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Atlanta, Georgia July • 1962 Also in this issue: The Workings of the Federal Open Market Committee Almost every third Tuesday, the Federal Open Market Committee meets in Washington to decide whether to place its influence on the side of loosening or tightening credit. This body is an important part of the policy-making machinery of the Federal Reserve System, and its decisions affect our entire economic system. Yet, despite the vital func tion it performs, the workings of the Committee are not: too familiar to the general public. Objectives of the Federal Reserve System A CHANGE IN THE RELUCTANT BORROWER? SIXTH DISTRICT STATISTICS DISTRICT BUSINESS CONDITIONS Certainly, the activities of the Federal Reserve System as a whole are more widely understood than the work of the Open Market Committee. The Reserve System’s job relates to counteracting sharp swings in the economy and to helping achieve a higher standard of living and a stable dollar. In an economy as complex as ours, one can obviously not expect the System to attain these goals single-handedly. The Federal Reserve’s contribution comes by way of regulating the amount of money and bank credit in the economy. When the economy’s total capacity to produce goods and services runs well ahead of total demand and unemployment is great, the System encourages spending with borrowed money. In such a situation, it eases credit by means of an expansion in bank reserves. But when total demand threatens to exceed productive capacity and endangers price stability, the System discourages spending by tightening credit. Federal Reserve officials are confronted continuously with this problem of deciding whether to lean in the direction of easing or tightening credit. To arrive at the proper decision, policy makers must assess the economic and credit scene, a task requiring constant study and analysis. Policy makers not only must decide what action to take, but also must choose among the available policy instruments. Statutory authority for the exercise of these instruments is divided among the Board of Governors, the twelve Federal Reserve Banks, and the Federal Open Market Committee. The tools include the power to engage in open market operations, to alter reserve requirements of member banks and stock market margin requirements, and to change the discount rate— the rate at which Reserve Banks lend to member banks. Open market operations refer to the buying and selling of bankers’ acceptances, foreign currencies, and, most important, U. S. Govern ment securities. Purchases of Government securities directly bring about an increase in bank reserves, thus banks are able to lend more money. Sales of Government securities by the System have the opposite effect. The Board of Governors of the Reserve System has the authority to set reserve requirements and stock market margin requirements. Dis count rates are established by individual Reserve Banks, but are subject to review and determination by the Board of Governors. The Federal Open Market Committee sets open market policy, which is the most important monetary policy in strument. Role of the Open M arket Committee Meetings of the Open Market Committee provide the co ordination made necessary by this diffusion of responsi bility. Policy makers take advantage of Committee meet ings to discuss possible changes in discount rates and reserve requirements as well as to decide upon open market policy. Actual membership on the Open Market Committee is limited to the Board of Governors, plus the presidents of five Reserve Banks. The President of the Federal Reserve Bank of New York, which actually conducts open market operations for the Committee, is a permanent member, while the other presidents rotate in designated order. Since 1955, when the executive committee of the Open Market Committee was disbanded, those presidents not serving on the Committee have been invited to attend the meetings. They do not have the right to vote, but may participate freely in the discussions. Not only the size of the group, but the frequency of the meetings influences the process of policy formulation by the Open Market Committee. Prior to 1955, meetings were held quarterly, but since then they have generally been held every three weeks. This permits frequent review of the economy and allows for quick shifts in policy. In emergencies, telephone conferences can be arranged. These procedures support the view that monetary policy is a flexible tool of public policy. The frequent meetings also help in the proper timing of policy changes to conform to seasonal and extraordinary needs as well as Treasury financing operations. For exam ple, whenever the Treasury is involved in a large financ ing operation, the Committee customarily makes no major policy change, for it does not wish to interfere, or give special aid to the Treasury. Still, there are advantages to meeting even when an immediate policy change is ruled out since a tentative decision as to later action may be reached. Economic Intelligence The research departments at each Reserve Bank and at the Board of Governors conduct long-range studies of various problems relating to monetary policy, and they continually study short-run business and financial develop ments and the effects of policy actions already taken. Analysis of the current data is most intensive in the immediate days before the Open Market Committee meets. Policy makers prepare for these meetings in different ways, but many rely heavily on discussions with senior advisers and on briefing sessions with their economic staffs. Shortly before each Open Market meeting, the Board of Governors confers with its advisers and economists; many Reserve Bank presidents do likewise. The arrangement followed at the Federal Reserve Bank of Atlanta is probably typical. Here, the President meets on the Friday before the Open Market meeting with his senior officers and economists. The topics dis cussed at these sessions vary, but generally each economist reviews an important aspect of the business and financial situation that is of particular importance at the time. District as well as national trends are scrutinized. The discussion ends with an expression of views as to what policy should be. In addition, the economists prepare several written reports. The reports cover a variety of subjects, such as employment, production, construction, farming, bank credit, bank reserves, money supply, interest rates, and recent policy effects. These experts also provide the President from time to time with special reports on in ternational developments, mortgage credit, leading busi ness indicators, savings flows, and other significant topics. The President has help not only from his own staff, but from the staffs of the Board of Governors and the New York Bank as well. For example, he receives a report covering open market operations every week, and a supple mental report covering operations through the close of business of the day preceding the Committee meeting. For information from the “grass roots,” the President of this Bank relies upon his Board of Directors in Atlanta and upon those at the four branches. Much time at the various Directors’ meetings is devoted to economic reports from different geographic areas within the Sixth District. This process of taking the economic pulse and considering appropriate policy is duplicated to some degree or other throughout the Federal Reserve System. The Committee Meets To see just how the Open Market Committee decides what to do, let us sit in on a hypothetical Committee meeting. The Committee meets in the building of the Board of Governors in Washington. We have already noted which policy members take part. Also present are various economists and other advisers. The Chairman of the Board of Governors is also Chair man of the Federal Open Market Committee. He ordinari ly calls the meeting to order at 10:00 a.m. The first order of business is the adoption of the minutes from the previous meeting. Then, the Chairman calls on the official responsible for executing the Committee’s decisions. That official supervises the actual buying and selling of U.S. Government securities at the New York Federal Reserve Bank and is called the Manager of the System Open Market Account. Typically, he summarizes the operations undertaken since the last meeting and discusses problems, if any, that he has encountered in trying to carry out the Committee’s intentions. He alerts the group to any special developments that have taken place in the financial markets, such as speculation in Government securities. He makes a special point of calling the policy makers’ attention to dates of forthcoming Treasury financing operations that, as already noted, may affect the tim ing of policy action. Three senior staff members of the Board of Governors speak after the Manager. The Director of the Division of Research and Statistics summarizes current business con •2 • ditions. Next, the Director of the Division of International Finance discusses foreign developments, with an emphasis on this country’s balance of payments. After this, one of the advisers to the Board reviews domestic financial con ditions. Instead of oral reports, the Board staff at times presents a visual economic presentation covering domestic and international developments. After the staff contributions, the Chairman calls on each member of the Board and each of the twelve presi dents. The first is the President of the Federal Reserve Bank of New York, who is also Vice Chairman of the Committee. Because the New York Bank is located in the country’s financial center, he usually talks of business and credit developments in national terms. He further addresses himself to international developments and open market and other Federal Reserve policies that seem appropriate in the light of these conditions. The members of the Board of Governors also discuss developments in national terms. Except for the head of the New York Bank, the individual presidents, however, usually begin with comments about conditions in their particular districts. Those representing districts in which industries vital to the national economy predominate often emphasize developments in these industries. Thus, the Cleveland Bank’s President customarily discusses the steel situation, while the Richmond Bank’s President may talk about the textile industry. District reports serve the purpose of calling attention to developments that are peculiar to certain parts of the country and are not apparent from national statistical ag gregates. Monetary policy, though, can be applied only in broad strokes. This is particularly true for the open market instrument. Open market transactions initially af fect the reserve position of a limited number of banks, but subsequently the reserves are diffused throughout the banking system. Thus, there is no assurance, for example, that only banks located in distressed areas would benefit from increases in Federal Reserve holdings of Govern ment obligations, that is, open market purchases. Since open market transactions cannot be adjusted to regional or area peculiarities, the district reports can do no more than be one of several important elements going into the final Committee decision. Conducting a "Go-around" The procedure whereby each policy maker gives his views and recommends policy is called the “go-around.” Picture nineteen well-informed people participating in the “goaround” and you can well imagine that often there is some difference of opinion. Some might believe that re serve pressures should be tightened; others might think re serve pressures should be eased; and still others that policy be left unchanged. Regardless of what the participants think policy ought to be, individuals differ in their views as to which guides the Manager should keep in mind when carrying out policy. One person might suggest that the Manager be guided primarily by an on-the-spot appraisal of credit con ditions in the New York money market. Another might suggest one or more particular quantitative measures the Manager should follow— perhaps some level of total mem ber bank reserves, short-term interest rates, or free re serves (that is, excess reserves less member bank bor rowings). The Chairman has the job of synthesizing the various opinions. Before he does, he expresses his point of view. Speaking at the end of the “go-around,” he has the bene fit of the views already expressed. He then states what he considers to be the consensus or majority policy position expressed around the table. It should be pointed out that in deriving the consensus only the position of the voting Committee members is considered. Usually, the consensus or majority position in favor of some particular policy is clear, in which case no formal vote is taken. Indeed, the differences in views are often rather small and turn around slight variations in degree of ease or restraint. However, if the Committee is divided, the Chairman may call for another “go-around” in order to get a clearer view, after which a formal vote is sometimes taken. If you are curious as to what the consensus has been at any meeting during the past year, merely refer to the Annual Report of the Board of Governors. The 1961 Report, for example, states that the consensus of a meet ing in August 1961 was that the prevailing degree of ease should be maintained until the next meeting of the Com mittee. Usually most Committee members are in broad agreement as to the appropriate credit policy, so that formal dissents are relatively few. The consensus becomes part of the Committee’s instructions to the Manager. The Committee has often expressed its intentions to the Manager in qualitative terms such as “ease” or “restraint.” The terms “ease” or “restraint” are not precise. Some persons, for example, may associate ease or tightness with short-term interest rates; others with a certain level of free reserves, total reserves, or a combination of various indicators. Therefore, some persons hold the view that the Committee should set forth its policy in quantitative terms. Some Committee members have indeed experimented with framing instructions in terms of some quantitatively definable figure. The Committee, though, has not used precise quantitative targets, partly because no single meas ure is completely reliable or meaningful. Conditions in money and credit markets change rapidly. And while some indicators are more useful guides in interpreting credit conditions than others, no single measure is always satisfactory. Occasionally, however, the Committee has included in its instructions to the Manager of the Account a general inference to some quantitative measures. Two of the measures most often used in such cases have been short term rates and free reserves. Yet, these guides are not always precise indicators of credit conditions. Nor are they perfect indicators of bank liquidity. It should be pointed out, though, that in combination with a wide range of factors these indicators are quite useful in analyz ing credit conditions. Attention has also shifted to interest rates because the relationship of domestic interest rates to •3 • foreign rates can affect the outflow of lunds and the U. S. balance of payments position. Formal Directive to the New York Bank After the Committee has agreed upon a policy consensus, its job is almost finished. Left to the end are the voting on a formal policy instruction or directive to the New York Reserve Bank and Committee business on foreign cur rencies transactions and other special agenda matters. The directive contains a reference to the Committee’s assess ment of the current economic situation and sets forth the broad objective that the Committee wants to attain. The New York Reserve Bank also operates under a set of technical authorizations, which the Committee can modify at any time, governing the conduct of open market opera tions. For the actual operations the scene shifts to the Federal Reserve Bank of New York.1 There a plan is usually drawn up by 11:00 each morning as to what action, if any, should be taken that day. It is then discussed in a telephone call made by the Manager to one of the presi dents currently serving on the Open Market Committee and a representative of the Board of Governors. This daily conference call is one of several techniques by which the policy-making body— the Federal Open Mar ket Committee— keeps in close contact with the executor of the policy— the Federal Reserve Bank of New York. H arry B randt i For a discussion of how open market operations are carried on at the Federal Reserve Bank of New York, see the articles that have appeared in the May 1960 and May 1961 issues of the Monthly Review of the Federal Reserve Bank of Atlanta, entitled “ What Are Open Market Operations?” and “ Managing the System Open Market Account.” A Change in the Reluctant Borrower? “Consumers are becoming less reluctant about going into debt nowadays.” This opinion, expressed recently by a Southern businessman, describes pretty well a change in the attitude of consumers that has taken place during the economic expansion of the past sixteen months. Looking at instalment credit figures for District department stores, furniture stores, credit unions, consumer finance com panies, and commercial banks, you find statistical evidence to support the businessman’s intuitive view. Thus, you see a different situation now than a year ago, when a look at consumer credit developments in the pages of this Review led to the conclusion that consumer borrowing had not, up to mid-1961, “. . . been adding any fuel to the economic recovery engine . . . .” The borrowing con sumer, so to speak, released his brakes in late 1961 and has been stepping on the throttle a bit since then. Consumer instalment credit held throughout the District by the institutions noted above accounts for about twothirds of the total instalment debt outstanding. You can obtain a reasonably good indication of over-all instalment credit here by looking at the credit series for these types of holders. A glance at the top panel (page 5), which charts the percentage change in the volume of new loans extended during the first four months of 1962 from the comparable period of 1961, confirms the pick-up in District consumer borrowing. Of the retail and financial institutions shown, all except credit unions registered sizable year-to-year gains. To obtain a more detailed picture of consumer borrow ing, seasonally adjusted data on extensions of new loans, repayments of old ones, and the net change in the amount outstanding at District commercial banks are particularly useful. Banks provide more instalment credit dollars to District consumers than do any other types of lenders. Also, the information they provide on different kinds of loans enables the observer to follow shifting patterns of loan demand. A New Switch? As the second panel indicates, extensions of new credit by commercial banks jumped sharply in February of this year and rose again in March and April. Those individuals obtaining new loans from banks have, in fact, been borrowing much more than old borrowers have been re paying, as a result of which the total amount owed to banks has been increasing. This is a situation quite differ ent from that of the preceding sixteen-month period, when monthly extensions of new credit were below or barely ex ceeded repayments in spite of increased borrowing after April 1961. Repayments, of course, continued at a high level throughout 1961 as people steadily paid back the high volume of credit that banks had previously extended to them. There was, as a result, a lengthy period of net repayment of debt by consumers during the first part of the recovery phase. This appears unique when compared to consumer be havior during the two preceding recoveries. During the fourteen months following the low point in general busi ness activity reached in February of last year, consumers borrowed only $16 million more than they repaid to banks. In marked contrast, during the fourteen-month periods following the business troughs of August 1954 and April 1958, consumers added $156 million and $198 million, respectively, to their outstanding bank debt. The per centage increases, measured from the business troughs designated by the National Bureau of Economic Research, indicate that the “cyclical bursts” in new bank loans have become successively weaker in each expansion phase. In addition, loans to consumers have begun to increase at a later date relative to the trough of the recession. Pinpointing Strengths and W eaknesses The recent strength in consumer borrowing can be traced, in large part, to borrowing for the purchase of automo biles. As the small charts on types of loans show, exten sions of new automobile loans have been strong com . 4. pared with the other types of loans made by banks. The recent sharp expansion has taken the volume of new auto loans substantially above repayments. The increased use of automotive credit has, however, been slightly weaker than in previous recoveries. One reason, perhaps, is that car buyers, while making the highest volume of purchases since 1955, are not using credit as extensively as they have in the past. Data for the U. S. reveal that in the first four months of 1962, 54 out of every 100 new cars sold were pur chased with credit provided by commercial banks, sales finance companies, auto dealers, and other financial in stitutions, while 46 out of every 100 were purchased cashon-the-barrelhead. The 54 automobiles bought with the use of credit represent the lowest percentage of credit sales in recent years. This suggests that, among other things, a greater percentage of credit sales, still higher auto sales, or both must be made if a boost in bank auto loans com parable to that experienced in previous expansions is to be provided. Of the other major types of consumer loans extended by banks, new loans for repair and modernization pur poses have been the weakest, actually declining through out most of the recovery period. Since repayments on such credit previously extended were high, outstanding credit for repair and modernization purposes declined. The volume of personal loans extended for travel, for miscellaneous expenses, and to meet emergencies has recently shown no definite upward movement and, generally speaking, has been about matched by repayments over the past two years. Loans to finance purchases of consumer goods other than automobiles, such as television sets, refrigerators, and washing machines, have remained relatively stable throughout most of 1961 and early 1962. Higher repayments have, for the most part, reduced amounts owed to District banks for such pur chases. CONSUMER INSTALMENT CREDIT, SIXTH DISTRICT Extended, by Type of Lender Percent Change, January-April 962 from January-April 1961 -5_____ 0 +5 +1C +15 +20 +25 1 1 l Consumer Finance Companies 1 Department Stores Furniture Stores .................................- 1 Commercial Banks Credit Unions * i I ............i ...............a i ...... i Total a t Comm ercial Banks Millions erf Dollars Millions of Dollars Types a t Commercial Banks Potential for Expansion What is the outlook for consumer debt expansion? There is, of course, a limit to the amount of debt the consumer can carry with ease. During the first quarter of 1962, about 12.8 percent of U. S. disposable income was devoted to the repayment of past instalment debts. Consumers, taken as a whole, have historically been reluctant to devote more than 13 percent of their after-tax income to debt repayment. It appears, therefore, that unless they change their credit habits radically, future expansion of consumer instalment lending will depend to a large extent upon future income growth. Instalment lending will also be influenced by consumer demand for the goods usually bought on credit, and in this connection there are some influences that will sustain and some that will moderate demand. On one hand, the satisfaction of pent-up demands for many items in the late forties and early fifties undoubtedly has dulled appe tites for still more of the same. Although demands have eased since then, consumers have continued to build up their stocks of durable goods. As they strive to maintain these stocks, replacement needs are likely to sustain de mand to an important degree. This is suggested by the ....... 1 • 5 • large percentage of households that now have many of the items usually bought on credit. In 1960, 67 percent of all occupied housing units in the states of the Sixth Dis trict contained washing machines; 75 percent owned automobiles, with 20 percent owning two cars or more. Eighty percent of the units owned one or more television sets. On the other hand, the record-high level of con sumer savings may act to moderate instalment credit demand. Whether or not the recent change noted in the pre viously reluctant District borrower will prove to be an enduring one will depend upon income growth, consumer appetites for more goods and services, replacement de mand, savings, and on the ever-changing whims of the consumer. Jack L. C ooper Debits to Individual Demand Deposit Accounts (In Thousands of Dollars) Percent Change Year-to-date 5 months May 1962 from from Apr. May 1962 1961 1961 May 1962 Apr. 1962 May 1961 47,844 954,329 42,251 39,646 86,361 312,802 210,989 28,968 67,008 1,790,198 907,635 43,466 861,658 37,454 34,901 80,289 291,353 178,086 25,118 60,642 1,612,967 781,346 45,103 970,794 38,963 38,024 74,853 319,374 201,993 26,799 63,637 1,779,540 840,456r 61,356 232,672 50,648 9-37,230 17,725 90,221 1,026,796 1,495,293 280,815 93,847 233,677 86,344 74,664 485,079 189,050 4,328,621 1,875,108 61,905 236,658 48,575 852,688 19,459 82,347 1,006,764 1,490,546 272,579 85,722 239,022 90,733 71,728 456,798 183,278 4,192,038 1,842,492 56,895 217,090 43,481 884,036 17,672 83,671 945,336 1,413,290 267,905 88,961 227,412 n.a. n.a. 442,607 151,474 3,894,494 l,830,966r 61,238 48,756 2,561,870 129,308 34,718 129,690 56,960 10,025 60,046 21,723 16,510 145,344 37,412 18,831 53,132 189,631 36,878 3,612,072 994,408 56,866 45,689 2,476,813 119,747 33,849 119,589 55,390 10,559 51,323 20,575 16,796 130,184 34,683 19,982 48,571 172,315 37,036 3,449,967 940,582 56,518 45,584 2,250,295 110,229 27,017 115,139 n.a. 11,115 52,368 20,386 17,202 133,841 31,339 18,745 51,001 178,161r 36,339 3,155,279r 984,764r 85,755 302,476 73,852 88,495 1,579,305 2,129,883 707,058 76,300 272,409 64,718 85,476 1,407,887 1,906,790 683,224 68,947 278,097 62,684 82,295 1,440,402 1,932,425 612,358r +12 +11 + 14 +4 +12 +12 +3 65,832 40,651 365,753 30,094 52,965 24,742 23,608 603,645 308,430 60,342 37,798 342,803 28,591 47,722 23,629 23,242 564,127 290,140 55,114 38,985 323,925 29,864 48,440 23,170 22,879 542,377 282,443r +9 +8 +7 +5 + 11 +5 +2 +7 +6 +9 +7 +3 +11 +9 Bristol* . . . . Chattanooga . . Johnson City* . . Kingsport* . . . Knoxville . . . Nashville . . . Total Reporting Cities Other Citiesf . . . 57,189 354,333 49,526 92,448 270,118 851,795 1,675,409 619,652 52,184 331,217 43,514 96,180 250.840 808,466 1,582,401 600,525 48,008 351,016 41,281 85,233 262,888 827,395 1,615,821 596,901r +10 +7 + 14 —4 +8 +5 +6 +3 +19 +1 +20 +8 +3 +3 +4 +4 SIXTH DISTRICT Reporting Cities Other Citiesf . . Total, 32 Cities . . 19,552,119 14,139,828 5,412 291 11,912,337 18,466,599 13.308,290 5,138.309 11,145,291 18,067,824r 12919,936r 5,147,888r ll,084,229r +6 +6 +5 +7 +8 +9 +5 +7 + 10 295,600,000 281,700,000 268,800,000r +5 + 10 +12 ALABAMA Anniston . . . Birmingham . . Dothan . . . Gadsden . . . Huntsville* . . Mobile . . . Montgomery Selma* . . . Tuscaloosa* . . Total Reporting Cities Other Citiesf . . + 10 +11 + 13 + 14 +8 +7 + 18 +15 + 10 +11 +16 +6 —2 +8 +4 +15 —2 +4 +8 +5 +1 +8 +7 +8 +8 +2 +18 +4 +8 +8 + 12 +8 +9 +8 +7 + 16 +6 + 10 FLORIDA Bank Announcements On June 1, the Commercial Bank and Trust Company, Covington, Louisiana, a nonmember bank, began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Officers include R. I. Didier, Jr., President; J. H. Warner, Jr., Vice President; and F. B. Folkes, Vice President and Cashier. The West Side Atlantic Bank, Jacksonville, Florida, a newly organized nonmember bank, opened for busi ness on June 12 and began to remit at par. Officers are G. R. Porter, President, and Harry W. Newberg, Cash ier. Capital totals $400,000, and surplus and undivided profits, $300,000. On June 26, the Guaranty Bank of Miami, a newly organized nonmember bank, opened for business and began to remit at par. Officers include L. H. Skeen, President, and Paul F. Staup, Vice President and Cash ier. Capital totals $500,000, and surplus and undivided profits, $250,000. Department Store Sales and Inventories* Percent Change Place Sales May 1962 from Apr. May 1962 1961 ALABAMA ............................. + 11 Birmingham....................... + 10 Mobile.................................. + 10 Montgomery....................... + 14 FLORIDA ............................. — 4 Daytona Beach . . . . —3 Jacksonville....................... +5 Miami A r e a ....................... —7 M ia m i............................ —6 O rla n d o ............................ +4 St. Ptrsbg-Tampa Area —3 GEORGIA ............................. +9 Atlanta** ....................... + 10 A u g u s ta ............................ +4 Columbus............................ Macon.................................. +5 Rome1* * ............................. +6 Savannah ............................ +8 LOUISIANA ....................... + 10 Baton Rouge....................... + 12 New Orleans....................... +9 M IS S IS S IP P I....................... +5 Jackson ............................. +7 M eridian............................ n.a. TENNESSEE ....................... + 12 Bristol-KinosportJohnson City** . . . +8 Bristol (Tenn. & Va.)** —0 Chattanooga....................... + 12 Knoxville............................. + 13 D I S T R IC T ............................. +5 +4 +1 + 10 + 10 + 14 +3 + 14 +7 +3 +70 +21 +11 +15 +1 n.a. +0 + 13 +8 +7 +11 +6 +6 +8 n.a. +9 5 Months 1962 from 1961 +2 +0 +6 +5 + 12 +1 +4 +8 +43 +21 +8 +11 +4 n.a. +2 +7 +3 +3 + 11 +1 +6 +8 n.a. +4 —5 +2 +2 —3 + 15 + 10 —9 + 10 +2 +0 +3 +9 —2 —5 +4 +6 +3 +3 +2 +0 +8 +9 +6 +5 +5 +3 n.a. n.a. + 10 + 25 +11 +2 +6 +7 +6 +7 +2 +7 +6 +7 +3 + 10 n.a. n.a. +7 +20 + 10 +7 GEORGIA Albany . . . . Athens* . . . . Atlanta . . . . Augusta . . . . Brunswick . . . Columbus . . . Dalton* . . . . Elberton . . . . Gainesville* . . Griffin* . . . . LaGrange* . . . Macon . . . . Marietta* . . . Newnan . . . . Rome* . . . . Savannah . . . Valdosta . . . . Total Reporting Cities Other Citiesf . . . +8 +7 +3 +8 +3 +8 +3 —5 + 17 +6 —2 + 12 +8 —6 +9 + 10 —0 +5 +6 +8 +7 + 14 + 17 + 29 + 13 n.a. — 10 +15 +7 —4 +9 + 19 +0 +4 +6 -f-1 + 14 +1 +12 +14 + 16 +14 +28 + 13 n.a. +1 +10 +9 —4 + 10 + 13 +11 —0 +8 +8 + 15 +4 1 — i +3 — 3 —3 + 23 +1 +1 n.a. —3 n.a. + 11 —3 —6 —2 —5 —5 n.a. —3 Alexandria* . . . Baton Rouge . . Lafayette* . . . Lake Charles . . New Orleans . . Total Reporting Cities Other Citiesf . . . +24 +9 + 18 +8 + 10 +10 + 15 +18 +12 + 10 +11 +7 +8 + 19 MISSISSIPPI +12 +2 +7 +6 n.a. +7 —1 +5 +2 +4 +7 +5 —3 +7 +7 ‘ Reporting stores account for over 90 percent of total District department sto>-e sales. **In order to permit publication of figures for this city, a special sample has been constructed that is not confined exclusively to department stores. Figires for non department stores, however, are not used in computing the District percent changes, n.a. Not available. +6 +5 +6 +15 +9 —1 —2 +4 LOUISIANA Inventories May 31,1962 from Apr. 30, May 31, 1962 1961 — Daytona Beach* Fort Lauderdale* Gainesville* . . Jacksonville . . Key West* . . Lakeland* . . Miami . . . Greater Miami* Orlando . . . Pensacola . . St. Petersburg . Sarasota* . . Tallahassee* Tampa . . . W. Palm-Palm Bch * Total Reporting Cities Other Citiesf . . . Biloxi-Gulfport* Hattiesburg . . . Jackson . . . . Laurel* . . . . Meridian . . . Natchez* . . . Vicksburg . . . Total Reporting Cities Other Citiesf . . . + 19 +4 + 13 + 13 +6 + 14 +3 + 11 +7 + 12 +12 + 10 TENNESSEE + 10 +7 + 13 + 13 +4 +9 +8 +3 + 11 +8 + 10 UNITED STATES 344 Cities . . . ♦Not included in total for 32 cities that are part of the national debit series maintained by the Board of Governors. fEstimated. r Revised. n.a. Not available. • 6 * Sixth District Statistics Seasonally Adjusted (All data are indexes, Latest Month (1962) SIXTH DISTRICT INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Farm Cash R e c e ip t s ........................................ Crops ............................................................... Livestock ......................................................... Department Store S a l e s * / * * ....................... Department Store S t o c k s * ............................. Instalment Credit at Banks,* (Mil. $) New Loans ......................................................... Repayments................................................... PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ Manufacturing.............................................. Apparel......................................................... Chemicals................................................... Fabricated M e t a ls .................................. Food............................................................... Lbr., Wood Prod., Furn. & Fix. . . . Paper ......................................................... Primary M e ta ls ........................................ Textiles ................................................... Transportation Equipment . . . . Nonmanufacturing........................................ Construction.............................................. Farm Employment.............................................. Insured Unemployment, (Percent of Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o lls .................................. Construction Contracts*.................................. R e sid e n tia l................................................... A llO th e r ......................................................... Electric Power P ro d u ctio n **....................... Cotton Consum ption**.................................. Petrol. Prod, in Coastal La. and Miss.** FINANCE AND BANKING Member Bank Loans* All B a n k s......................................................... Leading C i t i e s .............................................. Member Bank Deposits* All B a n k s......................................................... Leading C i t i e s .............................................. Bank D e b it s * / * * .............................................. One Month Ago 1957-59 = 100, unless indicated otherwise.) One Year Ago Two Months Ago Latest Month (1962) One Month Ago Two Months Ago One Year Ago 6,995r 114 99 6,884r 6,392 107 103 105 G EO R G IA Apr. 37,307 37,632r 37,316r 34,721 99 111 102 Apr. 113 96 112 119 Apr. 105 106 104 108 Apr. 113 102 111 111 June HOp 112 118 May 120 120 May May 133 125 139 127 138 128 126 126 May May May May May May May May May May May May May May May May May Apr. Apr. Apr. Apr. May May 106 106 118 100 105 105 98 103 97 96 103 106 94 85 4.0 40.9 121 139 116 158 122 106 147 106 105 116 100 105 107 97 104 95 96 101 106 93 91 4.2 40.6r 121 137 114 156 124 105 147 105 104 114 100 105 105 97 102 94 96 99 105 94 91 4.1 41.1 122 133 112 151 120 109 149r 104 102 110 100 101 103 95 104 93 96 87 104 89 85 6.3 40.2 110 98 101 96 117 97 136 May June 133 136 134 133 132 133 124 123 May June May 120 120 123 121 119 127 121 120 127 112 111 114 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Apr. Farm Cash R e c e ip t s ........................................Apr. Department Store S a l e s * * .............................May 6,926 99 114 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ May Manufacturing..............................................May Nonmanufacturing........................................ May Construction.............................................. May Farm Employment..............................................May Insured Unemployment, (Percent of Cov. Emp.) May Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . May Manufacturing P a y r o lls .................................. May 106 103 107 109 80 3.0 40.0 117 106 103 107 105r 82 3.4 39.9 118 FINANCE AND BANKING Member Bank L o a n s ........................................ May Member Bank D e p o s its ...................................May Bank D e b its * * ....................................................May 138 125 127 111 113 102 102 105 102 99 103 90 120 5.8 39.6 106 136 126 133 136 126 132 129 117 114 84 3.3 40.5 86 LO U ISIA N A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ............................. Department Store Sales*/** . . . Apr. Apr. May 5,597 103 103 5,616r 117 95 5,610r 101 102 5,317 92 96 May May May May May May May May 98 94 99 73 91 4.8 41.1 106 98 94 99 76 98 4.7 41.6r 108 98 94 99 80 100 4.5 41.5 106 99 94 100 76 88 6.5 40.8 101 May May May 129 112 115 132 112 116 128 111 120 117 106 104 Apr. Apr. May 2,835 69 104 2,837r 110 104 2,835r 109 104 2,617 84 96 May May May May May May May May 110 113 103 103 84 4.6 40.5 128 109 112r 107 102 93 4.6 40.2 126 108 110 107 98 91 4.8 40.8 128 105 105 106 96 82 7.6 39.5 110 May May May 151 130 131 150 129 138 148 127 140 135 118 120 Apr. Apr. May 5,983 110 100 6,086r 95 94 5,977r 96 106 5,560 97 93 May May May May May May May May 105 107 104 117 84 4.8 40.9 121 105 107 104 llO r 92 4.9 40 6r 118r 104 106 103 118 90 50 41.1 121 102 104 102 104 83 7.5 39.7 110 May May May 133 119 120 134 122 127 134 124 130 125 112 115 PRODUCTION AND EMPLOYMENT Nonmanufacturing Avg. Weekly Hrs. in Mfg., (Hrs.) Manufacturing Payrolls . . . FINANCE AND BANKING M ISSISSIPPI A LA BA M A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Farm Cash R e c e ip ts ........................................ Department Store S a l e s * * ............................. PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ Manufacturing.............................................. Nonmanufacturing........................................ Construction.............................................. Farm Employment.............................................. Insured Unemployment, (Percent of Cov. Emp.) Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o lls .................................. FINANCE AND BANKING Member Bank L o a n s ........................................ Member Bank D e p o s its .................................. Bank D e b its * * ................................................... Apr. Apr. May 5,143 104 108 5,138r 112 102 5,104r 107 111 4,812 96 103 May May May May May May May May 102 99 104 90 80 4.7 40.3 116 lO lr 98 103 91r 85 4.6 40.2 114 101 97 103 92 84 4.5 40.7 116 102 95 105 93 83 6.6 39.5 101 May May May 132 119 122 133 119 124 133 119 124 128 110 119 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ............................. Department Store Sales*/** . . . PRODUCTION AND EMPLOYMENT Nonfarm Employment............................. Avg. Weekly Hrs. in Mfg., (Hrs.) FINANCE AND BANKING Member Bank Deposits* TENNESSEE FLORIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ............................. Department Store Sales** . . . . PRODUCTION AND EMPLOYMENT Nonfarm Employment............................. Manufacturing.................................. Avg. Weekly Hrs in Mfg., (Hrs.) Apr. Apr. May 10,823 115 131 10,960r 10,906r 10,023 113 115 115 116 141 133 May May May May May May May May 114 121 113 92 105 3.2 41.4 147 113 120r 112 93r 94 3.3 41.4 147r 112 119 111 93 96 36 41.8 145 109 114 108 87 100 5.1 41.1 133 May May May 128 122 125 130 123 129 128 121 125 121 112 116 PRODUCTION AND EMPLOYMENT Avg. Weekly Hrs in Mfg., (Hrs.) FINANCE AND BANKING FINANCE AND BANKING *For Sixth District area only. INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e c e ip t s ............................. Department Store Sales*/** . . . Other totals for entire six states. p Preliminary. r Revised. **D aily average basis. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U.S. Bureau of Mines; elec. power prod., Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. • 7 • D I S T R I C T B U S I N E S S C O N D I T I O N S I I I I I I | I I I I I I I t I I I | I I I I I 1I I I I I | I I I I f I Billio ns of Dollars _ _A SenansualAdRj.ate ^^37 Personal Income. I otal nonfarm employment increased som ewhat further in the District in M ay, and insured unemployment reached its lowest level since 1959. Other seasonally adjusted economic indicators, however, depicted mixed trends. Available measures suggest consumer spending remained at the high levels of recent months but did not advance. Bank debits, a measure of total spend ing, declined. Loans and deposits at member banks dropped, after generally increasing for several months. The pace of farm activity slowed. v* Slackening field activity reduced farm em ploym ent in m any places in M ay. Employment decreased in all states except Florida, where harvesting of citrus and vegetable crops continued to be active. Although the index of prices received by farmers increased slightly, it remained below the level of a year earlier. The higher crop prices were oltset somewhat by declines in prices for milk, eggs, hogs, and broilers. Widespread showers in June replenished soil moisture and improved crops and pastures. \S Nonfarm employment, both manufacturing and nonmanufacturing, rose further in M ay, suggesting tnat total economic activity in the District continued to advance. Cotton consumption, an indicator of activity in the textile industry, rose slightly in May, but did not regain the high point reached in March. Preliminary May reports show that petroleum production in Louisiana and Mississippi remained nearly constant, after having declined a little in April. Steel production dropped slightly, according to preliminary figures for June, but much less than in the nation as a whole. The three-month average of contracts awarded for construction increased further, although at a slower pace. Construction employment, reflecting current rather than future activity, remained at the level of the preceding three months, the highest since October 1960. IS )S Manufacturing payrolls rose slightly further in M ay because of a fractional increase in the averag e w ork w eek. May data for total personal Dept. Store Sales income in District states are not yet available. In recent months, however, gains in personal income in this region have slowed. ^ ^ In June, for the second consecutive month, departm ent store sales w ere virtu a lly unchanged from the preceding month's volum e, accord ing to prelim inary figures. The steadiness in May sales reflected a substan tial decline at Georgia stores offset by gains registered in Tennessee, Alabama, and Florida. Sales at furniture stores likewise remained unchanged during May, but sales at household appliance stores rose sharply. Bank debits, after advanc ing to a record level during the March-April period, dipped moderately in May. The decline in checkbook spending was widespread throughout District states. )S )S Consumer instalment credit outstanding at commercial banks rose during M ay for the fourth consecutive month, although the increase w as sm aller than in the preceding two months. The rise reflected con tinued high borrowing for the purchase of automobiles and other consumer goods. Consumer savings in the form of member bank time deposits and sav ings and loan shares increased at a slightly slower rate than usual for this time of year. P E R C E N T OF R E Q U IR ED R E S E R V E S Excess Reserves A 4.1 — i A V ^* 4 4 Borrowings from -Vi F. R. Bank I I l I l l I I I I l i rl I I1* i e I1rwTil i i i DigitizedI 9for 6 0 FRASER 1961 http://fraser.stlouisfed.org/ *Seas. adj. figure; not an index. Federal Reserve Bank of St. Louis 1962 Activity at banks w as down slightly in M ay. Total member bank de posits, seasonally adjusted, and total bank credit—loans plus investments— declined after registering previous gains. The decline in loans in May was wide spread throughout District states, particularly at banks outside leading cities; only in Georgia did bank loans expand appreciably. Loans, however, continued to increase after seasonal adjustment at banks in leading cities in May and June.
@FedFRASER