The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Atlanta, Georgia
June • 1961
Also in this issue:
HAVE MORTGAGE MONEY,
WILL LEND
WITH MORTGAGE MONEY,
WILL CONSTRUCTION RISE?
DISTRICT BANKS
AND
MORTGAGE FINANCING
DISTRICT BUSINESS
CONDITIONS
SIXTH DISTRICT
INDEXES
Secferaf
ffysern
IBank
The Southern Housing Market
of the Sixties: Change and Challenge
Residential construction has picked up since the beginning of this year.
Still, many observers are wondering how fast and how far housing
activity will expand. In other postwar periods of expansion there have
been doubts about where housing was going. This time, however, the
uncertainty appears to be somewhat more pronounced. The reason:
The housing market has changed. Families in the nation and in states
lying wholly or partly in the Sixth District— Alabama, Florida, Georgia,
Louisiana, Mississippi, and Tennessee— are now better housed than
they have been in several decades.
Residential construction surged forward between 1946 and 1949, as
a bulging population with money in its pocket demanded the housing
it was unable to purchase during the depressed Thirties and the war
years of the Forties. During most of the Fifties, we continued to build
new housing units and catch up on the maintenance of our existing
stock. This activity was stimulated by a growing and shifting popula
tion, more and more upgrading (movement of families into larger and
better-equipped dwelling units), and rising incomes. Families generally
found the credit needed to satisfy their demand for housing available
on terms that became increasingly easy.
Questions for the Sixties
The building boom of the Fifties has increased the number and average
quality of housing units here in the South. This changed condition
raises two significant questions concerning housing in the Sixties. How
adequately does the present stock of housing satisfy the needs of our
existing population? How strong will the demand for housing be during
the Sixties? Unfortunately, we cannot provide a definite answer to this
last question. We can, however, focus on some of the factors that are
likely to influence the quantity and quality of housing demanded in the
years ahead.
Clues to the present adequacy of the flow of housing services may be
uncovered by reviewing data relating to the stock of existing housing.
Such information recently became available from the 1960 Census of
Housing. This Census provides us with data on the size and condition
of the housing stock by geographic area, tenure, and other character
istics. A comparison of these findings with information from the 1950
Census allows us to identify and evaluate changes in housing.
Housing Stock Is Bigger and Better Than Ever
The housing stock, like the movies, is bigger and better than ever. In
1960, the number of housing units in District states totaled about 6.6
million, an increase of 1.5 million over the 1950 level. Florida, alone,
accounted for more than one-half of the total increase in units during
The size a n d q u a lity of the housing stock in D istrict state s
in cre a se d s h a r p ly from 1950 to 1960, a cco rd in g to d a ta com
p iled b y th e U. S. B u rea u of th e C en su s.
Thousands of Units
Thousands of Units
1800
1600
1400
1200
1000
800
600
400
200
0
1950 I960
Florida
1950 I960
Georgia
1950 I960
Tennessee
1950 I960
Louisiana
1950 I960
Alabama
1950
Mississippi
M ost of th e e x p a n s io n in the n u m b er of housing units in
D istrict sta te s d u rin g th e p a st d e ca d e is d u e to the g ro w th
of ow n er-o ccup ied units in m e tro p o lita n a r e a s .
The p ro p o rtio n of o w n er-o ccu p ied units to to ta l housing
units ro se sh a rp ly from 1950 to 1960 in a ll D istrict sta te s.
Nonmetropolitan Areas
Metropolitan Areas
Renter
Total
Owner
Renter
Total
Owner
Percent of Total
Alabama
1950
17.7
1960
27.7
Florida
1950
28.5
1960
45.0
Georgia
1950
16.9
1960
26.4
Louisiana
1950
17.6
1960
28.3
Mississippi
1950
3.2
1960
6.0
Tennessee
1950
22.0
28.2
1960
District States
1950
18.5
1960
30.1
17.8
18.6
35.5
46.3
31.8
32.0
32.7
21.7
64.5
53.7
21.1
22.0
49.6
67.0
29.1
22.5
21.3
10.5
50.4
33.0
19.8
20.9
36.7
47.3
29.7
29.7
33.6
23.0
63.3
52.7
23.0
23.7
40.6
52.0
33.4
30.7
26.0
17.3
59.4
48.0
3.6
4.6
6.8
10.6
44.5
51.8
48.7
37.6
93.2
89.4
20.4
18.1
42.4
46.3
34.5
35.6
23.1
18.1
57.6
53.7
18.4
19.2
36.9
49.3
33.2
31.4
29.9
19.3
63.1
50.7
the Fifties. This phenomenal expansion in Florida was
required to provide shelter for families who had migrated
into the state because of its climate, favorable economi
cally and weatherwise.
The quality of the housing stock also improved mark
edly in the Fifties. The proportion of occupied housing
units classified as sound or as deteriorating (units that need
repair but are generally livable) soared from 79 percent
in 1950 to 91 percent in 1960. Associated with the im
provement in the quality of housing was a significant de
cline in the number of houses that were dilapidated (units
that do not provide safe and adequate shelter).
Although the quality of housing in District states has
improved considerably, it still lags behind that of the na
tion. District states, for example, accounted for 11 per
cent of all occupied housing units in the nation in 1960,
but had 23 percent of the housing that was dilapidated.
What is the reason for this uneven distribution of dilapi
dated dwellings? Part of the explanation is that the aver
age income of the District’s families is lower than that of
the nation’s. Thus, the quality of housing that southern
families can afford is also lower. Since the average income
of nonwhites tends to be less than that of whites, it is
not surprising that a larger proportion of the former group
lived in dilapidated dwellings located in District states.
In 1960, one of four nonwhites resided in a unit classi
fied as dilapidated, compared to one of 23 whites.
The distribution among District states of dilapidated
units was also uneven. The proportion of such units to
total occupied dwellings ranged from 13.6 percent in
Mississippi to 4.8 percent in Florida. The dilapidated units
in most states tended to be concentrated in rental units
in rural areas. This concentration persisted throughout
the past decade, although substantial progress has been
made toward wiping out urban and rural blight.
In 1960, only about 6 percent of the housing units in
metropolitan areas were dilapidated, less than half the
proportion in 1950. About the same rate of progress was
made in erasing slums in nonmetropolitan areas. Last
year, however, 13 percent of the housing units in these
areas were classified as dilapidated. The slums of the farm,
though less visible than those in urban centers, are none
theless very real. Partly to escape such conditions, many
families have moved to the city.
Housing M oves to Metropolitan Areas
Families migrated in great numbers into metropolitan
areas within District states during the Fifties. The
attractions? Job opportunities, higher incomes, and better
living conditions. The concentration of people in the Dis
trict’s metropolitan areas is associated with the South’s
continued transformation from a rural society and an
agrarian economy to an urban society characterized by a
considerable degree of industrialization.
Almost all the increase in housing units in District
states from 1950 to 1960 occurred in the District’s metro
politan areas. This is partly because of an increase in the
number and average size of metropolitan areas. Mainly,
it reflects this simple fact: Houses must be built where
people settle. By 1960, 49 percent of the occupied hous
.
2
•
ing units in District states were located in areas classified
as metropolitan, compared to 37 percent in 1950.
The movement of families into metropolitan areas has
been accompanied by a trend toward home ownership in
suburbs that have sprung up around our cities and towns.
Owner-occupied units in metropolitan areas in District
states have more than doubled in the past decade, whereas
renter-occupied units increased about one-third. In nonmetropolitan areas, owner-occupied dwellings increased
about 22 percent and more than offset a drop in renteroccupied units. Over the past decade, 1,272,000 owneroccupied units were added to the housing stock of District
states, compared to 47,000 renter-occupied units.
As a result of these developments, 62 percent of the
housing units in all District states were owner occupied
in 1960, compared to 52 percent ten years earlier. In both
metropolitan and nonmetropolitan areas alike, about six
of every ten units were owner occupied in 1960. This has
led one observer to comment that home ownership is now
more prevalent than at any time since the colonial days.
We cannot verify the accuracy of this statement, but one
thing is quite certain. More owner-occupied units were
added to the housing stock of District states in the past
decade than at any time in history.
Unoccupied Dwelling Units Rise
The sharp expansion in the number of housing units from
1950 to 1960 was accompanied by an increase in the
proportion of vacant units. At the time of the 1960 Census
survey, 9.7 percent of all housing units in District states
were unoccupied, compared to 8.3 percent in 1950. The
proportion of total housing units that were unoccupied
varied among District states, as the chart shows.
The g ro w th in th e ho using stock in D istrict sta te s w a s accom
p a n ie d b y a rise in th e p ro p o rtio n of a ll units th a t w e re
uno ccup ied . M a n y o f th e se u n its, h o w e v e r, w e re d ila p id a te d ,
a n d re sid e n ce s w e re a v a ila b le o n ly fo r se a s o n a l use.
Percent
Percent
to net nonfarm households. Nationally, the number of
such households increased 10.2 million during the Fifties.
In this same period, however, housing starts throughout
the country exceeded 12.0 million. Undoubtedly, starts
and households followed a similar pattern in District
states. Thus, the supply of housing has exceeded the pri
mary source of demand, household growth. Result: a
higher vacancy rate—but improvement in the quantity
and quality of housing.
Back to Fundamentals
The rise in the rental vacancy rate in this part of the
South suggests a couple of things. First, that the supply
of housing has increased faster than could be absorbed
by existing families, given the present level and structure
of financial resources and prices. Second, that we should
scrutinize the demand for housing much more closely
than we have in the past.
That the strength of demand should even be questioned
is an indication of the changes that the housing market
has undergone. During the past two decades, “unavail
ability of mortgage credit” was the common diagnosis
whenever housing starts slipped. The solution: an injec
tion of credit— and make the terms easier, please. Recently,
we have come to wonder if the old magic will continue to
work. Some of us have been forced to return to what the
professors might call “basic fundamentals.”
These fundamentals relate to the quantity and quality
aspects of housing demand. Quantity is affected by changes
in net household formations. In a region of the nation,
like the South, the magnitude of such changes results
partly from the number of new households that are formed
and remain in the area. Added to this is the difference
between the number of households migrating into or out
of the region. Quality is related to such things as the con
dition of the dwelling, amount of living space, the desir
ability of the neighborhood.
What are some of the variables that are likely to influ
ence the formation of new households in the years ahead?
What factors may encourage some families to upgrade
their housing? These are the next questions we will at
tempt to answer.
Household Formations in the Sixties
1950 I960
Florida
1950 I9 6 0
Mississippi
1950 I9 60
Louisiana
1950 I960
Alabama
1950 I960
Georgia
1950 I960
Tennessee
The figures overstate the vacancy rate level because
they include dilapidated and seasonal units as well as
units intended for year-round occupancy. When only
these latter units are considered, and when homes for sale
are excluded, we find that the rental vacancy rate rose
from 3.8 percent to 7.8 percent from 1950 to 1960.
The rise in the rental vacancy rate during the past dec
ade is due in part to the sharp expansion of housing starts,
both owner-occupied dwellings and rental units, relative
How rapidly the number of households will expand in
District states in the Sixties will depend mainly upon un
doubling and marriage trends and the extent of net migra
tion into the area. Undoubling, the splitting-up of families,
has been decreasing since the early 1950’s. Almost no one
expects a reversal of this trend in the years ahead. Past
data, however, show that the doubling-up of families is
substantially greater in the South than in the nation. This
is partly because there is a concentration of low-income
families in the area. If income and other factors are
favorable in the years ahead, undoubling may contribute
relatively more to household formations in the South
than in the nation.
The number of marriages taking place in any period
depends a great deal upon the number of males and fe
males reaching marriageable age. Some theorizers are sug
gesting that in the next few years marriages in the nation
• 3 •
and in the South will provide only a moderately strong
stimulus to household formations This is because the
number of people reaching marriageable age will be small,
reflecting the low birth rate of the Thirties.
Projecting the course of household formations is tricky
business at best. Nationally, all we know for sure is that
net nonfarm household formations averaged 902,000 for
the years 1955-59. Estimates of the average for the 196064 period have ranged between 850,000 and slightly over
a million. Most people expect household formations to
be higher in the second half of the Sixties than in the first,
since this is when the batch of babies born in the middle
and late Forties will begin to reach marriageable age.
The problem of estimating future growth in households
is even more complex for a region than for the nation be
cause of the added variable, migration. During the past
decade, migration accounted for a significant share of the
28-percent increase in households among District states.
Within District states, however, the rate of increase ranged
from 2 percent in Mississippi to 88 percent in Florida.
This startling disparity mainly reflects differences in net
migration.
The number of people who remain and are attracted
into District states during the next decade will depend
largely upon the growth of economic opportunities. Of
those families remaining within state boundaries, some
will shift from farm to city in search of higher incomes,
if present trends toward urbanization and industrialization
continue. The movement of families within and across
state boundaries may result in some imbalance between
households and housing. Those areas into which families
move rapidly will, of course, have a stronger relative de
mand for housing than areas that are more static.
Quite apart from growth in the number of households,
what is the likely impact of the changing age distribution
of the population on the type of housing demanded in the
nation and in the South? Population projections prepared
by the Bureau of the Census indicate two major shifts in
the 1960-65 period: a bulge in the 20-24 year age group
and a gap in the 25-44 year age group. We know from
past experience that people in the former group tend to be
renters, while home owners concentrate in the latter group.
Inference: a demand for rental units. Home builders,
however, need not despair necessarily. The number of
children 19 years and under is also expected to increase
rapidly in the first half of the Sixties. This may create
space pressures for existing home owners at some point,
and force them into larger homes.
Upgrading in the Sixties
There is plenty of potential for upgrading District housing
in the Sixties. About six of ten families in the District are
home owners. Some of these owners are probably dissatis
fied with their present house for one reason or another.
About one of six renters lives in a dilapidated unit. Surely,
most of these families would like to move into a better
apartment or home. The amount of shifting that will
take place among owners and renters, however, will de
pend largely upon financial and income developments.
Further development of trade-in financing may stimu
late upgrading by home owners. In this type of financing,
the home owner uses or trades in the equity he has built
up in his present home as a down payment against the
purchase price of a different one. At the other end of the
deal, the builder or realtor agrees to accept the house for
a price and assumes the burden of disposing of it. This
sounds like a simple technique for boosting home sales.
It’s not. Home owners and builders both have problems.
Imagine, if you can, that you as a home owner are con
templating a trade-in involving a new and bigger house.
These are some of the questions you will have to grapple
with. Can you get a “fair” price on your present home?
Will the equity built up in your present house satisfy the
down payment requirements of the new transaction? Is
the interest rate on the mortgage loan associated with
the contemplated purchase higher or lower than the rate
you are presently paying? By how much has the cost of
construction (price of the new house) risen since you last
purchased? Finally, are the additional satisfactions to be
derived from living in the new house worth the total cost
of upgrading? Or, should you expand and modernize your
present home rather than purchase a new one? After con
sidering these things, what will you do?
Now, let’s look at trade-ins from the standpoint of the
builder. When he takes in a home on trade, he assumes
certain risks. He has no guarantee, for example, that the
price he eventually sells the house for (including recon
ditioning and selling costs) will equal the price he paid
for it. It may be more, or it may be less. The trick is, of
course, to make a reasonable profit on the total transac
tion, the trade-in plus the sale of the new house.
The average builder has limited financial resources. He
cannot afford to have his capital tied up in even a small
inventory of houses. If he did tie it up, in all likelihood
his construction activity would cease until he was able to
sell one or more of the houses he accepted in trade. Quite
apart from risk involved, lack of funds to finance trade-ins
may inhibit some builders from engaging in this practice.
Trade-ins will probably become much more prevalent
if pressures to sell homes increase. District families cer
tainly have a share in the $120 billion in equity built up
by the nation’s home owners. The trade-in process by
“unthawing” equities may facilitate exchange. If homes are
exchanged on only a limited scale, however, little new
demand for housing will result. Only a general upward
movement of families into better living quarters can stimu
late home building.
Income and price developments may well play the
major part in shaping the pace and pattern of upgrading
throughout this decade. Since the end of World War II,
an income revolution has enabled many families to im
prove the quality of their housing. More and more families
have moved into the moderately-well-to-do class. Nation
ally, 53 percent of all families earned $5,000 or more
in 1959, compared to 22 percent in 1948. The income of
families in District states has also risen, as may be inferred
from the accompanying chart.
True, part of the income gains of the postwar period
have been dissipated by rising prices. Even so, many
families now have more real income to spend for housing
and other things. A continuation of the income expansion
could encourage families to become more dissatisfied with
.
4
.
If the p er ca p ita incom e of D istrict re sid e n ts e x p a n d s, a s it
h as in the p a st, fu rth e r im p ro ve m en ts m a y be m ad e in the
q u a n tity a n d q u a lity of so u th e rn ho using .
Dollars
Dollars
could be strongly influenced by the pattern of prices.
Housing, in the market of the Sixties, may have to com
pete price-wise more effectively than it has throughout
the postwar period.
2000
Challenge for the Future
1600
1200
800
400
1946 I960
Florida
1946 I960
Louisiana
1946 I960
Georgia
1946 I960
Tennessee
1946 I960
Alabama
1946 I960
Mississippi
0 W
their existing living quarters. To coin a technical phrase,
the rate of housing obsolescence may increase.
Incomes have risen sharply since 1946, but so have
construction costs. As a matter of fact, such costs have
risen much more rapidly than the overall consumer price
level. Now that many families are reasonably well housed,
their choice of expenditures for housing or for other things
We have made great progress toward providing reasonably
adequate housing for all families residing in District states.
Still, in 1960 more than 500,000 families lived in dilapi
dated dwellings. Many families who lived in sound or
deteriorating dwellings may also have felt they “needed”
more and better housing. It is financial capacity, along
with need, however, that makes demand effective.
Further improvements in the quantity and quality of
housing in District states will depend upon expansion in
income. Income expansion in turn is bound up with the
problem of encouraging southern economic growth. This
is the challenge. Growth in housing or economic activity
is not, as someone said, simply a matter of holding our
breath and floating upward on a cloud of expansion. Growth
requires effort and innovation. It also requires change.
A l f r e d P. J o h n s o n
Ha ve Mortgage Money, Will Lend
In recent months, prospects for home building and mort
gage financing in the nation have brightened perceptibly.
Throughout most of this year, housing starts in the nation
have increased. Current income has been rising, and the
outlook for future earnings has improved with the upturn
in economic activity. This improvement in families’ finan
cial position holds out hope that home sales will be
spurred. Given these omens of economic revival, lenders
may well anticipate an increase in demand for mortgage
funds.
Despite the increase in housing starts, the demand for
mortgage credit from all types of lenders in the nation
showed only faint signs of picking up through the first
quarter of this year. It is normal for mortgage lending to
lag behind building activity because of the time that must
necessarily elapse between the start of construction and
the sale and financing of a house. Signs of an upswing in
lending are, nevertheless, evident in the activities of sav
ings and loan associations, institutions which channel a
large share of their resources into the mortgage market.
Total lending by these institutions for construction, home
purchase, and other purposes was higher in the first
four months of this year than in the same period of 1960.
Savings and loan associations in District states, on the
other hand, did less mortgage lending in the first quarter
of 1961 than they did a year ago. That the lending of
savings and loan associations in the District recently has
not kept pace with that of those in the nation reflects in
part the slower recovery of home building in this part of
the South.
Outstanding loans secured by real estate at weekly
reporting banks in the District have edged upward since
mid-1960. This slight rise in long-term real estate lend
ing by banks has been encouraged by a marked expansion
in total deposits and some slackening in the demands of
businesses and consumers for short- and intermediateterm credit. The real estate lending pattern of commercial
banks reflects partly a response to cyclical forces and
partly some seasonal increase in demand for credit.
Nationally, the total value of commitments of savings
and loan associations and mutual savings banks to acquire
mortgages appears to be on the rise. Builders and con
sumers are again finding it relatively easy to raise mortgage
money. “Have mortgage money, will lend” would be the
probable response of the typical mortgage loan officer,
if he were asked to describe the liquidity condition of his
institution. Not only are mortgage funds available, he
might add, but they may be obtained at lower costs on
somewhat easier terms. The present ability and willing
ness of most lenders throughout the District and the
nation to extend mortgage credit reflects adjustments that
have taken place in the past twenty-two months in credit
and savings flows.
The Demand and Supply of Mortgage
Credit Adjusts
From mid-1959 through December 1960, a sharp drop in
home building activity was accompanied by a reduced de
mand for mortgage credit by home buyers. Nationally,
nonfarm mortgage recordings of $20,000 or less fell
about 14 percent from July 1959 through the latter part
of 1960. Mortgage recordings data, which include the
activities of savings and loan associations, insurance
companies, and commercial and mutual savings banks,
are not available by geographic region. The loan pattern
of savings and loan associations in District states through
out much of 1960, illustrated in the following chart,
suggests, however, that the national decline in mortgage
lending was paralleled in this part of the South.
In contrast to this downward trend in mortgage lend• 5 •
ing, savings flowed into financial institutions at an acceler
ated rate. During 1960, for example, the net increase in
savings of the nation’s consumers and businesses in sav
ings accounts and life insurance reserves at four major
financial institutions totaled $17.9 billion. About 75 per
cent of this increase was accounted for by savings and
loan associations, mutual savings banks, and insurance
companies. Commercial banks accounted for the remain
ing 25 percent of the increase in savings, a substantially
larger proportion than in 1959.
Throughout most of this year, savings have continued
to pour into the coffers of financial institutions located
in the nation and the District. This has meant that these
institutions, while they always have welcomed savings,
have had to put this larger pool of funds to work at a
time when mortgages and other investments have been
in short supply. In order to obtain mortgages, therefore,
investors have bid up their price and forced down yields.
Looked at in another way, realignment in the demand
and supply of mortgage funds has resulted in lower
interest rates for potential borrowers.
Housing Starts and Mortgage Lending
U n ited S ta te s
1958-61
Thousands of Units
Thousands of Units
Mortgage Loan Commitments
U nited States
1958-61
Borrowing Costs and Terms Ease
Deposits and Real Estate Loans
S ix th D istrict W e e k ly R ep o rtin g M e m b e r B an k s
1958-61
Millions of Dollars
Billions of Dollars
New Mortgage Loans at Savings and
Loan Associations
S ix th D istrict S ta tes
1959-61
5.6
Nationally, the interest rate on a 25-year loan insured
by the Federal Housing Administration— adjusted for dis
counts—was 5.75 percent in April 1961, or 49 basis
points lower than in January 1960. While the degree of
decline may have varied somewhat among regions, there
is no doubt that borrowing costs have eased in most
sections of the country.
In the District, scattered evidence shows that interest
rates have declined. Yields on conventional mortgages in
April of this year ranged between 5% and 61/ i percent,
with most rates % to y2 percent lower than in January
1960. Discounts on 25-year FHA-insured loans yielding
5% percent, moreover, were almost nil, compared with
3 to 4 points early last year. Discounts are a couple of
points higher on FHA loans yielding 5y2 percent, the
rate in effect between early February and late May. The
FHA rate was reduced to 5*4 percent, effective May 29.
Finally, discounts on 5 ^ percent loans guaranteed by
the Veterans Administration have fallen to about 4 points.
At this level of discount, VA loans may once again prove
attractive to investors.
Not only have interest rates declined as the supply of
mortgage funds seeking investment has increased, but
home borrowers are getting a break in a couple of other
ways. There is fragmentary evidence that down payments
and maturities on conventional loans have eased slightly
in certain areas. Some lenders, moreover, are absorbing
a larger share of the cost of closing a home loan.
Will Credit Ease Stimulate Home Building?
The housing and mortgage finance industries, as well as
others concerned with the course of economic activity,
are now attempting to appraise the impact of easing in
the mortgage market on activity and lending. A reduction
in down payments, for example, may draw into the hous
ing market families who had previously been held out be
cause of limited liquid assets. A lengthening of maturities
Continued on Page 10
• 6 •
With Mortgage Money, W ill Construction Rise?
How would you react to an easing of mortgage credit? As
the preceding article has pointed out, the cost of borrow
ing money to buy a house has declined in recent months.
Moreover, you can probably borrow a larger part of
the purchase price and take longer to repay your loan
now than you could a few months ago. Would this be
sufficient inducement to lead you to buy a house? If
economists knew how you and other hundreds of thou
sands of Americans would answer that question, they
would also know the answer to the one posed in the
preceding article; a question that is being asked by many
observers of the economic scene today: “Will credit ease
stimulate home building?” This is an important question
in the Sixth Federal Reserve District states, as an examina
tion of developments in the area’s construction industry
shows.
Current Activity Down
The chart on construction employment in Sixth District
states suggests why builders in the area are looking for
a stimulus to building. While businessmen are usually
happy to obtain more business, they are particularly so
when business has been trending downward, as it has in
the District’s construction industry. Assuming that changes
in the seasonally adjusted number of construction workers
give at least a rough idea of building trends, we can see
that District building activity started a more or less
steady decline after reaching a record high in mid-1959.
With the downtrend continuing through March of this
year, the industry’s employment in the first quarter of
1961 averaged 14 percent less than during the second and
third quarters of 1959. A further drop occurred in April,
but the rate of decline slackened appreciably, possibly
heralding a leveling off of construction employment.
The decline in District construction activity over the
past year and a half has reflected declines in every
District state. Florida, which had previously been in
the forefront of expansion, has experienced the sharpest
decline, about 19 percent. Alabama has shown the smallest
decline among District states, about 6 percent. Nationally,
the trend has also been downward, but the decline has
been considerably smaller than in District states.
Decline, in Part, Because of Housing
Our concern with the possible effect of easier mortgage
credit on the District’s construction industry is under
stood when we note that reduced home building has been
a major factor in the industry’s decline. Compared with
mid-1959, when District construction employment reached
its peak, seasonally adjusted contracts for residential
construction in the first quarter of this year were down
about 28 percent. Residential building in District states
accounted for over 46 of every 100 dollars in construc
tion contracts awarded during 1960, making home build
ing the most important single component of the con
struction industry. Add this to the fact that about 85 per
cent of houses purchased each year in the nation involve
the use of mortgage credit, and you see why so much
C o nstructio n e m p lo y m e n t in D istrict sta te s sta rte d to d e clin e
a f te r m id -1 9 59 a n d co n tin ued d o w n w a rd throu gh A p ril 1961.
The d e clin e in con stru ction em p lo y m e n t d u rin g th e p a st y e a r
a n d a h a lf reflected d e c re a se s in each D istrict sta te . The U. S.
d e clin e in th e sa m e p erio d w a s s m a lle r .
Percent Decrease,
u-S.
D istrict
States
D istrict construction a c t iv it y w a s off b ecau se of a red u ced
v o lu m e of co n tracts rep o rte d fo r both re sid e n tia l a n d o th e r
ty p e s of construction b y F. W . D odge C o rp o ra tio n .
Percent Decrease, 1st Qtr. Avg. 1961 from 2nd and 3rd Qtrs. Avg. 1959
A risin g tre n d in v a c a n c y ra te s in the U. S. a n d the South,
illu s tr a t iv e of th e D istrict tre n d , g iv e s e v id e n c e of an e a sin g
de m an d fo r ho using th a t m a y d a m p en a n y stim ulu s from
e a s ie r m o rtg ag e cre d it.
Percent
Percent
•7 •
attention is being given to the possible impact on con
struction activity of easier home-mortgage credit.
If the downtrend in this important sector were turned
into an uptrend, total construction activity would be given
a major boost. This, in turn, would have an immediate
helpful effect on the entire economy of the Sixth District
states, where total nonfarm employment has changed little
in recent months after earlier declines associated with the
nationwide recession that began in about the second
quarter of last year.
But Housing M ay Pick Up
Is there evidence yet of such a stimulus from easier
mortgage credit? So far, the signs have not been particu
larly encouraging, but perhaps it’s just too early to tell.
In the nation, where housing statistics are available more
quickly than in the District, the number of new houses
started rose in January, February, and March, then
dropped back slightly in April. Even the pessimists
probably would agree that this indicates at least a leveling
off, but because the recent developments have partly re
flected recovery from the effects of unusually severe
weather, some remain unconvinced that there is any
improvement.
In the Sixth Federal Reserve District, where the decline
in home building had been more severe than in the nation,
the pessimists may be even harder to convince. Still, there
are omens of possible better days ahead in the District.
First, the number of new dwelling units authorized by
local building permits had apparently halted their earlier
sharp decline by late 1960, as had the comparable national
number. Second, the index of seasonally adjusted contracts
for residential construction stopped declining in January,
and, more important, has picked up somewhat since then.
Because contracts cover work soon to be started, this
development points toward a probable rise in home build
ing activity.
Does this mean that residential construction activity
is, at last, responding to easier credit and that we can
sit back and confidently await the sharp upswing in home
building characteristic of the mortgage market during the
postwar years? Such a rise is, of course, a possibility. A
more cautious attitude, however, is warranted when one
sees evidence that the basic demand for housing may have
eased enough to dampen any stimulus from easier credit
alone. As the chart on quarterly vacancy rates shows,
there has been a steady uptrend in vacant dwelling units
available for rent. Figures for the South, comprised of
Sixth District states and nine other states, show an upward
trend similar to that of the nation but with an even higher
level of vacancies. Although quarterly figures for District
states alone are not available, figures from the Censuses
of Housing for the area indicate a similar uptrend between
1950 and 1960, with the actual vacancy rates falling be
tween those of the South and the nation in 1950 and
in 1960.
Judging from available national figures, we may explain
the apparent easing in housing demand by the tendency
during the last ten years for the number of houses built to
exceed the number of new households formed and also
by a steady decline in the number of married couples
without their own households. It seems quite likely that
the same factors have been at work in the District, since
the pace of building here generally exceeded that in the
nation during the last decade. Whatever the explanation,
the apparent easing in the demand for housing leads one
to expect easier mortgage credit to provide less of a
stimulus to home building now than it has in previous
postwar periods of credit ease.
Rise in Other Types Too?
Important as the home-building sector of the construction
industry is, the other numerous and varied kinds of con
struction account for more than half of total construction
activity in Sixth District states. Ranging from the building
of highways, schools, and hospitals to office buildings
and factories, these other types of construction collectively
may have similar or different movements than residential
construction. During the past year and a half they have,
unfortunately for District activity, reinforced a down
trend in home building. Thus, seasonally adjusted nonresidential contracts in the first quarter of this year
averaged about 23 percent below the monthly average of
second and third quarters 1959, when total construction
employment reached its record high. We may now hope
that nonresidential building will also reinforce any up
swing in residential activity that may be getting underway.
Contracts through April, however, showed that the hopedfor rise in Sixth District nonresidential construction ac
tivity had not, as yet come.
„
J
’
3
P h ilip M. W e b s t e r
Bank Announcements
On M a y 1, tw o n o n m em b er ban ks began to rem it at p a r fo r
ch ecks draw n on th em w hen re c eiv e d fro m the F ederal
R eserve B ank:
The B u fo rd C o m m ercia l B ank, B u ford, G eorgia. O fficers
are John D . C arter, P residen t, an d F o rrest P u ck ett, V ice
P residen t an d C ashier. C a p ita l totals $100,000, an d surplus
and u n d ivid ed p rofits $112,288.
The P eo p les B ank, L ith on ia, G eorgia. O fficers are G . O.
P ersons, II, P residen t; R . O. P ersons, Jr., V ice P resident;
W. L . W illiam son, C ashier; a n d M rs. E m elyn G ardner,
A ssista n t C ashier. C a p ita l totals $25,000, an d surplus and
u n d ivid ed p rofits $52,088.
O n M a y 12, the n ew ly o rg a n ized n o n m em ber E xchange
B ank o f T em p le Terrace, T em p le T errace, F lorida, open ed
fo r business an d began to re m it at par. O fficers are G . R .
G riffin , P residen t; M a x H . H o llin g sw o rth , V ice P resident;
A rch ie H . Jones, C ashier; a n d F red P. H a ym an , A ssistan t
C ashier. C a p ita l to ta ls $300,000, a n d su rplu s and u n divided
p rofits $150,000.
STATISTICAL STUDY
The seco n d revision o f
E
c o n o m ic
C
h a r a c t e r is t ic s
of
is n ow available
fo r d istribu tion . This stu d y classifies eco n o m ic data fo r the
D istrict by state and 27 trade and banking areas. In dividu al
copies m ay be o b ta in ed w ith o u t charge upon requ est to the
R esearch D ep a rtm en t, F edera l R e se rv e B an k o f A tlan ta,
A tla n ta 3, G eorgia.
th e
S ix
th
F
ederal
R
eserv e
D
is t r ic t
•
8
•
District Banks and Mortgage Financing
The Southeast, like the nation, vastly increased the size
and quality of its stock of houses and commercial struc
tures during the postwar period. Accordingly, financing
requirements of home buyers, builders, and mortgage
lenders increased tremendously. Financial institutions
oriented to the mortgage market responded to this basic
demand for money and provided funds in large quantities.
While the activities of such institutions as savings and loan
associations and life insurance companies are well known,
the substantial contribution made by commercial banks
has been somewhat less publicized.
What have been the trends in real estate lending by
banks in this region during the last decade? How do large
and small banks compare with regard to their holdings of
mortgage loan assets and their ability to increase them?
Can southern banks make a greater contribution to mort
gage financing within the bounds of safety and liquidity?
All Types of Real Estate Lending Expand
At member banks in the Sixth Federal Reserve District,
loans secured by nonfarm real estate amounted to $720
million on December 31, 1960, representing an increase
of $420 million since the end of 1950. This gain was
about evenly divided between loans on residential proper
ties and those on commercial properties, although the
proportion secured by residential structures declined from
Nonfarm Real Estate Loans
Sixth District Member Banks
1950-60
M illio ns of D o llars
M illio ns of D o llo rs
tween August 1954 and February 1959 at member banks
in leading District cities.
Indeed, member banks in this District are probably
more active in making construction loans and loans to
other real estate lenders than in buying permanent mort
gages. Although a loan survey made in October 1957
showed that construction loans amounted to only $145
million, or 28 percent of nonfarm real estate loans, and
that loans to other real estate lenders amounted to $195
million, or 38 percent, these percentages understate the
importance of these loans. Both types of credit mature
much sooner than the average real estate loan— an average
six months for construction loans and less for loans to
mortgage companies— and therefore turn over faster.
Judging from national data, the relative importance
of commercial banks in the market for nonfarm residential
mortgages increased sharply immediately after World War
II, reaching an historical peak in 1947 and 1948. There
after, as the resources of other institutions specializing in
mortgage finance grew rapidly, the share held by banks
declined. In District states, it dropped from 15 to 8 per
cent from the end of 1949 to the end of 1959.
Nevertheless, bank-held mortgages continued to grow
more rapidly than total bank resources. The share of nonfarm real estate loans in total District member bank assets
increased from 4.5 to 6.0 percent from 1950 to 1960.
What caused real estate loans at District banks to in
crease as much as they did? First, the heavy postwar de
mand for mortgage credit made itself felt at banks as well
as at other lending institutions. In Florida, where popula
tion growth and demand were especially great, growth in
real estate loans was strongest. Second, higher interest
rates on real estate loans than on some other types of
loans and securities made this type of investment compara
tively attractive to banks. Third, the near doubling of total
resources and a somewhat greater gain in time deposits
permitted member banks to invest more in real estate
loans without loss of liquidity with respect to deposits.
Lending by Small and Large Banks
68 to 57 percent. Most nonfarm real estate loans represent
mortgage holdings, but some construction loans and a
small amount of other business loans secured by real
estate are included. Loans secured by farm land amounted
to $52 million at the end of 1960, or 6.7 percent of total
real estate loans.
District member banks also sharply expanded their
loans to construction firms and interim mortgage credit
to other real estate lenders during the period after World
War II. Construction loans more than quadrupled from
1946 to 1957, the latest year for which outstanding loan
data are available. Loans to other real estate lenders—
mainly mortgage companies, which originate and service
loans for permanent investors— increased 250 percent be
As a general rule, the smaller the bank, the more im
portant its real estate lending to total lending activity. For
example, at the end of 1960, 31 percent of the total loans
at banks with deposits of less than $5 million were real
estate loans, compared to 9 percent at banks with deposits
of $100 million and over.
Most small banks, of course, are in small cities. De
mands for private short-term credit from commercial and
industrial borrowers are generally less strong there than in
the large cities, and competition from other real estate
lenders may also be weaker. Moreover, time deposits,
which may influence the amount of real estate lending
banks can do, are greater in relation to total deposits at
small banks than at large ones. Because of legal limita
tions, a national bank must hold its outstanding loans
secured by real estate (excluding Government insured or
guaranteed loans and construction loans) within an
• 9 •
amount no greater than 60 percent of its total time de
posits or 100 percent of unimpaired capital and surplus,
whichever is higher. Most member banks are operating
well within these limits, but many relate their long-term
real estate lending to the inflow of time deposits.
Real Estate Loans
Sixth District Member Banks
1950 and 1960
D eposit Size
of B ank
($ M illions)
N u m b er of
B anks
D ec. 30 D ec. 31
1950
1960
D o llar Volume
of Loans
D ec. 30
D ec. 31
1950
1960
R eal E state
as a Percent
of T otal L oans
D ec. 30 D ec. 31
1950
1960
Percent of Total
0 -5
5 - 10
1 0 -2 5
2 5 -5 0
50 - 100
100 and over
A ll Banks
50
21
15
6
4
4
100
28
26
26
9
5
6
100
15
13
17
14
11
30
100
6
12
20
16
13
33
100
32
28
22
19
13
10
16
31
29
22
20
18
9
15
Although real estate lending accounts for a smaller share
of total lending at large banks than at small ones, large
banks control a greater proportion of total resources, thus
accounting for a major share of the real estate lending at
all District banks. Between 1950 and 1960, large banks
accounted for a more than proportionate share of the
increase in this lending. As a result, large banks held
more of the total real estate loans outstanding at District
member banks in 1960 than in 1950.
The greater demands for real estate financing in large
cities resulting from the greater population growth and
building activity there may partly explain the greater
growth in real estate lending at large banks. Since small
banks were already heavily committed to real estate lend
ing in 1950, they may have been less inclined to commit
additional funds to real estate lending in subsequent years.
Can Banks Do M ore?
Will District banks contribute more to real estate financ
ing in the 1960’s than in the last ten years? Broadly speak
ing, the answer depends on four factors: (1) overall de
mand for mortgage credit, (2) growth of bank resources,
(3) demands for other kinds of bank credit, and (4)
bank decisions on lending policies.
About the demand for mortgage and construction credit
we can be quite sure. Continued population growth in
parts of this region will generate demand for more houses
and funds to finance them. On the other hand, other short
term credit demands may also press heavily on bank
resources, even as resources grow.
In such an environment of competing demands, the
fourth factor influencing banks’ volume of real estate
loans—possible changes in bank policies— could be
crucial. The recent easing of legal restrictions on national
banks may lead to some policy changes. Since late 1959,
national banks have been authorized by law to make
conventional loans of up to 75 percent of the appraised
value of the real estate if the loan is to be amortized
within twenty years. Previously, national banks could
make a conventional loan of no more than two-thirds of
the appraised value of the property if the loan were to be
amortized completely within fifteen years.
Past experience with Government guaranteed and in
sured mortgages, however, suggests that bankers consider
liquidity more important than legal restrictions. Bank hold
ings of Government insured or guaranteed mortgage loans
are not subject to the restrictions on conventional mort
gage financingf A national bank could, therefore, legally
have made loans on residential property at much more
liberal terms than at those imposed on conventional mort
gage lending even before the recent liberalization of re
strictions. Many banks have made such FHA and VA
loans in large volume. Yet, in 1960 such insured or guar
anteed loans made up only about one-fourth of the total
dollar volume of mortgage loans on residential properties
held by District banks. Apparently, the banks preferred
to make loans with shorter maturities than those typical of
FHA and VA. Such liquidity considerations are likely to
continue to influence lending policy in the future.
Some banks are exploring a possible way to keep active
in the mortgage lending field and at the same time avoid
undesirable liquidity aspects. By originating a substantial
volume of mortgages in their own communities, they hope
to build up a staff competent not only to grant or originate
loans efficiently but to service a large volume for other
holders as well. At the same time, by developing channels
for the sale of mortgages in the secondary market, they
believe they can keep the mortgages they hold themselves
within the limits of their banks’ liquidity standards.
During the 1960’s, the pattern of residential construc
tion may differ considerably from that of the 1950’s, as
the article on the southern housing market states. Also,
uneven rates of income growth and migration may cause
residential construction to be heavier in certain cities and
localities than in others. Consequently, some banks may
find heavier demands for real estate financing than others.
In addition, changes in financing techniques may be re
quired. If the past record is any guide, however, District
bankers will undoubtedly continue to adapt their lending
practices to the changing times and to contribute signifi
cantly to short-term construction financing and long-term
mortgage lending.
A[_bert ^ H irsch
Continued, from Page 6
and a lowering of mortgage rates, by reducing monthly
payments, could also help to overcome the income
obstacle that may have deterred some families from
buying a new or more expensive home.
The availability of mortgage funds on favorable terms
to the borrower does, no doubt, tend to broaden the base
of potential home buyers. It should be remembered,
however, that families demand the satisfaction that comes
from living in a home. They demand mortgage credit
simply to obtain this satisfaction. As we have noted in
the first article in this issue, the nature of the housing
market has changed markedly during the past decade.
Families in the District are now better housed than they
were ten years ago. Thus, the task of stimulating home
building through easy credit may now be more formidable
than in the past.
A
lfred
P.
10
Jo h n s o n
•
S ix th D is tr ic t In d e x e s
Seasonally Adjusted (1947-49 = 100)
I960
|
1961
MAR.
APR.
MAY
JUNE
JULY
AUG.
SEPT.
OCT.
NOV.
DEC.
JAN.
FEB.
MAR.
APR.
Nonfarm Employment.................................. 142
Manufacturing Employment . . . .
125
A p p a re l................................................... 195
C h e m ic a ls..............................................134
Fabricated Metals
.............................191
F o o d .........................................................115
Lbr., Wood Prod, Fur. & Fix. . . .
79
Paper.........................................................166
Primary M e t a l s ..................................
94
T e x tile s ...................................................
89
Transportation Equipment . . . .
205
Nonmanufacturing Employment . . . 149
Manufacturing Payrolls
............................. 216
Cotton Consumption**..................................
94
Electric Power Production**....................... 387
Petrol. Prod, in Coastal
Louisiana & M ississippi**....................... 228
Construction C o n tra c ts * ............................ 333
Residential................................................... 360
All O t h e r ................................................... 311
Farm Cash Receipts........................................121
Crops...............................................................95
L iv e s t o c k ................................................... 179
Department Store S a le s * / * * .......................162
Department Store Stocks*............................. 225
Furniture Store S a l e s * / * * ....................... 128
Member Bank D e p o s its * .............................181
Member Bank L o a n s * .................................. 345
Bank D e b its*................................................... 285
Turnover of Demand Deposits* . . . .
153
In Leading C it ie s ........................................167
Outside Leading C i t i e s .............................119
ALABAMA
Nonfarm Em ploym ent.............................124
Manufacturing Employment . . . .
105
Manufacturing Payrolls.............................188
Department Store S a le s * * ....................... 156
Furniture Store S a l e s .............................112
Member Bank Deposits.............................161
Member Bank Lo a n s.................................. 289
Farm Cash R eceip ts.................................. 125
Bank Debits
.............................................. 244
FLORIDA
Nonfarm Em ploym ent............................. 201
Manufacturing Employment . . . .
205
Manufacturing Payrolls............................. 352
Department Store S a le s * * ....................... 245
Furniture Store S a l e s .............................157
Member Bank Deposits............................. 238
Member Bank Lo a n s.................................. 552
Farm Cash R eceip ts.................................. 171
Bank D e b i t s .............................................. 404
GEORGIA
Nonfarm Em ploym ent.............................136
Manufacturing Employment . . . .
124
Manufacturing P ayrolls............................. 208
Department Store S a le s * * .......................156
Furniture Store S a l e s .............................120
Member Bank Deposits.............................159
Member Bank Lo a n s.................................. 271
Farm Cash R eceip ts.................................. 146
Bank D e b i t s .............................................. 252
LOUISIANA
Nonfarm Em ploym ent.............................130
Manufacturing Employment . . . .
95
Manufacturing P ayrolls.............................184
Department Store Sales*/** . . . .
150
Furniture Store S a le s * .............................172
Member Bank D e p o s its * .......................159
Member Bank L o a n s * ............................. 328
Farm Cash R eceip ts..................................
94
Bank D e b its * .............................................. 238
MISSISSIPPI
Nonfarm Em ploym ent............................ 136
Manufacturing Employment . . . .
135
Manufacturing Payrolls............................. 256
Department Store Sales*/** . . . .
153
Furniture Store S a le s * .............................94
Member Bank D e p o s it s * ....................... 202
Member Bank L o a n s * ............................. 425
Farm Cash R eceip ts.................................. 115
Bank D e b its * .............................................. 247
TENNESSEE
Nonfarm Em ploym ent.............................124
Manufacturing Employment . . . .
125
Manufacturing Payrolls.............................211
Department Store Sales*/** . . . .
137
Furniture Store S a le s * .............................98
Member Bank Deposits*
....................... 164
Member Bank L o a n s * ............................. 304
Farm Cash Receipts.................................. 86
Bank D e b its * .............................................. 239
144
126
197
137
191
116
79
169
98
88
210
152
227
95
363
144
126
198
137
196
118
80
170
99
88
210
151
230
94
366
143
126
198
138
196
117
79
167
99
88
205
151
233
93
375
143
126
199
137
196
117
78
169
97
89
197
150
236
93
382
143
125
196
137
197
117
78
166
95
88
199
150
228
90
385
143
124
193
132
193
120
77
167
91
87
199
150
221
85
373
142
123
188
131
190
119
76
166
92
86
205
150
220
83
372
142
122
188
131
188
117
76
165
88
85
185
150
217
83
369
141
122
189
133
189
116
75
164
89
85
190
149
218
79
390
142
121
187
133
191
118
73
163
86
84
191
150
213
78
401
141
121
187
133
189
118
73
164
87
84
190
150
212
79
383
141
121
186
134
184
118
73
165
86
83
183
149
214
79
368
141
121
189
135
184
118
73
166
87
84
187
149
219
82
n.a.
224
333
356
315
126
100
188
192
223
149
180
347
274
148
167
114
222
351
384
325
132
111
185
176
223
145
180
349
271
163
181
126
220
371
387
359
132
98
192
183
227
142
180
349
281
159
183
119
220
370
376
365
127
83
194
194
227
147
183
351
265
162
179
129
221
361
367
357
155
147
189
178
232
143
183
354
279
167
190
124
223
353
362
346
149
134
188
185
230
135
185
353
284r
158
175
120
232
337
364
316
167
157
186
189
231
141
188
353
265r
152
159
113
233
322
305
336
156
131
201
179
235
140
188
352
283r
153
162
111
250
286
300
276
132
94
199
187
233
134
189
359
281r
151
163
119
239
307
286
324
134
97
191
177
224
133
189
351
288r
162
176
125
237r
313
326
303
145
123
191
181
221
123
192
355
280r
156
168
116
247
323
341
309
136
104
205
178
221 r
118
189
353
295r
155
167
122
244
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
183
229p
139p
191
354
270
146
164
111
126
108
194
179r
127
159
296
122
239
126
108
196
162
128
159
298
131
239
126
108
199
171
127
159
293
123
244
126
108
200
178
126
160
291
124
232r
126
107
192
170
119
162
293
123
253r
125
105
182
166
117
164
292
150
252r
125
103
187
166
120
169
293
182
239r
125
103
183
155
110
165
294
130
244r
124
102
175
165
111
167
299
121
236r
125
101
175
158
109
169
300
115
242r
123
101
175
156
105
170
299
126
233r
123
101
177
166
99
167
303
133
243r
123
102
183
173
131
169
298
n.a.
226
203
206
370
273r
181
237
553
217
380
203
209
389
260
175
235
551
225
395
202
209
392
264
167
236
553
187
431
202
208
407
277
167
242
557
204
390r
202
208
403
263
203
240
564
270
427r
202
208
392
256
172
241
560
248
418r
201
207
399
261
156
246
561
212
405r
201
207
384
268
168
248
551
196
420r
201
208
384
276
164
250
560
232
413r
200
206
368
264
156
247
550
266
415r
200
207
374
264
149
252
556
264
399r
200
209
373
287
145
247
556
197
418r
200
209
392
269
156
248
550
n.a.
383
138
124
218
170
142
159
271
153
251
137
124
226
169
132
160
275
144
252
136
123
223
164
135
160
275
150
263
136
123
228
175
134
161
278
125
252
135
123
220
159
137
164
286
215
259r
135
121
213
168
134
166
288
160
274
135
121
211
172
144
170
286
204
250r
134
118
205
158
138
169
291
120
259r
134
119
205
164
135
170
289
148
257r
134
117
199
157
123
169
285
144
265r
134
116
200
155
120
173
292
152
255r
133
116
203r
166
124
172
292
171
267r
134
117
206
155
132
172
290
n.a.
246
132
96
188
155r
176
160
329
89
227
132
96
184
152
175
159
334
101
225
131
95
181
161
184
158
334
119
242
131
96
182
159
203
161
335
102
216r
130
95
181
152
145
159
334
91
230r
129
94
173
148
161
164
332
113
250r
129
94
170
151
159
163
329
115
212r
128
93
168
140
167
164
323
137
225r
128
93
175
155
172
166
331
113
234r
129
92
177
151
164
165
319
93
210r
129
91
173
151
152
167
322
103
208r
128
92
177r
155
139
163
314
104
236r
128
91
179
149
156
169
331
n.a.
215
137
136
252
166r
100
198
427
101
238
136
137
247
154
113
199
429
105
224
135
136
257
175
107
197
431
97
245
135
135
256
175
112
198
433
104
243r
134
134
250
153
100
194
425
98
255r
135
132
238
149
95
196
431
121
253r
135
132
242
158
84
204
431
141
242r
135
133
239
151
101
199
433
162
258r
134
131
240
164
124
209
460
136
254r
137
130
244
149
93
204
442
86
238r
136
129
237
146
92
205
446
99
234r
136
130
241 r
154
101
207
442
116
256r
136
132
244
157
88p
208
449
n.a.
236
128
127
231
159
103
164
305
100
231
127
127
228
146
111
163
309
95
241
127
127
229
155
107
165
309
102
238
127
128
230
167
93
170
313
109
230r
127
127
231
151
98
167
314
113
240r
126
128
224
157
96
166
311
106
238r
126
126
221
164
101
171
313
122
224r
125
124
218
156
98
169
314
143
247r
124
123
217
157
%
170
328
86
236r
124
123
215
147
83
170
315
96
249r
124
123
216
154
89
176
319
99
245r
124
123
216r
151r
92
176
310
99
258r
124
123
220
147
103
175
311
n.a.
237
SIXTH DISTRICT
*For Sixth District area only. Other totals for entire six states.
* * Daily average basis.
n.a. Not Available.
p Preliminary.
r Revised.
Sources: Nonfarm and mfg. emp. and payrolls, state depts. of labor; 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. Other indexes based on data collected by this Bank. All indexes calculated by this Bank.
• 11 *
D IS T R IC T
C O N D IT IO N S
l l | l I l l l I .......I
i l ll I i i i i il I lIl il
1947- 4 9 * 100
Seasonally Adjusted
B U S IN E S S
_____
Nonfarm Employment
Mfg. Payrolls
Mfg. Employment
O e f in ite signs of economic recovery have appeared , although over
all improvements in April w ere sm all. Recovery is underway in some of
the District’s key industries, but nonfarm employment has not yet increased
perceptibly. A relatively slow pickup in employment, of course, is not unusual
in the early phase of business recovery.
is*
There w ere encouraging signs from the cotton tex tile industry, one
of the District's most important m anufacturing industries. Cotton con
sumption in April rose moderately after several months of low-level stability.
Activity at steel mills in the region increased sharply in April and May.
Electric Power
Production
Construction
Contracts
3~mo. moving avg.
These and other improvements in April resulted in an increase in
m anufacturing employment. It w as, nevertheless, too sm all to over
come the sluggishness in nonm anufacturing em ploym ent, so total
nonfarm employment rem ained v irtu ally unchanged for the fourth
consecutive month. A slight rise did occur in Georgia, but changes in other
District states were not large enough to affect the employment indexes.
is* v* v*
Cotton Consumption
Farm Cash
, Receipts
Even though little change occurred in the ave rag e length of the
m anufacturing w ork w eek, the rise in m anufacturing em ploym ent w as
sufficient to boost manufacturing payrolls. No doubt, earnings other than
those of manufacturing workers rose in April also. Farm earnings in March,
for instance, measured by cash receipts, were at a level considerably above
last March’s. Although lower farm prices of cattle, broilers, and some fruits
and vegetables had a weakening effect on receipts, strength in orange, hog,
soybean, and rice prices were responsible for the increase over last March’s level.
Consumers used some of their additional incomes to boost their
purchases. After rising in April, department store sales held firm in May,
Bank Debits
Dept. Store Stocks
according to preliminary figures. Furniture store sales showed a marked
improvement. Sales at household appliance stores, however, weakened in
April, following the gains made in the preceding month. In March, automobile
sales rose moderately, and, if they continued to move similar to U. S. sales
as they did in March, further gains were made in April and May.
^
v
Despite some increase in spending, consumers displayed a great
deal of caution. Many appeared anxious to use additional earnings to reduce
Dept. Store
Sales
Member Bank Loans
Member Bank Deposits
RATIO TO R EQ U IRED
B o rrow ings from
{ / F. R. Bonk
‘E x c e s s Reserves
their instalment debt at commercial banks. Even though a substantial rise
in new borrowings to purchase consumer goods other than automobiles
occurred, commercial bank instalment credit in April remained below that
of a year ago. Outstanding debt declined for the seventh consecutive month.
While consumers continued to repay their instalment indebtedness, they added
to their holdings of time deposits and savings and loan shares at about the
usual rate for this time of year.
^ ^ *
Not much strength w as displayed in the dem and for loans at District
member banks. Member bank loans, seasonally adjusted, changed little
during April and remained below the year-end level at banks in leading Dis
trict cities. The lack of change in April reflects declines at Alabama, Florida,
and Georgia member banks that offset the gains in other states, particularly
Louisiana. Investments at member banks, on the other hand, rose sharply in
April, largely reflecting purchases of Treasury short-term securities by banks
in leading cities. Reserve positions remain easy with excess reserves being
substantial and borrowings from the Federal Reserve Bank of Atlanta minimal.
@FedFRASER