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IN THIS ISSUE: •W hat Kind of Year? The Southeast in 1968 • Consumer Surprises • Prosperity Slows Industrial Growth •A Good Year for Agriculture • Construction Stars •Bank Credit Grows Uninterrupted REVIEW •D istrict Dusiness Conditinns FED ER A L R ES ER V E B A N K OF A T LA N T A JA N U A R Y 1969 W h a t K in d o f Year? T h e S o u t h e a s t in 1 9 6 8 Records set by the national economy are by now taken as a matter of course. However, when records are broken in an area that has a lower per capita income than the national average, it is news one does not tire of hearing. And when, because of such a lag, “catching up” becomes an important objective, fresh evidence that the region is growing faster than the rest of the country is doubly welcome. These statements are highly descriptive of what happened to the economy of the Southeast during 1968. All sorts of new records were set— in employment, in income, as well as in construc tion. Moreover, the rate of gain in personal in come in the Sixth District was more rapid than in the rest of the nation. Personal incomes in the District were up about 10 percent from 1967, according to this Bank’s estimates, based on the first ten months’ data. Although these figures showed again that the Southeast is one of the faster growing areas of the country, one should not exaggerate the magni tude of last year’s growth. In no individual Dis trict state did the growth rate in 1968 differ sharply from the 9-percent gain in the national average. According to preliminary estimates, in come was up 12 percent in Florida, 11 percent in Georgia, 10 percent in Mississippi, 9 percent in Louisiana, and 8 percent in Alabama and Tennessee from the year before. With the Southeast’s economic structure look ing increasingly like the nation’s, it is not sur prising that the movement of the District econo my throughout the year also followed closely that of the nation. As in other parts of the coun try, business activity here was a little less ebul lient toward the latter part of 1968 than earlier in the year. Aside from national income, two prominent District indicators that slowed down in autumn were employment and bank debits Monthly Review, Vol. LIV, No. 1. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of At lanta, Atlanta, Georgia 30303. (a measure of checkbook spending). The response to the imposition of the tax surcharge around mid-year and to the slowed growth of Federal spending was very much milder, however, than predicted nationally and implicitly for the Southeast as well. When the tax increase went into effect, many observers had forecast a substantial slowdown in second half 1968; some went so far as to say that a recession in early 1969 was a distinct possibility. Yet, to the surprise of even those who were bullish about the outlook in the Southeast, that region’s economy continued to expand with little let-up. Economic activity in the closing months of 1968, in fact, remained sufficiently strong to cause many economic gains for 1968 as a whole to exceed those of 1967. Certainly, this was true for the best regional economic yardstick available —personal income. During 1968, rates of personal income gains did not differ too much from state to state. 0 2 Percent Increase 4 6 8U Income expansion in most states slowed during the latter part of the year. BillionS Florida Georgia Mississippi District States U.S. Louisiana Alabama Tennessee I I I ♦Based on first ten months from year ago. Lessons Learned What lessons can we leam from this experience? One lesson that 1968 taught Southerners was not to exaggerate the likely short-run impact on the economy of changes in governmental policies. We might note that the forces that have stimu lated Southern economic growth over the long term have been largely private, with much of the push coming from manufacturers and distributors who were attracted to the Southeast. This de velopment, of course, continued during 1968. A less obvious but very important private contributor to what happened in the economy last year was the consumer. Nationally, he more or less shrugged off the tax increase by curtail ing his saving more than his spending. South erners acted in the same way. Thus, the private sector and, above all, the consumer affected last year’s economic results even more than usual. Without help from the consumer, 1968 still might have been a fairly good year, but because of his role it was a very good one. Success Qualified Can we, therefore, conclude that it was an un qualified success? We think not. Indeed, 1968 was disappointing in a way. Why? What can be wrong when the economy enjoys one of its biggest expansions in history? Inflation. What happened to consumer prices in Atlanta is probably typical of the Southeast as a whole. In Atlanta, consumer prices were up more than 4 percent from 1967. As a result much of last J A N U A R Y 1 9 69 year’s dollar gains was “fictional.” Why this happened is no mystery. Wage in creases in many instances exceeded gains in pro ductivity. With effective demand growing faster than goods and services could be produced, these costs and others were frequently passed on to consumers. At the same time, skilled labor was extremely scarce. For that matter, workers of almost every description were in short supply, as unemployment was at the lowest rate in over 15 years. Although slightly higher in the Dis trict than in the nation, the percentage of unem ployed hovered at or below the 4-percent “full” employment level almost all year. Thus, inflation and labor shortages were two important develop ments the Southeast shared with the nation. Of sorts, this was a repetition of what hap pened in 1966. Then, too, inflationary pressures and labor shortages were quite common. In one other important respect, though, 1968 was different from 1966—at least in degree. Credit, which the Southeast typically imports on balance, seemed more ample than in 1966. This was especially true for funds available from non banking institutions for financing residential con struction. Loanable funds from banks, too, were not in short supply last year, as banks enjoyed rapid deposit gains. However, there were excep tions, partly because of special local circum stances. The other articles of this issue discuss these and other significant developments that made last year both “great” and “disappointing.” H arry B randt 3 C o n s u m e r S u rp ris e s Consumer spending advanced rapidly throughout most of 1968. Instead of spending less after the tax increase went into effect in July, consumers sharply increased their spending by saving a smaller proportion of their income. In addition, consumers stepped up the use of instalment credit. That Southerners behaved—or, based on their failure to react to higher taxes as expected, misbehaved—in the same way is evidenced by the trend of instalment credit at commercial banks during 1968. Consumer Borrowing Accelerates The use of instalment credit generally parallels the trend in consumer income and spending, since many types of purchases are partially credit financed. Thus, when consumers decided to save more and spend less of their increasing income in early 1968, the growth in instalment debt slowed. Later in the year, as consumers began spending a larger proportion of their in come, the use of instalment credit accelerated. Outstanding instalment debt at Sixth District banks rose steadily through 1968. District con sumers owed $3.2 billion in instalment credit to commercial banks at the beginning of the year. By the end of November, the figure had jumped to about $3.8 billion. The rate of advance was fastest during the second quarter. The advances in October and November suggest the fourth quarter will also be strong. Although each of these categories of borrowing advanced last year, loans to purchase automo biles were largely responsible for the overall growth in instalment credit. Automobile loans account for about 53 percent of the total instal ment debt outstanding at banks; they were In stalm en t le n d in g at com m e rcial b a n k s rose sharply in 1968; autom obile lo an s set the pace. Million S Change in Total Instalment Credit from Month Ago Automobile Credit Sets the Pace Instalment credit is used to finance expenditures for a variety of goods and services. Sales of most consumer durable goods, such as automo biles, furniture, and appliances, to name a few, are usually partially credit financed. In addition, loans for repairing and modernizing houses, and personal loans for, among other purposes, medi cal bills, vacations, and education are also popular. Digitized 4 for FRASER M O N TH LY R E V IE W responsible for about the same percentage of the net increase in the volume of outstanding credit in most months last year. The pattern of auto credit was largely a result of the increase in sales. New car sales, after a rather slow start at the beginning of the year, gained momentum rapidly and set a new na tional record of about 9.6 million new car sales. The trend of automobile loans at District banks is partial evidence that Southerners participated in this surge to buy more automobiles. Overall spending, based on bank debits, also advanced sharply in 1968, rising 14 percent for the first 11 months of the year over the com parable 1967 period. Florida’s 18-percent gain was the largest; Miami, Fort Lauderdale, and Palm Beach experienced the biggest percentage gains. Alabama, Georgia, and the District por tions of Mississippi and Tennessee posted gains about in line with the regional average. The Dis trict portion of Louisiana, on the other hand, experienced the smallest, although respectable, gain of 9 percent as bank debits in New Orleans rose only 7 percent. Revolving Credit— A New Dimension Increasingly more Southern consumers added a new dimension to their borrowing last year—re volving bank credit. Although not entirely new, the bank credit card and check-credit plans have recently been introduced by a growing number of banks. Overall about 125 District banks now Revolving credit at banks increased rapidly; the major impetus coming from bank credit cards. J A N for U A RFRASER Y 1969 Digitized Million S offer some type of prearranged credit privilege to their customers. Banks in Alabama, Georgia, and Tennessee were especially active in entering the credit card business last year. Recently, several major banks in Florida entered through franchise and agency-type arrangements with other banks or groups of banks. In each state, the major recent impetus has come from the agency and franchise arrangement. As yet, outstanding balances under various types of credit card plans account for less than 3 percent of total bank instalment credit. The growth was rapid in 1968, however. Outstanding balances under these plans more than doubled during the first 11 months of 1968, increasing from $43 million in January to nearly $95 mil lion at the end of November. Most of this growth came from bank credit cards instead of checkcredit plans. New Surprises? Although predicting consumer behavior is not precise, over the years certain important relation ships have been identified that help explain con sumer behavior. Typically, the trend in consumer spending and saving is closely related to the trend in disposable personal income. Whether incomes accelerate or slow down, spending will usually respond accordingly. But sometimes the extent and direction of the responses are not as expected because of the influence of other vari ables—such as accumulated wealth and savings, price changes and expectations, and consumer attitudes. The experience of 1968 taught us that these other variables may be of overriding importance to short-run changes in consumer behavior. The decisions of consumers to save more earlier in the year may have been an attempt to hedge against the tax increase when it did appear. In addition, the continuing rapid advance in prices may have induced spending in anticipation of additional price rises. Early in 1969, increased social security taxes and the effects of making up the increased in come tax that was retroactive back to April 1968 may dampen consumer spending. The surcharge is scheduled to expire in July 1969; whether it is extended will depend largely on the strength of overall demand and price pressures. It ap pears, therefore, that consumers will again be important in determining economic activity in 1969. Whatever the outcome, 1969 will undoubt edly hold some new surprises. J o e W. M c L e a r y 5 Prosperity Slows Industrial Growth Viewed from the emulous tradition of the South, the overall performance of the District’s indus trial sector last year was nothing to crow about. To be sure, the District’s economy managed to stay on the growth path in 1968, thus participat ing in the nation’s record eight consecutive years of prosperity. But the overall growth, measured in terms of nonfarm employment, did not out perform that of the nation; nor did it outpace its own 1967 record. It just paralleled the average growth of the nation in 1968. As was the case for the nation as a whole, ex pansion of District industry was hampered by capacity limitations imposed by supplies of capi tal and labor, particularly of labor. Throughout the year, the District’s overall idle labor force was down to an almost irreducible minimum rate—3.3 to 4 percent—and even lower in the large metropolitan areas. In addition, the South east’s economy was influenced by a slowing down in some phases of the national economy and by some industrial disturbances that were nation wide in scope. In retrospect, the District’s economy resumed a vigorous expansion at the end of 1967. But this expansion was soon held back by limits on labor resources. By January 1968, the District’s overall unemployment rate had already declined to 3.7 percent, and the manufacturing sector’s average workweek had climbed to 41 hours. Labor market conditions remained tight through out 1968. steel industry was due for renewal last July, and the District’s primary metal industry employment underwent another seesaw game. When the wide ly expected steel strike was finally averted in July, the subsequent slowdown in steel produc tion forced a curtailment in the District’s pri mary metal employment in the latter half of 1968. Because of its heavy concentration of steel mills, Alabama’s industrial economy in general, and Birmingham’s in particular, were adversely affected by the general sluggishness in steel business in the last half of the year. This down ward trend was finally reversed in November. While the exact nature of the economic impact arising from the de-escalation of the U. S. Manned Space Flight program is yet to be assessed, several areas in the District have been affected, in vary ing degrees, by reduction in spending on space exploration. Huntsville, Alabama, where the Marshall Space Flight Center is located; New Orleans, where a big test facility is located; and Cape Kennedy, the launching site, have reportedGrowth of District manufacturing employment leveled off in first half 1968. Employment strength shifted in the second half from non manufacturing to manufacturing. Seas. Adi. Percent District Industry Feels the Pinch The broadly diversified industrial base of the District economy was not without mixed bless ings last year. While the District’s industries as a whole benefited from the nation’s long unin terrupted prosperity, they also shared with the rest of the nation some of the industrial disturb ances. The labor union contract of the nation’s Digitized 6 for FRASER M O NTHLY R E V IE W ly lost employment in space-work related areas. Defense activities in the District, as measured by the amount of defense prime contract awards, however, were only slightly down from the 1967 level in the first half of 1968. Its share of the nation’s total awards appears to have changed little last year. There was a wide divergence in employment growth among District states in 1968. Percent Increase, 1968 from 1967* 0 1 2 3 4 T Overall Growth of Industry Even though overall growth in the District in dustries, as measured by growth of nonfarm em ployment, matched that of the U.S., District business activity did not follow the ebb and flow of the national economy in exact timing and magnitude. During the first six months of 1968, the District outpaced the nation in nonmanufac turing job gains, while it was outperformed by the nation in manufacturing job increases. Be ginning in July, however, District employment strength shifted to manufacturing. For the entire year, a rapid expansion in the District’s trade, public utilities, and Federal and local government employment accounted for most of the increases in nonmanufacturing employ ment. Within the manufacturing sectors, the fabricated metals and transportation equipment industries scored the largest employment gains— about 5 percent each. Resurgence in construc tion activity and a strong demand for consumer durables helped to boost fabricated metal employ ment. Transportation equipment continued to benefit from a strong demand for both military and civilian aircraft. To overcome limitations imposed by high ca pacity use, the chemical and paper and pulp industries last year continued a high level of capital spending on both plant expansion and modernization. Sizable gains in employment in these plants last year were in a large part attri butable to such spendings. The textile and apparel industries each added 1 percent to their working forces. It appears that decreases in defense orders for textile products were more than offset by strong consumer de mand. However, increased importing of textile JA N U A R Y 1969 *1968 partially estimated. products undoubtedly continued to exert dampen ing effects on textile employment. Lumber, wood, and furniture seem to have en joyed a strong business. Although employment gains were moderate, trade sources revealed that the Southern lumber and wood industry sold its products as fast as it could produce them. Food and food processing jobs registered a moderate loss from the 1967 level. As usual, there was a wide divergence in the employment growth rates among the District’s six states. This ranged from a 4-percent rate in Florida to less than 1 percent in Alabama. Geor gia scored the second fastest gain and Mississippi reported the third in nonfarm employment. Last year the overall growth of District in dustries was hampered largely by capacity limitations resulting from the nation’s prolonged prosperity. However, as the national economy moves toward correcting the current inflationary boom, it appears that the District industries as a whole will show another moderate gain in em ployment during 1969. C. S. P yun 7 A Good Year For Agriculture The rapid pace of economic activity in 1968 has left its mark on the agricultural sector. Personal incomes advanced during the year, allowing con sumers to maintain high levels of consumption on most items—including food. This strong de mand has aided District farmers, pushing the index of prices received for both livestock and crops well above 1967 levels. Livestock The major strength in livestock prices came when egg prices advanced sharply in the second and third quarters. This recovery occurred even though total District egg production through November was fractionally above the previous year’s output. Higher prices for red meats en couraged some consumers to purchase more poultry, strengthening broiler prices throughout the first half of the year. Despite seasonal declines since July and the continued high-level output, prices have remained above those of 1967. Both nationally and in the District, beef and pork production expanded cyclically in 1968. But per capita consumption also increased, causing higher prices than were expected. Hog prices averaged below 1967 levels, particularly in the first quarter. However, prices remained high rela tive to historical standards, peaking at $21 per pound at North Georgia markets in July. District dairy producers have also experienced a relatively good year. Milk production declined slightly in 1968 and prices advanced. Milk pro ducers in Federal order markets received price increases for manufacturers grade milk in April. These higher prices pushed dollar sales from dairy products above year-earlier levels. only 322 pounds per acre, 76 pounds below 1967’s poor crop and the lowest level for any major cot ton producing state. Since planted cotton acre ages advanced nearly 50 percent in response to modifications of the cotton acreage control pro gram, Georgia’s total output was up 16 percent. Elsewhere, District cotton farmers expanded acreages 36 percent, and generally better yields pushed output up nearly 50 percent. Despite this sharp gain, prices advanced. Projected U. S. domestic cotton consumption and exports of 12 million bales during the 1968-69 marketing year exceeded 1968’s production by over one million bales. Hence, relatively small carryover stocks will be depleted further. Estimates of cash receipts from cotton sales exceed earlier levels; however, the contribution of government payments from the cotton program declined significantly. Incomes to rice farmers were also significantly higher in 1968. Because of very strong export demands for rice, acreage allotments were ex panded by 20 percent, and farmers responded by increasing plantings by that amount. Price support levels remained unchanged and yields were increased slightly. Florida citrus producers also had a banner year in 1968. Lower production and strong con sumer demand during the 1967-68 season caused very high prices and pushed total cash receipts to record levels. Peanut, sugarcane, and tobacco output dropped in 1968. The declines are attri- Crops In the crop sector, prices were generally good, but it was a frustrating production year for many farmers, particularly in Georgia. Dry weather late in the growing season significantly cut yields of most major crops. Cotton yields dropped to Digitized 8 for FRASER M O NTHLY R E V IE W Changes in District production of farm com modities showed mixed trends.* -40 -30 Percent Change, 1968 from 1967 -20 -10 0 10 20 30 Dollar sales by farmers in the six District states were well above the same period a year ago. Billion $ 40 50 ■ ■ ■ ■ Rice Peanuts | Tobacco Citrus Sugar Cane I Soybeans ■ Hogs Cattle &Calves Broilers 1 ■Eggs Milk 1 . I...........I ......... I... -1. . ...... 1..........!......... I --- ' * Livestock changes are for the first 10 months of 1967 and 1968. Crop changes are based on the U. S. D. A. December 1,1968, estimates. buted to reduced acreages of sugarcane and tobacco, while lower yields cut peanut output. Total receipts from these crops were down. Soybean acreages were expanded further, but yields in all District states except Louisiana and Mississippi declined—the first decline in total output since 1962. Even though support prices remained unchanged at $2.50 per bushel, prices averaged the lowest since 1963. Many farmers sold their crops at lower prices because they lacked the necessary storage facilities to place beans under loan. In addition, production in re cent years has exceeded domestic utilization plus exports. Total utilization will increase in the coming year, but carryover stocks by September 1969 are expected to reach approximately 300 million bushels—a 4-month supply. District com acreages were cut by 8 percent. Output is estimated at only 150 million bushels —32 percent below last year—and the acreage yield, 39 bushels per acre, is down 14 bushels from 1967. Since most of the com produced by District farmers is fed to the producers’ own livestock, it does not enter normal commercial marketing channels. However, corn that is sold will command lower prices, since national sup plies of feed grains are quite large. Farm Income Through October, total cash receipts from farm marketings were nearly 8 percent above last year’s record level. By October, Florida farmers had already sold over $1 billion in farm com modities and Georgia producers, despite the dis appointing crop year, may also record their third J A N Ufor A R FRASER Y 1969 Digitized consecutive $ 1-billion year. Government pay ments were lower in 1968, primarily because cotton program payments were cut significantly. Total cash incomes received by all District farmers in 1968 will be greater than a year earlier. Even though production costs have risen, total net farm income advanced in 1968, and the gain may equal or exceed the 5.5-percent gain estimated for all U. S. farmers. In addition, the net income per farm will show even greater ad vances, since the number of farm operators has declined. Florida producers will probably record the largest gain in per farm net incomes, while Georgia and Tennessee farmers may not match their last year’s net income levels. Reports of few delinquencies and unplanned renewals on farm loans mirror the relatively strong financial position of most farm borrowers. The availability of farm credit was fairly good in 1968. Total deposits at nonreserve city mem ber banks and all nonmember banks were nearly 8 percent greater on June 30, 1968, than on the same date a year ago. Total farm loans outstand ing rose 12 percent during the same period. Some tightening occurred at nonmember banks because total deposits grew much less rapidly than loans. However, the increase in loan-to-deposit ratios indicated that these banks were able to accommo date the stronger loan demand. Interest rates on farm loans advanced slightly. R o b e r t E. S w e e n e y 9 Construction Stars Contrary to widespread expectations, construc tion in 1968 turned out to be a Cinderella sector of the national economy. Construction in the Sixth District not only matched this national performance but exceeded it by a comfortable margin. Although regional breakdowns on cur rent outlays are not available, construction con tract data provide an acceptable proxy. Through November, the dollar volume of District contract ing had exceeded the comparable 1967 period by 17 percent, while the U. S. volume had ex panded 14 percent. In both the U. S. and region ally, rising material and labor costs played a large part in total dollar-volume gains. Still, in creases in total floor area were substantial. Residential construction was the star of the drama in Southeastern construction gains, ac counting for more than half of total dollar volume. Rising costs also accounted for a morethan-desirable share of the 23-percent increase, but total dwelling units also increased considerably. Within this overall regional boom in residen tial construction, there were some notable shifts from the recovery pattern of 1967. For example, outside the District’s standard metropolitan sta tistical areas, residential construction showed a small year-to-year decline. Within metropolitan areas, largely because of a surge in multifamily projects, both the number of dwelling units and the dollar volume of contracts increased sharply. South Florida metropolitan areas produced the major portion of the total District gain. At first glance, the performance of construction in this District presents a paradox. In our Jan uary 1968 Review, it was suggested that “ . . . ris ing interest rates at home and abroad might once again produce a diversion of funds from savings institutions that would hinder the construction industry.” Both short- and long-term yields rose higher in 1968 than in the “credit crunch” year of 1966. In fact, high-grade corporate bond yields at their lowest point in 1968 were more than 50 Digitized10for FRASER After a mid-1968 slowdown, construction contract volume resumed its sharp uptrend. Residential contracts were also strong in the second half. Percent 1965 1966 1967 1968 ’ New Series. basis points higher than the peaks of 1966. The same pattern prevailed in long-term government bond yields. At the same time, the Southeast certainly had not suddenly overcome its basic capital deficit status. How then, do we account for a construction boom? Resumption of a higher level of spending on highways was a substantial factor in the total increase. Several large public utility projects also added appreciably to volume, particularly after mid-year. The largest involved a plant in Ala bama amounting to $145 million. New and ex panded manufacturing plants, many of them financed with industrial revenue bonds, were also numerous. Even so, residential construction gains were so sharp, especially in Florida, that for the first time they accounted for more than half of total new construction contracts. A summary explanation of the paradox of the erstwhile weakest sector turning in the strongest M O NTHLY R E V IE W performance is easily stated: The residential construction sector and the financial institutions that support it are not the same ones we were looking at in 1966 when they bore a large share of credit restraint. Output of new housing had lagged behind growing needs since at least 1963, but in 1966 the gap was not acute to the point of overcoming buyer resistance to newly encoun tered mortgage rates of 7 percent and above. Although costs of new housing were rising rap idly even then, these costs had not been fully reflected in the prices of existing housing nor in rising rents. Vacancy and foreclosure rates were still relatively high, and financial institutions in a number of markets held unwieldy inventories of foreclosed properties. Substantial changes have occurred in all these factors, and perhaps the greatest change has come about in the attitude of the potential home buyer. He now views the cost of mortgage money as minor when com pared to the rapidly rising cost of the house itself. Nevertheless, these rising costs and inflation in land prices have been partly responsible for shifts in demand toward apartments. Higher rates of population growth have stimulated great ly increased apartment building in many areas, such as south Florida. Improvements in the quality and amenities in apartment complexes have also been favorable influences. Strengthened demand factors, reflected in high er mortgage rates, enabled nonbank savings in stitutions to be more aggressive in bidding for C h a n g e s in Savings and loan associations in all sta te sin -H Icreased their mortgage lending, and all experienced declines in rate of new savings flows. M Net Savings Growth* I I I I Georgia Mississippi Tennessee Louisiana Alabama *Yaar-to-P^^H through November savings flows. Moreover, net inflows in 1967 had been unusually large. By shifting from other types of lending and emphasizing single-family mort gages, many savings and loan associations were able to supply mortgage credit to this sector in spite of smaller net savings inflows in 1968 (rela tive to the unusually high 1967 flows). Toward the end of the year, however, apprehension about continued high rates in the money and capital markets had returned. H i r a m J. H o n e a P a r S ta tu s Effective January 1, 1969, checks drawn on all banks in Florida may be cleared through the Federal Reserve System. This has been made possible by action of the 41st Legislature of the State of Florida providing for par clearance. The change will involve the conversion par of these 24 banks: Apalachicola State Bank, Apalachicola Bank of Blountstown, Blountstown The Bank of Bonifay, Bonifay Branford State Bank, Branford Cedar Key State Bank, Cedar Key Gadsden State Bank, Chattahoochee Levy County State Bank, Chiefland Florida Bank at Chipley, Chipley Dixie County State Bank, Cross City Bank of Graceville, Graceville Bank of Greenville, Greenville Havana State Bank, Havana The following nonmember Georgia banks also began from the Federal Reserve Bank: Bank of Terrell, Dawson (12-2-68) Bank of Canton, Canton (1-1-69) Etowah Bank, Canton Citizens Bank, Forsyth The Farm ers Bank, Forsyth Digitized J A N Ufor A R FRASER Y 1969 High Springs Bank, High Springs Hamilton County Bank, Jasper Bank of Jay, Ja y Farm ers and Dealers Bank, Lake Butler Colum bia County Bank, Lake City The State Exchange Bank, Lake City The Citizens Bank of MacClenny, MacClenny The Farmers Bank of Malone, Malone Lafayette County State Bank, Mayo Bank of Newberry, New berry Farm ers and Merchants Bank, Trenton Wewahitchka State Bank, Wewahitchka remit at par for checks drawn on them when received Monroe County Bank, Forsyth (1-1-69) Bank of Taylorsville, Taylorsville Bank of Dade, Trenton Crawford County Bank, Roberta (1-2-69) The Farm ers Bank of Tifton, Tifton 11 Bank Credit Grows Uninterrupted Monetary policy has a strong influence on bank credit. Thus it is important that we look at changes in monetary policy, as well as changes in the demand for bank credit, when explaining what happened at District banks last year. Throughout the first half of 1968, in an effort to curb inflationary price and cost pressures, monetary policy moved in the direction of further restraint. Interest rates climbed during the winter and spring months, reflecting not only more re strictive monetary policy, but continued rela tively heavy credit demands and uncertainty as to whether a program of fiscal restraint would be legislated. In May, most short-term rates climbed above their 1966 highs, and then started to come down as the prospects for fiscal restraint im proved. The fiscal measures instituted in June led to expectations of further rate declines— based mainly on anticipation of some weakening in the outlook for business and an easier mone tary policy. Rates did fall early in the summer, and there was some easing of monetary policy. But, as the summer progressed, developments in dicated considerably more strength than antici pated. By early fall, interest rates were again climbing rapidly, and late in the year monetary restraint was intensified. At year end, rates were above their earlier 1968 highs. The impact of these changes is reflected in the pattern banking followed nationally. During the first half of the year, firming monetary policy and rising interest rates greatly retarded banks’ deposit inflows. In order to meet the credit de mands of borrowers, which were strong compared to deposit inflows, banks curtailed the expansion of their security portfolios. Bank credit growth slowed. Deposit inflows picked up sharply during the summer as monetary policy eased and interest rates fell. Banks were able to meet stronger loan demands and built up their investments. Bank credit growth accelerated. Late in the year, rising interest rates and firmer policy again reduced the rate of bank credit expansion. 12 Generally, that is also the pattern banking in the District followed. However, changes in the pace of deposit inflows and bank credit growth were much less severe here. Bank credit at Sixth District member banks ( loans and investments—seasonally adjusted) grew at a much faster pace than nationally dur ing the first half. For one reason, deposit inflows were then much stronger in the District—-time and savings deposits growing about twice as fast as nationally. However, by the end of March rates on large denomination negotiable certificates of deposit were no longer competitive with yields on other money market instruments, and banks had CD losses. In mid-April, the Board of Gover nors raised Regulation Q ceilings on all but the shortest-term large denomination CD’s. Though banks—in the District, as well as nationally— quickly raised their rates to the new ceilings, it wasn’t until July that District bankers were successful in attracting any sizable volume of these deposits. Also in mid-April, the major District banks joined others in increasing their prime lending rate from 6 to 6 ]/2 percent, but this apparently had little effect on the level of loan demand. District banks were ahead of the U.S. in rate of deposit and credit growth. Percent Per Annum lo a n s & Investments Loans investments U S. Gov't Securities Other Securities Time Deposits * Member Banks * * Commjrcial Banks M O NTHLY R E V IE W SIXTH DISTRICT MEMBER BANKS Percentage Change: 1968 from 1967* Investm ents Deposil Loans Trade and Banking Areas ALABAM A 12.2 13.6 16.5 1— Anniston-Gadsden 7.6 9.6 8.6 2— Birm ingham 11.0 10.9 11.7 3— Dothan 6.0 2.2 5.9 4— Mobile 11.0 10.0 11.8 5— M ontgom ery FLO RID A 7.4 8.6 11.3 6— Jacksonville 18.6 25.0 16.1 7— Miami 13.8 23.2 11.0 8— Orlando 12.2 20.7 18.0 9— Pensacola 16.8 22.7 12.8 10— Tam pa-St. Petersburg GEORGIA 10.3 10.1 13.8 11— Atlanta 15.3 8.8 12— Augusta 20.2 9.3 9.6 9.1 13— Colum bus -2.9 9.1 19.1 14— Macon 18.1 14.2 17.4 15— Savannah 10.8 11.3 8.0 16— South Georgia LO U IS IA N A 10.3 15.0 11.2 17— Alexandria-Lake Charles 22.6 12.0 8.5 18— Baton Rouge 9.2 19— Lafayette-lberia-Houm a 4.8 16.1 5.3 2.6 11.2 20— New Orleans M ISSISSIPPI 7.6 6.6 21— Jackson 11.3 22— Hattiesburg-Laurel-M eridian 10.1 11.4 12.1 9.6 7.1 7.5 23— Natchez TE N N E S S E E 8.2 3.3 5.8 24— Chattanooga 6.7 9.1 2.6 25— Knoxville 7.6 11.1 12.5 26— N ashville 5.8 5.8 6-1 27— Tri-Cities 10.8 14.4 10.9 S IXTH D IS TR IC T T O T A L *Based on averages of 11 m onths (January through November) for each year. During the summer, time deposit inflows picked up sharply, and District banks were at tracting sizable amounts of large denomination CD’s at well below ceiling rates. Credit demands B a n k With market interest rates at a somewhat re duced level and with banks able to attract funds for loan and investment expansion, the larger banks lowered their prime rate in late September. Some felt this move was premature. Most limited their rate adjustments to loans to national ac counts and selected borrowers. From early November on, interest rates were again on the rise and by mid-December some bankers were having trouble replacing maturing CD’s even at ceiling rates. Once again disinter mediation was a threat. Yet there was no weaken ing in the demand for loans. The prime rate was raised to 6 V2 percent in mid-November and to 6 % percent in mid-December. Another increase, to 7 percent, took place in early January. During the closing months of last year, while interest rates rose rapidly and monetary policy showed signs of tightening, District banks fared better than nationally—both in terms of deposit inflows and bank credit expansion. In the Dis trict, time deposit inflows were relatively strong er than nationally. And, there was no slowing in the pace of bank credit growth. District bankers continued to meet the heavy demands of their borrowers and at the same time made sizable additions to their security portfolios. Thus, 1968 ended on a strong note for District bankers. D o ro th y F. Arp A n n o u n c e m e n ts Industrial National Bank, Tallahassee, Florida, a con version of Industrial Savings Bank of Tallahassee, opened as a member bank on December 4 and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Julian V. Smith is president; F. 0. Conrad, vice president; R. Spencer Burress, executive vice president and cashier. Capital is $300,000; surplus and other capital funds, $200,000. On December 16, The Nashville Bank and Trust Company, Nashville, Tennessee, a newly organized nonmember bank, opened for business and began to remit at par. Officers are Joseph T. Howell, Jr., presi dent; John B. Hardcastle, vice president and cashier; H. G. Aldred and J. R. Mathis, vice presidents. Capital is $2,000,000; surplus and other capital funds, $2,180,000. Trust Company of Columbus, Columbus, Georgia, commenced operation as a commercial bank on Decem JA N U A R Y 1969 continued to strengthen—with business and con sumer lending especially strong. The greater availability of funds also enabled banks to add heavily to their municipal securities. ber 31, 1968, and began to remit at par. First National Bank of Port Allen, Port Allen, Louisi ana, a newly organized member bank, opened on January 2 and began to remit at par. 0. B. Harrell is president. Capital is $300,000; surplus and other capital funds, $450,000. Also on January 2, The Citizens Bank of Henderson ville, Hendersonville, Tennessee, opened as a new non member bank and began to remit at par. The officers are Noble C. Caudill, president; Ralph L. Jones, execu tive vice president; William T. Burgess, vice president and cashier. Capital and surplus funds are $500,000. Citizens Bank of Calhoun, Calhoun, Georgia, opened on January 2 as a new nonmember bank and began to remit at par. Richard M. Zorn is president; Charles E. Anderson, vice president and cashier; Claude E. Nichols, vice president. Capital is $200,000; surplus and other capital funds, $200,000. 13 Sixth District Statistics Seasonally Adjusted (All data are indexes, 1957-59 = IOO, unless indicated otherwise.) Latest Month (1968) One M onth Ago Two M onths Ago One Year Ago Latest Month (1968) SIX T H D IS T R IC T Oct. 65,948 Nov. 235 Oct. 195 . Oct. 104 . Oct. 176 65,915 233 151 93 169 67,092 233 159 187 165 59,681 210 130 103 147 359.Or 280.4 356.6 321.8 303.1 263.0 160 159 113 94 161 158 112 81 164 159 113 79 161 152 100 92 P R O D U C T IO N AND . Nov. . Nov. ....................... 142 1 41 142 1 41 142 1 41 139 1 39 G E O R G IA 174 173 174 171 IN C O M E 327.6 280.1 EM PLO YM ENT N o n f a r m E m p l o y m e n t ....................... N o v . M a n u f a c tu rin g ............................... N o v . A p p a re l .......................................... N o v . C h e m i c a l s ...................................... N o v . 137 1 37 135 133 F a b r ic a t e d M e t a l s ...........................N o v. F o o d .................................................. N o v. 163 113 160 114 155 114 1 52 1 13 Lbr., W o o d P rod ., F u rn . & Fix . . . 106 106 106 105 P a p e r .............................................. N o v . P r im a r y M e t a l s ...............................N o v . 124 129 124 127 124 128 120 1 32 T e x t ile s . Nov. 110 110 110 108 190 1 43 190 142 186 142 182 139 .......................................... N o v . T r a n s p o r t a t io n E q u ip m e n t . . . . Nov. N o n m a n u f a c t u r i n g ...............................N o v . C o n s t r u c t io n ...................................N o v . 130 130 130 1 25 F a r m E m p l o y m e n t ...............................N o v . U n e m p l o y m e n t R a te ( P e rc e n t o f W o r k F o r c e ) ............... N o v . 60 55 51 62 3 .9 3.8 4.0 3.9 In s u r e d U n e m p lo y m e n t (P e r c e n t of C o v. E m p . ) ................... N o v. 1.8 1.9 2.0 2.1 A v g . W e e k ly H rs. in M fg . (H rs.) . . Avg. Weekly Hrs. in Mfg. (Hrs.) . Nov. . Nov. 2.8 41.8 2.9 41.6 2.8 42.1 2.9 42.1 315 235 245 273 209 202 12,865 237 141 13,028 237 163 11,656 209 127 F IN A N C E A N D B A N K IN G Instalm ent Credit at B an k s* (Mil. $) R ep aym ents Farm Em ploym ent . Unem ploym ent Rate One Year Ago . Nov. . Nov. IN C O M E A N D S P E N D IN G Personal Incom e (Mil. $, Annual Rate) One Two M onth M onths Ago Ago 4 1 .1 4 1 .0 4 1 .4 4 1 .2 C o n s t r u c t io n C o n t r a c t s * ................... N o v . . Nov. 226 228 172 184r R e s i d e n t i a l ...................................... N o v . A ll O t h e r .......................................... N o v . 233 220 271 191 198 150 204r 166 E le c t r ic P o w e r P r o d u c t i o n * * . . . . O ct. C o t to n C o n s u m p t i o n * * ....................... N o v. 150 100 149 10 1 146 104 146 105 P e tro l. P ro d , in C o a s t a l La. a n d M i s s . * * N o v . 215 220 256 246 Mem ber Bank L o a n s .........................Nov. Mem ber B ank D e p o s it s ..................... Nov. B ank D e b i t s * * ................................... Nov. 326 246 248 Personal Incom e (Mil. $, Annual Rate) . Oct. 13,050 M anufacturing P a y r o ll s ..................... Nov. 244 Farm Cash R e c e i p t s .........................Oct. 132 320 243 242 P R O D U C T IO N A N D E M P L O Y M E N T Nov. Nov. Nov. Nov. Nov. 144 137 147 143 48 143 137 146 145 54 143 136 146 146 48 139 133 142 140 53 Nov. Nov. 3.7 40.8 3.2 40.9 3.5 41.5 3.6 40.5 Nov. Nov. Bank D e b i t s * * ................................... Nov. 309 241 269 305 242 264 308 237 268 263 212 237 Personal Incom e (Mil. $, Annual Rate) . Oct. 10,073 M anufacturing P a y r o ll s ..................... Nov. 206 Farm Cash R e c e i p t s .........................Oct. 150 10,013 203 108 10,154 205 308 9,292 194 149 M anufacturing Non m anufacturing Farm Em ployment . Unem ploym ent Rate Avg. Weekly Hrs. in M fg. (Hrs.) F IN A N C E A N D B A N K IN G L O U IS IA N A IN C O M E F IN A N C E A N D B A N K IN G Loans* . Nov. . Nov. 296 259 294 258 291 254 258 230 . Nov. . Nov. . Nov. 222 190 242 220 190 235 215 187 241 197 174 207 Personal Incom e (Mil. $, Annual Rate) . Oct. M anufacturing P a y r o ll s ..................... Nov. Farm Cash R e c e i p t s .........................Oct. 8,375 205 105 8,380 207 111 8,679 204 144 7,627 186 94 A ll M e m b e r B a n k s ............... P R O D U C T IO N A N D E M P L O Y M E N T Deposits* Bank D e b i t s * / * * ..................... ALABAMA Nonfarm Em ploym ent . . . . M anufacturing .................. N o n m a n u fa c t u r in g .............. C o n s t r u c t i o n .................. Farm E m p lo y m e n t .................. Unem ploym ent Rate Nov. Nov. Nov. Nov. Nov. 131 123 133 140 58 132 123 134 140 58 132 123 134 138 51 129 120 132 142 63 Nov. Nov. 5.2 40.8 5.1 41.5 5.2 41.8 4.8 42.3 Nov. M em ber B ank Loans* . . . . Nov. M em ber B ank Deposits* . . . B ank D e b i t s * / * * ................................Nov. 242 179 196 244 177 192 242 172 190 228 164 4,867 271 121 4,813 270 108 5,216 270 191 4,247 236 118 Nov. Nov. Nov. Nov. Nov. 144 154 140 144 52 144 154 139 141 45 143 153 139 141 38 141 148 138 149 46 Nov. Nov. 4.8 41.5 4.6 41.2 5.2 40.9 4.9 41.2 Nov. Nov. Nov. 353 253 251 349 247 237 347 249 251 316 230 214 IN C O M E P R O D U C T IO N A N D E M P L O Y M E N T Nov. Nov. Nov. C o n s t r u c t i o n ............................ Nov. Farm E m p lo y m e n t............................ Nov. Unem ploym ent Rate (Percent of Work F o r c e ) .............. Nov. Avg. Weekly Hrs. in M fg. (Hrs.) . . , Nov. 127 129 127 117 64 127 128 127 118 55 127 126 127 117 52 126 126 127 118 66 4.4 41.2 4.6 41.3 4.9 41.3 4.4 40.9 267 211 219 270 207 214 265 205 221 243 191 191 F IN A N C E A N D B A N K IN G M IS S IS S IP P I IN C O M E Personal Incom e (Mil. $, Annual Rate) . Oct. M anufacturing P a y r o ll s ..................... Nov. Farm Cash R e c e i p t s .........................Oct. P R O D U C T IO N A N D E M P L O Y M E N T F IN A N C E A N D B A N K IN G M em ber B ank L o a n s ..................... ... Nov. Nov. M em ber Bank D e p o s i t s .............. Nov. B ank Debits** ............................ FL O R ID A IN C O M E Personal Incom e (Mil. $, Annual Rate) M anufacturing P a y r o ll s .................. Oct. 19,599 Nov. 291 Oct. 162 19,720 292 187 19,742 295 172 17,348 266 165 C o n s t r u c t i o n .................. Farm E m p lo y m e n t.................. U nem ploym ent Rate (Percent of Work Force) . . Avg. Weekly Hrs. in Mfg. (Hrs.) F IN A N C E A N D B A N K IN G M em ber Bank Loans* P R O D U C T IO N A N D E M P L O Y M E N T Nonfarm Em ploym ent . . . . Digitized for14 FRASER . . . . M O NTHLY R E V IE W Latest Month (1968) One Month Ago Two M onths Ago One Year Ago One Latest Month (1968) TEN N ESSEE N o n m a n u fa c t u r in g .................. C o n s t r u c t i o n ..................... Farm E m p lo y m e n t ..................... Unem ploym ent Rate (Percent of Work Force) . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . IN C O M E Personal Incom e (Mil. $, Ann. Rate) M anufacturing P a y r o ll s .................. Farm Cash R e c e i p t s ..................... Oct. . Nov. . Oct. 9,984 223 120 10,124 222 114 10,273 217 139 9,511 200 109 Two Month Ago M onths Ago One Year Ago . . Nov. . . Nov. . . Nov. 136 166 61 135 161 52 135 162 52 133 159 67 . . Nov. . . Nov. 4.1 40.9 3.8 40.4 4.0 40.8 4.2 41.0 . . Nov. . . Nov. 288 194 253 284 195 255 277 192 263 252 184 224 F IN A N C E A N D B A N K IN G P R O D U C T IO N A N D E M P L O Y M E N T Nonfarm E m p l o y m e n t .................. M anufacturing ......................... . Nov. . Nov. 140 149 139 149 139 147 M em ber B ank L o a n s * .............. M em ber B ank Deposits* . . . . Bank D e bits*/** ..................... 138 146 •Daily average basis. *For Sixth District area only. Other totals for entire six states. Sources: Personal incom e estim ated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consum ption, U.S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U.S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. Debits to Demand Deposit Accounts Insured Commercial Banks in the Sixth District (In Thousands of Dollars) Nov. 1968 Oct. 1968 Nov. 1967 Percent Change Percent Change Year-to-Date 11 m onths 1968 Oct. Nov. from 1968 1967 1967 Year-to-Date 11 m onths 1968 Oct. Nov. from 1968 1967 1967 ST A N D A R D M ET R O P O LIT A N ST A T IST IC A L A R E A S t Birm ingham . . . . Gadsden ................. H u n t s v i l l e .............. M obile ................. Montgom ery . . . . Tuscaloosa . . . . 1,719,574 65,972 195,323 512,565 333,887 111,946 1,894,262 67,774 211,570 556,573 358,002 112,916 l,547,401r 63,897 182,803 498,340 320,013 99,454 -9 -3 -8 -8 —7 -1 + 11 +3 +7 +3 +4 + 13 + 11 +6 +6 +8 +9 + 11 Ft. La u d e rd ale Hollywood . . . 814,672 Jacksonville . . . . 1,692,722 ................. M iam i 2,897,751 O r l a n d o ................. 608,862 P e n s a c o l a .............. 203,692 T allahassee . . . . 153,436 Tampa-St. Petersburg 1,621,435 W. Palm Beach . . . 482,089 856,496 1,835,593 2,984,016 640,760 219,406 152,407 1,760,199 516,107 637,693 1,448,610 2,425,602 539,345 188,394 145,725 1,384,367 413,953 -5 -8 -3 -5 -7 +1 -8 -7 +28 + 17 + 19 + 13 +8 +5 + 17 + 16 + 24 + 12 + 25 + 18 + 10 + 10 + 18 + 21 A lbany ................. Atlanta ................. A ugusta .............. Colum bu s .............. ................. M acon Savannah .............. 97,042 5,838,595 278,644 229,663 271,867 298,594 105,504 6,464,307 318,863 260,234 292,412 320,308 94,252r -8 5,180,393 - 1 0 292,474 - 1 3 223,521 - 1 2 -7 264,007 268,936 -7 +3 + 13 -5 +3 +3 + 11 + 13 + 16 +7 + 12 + 10 + 13 Baton Rouge . . . . .............. Lafayette Lake Charles . . . New Orleans . . . . 594,488 144,754 162,584 2,467,946 610,821 150,368 173,594 2,792,254 534,383 125,405 151,437 2,327,214 -3 -4 -6 -1 2 + 11 + 15 +7 +6 + 12 + 13 + 10 +7 .............. 758,162 785,525 669,695 -3 + 13 + 13 Chattanooga . . . . Knoxville .............. N ashville .............. 625,584 510,883 1,900,789 684,022 563,579 2,092,756 618,369 469,973 1,782,918 -9 -9 -9 +1 +9 +7 + 10 + 12 + 15 74,015 71,491 50,494 77,680 81,276 58,200 63,228 -5 63,738 -8 50,562r - 1 3 + 17 + 18 -0 + 15 + 14 +3 35,117 74,982 216,266 87,345 33,239 87,283 241,368 97,488r 111,480 102,863 103,122 105,679 Jackson O TH ER C E N T E R S Anniston Dothan Selm a . . . . .............. .............. Nov. 1968 33,173 63,357 240,771 88,121 +6 -1 4 -1 0 -1 0 +6 + 18 -1 0 -1 -1 + 17 +7 +7 77,735 91,245 +8 -3 +43 + 13 + 29 + 18 •Includes only banks in the Sixth District portion of the state. J A N U A R Y 1969 tPartially estimated. Nov. 1967 . . . . . . . . . . . . . . . . . . . . . . . . 122,939 38,438 64,642 21,726 356,065 128,381 866,020 64,205 164.094 39,661 68,669 25,051 408,439r 140,910 926,326r 62,130 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,116 45,771 110,484 14,089 67,803 36,376 20,486 23,216 87,160 54,814 94,924 46,167 122,569 17,664 79,623 38,426 23,566 26,787 86,225 56,226 Abbeville . . . . . . . . Alexandria Bunkie . . . . . . . . . Ham m ond New Iberia . . . . . . . . Plaquem ine . . . Thibodaux 12,779 162,208 9,673 38,134 38,673 14,723 25,403 13,332 164,566 7.772 41,656 39,736 13.588 24,993 . . . . . 118,757 62,380 39,240 67,400 40,742 127,812 70,289 43,705 76,362 43,885 99,261 54,613 32,373 65,497 38,025 . . . . . . . . . . . 70,861 46,223 29,879 76,102 45,307 28,617 Bristol . . . . . . Johnson City . . . Kingsport . . . . . 78,239 79,300 167,027 D ISTRICT , Total 34,606,477 Lakeland . . Monroe County Ocala . . . St. Augustine St. Petersburg Sarasota . . Tam pa . . . Winter Haven . Athens . Brunsw ick Dalton . Elberton Gainesville Griffin . LaGrange Newnan Rom e . Valdosta Biloxi-Gulfport Hattiesburg Laurel . . Meridian . Natchez . Pascagoula— M o ss Point Vicksburg . Yazoo City . SIX T H Bartow .............. Bradenton . . . Brevard County Daytona Beach . . Ft. M yers— N. Ft. Meyrs . . Gainesville . . . Oct. 1968 . . . . . . . . . . . . . . . . Alabam a} . . . Florida} Georgia} , . . . . . . . Louisiana}* . . . M ississip p i}* Tennessee}* . . . ^Estimated. 4,346,036 10,836,357 8,896,641 4,271,162 1,615,220 4,641,061 117,530 - 2 5 30,538 -3 53,726 -6 19,892 - 1 3 306,081r - 1 3 109,954 -9 725,643r -7 57,723 +3 +5 +26 +20 +9 + 16 + 17 + 19 + 11 + 10 + 12 + 11 + 16 + 10 +27 +21 + 15 -9 -1 -1 0 -2 0 -1 5 -5 -1 3 -1 3 +1 -3 +17 + 10 +21 +3 -3 +5 +2 -1 5 + 15 -6 + 19 + 12 +29 -3 +1 +9 +4 +2 + 13 +3 -4 11,026 -1 131,320 8,857 + 24 36,260 -8 34,439r -3 +8 11,388 23,310 +2 + 16 +24 +9 +5 + 12 +29 +9 + 10 + 11 +2 +3 +5 +21 +8 -7 -1 1 -1 0 -1 2 -7 +20 + 14 +21 +3 +7 + 16 + 13 +22 +7 + 11 56,624 45,104 32,914 -7 +2 +4 +25 +2 -9 + 25 +3 +5 87,469 91,840 182,214 76,026 74,608 165,268 -1 1 -1 4 -8 +3 +6 +1 + 17 + 10 + 10 37,526,594 31,147,145 -8 + 11 + 14 4,762,823 11,434,656 9,919,920 4,677,123 1,701,422 5,030,650 3,988,632 9,247,298 8,216,314 3,939,545 1,445,323 4,310,033 -9 -5 -1 0 -9 -5 -8 +9 +17 +8 +8 + 12 +8 + 12 +18 + 14 +9 + 13 +12 73,487 41,697r 91,029 13,665 69,748 34,716 20,090 27,352r 75,853 58,015 r-Revised. 15 District Business Conditions The District economy continues on an upward course. November brought higher employment and pay rolls; District bankers did a brisk lending business. The construction and mortgage boom continued in November as thrift institutions apprehensively awaited the year-end reinvestment period. Farm cash receipts remained high through October. ber banks the pace was less hectic than in No A strong rebound in nonmanufacturing jobs, vember. Losses of large denomination certificates together with the continued strength in the manu of deposit over the mid-December tax date period facturing sector, boosted total nonfarm employ were moderate, despite sharp increases in direct ment in November. All District states posted gains investment yields, largely because of the banks’ in nonfarm jobs except Louisiana. Primary metal earlier aggressive sales of 1969 maturities. employment showed a strong gain, signaling the Mortgage markets have also felt the cold breath end of strike-associated inventory adjustments on of higher interest rates. Record yields have al the part of steel users. Manufacturing payrolls ready been partially reflected in FHA-VA increased substantially, reflecting overall gains in secondary market prices. Although nonbank de manufacturing jobs and a longer factory work positary institutions in the Southeast enjoyed week. The District’s unemployment rate, although relatively strong savings flows in December, it is still low, edged up despite a reduction in the na still too early to gauge the impact of higher tional rate. The District increase resulted from de yields on their available mortgage funds during creases in farm jobs at the end of the harvest sea the January reinvestment period. The pace of son and from a large influx of women workers new construction contracts has slowed only slight into the District labor market. ly, reflecting the lag between capital market Consumer borrowing continued its upward path yield movements and building. in November. Although November’s increase in District farmers, in general, have fared well in consumer instalment debt at banks was smaller 1968. Even though prices for most farm com than in October, the gain was above the average modities have fallen, cash receipts through Oc for the year. Automobile loans provided most tober remain well above a year ago. Burley to of the thrust, but personal loans, buoyed by bacco sales in Tennessee are nearing completion, a sharp advance in revolving credit, also rose and prices are near last year’s levels. In Florida, significantly. Bank debits, after a leveling off freezes on December 16 and 17 damaged citrus, since mid-year, rose sharply during November in sugarcane, and vegetable crops. each state except Tennessee. N O TE : Data on w hich statem ents are based have been ad In early December, loans continued to expand justed w henever possible to elim inate seasonal influ ences. at District member banks. However, at large mem Digitized 16for FRASER M O NTHLY R E V IE W
@FedFRASER