assessment
to be made only after each period ends and
thus the discussion is limited to the first three
179
180
sets of longer-run monetary objectives adopted
by the FOMC. One drawback of this approach
is that it does not take explicit account of the
interim growth path of the monetary aggregates
between the beginning and end of each period.
However, tentative evidence suggests that
fairly large monthly or quarterly deviations
from the longer-run objectives do no significant
harm to the economy, if monetary growth over
perhaps a four-quarter period averages out
within the FOMC's growth ranges. While the
assessment here gives greater emphasis to endof-period levels compared to those levels
implied by the FOMC's upper and lower
growth paths, the "growth ray" diagram out
lined earlier is used to illustrate the interim
pattern of monetary aggregate growth.
At its April 1975 meeting, the FOMC adopted
initial longer-run (1 2 -month) growth ranges
of 5 to 71/2 percent for Mi, 8 V2 to 10 1/2
percent for M 2, and 10 to 12 percent for M 3,
based on their March 1975 levels. Figure 4
shows the March 1975 to March 1976 growth
of Mi (top panel), M 2 (middle panel) and
M :i (bottom panel) in relation to their respective
longer-run "growth rays." Despite fluctuations
in the month-to-month growth rates during
this period, the March 1976 level of Mi was
nearly equal to that called for by its lower
path; the March 1976 level of M 2 was at the
midpoint of its longer-run growth range; and
the March 1976 level of Ms was just slightly
above that consistent with its upper growth
path.
At its July 1975 meeting, the FOMC consid
ered the economic situation essentially un
changed from several months earlier and,
therefore, maintained the 5- to 71/2, 8V2- to
IOV 2- and 10- to 12-percent longer-run ranges
for Mi, M 2 and M 3, respectively. However,
the base period was changed to the second
quarter of 1975, instead of the final month
of the base quarter. At its October 1975
meeting, the FOMC again retained a 5- to W 2 percent range for Mi and moved its base period
ahead to the third quarter of 1975. Both
the M 2 and M 3 longer-run growth ranges were
widened by a one-percentage-point reduction
in the lower end and were also based on the
third quarter of 1975. These adjustments were
made because a rise in market interest rates
from heavy Treasury borrowings was expected
to moderate savings inflows to depository
institutions.
Figure 5 shows the actual quarterly average
D EC EM B ER 1976, M O N T H L Y REVIEW
growth of Mi, M 2 and M 3 relative to their
respective longer-run ranges for the second
quarter 1975-second quarter 1976 (2Q '75-'76)
and third quarter 1975-third quarter 1976
(3Q '75-76) periods. The top panel shows Mi
averaged $302.8 billion in the second quarter
of 1976, within but very near the lower end
of its range. In the third quarter of 1976, Mi
averaged $305.9 billion, about $1 1/2 billion
below the level consistent with the lower end
of its longer-run growth range. In other words,
Mi grew by 41/2 percent in the 3Q '75-76
period, slightly less than its 5-percent lower
growth rate. The middle panel of Figure 5
indicates that M 2 equaled $695.0 billion in the
second quarter and $710.9 billion in the third
quarter of 1976. This means that M 2 grew 91
A
percent in the 2Q '75-76 period, at the mid
point of its growth range. M 2 grew at a rate
slightly above the midpoint of its growth range
in the 3Q '75-76 period. This panel clearly
shows second and third quarter 1976 levels
of M 2 comfortably within the FOMC's longerrun growth ranges. The bottom panel of
Figure 5 shows that the second and third
quarter 1976 levels of M 3 were about equal
to the levels consistent with the upper ends of
the Committee's longer-run growth ranges.
That is, M 3 grew by 12 and H V 2 percent in
the 2Q '75-76 and 3Q '75-76 periods, respec
tively, at the upper limits of the Committee's
desired longer-run growth ranges6
.
An overall assessment of the System's per
formance in attaining its monetary objectives is
complicated by the existence of multiple
monetary aggregate growth ranges and multiple
time periods to which those ranges apply.
However, the results suggest that the FOMC
basically achieved its first three sets of
publicly announced longer-run monetary
growth objectives.*
Figure 5
1975
1976
7 20
700
680
660
640
2Q
FOM C
3Q
19 7 5
4Q
L o n g e r-R u n
IQ
2Q
1976
3Q
(4 Q ) M s G r o w t h R a n g e s
(2Q’75-2Q’76 and 3Q’75-3Q’76)
1187.3
1180
1140
1100
1060
G the time of this writing, the FOMC has adopted three
At
other sets of longer-run monetary growth ranges, in
every case moving the base period forward one quarter,
for time periods not yet ended. Interim comparisons
of Mi, M 2 and M 3 growth relative to their respective longer-run
“growth rays” suggest the same pattern noted above: Mi growth
has been about equal to its lower growth rate, M 2 growth has
remained within, but toward the upper end of, its growth
range and M 3 growth has been at the top of its growth range.
FEDERAL RESERVE BAN
http://fraser.stlouisfed.org/ K OF ATLANTA
Federal Reserve Bank of St. Louis
1026.1
1020
3Q
1975
2Q
1976
181
S ix t h D i s t r i c t S ta tis tic s
S e a s o n a lly A d ju ste d
(A ll d a t a a r e i n d e x e s ,
Latest Month
1976
One
Month
Ago
Two
Months
Ago
One
Year
Ago
SIXTH DISTRICT
One
Month
Ago
TWo
Months
Ago
One
Year
Ago
6.8
40.6
7.0
40.5
6.9
40.7
7.9
40.2
308
251
346
304
247
332
295
242
319
269
226
293
139.0
197.2
137.6
442.4
135.5
240.1
148.1
Sept.
Sept.
Sept.
Sept.
Sept.
109.0
99.0
109.1
97.9
110.9
61.8
99.2
109.9
97.5
111.9
62.3
107.8
Sept.
Sept.
9.4
39.9
9.6
9.2
Member Bank L o a n s ........................... . Oct.
Member Bank D e p o s i t s .................. . Oct.
Bank D e b i t s * * ................................... . Sept.
300
264
379
297
264
403
295
262
367
285
247
322
M anufacturing I n c o m e ...................... .... Sept.
Farm Cash R e c e ip ts ............................... Aug.
132.0
132.3
128.8
264.8
133.0
119.3
Sept.
Sept.
Sept.
Sept.
Sept.
103.1
95.9
105.9
73.0
106.2
102.7
94.9
105.7
72.2
115.7
103.0
95.9
105.7
72.7
100.9
91.8
104.5
76.5
102.3
Sept.
Sept.
6.2
6.5
40.0
40.1
40.1
Latest Month
1976
Unemployment Rate
(Percent of Work Force)*** . . . . Sept.
Average Weekly Hours in Mfg. (Hrs.) . Sept.
INCOME AND SPENDING
Manufacturing I n c o m e .......................... Sept.
. Sept
Farm Cash R e c e ip t s ...............................Aug,
Aug.
C r o p s .....................................................Aug.
Aug.
Livestock
............................................ Aug.
Instalm ent Credit at Banks*/1 (Mil. $)
New Loans ............................................ Sept.
R e p a y m e n t s ........................................Sept
Sept.
Retail Sales ............................................ Aug.
. Aug
140.8
189.9
165.0
200.9
138.0
287.7
480.3
215.6
138.8
228.0
290.4
211.8
125.8
176.8
151.6
184.9
806
779
149.0
869
789
146.5r
819
723
145.5r
791
730
132.6
106.5
97.7
98.8
96.5
95.3
96.1
98.8
105.9
104.6
96.4
88.7
91.6
98.4
95.3
108.2
93.9
109.2
81.2
104.4
107.6
113.3
116.8
106.9
118.2
91.9
106.1
96.8
98.0
95.7
95.3
97.3
98.8
106.0
104.6
95.3
87.3
91.0
98.2
94.8
107.8
91.4
109.0
80.3
104.3
107.8
112.9
116.3
106.6
119.0
94.5
106.7
97.3
98.1
95.9
96.5
96.3
98.9
106.0
104.5
96.3
105.3
94.6
96.1
95.7
92.4
93.8
95.0
103.8
7.6
7.8
7.4
9.0
3.8
40.1
174
168
179
74.9
3.8
40.4
190
184
195
65.3
148.0
146.3
126.8
149.7
126.9
146.0
129.6
163.9
150.8
162.1
133.5
138.8
104.1
3.8
40.5
205
175
234
79.3
86.3
148.1
147.3
129.7
146.2
133.3
145.4
129.4
163.1
149.7
160.7
135.6
137.3
102.5
5.0
40.3
168
147
188
69.5
91.5
144.0
145.6
126.5
142.4
128.1
138.0
127.8
161.8
141.5
146.4
132.6
144.3
157.9
254.9
150.7
157.7
253.5
147.2
145.6
227.7
134.9
EMPLOYMENT AND PRODUCTION
Nonfarm E m p lo y m e n t.......................... Sept.
M anufacturing
...............................
Sept.
Nondurable G o o d s ......................
Sept.
F o o d ............................................ .... Sept.
Textiles
...................................
Sept.
Apparel
...................................
Sept.
Paper ........................................
Sept.
Printing and Publishing . .
Sept.
C h e m i c a l s ...............................
Sept.
Durable G o o d s ..........................
Sept.
Lbr., Woods Prods., Furn. & Fix. Sept.
Stone, Clay, and Glass . . .
Sept.
Primary M e t a l s ......................
Sept.
Fabricated M e t a l s .................
Sept.
M a c h i n e r y ...............................
Sept.
Transportation Equipment
Sept.
N o n m an u factu rin g ..........................
Sept.
C o n s t r u c t i o n ...........................
Sept.
Transportation
......................
Sept.
T r a d e ........................................
Sept.
Fin., ins., and real est. . .
Sept.
S e r v i c e s ...................................
Sept.
Federal Government . . . .
Sept.
State and Local Government
Sept.
Farm E m p lo y m e n t...............................
Sept.
Unemployment Rate
(Percent of Work Force) . . . .
Sept.
Insured Unemployment
(Percent of Cov. E m p .) ..................
Sept.
Average Weekly Hours in Mfg. (Hrs.)
Sept.
Construction C o n t r a c t s * ..................
Sept.
R e s id e n tia l........................................
Sept.
All O t h e r ............................................
Sept.
Cotton C o n su m p tio n * *......................
Aug.
Petroleum P r o d u c ti o n '..................... . Sept.
M anufacturing Production . . . .
Aug.
Nondurable G o o d s ..........................
Aug.
Food
........................................
Aug.
Textiles
...................................
Aug.
Apparel
...................................
Aug.
Paper
........................................
Aug.
Printing and Publishing . .
Aug.
Chemicals ...............................
Aug.
Aug.
Durable G o o d s ...............................
Lumber and W o o d ..................
Aug.
Aug.
Furniture and Fixtures . . .
Stone, Clay, and Glass . .
Aug.
Primary M e t a l s ...................... • Aug.
Fabricated M e ta l s .................. . Aug.
Nonelectrical Machinery . . . Aug.
Electrical Machinery . . . . Aug.
Transportation Equipment
. Aug.
88.0
148.1
146.0
125.1
146.5
125.7
146.6
129.7
165.8
151.7
163.5
132.8
140.8
104.1
109.7
159.5
257.7
151.5
86.6
111.8
88.0
90.9
98.2
96.3
108.5
94.5
109.7
80.3
104.2
108.3
112.7
116.6
106.5
121.2
97.5
112.2
101.0
92.6
85.3
91.0
92.7
95.2
102.6
90.2
108.7
FINANCE AND BANKING
Member Bank L o a n s ............................... Oct.
Member Bank D e p o s its ...........................Oct.
Bank D e b i t s * * ........................................Sept.
F L O R ID A
M anufacturing I n c o m e ...........................Sept.
Farm Cash R e c e ip ts ............................... Aug.
101.2
112.1
. Oct.
, Oct.
282
277
275
220
263
225
. Oct.
. Oct.
Sept.
239
199
366
237
197
373
235
195
346
223
190
322
. Sept.
144.0
232.2
139.6
304.9
141.6
267.9
EMPLOYMENT
Nonfarm E m p lo y m e n t..........................
M anufacturing
...................................
N o n m a n u fa c tu rin g ...............................
Construction ...................................
Farm E m p lo y m en t............................... ....
Unemployment Rate
(Percent of Work Force)*** . . .
Average Weekly Hours in Mfg. (Hrs.)
110.2
100.1
114.7
121.6
108.9
98.1
113.7
121.7
117.7
110.0
107.6
97.6
220
1 .6
10
62.7
98.6
108.8
94.6
111.1
71.2
100.1
11.2
39.7
FINANCE AND BANKING
202.8
111.6
EMPLOYMENT
Nonfarm E m p lo y m e n t......................
M anufacturing
...............................
N o n m a n u fa c tu rin g ..........................
C o n s t r u c t io n ...............................
Farm Employment
...........................
Unemployment Rate
(Percent of Work Force) . . . .
Average Weekly Hours in Mfg. (Hrs.)
39.5
112.8
6.2
8.2
FINANCE AND BANKING
Member Bank L o a n s ...........................
Member Bank D e p o s i t s ..................
Bank D e b i t s * * ...................................
Oct.
Oct.
Sept.
200
250
198
432
256
195
407
240
193
402
Sept.
Aug.
147.6
191.0
142.2
142.1
209.4
132.3
351.6
105.1
105.8
101.9
71.8
105.4
100.7
106.3
102.7
76.7
105.4
100.7
106.3
103.2
71.4
258
442
LO U IS IA N A
200.8
EMPLOYMENT
Farm Employment
...........................
Unemployment Rate
(Percent of Work Force)*** . . .
Average Weekly Hours in Mfg. (Hrs.)
Sept.
Sept.
Sept.
Sept.
Sept.
106.1
101.2
107.0
104.0
67.8
101.2
Sept.
Sept.
7.2
41.8
7.7
41.2
7.8
41.5
7.1
41.9
Oct.
Oct.
Sept.
249
227
301
245
245
295
275
241
207
279
Sept.
Aug.
129.1
219.2
221
122.0
86.1
101.5
106.9
112.9
115.6
106.8
116.9
90.5
FINANCE AND BANKING
Loans*
All Member Banks . . .
Large Banks ......................
Deposits*
All Member Banks . . .
Large Banks ......................
Bank Debits*/**
..................
i
156.6
252.3
159.0
279.3
157.7
276.6
200.8
Sept.
Sept.
Sept.
Sept.
Sept.
106.5
99.5
109.9
106.7
99.2
110.3
99.4
73.5
FINANCE AND BANKING
Member Bank L o a n s * ......................
Member Bank D e p o s its * ..................
Bank Debits*/**
...............................
220
220
M IS S IS S IP P I
EMPLOYMENT
M anufacturing
Non m anufacturing
12
8
140.0
EMPLOYMENT
.
.
.
.
.
Sept.
Sept.
Sept.
Sept.
Sept.
108.2
98.8
115.0
118.4
116.7
112.0
121.9
110.1
Manufacturing
Farm Employment
100.8
78.3
107.2
100.0
110.6
98.6
87.4
104.3
96.7
108.0
93.9
67.8
DE C E M B E R 1976, M O N T H L Y REVIEW
One
Two
Month Months
Ago
Ago
Latest Month
1976
Unemployment Rate
(Percent of Work Force)*** . . .
Average Weekly Hours in Mfg. (Hrs.)
One
Year
Ago
One
Two
Month Months
Ago
Ago
One
Year
Ago
Sept.
Sept.
Sept.
Sept.
Sept.
103.6
95.2
107.9
80.9
99.9
103.4
94.4
108.1
80.3
96.9
103.9
95.1
108.5
80.4
96.1
103.1
92.1
108.7
92.5
101.3
Sept.
Sept.
7.2
40.3
7.2
40.6
6.7
40.6
8.8
40.5
284
235
309
278
232
316
271
228
284
271
218
268
EM P L O Y M E N T
Sept.
Sept.
FINANCE AND BANKING
Member Bank Loans*
Member Bank Deposits*
Bank Debits*/** . . .
Oct.
Oct.
Sept.
286
247
326
284
244
330
277
245
327
139.3
227.0
136.0
247.8
136.2
256.2
Nonfarm Em ploym ent.................... .
Manufacturing ............................ .
Nonmanufacturing....................... .
C onstruction................................
Farm Employment ........................ .
Unemployment Rate
(Percent of Work F o r c e )................
Average Weekly Hours in Mfg. (Hrs.) .
257
225
281
, Sept.
Aug.
124.5
163.3
*For Sixth District area only; other totals for entire six states
♦♦♦Seasonally adjusted data suDDlied bv state aepnrip<;
Note:
Latest Month
1976
FINANCE AND BANKING
Member Bank Loans* . . . . . . . Oct.
Member Bank Deposits* . . . . . . Oct.
Bank Debits*/** ....................
**Daily average basis
tPreliminary data
r-Revised
N.A. Not available
All indexes: 1967 = 100, except mfg. income, employment, and retail sales, 1972 = 100.
Sources: Manufacturing production estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. income 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 Div., McGraw-Hill Information Systems Co.; pet. prod., U.S. Bureau of
.
Mines; 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.
■Data have been bench marked and new trading day factors and seasonal factors computed using December 31, 1974 and June 30, 1975 Report of Condition data as bases.
D e b i t s
t o
D e m a n d
D e p o s i t
A c c o u n t s
I n s u r e d C o m m e r c i a l B a n k s in t h e S i x t h D i s t r i c t
(In Thousands of Dollars)
Sept.
1976
August
1976
Sept.
1975
6,324,868
129,082
462,776
1,372,425
975,452
299,031
5,987,793
126,885
460,064
1,391,314
967,329
307,196
4,995,976
115,521
459,642
1,284,278
864,557
293,456
900,643
482,221
933,334
551,035
+
+
+
+
-
Sept.
1975
278,497
99,596
242,467
95,043
230,446
97,062
177,566
87,158
205,257
43,684
1,018,250
2,233,437
+ 13
+ 15
+ 14
- 0
+28
+ 8
Bradenton . .
Monroe County
Ocala . . . .
St. Augustine .
St. Petersburg .
Tampa . . . .
196,271
81,850
213,687
48,054
1,163,695
2,365,333
201,996
89,525
220,482
52,566
1,111,518
2,363,859
818,853
429,589
- 4
-12
+ 10
+ 12
+10
+ 9
+ 7
+ 2
+20
-22
+42 +30
+ 14 + 2
+33 + 8
+ 14 +30
Athens . . . .
Brunswick . .
Dalton . . . .
Elberton . . .
Gainesville . .
Griffin . . . .
LaGrange . . .
Newnan . . .
Rome . . . .
Valdosta . . .
194,354
117,046
212,326
33,379
203,730
81,958
42,065
57,045
173,562
128,712
181,787
122,449
240,336
34,227
199,691
85,560
46,380
54,493
173,216
127,131
Abbeville . .
Bunkie . . . .
Hammond .
New Iberia .
Plaquemine .
Thibodaux .
22,552
14,860
93,857
100,987
33,623
63,419
.
.
2,312,952
423,060
284,740
7,850,354
1,743,354
378,481
257,860
5,332,250
414,551
8,944,039
1,991,471
723,782
464,616
999,426
4,542,474
1,150,131
414,236
9,086,437
2,013,894
753,304
468,802
1,179,965
4,451,016
1,181,886
393,296 + 0 + 5
7,206,281 - 2 +24
1,602,485 - 1 + 24
643,580 - 4 + 12
497,869 - 1 - 7
970,446 -15 + 3
4,208,882 + 2 + 8
1,006,333 - 3 + 14
Albany ...............
A tlan ta...............
Augusta . . . .
Columbus . . . .
Macon ...............
Savannah . . .
223,598
25,863,625
828,518
556,398
824,075
1,408,458
210,082
25,035,432
848,398
573,225
819,230
1,439,498
199,836
23,670,979
614,000
501,419
926,485r
1,096,493
376,643
2,169,237
491,361
356,524
6,205,510
363,420
2,221,969
502,481
325,456
6,190,613
331,649
2,218,900
430,706
306,196
5,820,305
+ 4 + 14
- 2 - 2
- 2 + 14
+ 10 + 16
+ 0 + 7
+ 9
+ 2
+ 15
+ 13
+ 8
Biloxi-Gulfport
Jackson . . . .
358,527
2,302,931
371,632
2,432,062
294,872
1,840,565
- 4
- 5
+22
+22
Chattanooga . .
Knoxville . . . .
Nashville . . . .
1,343,422
1,718,779
5,045,829
1,362,705
1,335,369
1,750,151 r 1,517,861
5,557,553
4,192,476
THER CENTERS
Anniston . . .
156,316
154,682
August
1976
+27
+ 12
+ 1
+ 7
+ 13
+ 2
2,467,236
431,359
342,727
6,089,229
. .
. .
. .
. .
. .
Sept.
1976
6
2
1
1
1
3
Bartow-LakelandWinter Haven .
Daytona Beach
Ft. LauderdaleHollywood . .
Ft. Myers . . .
Gainesville . . .
Jacksonville . .
MelbourneTitusville-Cocoa
M iam i................
Orlando . . . .
Pensacola . . .
Sarasota . . . .
Tallahassee . . .
Tampa-St. Pete
W Palm Beach
.
Alexandria .
Baton Rouge
Lafayette . .
Lake Charles
New Orleans
to
Dothan . . . .
Selma . . . .
STANDARD METROPOLITAN
STATISTICAL AREAS2
Birmingham . ,
Gadsden . . . .
Huntsville . . .
M o b ile ...............
Montgomery . .
Tuscaloosa . . .
Percent Change
Year
Percent Change
Year
to
Sept.
date
1976
9 mos.
from
1976
Aug. Sept. from
1976 1975 1975
130,913
+
+
+
-
6
3
2
3
1
2
+ 3
+ 16
+ 19
+35
- 4
+ 3
+ 8
+ 7
+ 12 + 7
+ 9 + 15
+ 35 + 15
+ 11 + 11
-11 + lr
+28 +37
+22
+ 25
- 1 + 1 + 3
- 2 + 13 +10r
- 9 +20 + 11
+ 1 + 19
+ 16
Sept.
date
1976
9 mos.
from
1976
Aug. Sept. from
1976 1975 1975
+ 15 +21
+ 5 + 3
+ 19
+16
+
+
3
9
3
9
5
0
+ 11
- 6
+ 4
+ 10
+ 14
+ 6
+ 5
-1 7
+ 2
+ 9
+10
+ 7
188,212 + 7
124,716 - 4
202,036 -1 2
31,624 - 4
182,161 + 2
77,225 - 4
41,136 - 9
46,566 + 5
196,603 + 0
107,751 + 1
+ 3
- 6
+ 5
+ 6
+ 12
+ 6
+ 2
+23
-12
+ 19
+13
+ 6
+22
+20
+ 14
+ 12
+ 15
+ 15
+ 6
+ 11
20,168
12,213
98,671
96,393
27,448
63,844
20,524
16,997
101,146
82,505
29,046
60,698
+ 12
+22
- 5
+ 5
+22
- 1
+ 10 + 9
-1 3 - 7
- 7 - 6
+22 + 14
+16 - 9
+ 4 - 2
181,403
93,683
149,204
72,856
179,311
99,598
159,367
71,699
158,239
96,140
139,689
63,065
+
+
+ 15
- 3
+ 7
+ 16
.
.
168,037
88,241
48,427
163,819
87,266
44,901
163,817
79,970
97,253
+ 3 + 3 + 1
+ 1 + 10 +19
+ 8 -5 0 - 1
Bristolf . . .
Johnson City
Kingsport . .
258,500
171,748
396,999
233,922
174,277
399,227
136,067
190,942
347,325
+ 11 + 90 +52
- 1 -1 0 + 3
- 1 + 14 +22
Hattiesburg .
Laurel . . .
Meridian . .
Natchez . .
PascagoulaMoss Point
Vicksburg .
Yazoo City .
.
.
.
.
.
.
1
6
6
2
rict Total . . . . 108,774,105 110,292,630r 95,684,714r - 1 + 14
Alabama . . . . 13,461,791 13,055,432
32,543,606 34,499,304
Florida . . . .
Georgia . . .
34,630,845 33,918,525
Louisiana' . . . 11,523,119 11,500,724
4,653,614
Mississippi’
4,498,300
Tennessee' . . . 12,116,444 12,665,031r
11,456,092
27,676,170
31,301,109r
10,861,819
3,912,731
10,475,793
+
+
+
-
+ 15
+16
+ 9
+ 17
+14r
3 + 18 + 12
6 + 18 +16
2 + 11 +16r
0 + 6 + 7
3 + 15 +19
4 + 16 +1 lr
■(•Changes reflect structural changes in series.
’District portion only.
-Conforms to SMSA definitions as of December 31, 1972.
BANK OF ATLANTA
FEDERAL RESERVE
183
D i s t r i c t
B u s i n e s s
C o n d i t i o n s
*Seas. adj. figure; not an index
Latest plotting: September, except mfg. production, retail sales, and farm cash receipts, August.
S cattered signs o f e xp an sion are re a p p e a rin g in th e Southeast's e c o n o m y . E m p lo y m e n t re b o u n d e d , p o s t
in g p a rtic u la rly stro n g gains in th e m a n u fa c tu rin g a n d c o n s tru c tio n sectors. In c o m e a n d re ta il sales a d
vances w e re stro n g e r tha n in p re vio u s m o n th s . Farm in c o m e pro spe cts w e re b u o y e d b y increases in
fa rm prices an d g o o d h a rvestin g progress. H o w e v e r, b a n k le n d in g rem a ins la n g u id a n d c o n s tru c tio n
c o n tra c t aw ards d e c lin e d .
The n u m b e r o f to ta l n o n fa rm jo b s rose in Sep
te m b e r, an d th e u n e m p lo y m e n t rate d e c lin e d in
fo u r o f th e fiv e states re p o rtin g . M a n u fa c tu rin g e m
p lo y m e n t g re w b o th in th e d u ra b le and n o n d u ra b le
sectors, b u t fa c to ry hours decreased. Job stre n g th
was p a rtic u la rly s o lid in the tra n s p o rta tio n e q u ip
m en t, lu m b e r, fu rn itu re and fo o d in d u strie s. C o n
s tru c tio n e m p lo y m e n t gains m o re than o ffs e t re d u c
tio n s in state and lo cal g o v e rn m e n t jo bs.
D u rin g S ep tem be r, m a n u fa c tu rin g in c o m e p o ste d
its firs t siza ble advance since February. Retail sales
w e re up d u rin g A u g u st, a lth o u g h d e p a rtm e n t store
sales w e re d o w n s lig h tly . Bank extensions o f c o n
sum er in s ta llm e n t c re d it surg ed ; m a jo r increases
o c c u rre d fo r a u to c re d it, che ck c re d it and o th e r
retail co n su m e r goods c re d it. D e clin e s w e re regis
tered in m o b ile h o m e c re d it and pe rson al loans.
C o n su m e r p rice increases in th e second q u a rte r
m o ve d ab ove th e n a tio n a l rate, fo llo w in g tw o
qu arters o f b e lo w -n a tio n a l increases.
The e c o n o m ic p o s itio n o f farm ers b rig h te n e d
w ith a c o n tin u a tio n o f p ric e increases re ce ive d fro m
S ep tem be r to O c to b e r. P re lim in a ry data sh o w e d
m id -O c to b e r increases fo r c a ttle , grains and c o tto n ,
p rim a rily re fle c tin g im p ro v e d m a rke t de m a n d . O f
Note:
ferin gs o f fe e d e r c a ttle ap p e a re d to be s lo w in g
d o w n . The squeeze o n h o g p ro d u c e rs was tig h t
ened by risin g co rn and fa llin g h o g prices. C ro p
harvests progressed ra p id ly , and re c e n tly p la n te d
sm all grain crops w e re g ro w in g w e ll. C re d it use
c o n tin u e d to exp an d as som e m a jo r lenders c u t
in te re st rates on loans.
Bank le n d in g c o n tin u e s to ad van ce s lo w ly and
is strong est at th e m e d iu m - an d s m a ll-size banks.
D u rin g S ep tem be r, large lo an gains w e re re p o rte d
by m e m b e r banks in th e K n o x v ille , B irm in g h a m and
Jackson areas. D u rin g e a rly O c to b e r, m an y D is tric t
banks re d u ce d th e ir p rim e le n d in g rate to 6 -3 /4
p e rce n t, a lth o u g h in som e areas a h ig h e r rate is
p re d o m in a n t. A fte r re d u c in g h o ld in g s o f ta x-e xe m p t
m u n ic ip a ls fo r n e a rly tw o years, D is tric t banks on
ba la nce began a d d in g to th e ir h o ld in g s in Sep
te m b e r.
C o n s tru c tio n a c tiv ity d e c lin e d fo r th e second
m o n th in S ep tem be r. T he v a lu e o f re sid e n tia l c o n
tra c t aw ards d ro p p e d in m o st parts o f th e re g io n ;
n o n re s id e n tia l a c tiv ity was fla t. Flow s in to D is tric t
savings and loan associations w e re m o d e ra te , and
m o rtg a g e in te re s t rates c o n tin u e d to d r ift d o w n
w a rd .
Data on which statements are based have been adjusted whenever possible to eliminate seasonal influences.
184
DECEMBER 1 7 , MONTHLY REVIEW
96
