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In this issue: T h e S o u t h e a s t in 1 9 7 2 : M a t c h e s F a st U . S. P a c e In d u stry: A R isin g L a b o r D e m a n d T he C onsum er: C o n stru ctio n : A g r ic u ltu r e : B a n k in g : B e c o m in g C o n fid e n t M ore o f th e S am e T h e B e st Y ea r Ever S tron g a n d B a la n c e d G r o w th D istr ic t B u s in e s s C o n d it io n s T h e S o u t h e a s t in M a tc h e s by H arry Fa st 1 97 2 : U . S. P a c e Brandt The titles of other articles in this R e v i e w testify to an important fact: By all accounts, economic activity in the Southeast in 1972 was up strongly from 1971. Personal income, jobs, and production all grew at a fast rate in the Sixth District states (Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee). This cheerful news was, of course, not confined to the Southeast. The upsurge in the economy came at various rates to every region. Because the Southeast for many years has grown faster than the rest of the nation, many Southerners probably expected their economy to boom even more during 1972. The six states' per capita income had climbed to 83 percent of the national average in 1971 from 74 percent ten years earlier. But, even though economic statistics available for 1972 point to tantalizing gains, those gains were not significantly faster than the nation's. The rate of personal income gain did not differ in the first half of 1972 from the U.S. average. Growth in several Southeastern states was indeed below the U.S. as a whole, and, on a per capita basis, the regional gain was smaller. Factory earnings for the first eleven months were under the nationwide advance, and total nonfarm jobs were just barely ahead of the U. S. increase. Though Southerners were better off than in 1971— in part because they also found inflation slowing— 1972 on the whole was not much different for them than for other Americans. Economists used to think that inflation caused consumers to rush into buying automobiles and other durable goods in an effort to beat further price increases. But by cutting into purchasing power and financial Monthly Review, Vol. LVIII, No. 1. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. JANUARY 1973, MONTHLY REVIEW In c o m e gro w th w as A N N O U N CEM EN T r a p id . T he Federal Reserve System paid the U. S. Treasury $3,231,000,000 d uring 1972. U n d e r a p o licy ad o pted by the Board of G o ve rn o rs at the end of 1964, the Federal Reserve Banks' net earnings (after statutory d ivid en d s to m e m ber banks and add itio n s to surplus) are turned o ver to the U. S. T reasu ry as interest on Federal Reserve notes. T he Reserve Banks' net e arn ings in 1972 am ou n ted to $3,378 m illio n (less $50 m illio n p rin cip ally due to losses on foreign exchange tran sactio ns); d ivid en d s, $46 m illio n ; and add itio n s to surplus, $51 m illio n . *6 m o n th s d a ta Jobs rose ahead of the U.S. average in some states, below in others. %chg. 1972 from 1971* Ban k A n n o u n c e m e n ts DECEMBER 8, 1972 BANK O F NORTH TAMPA Ala. Ga. U .S . La. M iss. Fla. T en n . *C overs s e a s o n a lly a d ju s te d d a ta fo r f ir s t 10 m o n th s of e a c h y e a r assets, inflation also may influence consumers to cut down on spending. In that view, less inflation induces freer spending habits. Certainly, this influence was present during 1972, judging from the confidence which Southerners exercised in their spending. Without some controls, it seems doubtful whether inflation would have slowed as much as it did. Even the severest critics of the control program admit that it has done some good in holding down price increases, although there is disagreement over just how much impact it has had. Progress has been made on the inflation front, but inflation will continue to be a problem if the widespread expectations for a booming 1973 economy materialize ■ Tampa, Florida O pened tor business as a par-rem itting nonm em ber. O fficers: Theodore J. Couch, chairm an of the board and president; Donald N. Barum, executive vice president; W illia m E. )oyce, cashier. Capital, $600,000; surplus and other funds, $350,000. DECEMBER 19, 1972 CLEARW ATER MALL CO M M U N ITY BANK Clearwater, Florida O pened for business as a par-rem itting nonm em ber O fficers: G eorge Ruppel, president; Robert F. G uthrie, executive vice president. Capital, $400,000; surplus and other funds, $600,000. DECEMBER 20, 1972 CITIZENS BANK O F G EO RGIA Stone Mountain, Georgia A d m itted to m em bership in the Federal Reserve System. DECEMBER 22, 1972 C O LO N IA L BANK New Orleans, Louisiana A d m itted to m em bership in the Federal Reserve System. FEDERAL RESERVE BANK OF ATLANTA 3 In d u s t r y : A by R is in g W illia m D. L a b o r D e m a n d Toal Economic growth can mean different things to different people. Although the fabric of a region's economy consists of many interwoven threads, one basic aspect of economic growth is its ability to create jobs for an enlarging labor supply. In 1972, the Southeastern economy demonstrated this by translating its output gains into a rising demand for labor, which eventually led to an increase in jobs. Retail sales, construction, banking, and agriculture were all positive factors in the 1972 Southeastern economy. Manufacturing also contributed strongly, according to the Bank's index which showed hefty production increases. Both durable and nondurable goods output expanded more rapidly than in 1971 and at about the same pace as national manufacturing output. Because of the stepped-up pace in manufacturing, retail sales, and construction, labor demand has risen sharply. The number of help-wanted advertisements in large city papers provides a rough index of changes in jobs available. A weighted average of help-wanted advertising for seven South eastern metropolitan areas confirms a rise in labor demand that began in mid-1971 and continued without interruption through August 1972.1 This weighted index had also indicated the earlier drop-off in jobs from late 1969 to 1970. In the past year and a half, the rise in labor demand, indicated by the help-wanted index, has grown faster than nationally. Did this rising demand automatically result in tighter labor markets in the Southeast? For two reasons, the answer is no— at least, not immediately. First, initial increases in labor demand can be satisfied by existing jobholders extending hours ^ h e District help-w an ted index is developed from help-w an ted indexes tabulated by the Conference Board for seven Southeastern m etro politan areas: Atlanta, Jacksonville, M ia m i, B irm ingham , New O rleans, Knoxville, and Nashville. The weights used are 1970 nonfarm em p lo ym en t in each m etro politan area as com pared to total nonfarm em ploym ent in all seven areas. Em ploym ent in these seven m etro politan areas amounts to about 30 percent of District nonfarm em ploym ent. JANUARY 1973, MONTHLY REVIEW worked per week. A decrease in work hours usually occurs in an economic downturn, thus leaving room for expansion when economic activity picks up. In 1971, labor demand began to rise (as measured by the help-wanted index). Employers initially reacted by lengthening their employees' hours in order to meet production schedules and sales; this limited initial employment gains. As Southeastern labor demand rose further in 1972, employment gains began to increase. Although the workweek continued to lengthen slightly, more of the labor demand was satisfied by hiring additional workers. Services, trade, and state and local governments, only slightly affected by the 1970 recession, added jobs steadily throughout 1970, 1971, and 1972. Durable manufacturing jobs, on the other hand, declined in late 1969, increased in early1971, and accelerated in 1972. Nondurable manufacturing followed a similar but less pronounced pattern. The rise in construction employment was less than one might have anticipated, considering the industry's robustness, though construction jobs rose in 1971 and early 1972. This strike-prone industry did, however, suffer a midyear industrial dispute which blunted further gains. Overall, Southeastern job growth, responding to the rising labor demand, picked up sharply in 1972, matching the pace of the Sixties. Although not true for each industry, job growth was enough to barely exceed the national pace which had also bounced back in 1972. Even though employment gains began to push the Southeast's unemployment rate downward as early as mid-1971, the decline in the unemployment rate and consequent tightness in labor markets were less than generally expected for yet another reason: Labor force growth was very strong in 1972. During the previous two years, labor force growth had been less than the average rise during the Sixties. Workers who became dis couraged at finding jobs left the labor force in 1970 and 1971; however, in 1972 many returned as jobs became available. The net result was greater-than-anticipated labor force growth in 1972, less tight labor markets, and higher un employment rates than would have otherwise existed. Despite a lengthening in the workweek and rapid growth in the labor force, increased labor demand did begin to push the region's unemploy ment rate downward from around 5 percent in mid-1971 to the 4-percent range by late 1972. Furthermore, the rise in labor demand was wide spread. All seven metropolitan areas for which data are available posted gains in help-wanted ads from the previous year. The strongest of these gains was in Atlanta, the smallest in New Orleans. Unemployment statistics mirrored these geographic FEDERAL RESERVE BANK OF ATLANTA - d e s p ite la b o r fo rce grow th. ___ -1 1 5 1969 1970 1971 1972 N ote: S e rie s show n in o rd e r a re : m fg. prod., h e lp -w a n te d a d v e rtis in g , fa c to ry w o rk w e ek , n o n fa rm e m p lo y m e n t, u n e m p lo y m e n t ra te , a n d c iv ilian la b o r fo rce . All fig u re s a re s e a s o n a lly a d ju s te d . differences in labor demand. For example, Atlanta, with strong labor demand, had a relatively low unemployment rate, while in metropolitan New Orleans, with weaker labor demand, the unemployment rate remained relatively high. The 1973 Job Picture What does this revitalized Southeastern economy indicate for the region's labor markets in 1973? The momentum from the 1972 economy plus the rise in labor demand as reflected in the helpwanted index, suggest that continued job growth is highly likely. Additionally, the past two years of increase in average weekly hours suggests that significant lengthening of the workweek is not likely. Consequently, to further satisfy labor demands, more workers will be needed, spelling good news for job gains in the months to c o m e .i 5 T h e C o n s u m e r: B e c o m in g by B r ia n D. C o n f id e n t D itte n h a fe r Rapid growth in the economy has restored consumer confidence. The resulting boom in spending accelerated throughout 1972 and has helped fuel a strong expansion of employment and production. The most buoyant and expansive sector of consumer spending was automobile sales. Though Sixth District auto sales had already begun to rebound from the 1970 recession during early 1971, the prospect of an excise tax refund caused sales to jump in the latter part of the year. This was an expected consequence of the tax policy, so the rapid climb in sales was not surprising. What did surprise many people was the outstanding performance of auto sales throughout 1972. New car registrations in the Southeast were 12 percent higher in 1972 than in 1971. Adding to the strength of the auto buying boom was the purchase of light trucks as second vehicles by some consumers. If registrations of light trucks and autos are combined, a 15-percent increase in registrations is indicated (in the first ten months of 1972). The Boom Spreads Beginning in the first quarter of 1972, sales of nonautomotive consumer goods also began to reach boom proportions. Department store sales in major Southeastern metropolitan areas reflect increased purchases of a wide variety of items. During the 1970 recession year, department store sales were virtually unchanged when inflation is taken into account; but in 1971, sales spurted 12 percent while the rate of inflation was slowing. During 1972, sales continued to grow at a quickening pace. Based on rate of change for the first three quarters, 1972 sales will exceed 1971's high level by at least 15 percent. If the consumer in the Southeast was following the national spending pattern, more of his dollars went for "big ticket” durable items such as household appliances and furniture, a trend consistent with the high level of 1972 housing starts. The broadening range of purchases is also reflected in the growth of consumer instalment credit at District commercial banks. Lending patterns indicate a shift toward home repair and modernization and toward personal loans and loans for nonautomotive consumer goods. By far the largest dollar increase in consumer borrowing in 1972 was in the automotive category; however, the proportion of new credit used to finance auto purchases dropped to 51 percent from 62 percent in 1971. Meanwhile, both loans for home repairs and personal loans were enlarging their share of the total at the expense of auto loans. JANUARY 1973, MONTHLY REVIEW MOTOR VEHICLE REGISTRATIONS P e rc e n t In c re a s e 1972 fro m 1971* T ru c k s A u to s A labam a 27.8 14.8 District auto sales remain strong . . . T o ta l 1969 = 100 16.9 F lorida 35.5 7.9 11.4 G eorgia 3 1 .9 8.9 12.6 L o uisiana 28.3 14.2 16.7 M ississip p i 39.0 19.0 23.2 T e n n e ss e e 35.9 16.0 19.3 D istric t S ta te s 33.1 11.7 15.0 140 100 60 S o u rce : B ased on d a ta s u p p lie d by R. L. Polk & C o m p an y . ♦B ased on fig u re s fo r fir s t te n m o n th s of e a c h y ear. department store sales join the expansion . . . Consumers have indicated confidence in the continuation of economic expansion by their willingness to take on new debt. Historically, consumers have been reluctant to take on additional debt when they doubted their immediate prospects. In the past year, however, a declining unemployment rate, large employment increases, and rapidly rising incomes have relieved many consumers of economic anxiety. They have responded by spending more from current incomes and borrowing more against anticipated incomes. These consumer attitudes are reflected in growth of instalment credit at the District's com mercial banks. During 1970, consumers increased their borrowings by only 6.2 percent, but during 1971, when the business expansion was getting under way, consumer instalment credit outstanding grew by 10 percent, jumping an additional 16 percent over the twelve months ending in November 1972. Despite this rapid growth in debt, the consumer remains in a relatively strong financial position. Cains in personal income have been large, sustaining high levels of savings inflows to all types of thrift institutions during the past year. Expansion in savings deposits has ranged from 16 percent at savings and loan institutions to 18 percent at commercial banks. In short, the consumer seems in a good position to service the debt he has undertaken either by drawing down his savings deposits or spending more of his growing income. However, as is usually the case in an economic expansion, some increase in delinquency rates apparently has occurred. 1 9 6 9 = 100 I I I 250 200 150 100 J J Consumer spending is expected to be a strong element in the economy during 1973. Income has been growing rapidly as the national economy has gathered steam, and consumer confidence has been bolstered by large employment gains and declines in unemployment. Although the increase in consumer borrowing has been both rapid and FEDERAL RESERVE BANK OF ATLANTA i _________ D and use of bank credit grows and broadens. % chg. from year ago Consumer instalment credit 20 1972* 15 10 5 Auto The Outlook 300 Nonauto Consumer Repair & Modern. Personal Total 0 ‘ O c to b e r fig u re s large, income and savings deposit growth indi cates that the consumer is in a good position to service this debt. Large tax refunds in early 1973 should add to consumer spending already stimulated by a rapidly growing economy. * 7 C o n s t r u c t io n : M o re by Boyd F. o f th e S a m e K in g Construction activity grew rapidly in the region's economy in 1972 just as in 1971. Some details of this sector's performance differed from the year before and some new, transient forces were apparent. O n the whole, however, construction activity bore out the conclusion of our 1971 report that "Most of the influences that accounted for the area's construction performance in 1971 seem likely to retain their force in 1972." The value of all construction contract awards, a rough proxy for construction spending, rose to $12.7 billion in the first 10 months of 1972 in the District states as compared with $9.8 billion in the same period in 1971 .* Residential contract awards accounted for all but $100 million of this increase as the value of these awards approached $8 billion and the number of dwelling units awarded rose to more than 430,000. Nonresidential construction activity continued during 1972 at levels prevailing during the last half of 1971. Residential Construction Residential construction activity in the region was pushed to higher levels by strong demand arising from many years of relatively rapid urbanization, population and income growth, and slow residential building in 1969 and 1970. Combined with ample credit for interim and permanent financing of all types of residential structures, these demands produced in 1971 a steady rise in residential construction activity, continuing into 1972. Other forces, including a splurge of condominium construction specific mainly to Florida, added impetus. Construction and mortgage credit conditions remained conducive to residential building in 1972. Interest rates on single-family residence mortgage loans and on construction loans declined slightly over the year in those areas from which reports are available. Savings inflows and mortgage lending at the region's savings and loan associations ran well ahead of 1971's record levels and the District's mortgage bankers found ready markets for residential mortgages at institutions both within and outside the Southeast. ’ Construction Company. contract awards data from F. W. Dodge D ivisio n, M c G ra w -H ill In fo rm atio n Systems JANUARY 1973, MONTHLY REVIEW As in 1971, each of the District states recorded more than 30-percent growth in the value of residential contract awards in 1972. Only Georgia and Louisiana recorded growth rates below that of the nation, each suffering from soft markets for multi-unit housing in its large cities. Georgia had the only metropolitan area— Augusta— where contracts declined during the year. Florida regained its regional lead in residential building. After lean years in 1970 and 1971, the Southeastern's population growth leader recorded a more than 80-percent increase in residential contracts and accounted for almost one-half of the region's total residential contract awards. Rapid growth occurred in each of Florida's metropolitan areas as many large multi-unit com plexes were begun. Although continuing population growth and credit availability played major roles, Florida's 1972 growth was spurred in some areas by a moratorium on sewer connections for units on which building permits were issued after October 1. Nonresidential Construction In 1972, monthly nonresidential construction con tracts fluctuated around a level established in mid-1971. Large contracts were less frequent than in previous years. The steadiness of nonresidential activity resulted from gains in commercial and public services construction balancing losses in manu facturing construction. Both commercial and public services construction are closely related to regional trends; the strength and growth of the regional economy buoyed this activity as it did residential building. There were fewer large Residential construction boomed; nonresidential held stable. 1967 = 100 ~ District states contracts ($ value) _ 300 t R e sid e n tia l 250 200 ^ / N o n re sid e n tia l A/ • 1971 N ote: F ig u re s a re s e a s o n a lly a d ju s te d a v e ra g e s FEDERAL RESERVE BANK OF ATLANTA 1972 5-m o. m o v in g 150 Each state shared in the residential boom. % chg. from year ago Contracts ($ value) H 1971 s ta t e s N ote: C overs d a ta fo r firs t 10 m o n th s of e a c h y e a r contracts for electric power plants than in the past four years, but there were more small contracts for electric power plants, hospitals, hotels and motels, and commercial buildings. Factory construction contract awards in the District paralleled weak national spending for factory buildings. Southeastern industry shared low levels of capacity use, thus contracts for new plants declined over the year. Big contracts, which buoyed 1971's activity, were also absent in this type of construction. Outlook for 1973 Construction patterns will probably change in 1973. Residential building, while still supported by population and income growth, will lose some support from less permanent influences. Two boom years have cut the backlog of unsatisfied housing demand from 1969 and 1970. As other sec tors of the economy continue to expand, more funds will probably be siphoned away from housing to finance inventory and plant and equipment spending. A further check on regional expansion of residential construction is the moratorium on sewer connections in some Florida areas, which could substantially cut activity in one of the region's fastest growing markets. Overbuilding may also adversely affect residential construction in some areas in 1973. Lagging types of nonresidential construction seem likely to pick up in 1973 while growing types show little or no weakness. Expanded economic activity throughout the nation is apt to push manufacturers closer to capacity and accelerate plant and equipment additions in the Southeast. At the same time, announced bidding on public utility contracts presages a large volume of these awards in 1973, and no let-up in store, office, and warehouse contracts is evident.® 9 A g r ic u lt u r e : T h e by G ene B e s t Y e a r D. E v e r S u lliv a n When the record books have been completed, 1972 will stand out as the best year in history for District farmers. Growing demand for farm products resulted in rising prices and increased output for most agricultural commodities, producing record-breaking farm income in both the crop and livestock sectors. This was despite crop losses resulting from heavy rains during the harvest season. Although farm costs also rose, profits have increased and farmers have been encouraged to borrow more money to expand operations. Cash Receipts Throughout 1972, cash receipts from farm marketings ran ahead of year-ago levels. Early in 1972, the strongest push came from higher livestock prices. Later in the year, crop prices advanced also, helped in no small measure by Russia's grain purchases. Although prices of poultry, eggs, cotton, and citrus fruits sometimes ran counter to the trend, average annual prices still compared favorably with 1971's levels. Cotton provided one of the strongest boosts to District farm income. The high prices of late 1971 and early 1972 stimulated farmers to raise output by about 15 percent. Although this increase came at the expense of grain output, the trade was a favorable one for District farmers. Farm Costs In spite of control programs, prices paid by farmers for commodities and services showed the sharpest rise in recent years. Interest rates, wages, taxes, and prices of production items all registered significant increases. O nly a slower rate of growth in living expenses held back increases in prices paid for commodities and services. Higher prices and expanding output of crops and livestock resulted in JANUARY 1973, MONTHLY REVIEW and these are the boosters. Cash farm income gets a boost. . . % chg. from year ago $ 6 4 2 0 ♦ P artia lly e s tim a te d by F e d e ra l R ese rv e B an k of A tla n ta Hogs & Pigs Sugar cane Oranges Cotton Soybeans rapidly rising production expenses. Cash receipts rose even faster, however, creating larger net returns to farmers. Credit Total agricultural credit reached an all-time high of $6.3 billion in District states in 1971, but moved even higher in 1972. Increases in land purchases for farm enlargement, soaring nonreal estate capital needs, and expanded production have all fed the demand for farm credit. Most lenders experienced favorable farm loan repayments in 1972. However, there were pockets where drouth severely restricted production and where heavy fall rains and flooding destroyed crops before they could be harvested. In these unfortunate areas, some loan carry-overs have been unavoidable. & Calves * B ased on e s tim a te d p ro d u c tio n le v e ls Use of credit bounds upward. Billion $ 6 The Outlook Favorable prices and increasing profits will stimulate further expansions in production, where allowed, in the year ahead. A reduction in cotton acreage allotments has been announced, but the diverted land will almost certainly be utilized to expand increasingly profitable soybean pro duction. Livestock producers are likely to continue expanding output as rapidly as possible in response to 1972's unusually high prices. With no foreseeable letup in the brisk demand for food and feed products, 1973 could be a still better year for District farmers. ■ FEDERAL RESERVE BANK OF ATLANTA **First 11 m o n th s O th e r 4 P ro d u ctio n C re d it A ssocs. F e d e ra l Land B an k s 2 C o m m e rc ial B anks 1971 0 1972* ‘ P a rtia lly e s tim a te d by F e d e ra l R ese rv e B ank of A tlan ta 11 B a n k in g : S tro n g a n d B a la n c e d G ro w th by John M. G od frey As 1972 unfolded, it became increasingly clear that District banks would have their best year since 1968. As the economy showed signs of a robust advance, conditions seemed to be ideal for ensuring strong banking gains. In addition, monetary policy was supplying reserves at a strong pace— at least until early summer. Therefore, bankers had everything going for them: a strong deposit growth and a stronger economic pace increasing credit demands from more traditional types of borrowers. In short, 1972 was a year in which District banks achieved a strong and, notably, more balanced growth in deposits and credit. Monetary policy was generally expansive during the year, enabling banks to expand deposits in line with the economic upturn. However, beginning in June there was a noticeable tightening in reserve positions of Sixth District member banks as credit demands strengthened relative to the banks' ability to meet them. Borrowing from the Federal Reserve Bank of Atlanta was virtually nonexistent prior to June, but then picked up and remained at moderate levels throughout the rest of the year. At the same time, many banks also increased their use of the Federal funds market. Those banks with excess reserves stepped up Federal funds sales as interest rates rose, while banks in need of additional funds bought more overnight reserves. Total member bank deposits in this region were up over 16 percent during the year, a somewhat faster pace than in 1971. Demand deposit growth was generally stronger throughout 1972; interest-bearing deposits, however, continued to provide the bulk of District deposit gains. Consumers added large amounts to passbook savings accounts and "other" time deposits. Many large banks actively competed for additional deposits by raising offering rates on large-denomination CD's. Business firms accounted for over one-half of the year's nearly 50-percent advance in these money market instruments. In addition, state and local governments placed substantial amounts of surplus funds in local banks at interest. These additional funds were the result of (1) greater-than-anticipated tax receipts generated by strong economic gains and tax rate increases and (2) federal revenue sharing distributions. Improved economic conditions increased demands on local banks to make JANUARY 1973, MONTHLY REVIEW loans and to purchase investments. As a result, total member bank credit advanced over 20 percent and banks achieved a better balance in their credit expansion. In particular, sectors where credit requests had been weak developed considerable strength. Bank lending advanced 24 percent during 1972, up sharply over the previous year's weaker 14 percent gain. Consumer borrow ing increased notably as consumer instalment credit demands broadened to include more than just a strong auto loan demand. Real estate lending rose in line with vigorous gains in single and multifamily residential construction. Borrowing by commercial and industrial firms was one type of bank credit gaining considerable strength in 1972. The growing economic recovery caused business firms to take down new lines of credit after repaying sub stantial amounts the year before. The lending rate posted by many large District banks also reflected renewed credit demands: The prime rate at the beginning of 1972 started at 5 percent, dipped to 43A percent by March, and by the end of the year had increased to 6 percent. Two strong sectors of the regional economy— wholesale and retail trade and service firms— had sharp loan gains at large District banks. Construction firms were in need of much additional working capital as many new construction projects were started. In the manufacturing industries, textiles and apparel, fabricated metals, food products, and chemicals and rubber were net borrowers after generally reducing bank loans during most of 1971. Not only have many large banks experienced a better balance in the type of business borrowers, but Deposit and loan growth accelerated. % chg . Nov. from ago 30 20 10 Other Time Total Demand Deposits Deposits Deposits N ote: Loans F ig u res c o v er m e m b e r b a n k s FEDERAL RESERVE BANK OF ATLANTA U.S. Gov't. Other Securities Securities 0 SIXTH DISTRICT MEMBER BANKS P e rc e n ta g e C h an g e: Nov. 1972 from Nov. 1971 L oans In v e s tm e n ts D e p o sits 18.8 20.3 ALABAMA ................... . 15.7 5.7 16.8 A n n isto n -G a d sd e n . . . . 12.4 16.9 22.6 B i r m i n g h a m .................... . 14.4 16.3 18.5 D othan .............................. . 17.5 30.4 15.9 M o b i l e ................................. . 19.7 22.8 22.7 M o n t g o m e r y .................... . 19.1 15.7 26.0 FLORIDA .............................. . 18.5 - 1.6 13.9 J a c k s o n v i l l e .................... . 14.0 15.8 29.3 M i a m i ................................. . 20.5 24.4 34.4 O r l a n d o .............................. . 17.3 7.3 24.2 P e n s a c o l a ......................... . 16.8 18.2 22.8 . 17.9 T am p a-S t. P e te rs b u rg 13.2 29.8 GEORGIA .............................. . 16.2 15.4 33.6 A tlan ta .............................. . 16.7 27.7 8.0 A u g u s t a .............................. . 20.6 14.4 14.3 C o l u m b u s ......................... . 15.4 19.4 -4 .5 7.2 M a c o n ................................. 3.7 18.9 Savannah ......................... . 15.1 25.8 14.7 . 13.8 S o u th G eorgia . . . . 5.2 19.7 LOUISIANA ......................... . 10.7 22.7 5.1 A lexandria-L ake C h arle s . 11.8 8.2 17.2 B aton R ouge .................... . 12.3 12.8 13.5 L a fa y e tte -Ib e ria -H o u m a . 12.2 3.7 20.6 New O r l e a n s .................... 9.9 19.7 16.2 M I S S I S S I P P I ........................ . 16.3 Jackson ............................ . 14.3 16.4 18.2 H a ttie sb u rg -L a u re l8.8 24.1 M eridian ........................ . 17.6 16.2 24.8 N a t c h e z .............................. . 16.2 16.0 TEN N ESSEE ......................... . 17.9 21.6 17.4 13.7 C h a t t a n o o g a .................... . 10.9 5.2 Knoxville ......................... 5.0 6.6 . 24.2 27.9 17.8 N ash v ille ......................... 12.2 20.1 T ri-C ities ......................... . 11.6 24.2 14.3 SIXTH DISTRICT TOTAL . . 16.5 N ote: S ta te fig u re s in c lu d e only D istrict p o rtio n s. O th er d a ta a re fo r tr a d e a n d b a n k in g a re a s. also in the maturity of loans. Most business credit extended in 1971 was for less than one year, but in 1972 a much larger amount consisted of intermediate- and long-term credit. Term credit advanced by more than $185 million in the first eleven months of 1972 in sharp contrast to the $40-million increase during the previous year. District banks were not faced with the neces sity of rebuilding liquidity in 1972 as in the previous two years. Changes in their investment portfolios during 1972 indicated a general desire to increase yields and current income. Reflecting this, their U.S. Treasury investments were virtually unchanged. Many banks, however, did liquidate short- and medium-maturity Governments while adding higher yielding, longer-maturity securities. Holdings of municipal obligations and U.S. agency issues, in turn, advanced more than 20 percent. When the final results are in, District banks should find 1972 was a good year. Banks were able to expand deposits without much effort and without paying appreciably higher interest rates for them. At the same time, banks satisfied their loan customers to a great extent. As a further result, bank earnings in 1972 should show a noticeable improvement in contrast to the last several years. ■ 13 S ix t h D is t r ic t S t a t is t ic s S e a s o n a lly A d ju sted (All d a t a a r e i n d e x e s , u n l e s s i n d i c a t e d o t h e r w i s e . ) One Two Latest Month Month Months 1972 Ago Ago One Year Ago SIXTH DISTRICT Unemployment Rate (Percent of Work F o r c e )................ Nov. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Nov. INCOME AND SPENDING Manufacturing P a y r o lls ................ Farm Cash R eceip ts........................ C r o p s ............................................ Livestock .................................... Instalment Credit at Banks* (Mil. $) New Loans ................................... Repayments................................... 152 141 125 149 151 122 94 154 149 138 140 142 137 116 105 116 FINANCE AND BANKING Member Bank L oan s........................... Nov. Member Bank D e p o sits .................... Nov. Bank D eb its* * .................................... Nov. 487 415 505 424 444 388 442 364 FLORIDA 118 110 109 103 106 108 110 117 105 111 106 114 111 120 131 103 121 113 103 120 128 126 100 128 84 118 110 109 103 106 107 111 117 105 111 105 113 110 119 130 103 120 113 103 120 127 125 99 127 85 117 109 109 102 105 106 110 116 105 110 104 112 no 118 128 103 120 111 103 119 127 125 99 127 84 114 106 107 101 103 108 110 113 105 105 101. 109 101 115 119 104 115 110 104 116 122 122 101 120 86 3.9 4.1 4.1 4.5 1.8 41.0 297 324 270 186 81 123 279 234 185 275 275 221 161 297 332 199 188 183 214 268 444 750 428 2.0 41.1 310 358 263 179 82 122 275 235 185 271 282 220 161 295 323 198 188 182 213 267 449 713 405 2.1 41.2 218 320 119 174 81 129 277 237 187 272 290 218 163 298 325 197 187 182 208 268 428 720 423 2.7 40.7 200 229 171 167 86 119 255 219 175 252 269 200 161 252 298 189 178 170 197 247 413 626 384 . Nov. . Nov. 202 188 196 180 193 179 163 148 . Nov. . Nov. . Nov. 176 153 204 178 157 202 174 154 199 151 134 174 EMPLOYMENT AND PRODUCTION Nonfarm Em ployment.................... . Nov. Manufacturing ............................ . Nov. Nondurable G ood s................... F o o d ....................................... T e x t i le s ................................ . Nov. Apparel................................... Paper .................................... . Nov. Printing and Publishing . . . Nov. C h e m ica ls............................ . Nov. Durable G o o d s ........................ . Nov. Lbr., Wood Prods., Furn. & Fix. . Nov. Stone, Clay, and Glass . . . . Nov. Primary M e ta ls.................... . Nov. Fabricated M e ta ls................ . Nov. M achinery............................ . Nov. Transportation Equipment . Nov. Nonmanufacturing....................... . Nov. C onstruction........................ . Nov. Transportation .................... . Nov. T r a d e .................................... . Nov. Fin., ins., and real est. . . . . Nov. S e r v ic e s ................................ . Nov. Federal Government . . . . . Nov. State and Local Government . Nov. Farm Employment........................... . Nov. Unemployment Rate (Percent of Work Force) . . . . . Nov. Insured Unemployment (Percent of Cov. E m p .)................ . Nov. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Nov. Construction C ontracts*................ . Nov. R esid en tial................................... . Nov. All O th er....................................... . Nov. Electric Power Production** . . . . July Cotton Consumption**.................... . Oct. Petroleum Production**/-!"! . . . . . Dec. Manufacturing Production . . . . . Aug. Nondurable G ood s....................... . Aug. F o o d ....................................... . Aug. T e x t i le s ................................ . Aug. Apparel ................................ . Aug. paper .................................... . Aug. Printing and Publishing . . . Aug. C h e m ic a ls............................ . Aug. Durable G o o d s ............................ . Aug. Lumber and W ood............... . Aug. Furniture and Fixtures . . . . Aug. Stone, Clay, and Glass . . . . Aug. Primary M e ta ls .................... . Aug. Fabricated M e ta ls............... . Aug. Nonelectrical Machinery . . . Aug. Electrical Machinery . . . . . Aug. Transportation Equipment • Aug. FINANCE AND BANKING Loans* All Member B an k s....................... Large B a n k s ................................ Deposits* All Member B a n k s .................... Large Banks ................................. Bank D eb its* /* * ............................ One TWo Latest Month Month Months 1972 Ago Ago ALABAMA INCOME Manufacturing P a y r o lls ....................Nov. Farm Cash R eceip ts........................... Oct. 4.4 40.8 4.8 41.0 5.4 40.8 194 172 183 187 171 179 183 168 181 162 149 159 154 197 154 169 151 140 142 177 130 114 133 140 94 129 114 132 139 99 128 113 131 135 106 123 109 126 131 3.1 41.4 3.3 41.6 3.3 41.4 3.9 40.6 FINANCE AND BANKING Member Bank L oans........................... Nov. Member Bank D e p o s its ....................Nov. Bank D eb its* * .................................... Nov. 224 200 238 220 202 235 213 197 227 178 169 197 145 115 134 108 116 105 114 104 118 GEORGIA INCOME Manufacturing P a y r o lls ....................Nov. Farm Cash R e c e ip ts ........................ Oct. EMPLOYMENT Nonfarm Em ploym ent........................Nov. Manufacturing ................................Nov. Nonmanufacturing........................... Nov. Construction................................Nov. Farm Employment............................... Nov. Unemployment Rate (Percent of Work F o r c e )................Nov. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Nov. FINANCE AND BANKING Member Bank L o a n s ........................Nov. Member Bank D e p o s its ....................Nov. Bank D e b its* * .................................... Nov. 147 166 117 106 122 111 116 106 121 112 121 110 3.7 40.5 4.2 40.6 198 156 218 111 190 157 209 152 134 181 140 173 120 108 107 105 109 108 187 160 209 LOUISIANA INCOME Manufacturing Payrolls....................... Nov. Farm Cash R eceip ts............................ Oct. EMPLOYMENT Nonfarm Em ploym ent........................ Nov. Manufacturing ................................Nov. Nonmanufacturing........................... Nov. C onstruction................................ Nov. Farm Employment............................... Nov. Unemployment Rate (Percent of Work F o r c e ) ................ Nov. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Nov. FINANCE AND BANKING Member Bank L o a n s*........................ Nov. Member Bank D ep osits*.................... Nov. Bank D eb its* /* * ................................ Nov. 140 128 108 101 109 101 102 6.0 128 100 106 86 6.7 41.4 42.1 170 161 165 167 158 163 147 144 146 116 116 115 113 113 112 115 111 176 160 161 MISSISSIPPI 148 128 145 131 144 157 133 102 INCOME Manufacturing P a y r o lls .................... Nov. Farm Cash Receipts . .........................Oct. EMPLOYMENT Nonfarm Em ploym ent.................... . Manufacturing ................................. Nonmanufacturing....................... ... . C onstruction........................ . Farm Employment........................... ... . 110 110 111 102 76 110 109 110 104 80 109 108 109 100 72 107 107 107 102 80 EMPLOYMENT Nonfarm Em ploym ent........................ Nov. Manufacturing ................................ Nov. Nonmanufacturing........................... Nov. C onstruction................................ Nov. Farm Employment............................... Nov. 14 4.2 41.1 EMPLOYMENT Nonfarm Em ploym ent........................Nov. Manufacturing ................................ Nov. Nonmanufacturing........................... Nov. Construction................................ Nov. Farm Employment...............................Nov. Unemployment Rate (Percent of Work Force) . . . . Nov. Avg. Weekly Hrs. In Mfg. (Hrs.) . . . Nov. INCOME Manufacturing Payrolls................... . Nov. Farm Cash R eceip ts............................ Oct. One Year Ago Nov. Nov. Nov. Nov. Nov. 166 108 122 121 121 112 JANUARY 1973, MONTHLY REVIEW One Two Month Months Ago Ago Unemployment Rate (Percent of Work F o r c e )................ Nov. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Nov. FINANCE AND BANKING Member Bank L oan s*........................Nov. Member Bank D eposits*....................Nov. Bank D eb its* /* * ................................Nov. 3.9 40.9 3.9 40.7 197 172 196 173 193 160 126 One Two Month Months Ago Ago Latest Month 1972 One Year Ago EMPLOYMENT 4.0 40.6 201 Manufacturing Payrolls....................... Nov. Farm Cash R eceip ts............................Oct. One Year Ago 4.4 41.1 198 173 183 158 164 168 148 167 156 148 ‘ For Sixth District area only; other totals for entire six states 117 ill 121 Nonfarm Employment........................Nov. Manufacturing ................................Nov. Nonmanufacturing...........................Nov. Construction................................Nov. Farm Employment...............................Nov. Unemployment Rate (Percent of Work F o r c e )................ Nov. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Nov. 118 86 *Daily average basis tPreliminary data r-Revised 116 117 113 107 116 113 3.4 41.2 4.0 40.3 190 167 177 163 145 159 117 85 3.3 198 171 171 110 120 120 41.1 FINANCE AND BANKING Member Bank L o a n s* ........................Nov. Member Bank D ep osits*....................Nov. Bank Debits*/**...................................Nov. 139 104 117 116 193 172 177 N.A. Not available Note: Indexes for bank debits, construction contracts, cotton consumption, employment, farm cash receipts, loans, petroleum production, and payrolls: 1967=100. All other indexes: 1957-59=100. ft Figures include Ala. (for first time), Coastal La., and Miss.; Ala. back data now available from 1965. Sources: Manufacturing production estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Div., McGraw-Hill Information Systems Co.; 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. D e b it s to D e m a n d D e p o s it 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 ix t h D ist r ic t (In T h o u s a n d s o f D o lla r s ) Nov. 1972 Oct. 1972 Nov. 1971 Nov. 1971 131,979 73,541 146,627 74,529 120,849 65,957 -1 0 + 9 + 14 - 1 +11 + 15 Bradenton . . . . 163,490 Monroe County . . 58,991 O c a la ................... 145,347 St. Augustine . . . 25,022 St. Petersburg . . 792,481 Tampa . . . . 1,443,782 141,334 57,947 158,305 21,979 817,121 1,398,670 120,695 50,741 130,720 26,091 658,699 1,348,916 + 16 + 2 - 8 + 14 - 3 + 3 +35 + 16 + 11 - 4 +20 + 7 + + + + + + 21 18 41 5 21 14 146,658 76,391 168,637 17,890 114,697 57,975 32,940 48,828 129,355 93,506 159,570 81,299 167,643 18,923 121,337 61,630 34,508 61,155 129,482 91,195 132,884 70,737 146,286 16,909 101,734 51,477 28,938 38,661 111,868 74,248 - 8 - 6 + 1 - 5 - 5 - 6 - 5 -2 0 - 0 + 3 + 10 + 8 + 15 + 6 + 13 + 13 + 14 +26 + 16 +26 _ + + + + + + + + + 13 19 16 22 7 10 0 34 15 15 Abbeville . . . . B u n k ie ................ Hammond . . . . New Iberia . . . Plaquemine . . . Thibodaux . . . . 15,001 13,159 59,144 55,824 23,130 34,763 14,568 13,241 60,043 53,125 18,220 29,630 14,253 + 3 1 14,245 56,486 - 1 48,282 + 5 15,007 +27 35,054 + 17 - + 5 - 8 + 5 + 16 +54 - 1 + 5 7 + 10 + 8 + 17 + 6 Hattiesburg . . . Laurel ................ Meridian . . . . Natchez ............... Pascagoula Moss Point . . Vicksburg . . . . Yazoo City . . . . 104,126 67,944 109,124 50,764 116,005 69,359 110,578 50,960 94,872 56,171 89,853 45,040 -1 0 - 2 - 1 - 0 + 10 +21 +21 + 13 + + + + 150,712 66,628 40,138 157,138 68,061 40,609 108,221 65,448 37,727 - 4 +39 + 36 - 2 + 2 + 2 - 1 + 6 + 3 B r is t o l................ Johnson City . . . Kingsport . . . . 114,264 132,888 218,714 128,625 143,641 225,401 126,031 120,507 192,322 -11 - 9 — 1 - 7 + 10 + 17 - 3 + 14 + 14 . . . . 60,710,183 62,047,089 51,906,970 Alabama . . . . 7,050,633 F lo rid a ................ 20,969,156 G eorgia............... 16,820,862 6,209,634 Louisiana1 . . . . Mississippi1 . . . . 2,734,497 Tennessee' . . . . 6,925,401 7,183,268 21,130,133 17,020,965 6,591,936 2,803,264 7,317,523 6,116,606 17,429,167 13,858,365 5,724,346 2,387,131 6,391,355 - Nov. 1972 Dothan . . . . Selma . . . . STANDARD METROPOLITAN STATISTICAL AREAS Birmingham . . . . 2,942,239 Gadsden . . . . . 98,264 Huntsville . . . . 266,141 M o b ile ................ 887,200 Montgomery . . . 549,299 Tuscaloosa . . . 166,860 Bartow-LakelandWinter Haven 631,373 Daytona Beach . . 298,111 Ft. LauderdaleHollywood . . . . 1,557,095 Ft. Myers . . . . 235,650 Gainesville . . . 217,245 Jacksonville . . . . 3,212,638 MelbourneTitusvilleCocoa ............... 410,035 Miami ................ 5,726,406 O rlando............... 1,235,508 Pensacola . . . . 378,791 Sarasota . . . . 402,089 Tallahassee . . . 626,657 Tampa-St. Pete 3,140,511 W. Palm Beach . . 935,655 3,023,461 92,580 283,066 907,283 548,489 171,510 2,427,202 82,854 259,092 829,819 480,993 153,353 643,000 317,796 510,933 245,190 —2 —6 +24 +22 + 23 + 30 1,716,641 234,365 214,205 3,380,509 1,296,864 201,928 191,218 2,534,250 —9 + 1 + 1 —5 +20 + 17 + 14 +27 + 25 + 9 + 18 26 356,517 5,599,451 1,260,926 391,017 385,244 591,182 3,077,531 933,709 345,020 4,693,009 1,089,281 346,534 292,935 450,537 2,721,796 779,481 + 15 + 2 - 2 - 3 4- 4 + 6 + 2 + 0 + 19 +22 + 13 + 9 +37 +39 + 15 +20 + + + + + + + + 17 15 24 14 30 77 20 17 + 13 +23 + 14 + 6 + 1 + 12 + + + + + + 17 20 14 10 13 12 ~ + + - 3 6 6 2 0 3 +21 + 27 + 19 + 5 + 3 + 9 + 7 + 17 + 14 + 10 + 9 + 11 Albany ................ A tla n ta ............... A ugusta............... Columbus . . . . M a c o n ................ Savannah . . . . 170,215 11,592,317 426,164 399,515 450,480 443,883 187,010 11,633,008 456,140 402,086 466,195 474,635 150,007 9,414,017 373,995 376,297 445,000 395,252 - 9 —0 - 7 —1 —3 —6 Alexandria . . . . Baton Rouge . . Lafayette . . . . Lake Charles . . . New Orleans . . . 200,679 1,070,896 234,664 192,027 3,419,266 221,804 1,125,578 255,391 199,538 3,680,063 171,816 899,561 211,979 192,585 3,269,420 —10 + 17 - 5 + 19 - 8 + 11 - 4 - 0 - 7 + 5 + 15 + 12 + 15 + 7 + 7 Biloxi-Gulfport . . Jackson ............... 214,311 1,258,590 218,712 1,272,787 187,643 1,115,914 - 2 + 14 - 1 + 13 + 16 + 15 Chattanooga . . . Knoxville . . . . Nashville . . . . 964,787 801,052 2,808,189 1,013,028 827,056 2,931,020 1,051,270 744,698 2,434,796 - 5 - 8 + 0 - 3 + 8 + 8 - 4 + 15 + 20 97,124 99,782 90,465 OTHER CENTERS Anniston . . . . Oct. 1972 Percent Change Year to Nov. date 1972 11 mos. From 1972 Oct. Nov. from 1972 1971 1971 Percent Change I Year to Nov. date 1972 11 mos. From . 1972 Oct Nov. | from 1972 1971 1971 „ 3 + 7 + 9 Athens ................ Brunswick . . . . D a lt o n ................ Elberton . . . . . Gainesville . . . G r iffin ................ LaGrange . . . . Newnan . . . . R o m e ................... Valdosta . . . . District Total - 2 2 1 1 6 2 5 — 17 18 21 10 + 17 + 17 + 15 +20 +21 + 8 + 15 + 8 + + + + + + 19 20 18 9 17 12 1District portion only r-Revised Figures for some areas differ slightly from preliminary figures published in "Bank Debits and Deposit Turnover" by Board of Governors of the Federal Reserve System. FEDERAL RESERVE BANK OF ATLANTA 15 D is t r ic t B u s in e s s C o n d it io n s 1957-59=100 Seas. Ad) Mfg. Production Construction Contracts** Average Weekly Hours rarnt uasn necetpis 40.4 J* Mfg. Payrolls Nv * \'^// 6 -M o . M o vin g A v g . 1111 i 11 11 i 111 i i 111 i i i 11 l i 1970 1971 * S e a s. a d j. fig u re ; n o t a n in d ex L a te s t p lo ttin g : N o v em b er, e x c e p t m fg. p ro d u c tio n , A u g u st, a n d fa rm re c e ip ts , O cto b er. Despite a pause in some sectors, the District economy remains upward bound. Consumer spending and borrowing stayed at high levels. Nonfarm jobs increased in November and the unemployment rate de clined. Construction contract activity eased in November. The threat of substantial crop losses from con tinued rains grew more serious. Employment gains were recorded again in No vember. Each of the District states posted job in creases. Manufacturing employment, climbing since mid-1971, pushed past its previous mid-1969 peak in November. Manufacturing production also con tinued to expand. A decline in the unemployment rate and a rise in manufacturing payrolls were other bright spots. Consumer spending continued to boost the economy, and borrowing to finance consumer purchases grew significantly in November. W hile the increase in consumer borrowing at commercial banks was concentrated in loans to purchase autos and other consumer goods, all categories shared in the gains. Department store sales were well above year-ago levels, as retailers reported Christ mas sales even better than expected. Unit sales of domestically produced autos reached boom propor tions in November. Dealer inventories were re ported at relatively low levels for this season, and some models were in short supply. Following relatively weak gains in November, member bank deposits expanded rapidly during December, according to preliminary data. Demand deposits were up sharply. Also, many state and local governments have placed a portion of their Federal revenue-sharing funds in local banks, boosting bank time deposits. Loan growth remains strong and, at year's end, many large banks had posted prime lending rates of 6 percent. Coming under increased reserve pressures, member banks are making greater use of this Bank's discount window. The value of construction contract awards fell slightly in November but was well above levels recorded a year ago. Nonresidential awards re mained at October's high level. Residential awards declined slightly, but still accounted for the bulk of contract awards. Inflows at thrift institutions maintained high levels. Prices received by farmers declined in November. A sharp drop in citrus prices and more moderate declines in broiler, tobacco, and cotton prices out weighed increases for most other items. A bumper citrus crop in prospect is responsible for the plunge in on-tree citrus prices. Incessant rainy, cloudy weather has further deteriorated unharvested cotton and soybean crops. Thr.ough the first 10 months of 1972, cash receipts were one-tenth higher than 1971's comparable level. Farm income has been threatened, however, by wet, muddy fields that have limited harvesting operations in some areas since the end of October. NOTE: D ata on w h ich s ta t e m e n ts a re b a se d h av e b e en a d ju s te d w h e n e v e r p o s sib le to e lim in a te s e a s o n a l in flu e n c e s. 16 )ANUARY 1973, MONTHLY REVIEW
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