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^deral R e serv e Bank of Atlanta ■1 9 7 2 Inthisissr T h e 1971 F o r e c a s t s R e v is ite d a n d a L o o k a t 1 9 7 2 C o a l: R o a r in g A g a in ! D is tr ic t B a n k in g N o t e s D is tr ic t B u s in e ss C o n d i t i o n s T h e 1971 F o r e c a s t s R e v is it e d an d a Lo o k at 1972 b y F r e d e r i c k R. S t r o b e l and W illia m D. T o a l " I f all the e c o n o m is ts in the w o r ld w ere laid e n d to en d, they w o u ld n ever reach a c o n c lu s io n . " S o g o e s an o ld sayin g. In M a r c h o f 1971, the M o n t h ly R e v ie w 1 im p lic itly p u t this state m e n t to the test b y e x p la in in g the w o r k in g s a n d p re se n tin g the forecasts o f five w e ll-k n o w n e c o n o m e tr ic m o d e ls .2 W e n o te d at the tim e that d e sp ite the v a ry in g the o re tica l a p p r o a c h e s o f the m o d e ls (the St. L o u is an d R C A m o d e ls take the " m o n e t a r is t " a p p ro a c h , the oth ers are b a sic a lly "K e y n e s ia n " ), all five te n d e d to a gre e in their ove ra ll forecast for 1971. W h ile this fact o f a gre e m e n t b e lie s the o p e n in g q u o te , c o n se n su s is n ot the p ro o f o f the p u d d in g , i.e., the m o b can be w r o n g . W h a t c o u n ts is w h e th e r o r n ot the forecasts turn ou t to be accurate. A n d , fro m the actual data sh o w n in the table, the five m o d e ls, in a d d itio n to the ir ge n e ral a gre e m e n t, a ch ie v e d h igh m a rks for a cc u ra c y in m a n y o f their p re d ic tio n s fo r 1971. A y ear a go, o u r su m m a r y d e sc rip tio n o f these m o d e ls ' 1971 fo re c asts w as as fo llo w s : The year 1971 will be one of gradual economic improvement. Real economic growth will resume a positive rate, with the economy expanding at 2.5 percent to 3.0 percent. Housing (residential investment in the table) should serve as a major stimulus to the economy. Price increases will be in the neighborhood of 4.0 percent, slowing from 1970's increase of 5.3 percent. However, the labor situation is not expected to improve significantly, with the unemployment rate expected to remain close to 6.0 percent. ’ F. R. Strobel and W. D. Toal, "Econometric Models: What They Are and What They Say for 1971.” JThe five models were: University of Michigan, Data Resources, Wharton, St. Louis Federal Reserve Bank, and RCA. Monthly Review, Vol. LVII, No. 3. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. M O N T H L Y R EV IEW u n e m p lo y m e n t in 1971 differed from p re d ic tio n s m a d e in late 1970. Though m issin g in som e d etail, the m od els’ batting average for 1971 AS A W H O LE w as good. (Fig u res in b illio n s of current d o llars u n le ss otherw ise indicated) Model A verage1 Curren t G N P ..................... P rice Change (Percent, Annual R a te )2 .................... Real G N P Growth (Percent, Annual R a t e ) .................... C o n s u m p t i o n ......................... Total Investm ent . . . . B u sin e ss Fixed Investm ent Inventory Investm ent (Net C h a n g e ) .................... R esiden tial Investm ent , Net Exports of Goods and S e rv ic e s: i .............................. U nem ploym ent Rate ( P e r c e n t ) .............................. A Closer Look Actual . . . . 1044.5 1046.8 . . . . 4.0 4.6 . . 2.8 . . 658.6 . . 145.7 . . 105.1 2.7 662.1 151.6 108.7 . . . . . . . . . . . . . . . . 4.5 36.0 2.2 40.6 . . . . 4.8 0.0 . . . . 5.8 5.9 'Total investment, certain components ot investment, and net exports were forecasted by neither the St. Louis nor RCA models. Also, the St. Louis model did not forecast consumption. Consequently, the model averages for these components of total spending are based on the remaining models. 2Computed as the percent change in the GNP implicit deflator. ’ Exports minus imports. Dates of Forecast Release: November and December, 1970. The five models were: University of Michigan, Data Resources, Wharton, St. Louis Federal Reserve Bank, and RCA. A year later a su m m a ry d e sc rip tio n o f the e c o n o m y 's actual p e rfo rm a n c e in 1971 is as fo llo w s: The year 1971 was one of gradual economic improvement. Real economic growth resumed a positive rate, with the economy expanding at 2.7 percent. Housing, a major stimulus to the economy, advanced by 34 percent to record levels. The GNP implicit price deflator advanced by 4.6 percent and the Consumer Price Index climbed by 4.3 percent. The unemployment rate averaged 5.9 percent for the year, down only slightly from December 1970's rate of 6.1 percent. C learly, the a b o v e p a ra grap h se em s in general agre e m e n t w ith the average forecasts o f the five m o d e ls su m m a riz e d in the p re v io u s p aragrap h . A clo se r lo o k indicates, h ow ever, that the m o d e ls d id m iss on so m e o f the c o m p o n e n ts o f G ro ss N a tio n a l P ro d u c t (G N P ). T h is is largely b e cau se events h a p p e n e d , o r e c o n o m ic re latio n sh ip s ch a n ge d , that c o u ld n o t be foreseen at the tim e the forecasts w ere m ade. In d e e d , 1971 w as an u n u su a l year for the e c o n o m y , c o n ta in in g m a n y u n fore see n d e v e lo p m e nts o n bo th the d o m e s tic and the intern ation al scenes. A n d , w h e n this h ap p en s, e c o n o m e tric m o d e ls are m o re likely to m iss their mark. A s w e stressed in o u r article last year, a key to e c o n o m e tric s is pre dictability. W ith this in m in d, let us see w h ic h aspe cts o f sp e n d in g, prices, and FE D ER A L R ESER V E BANK O F A TLAN TA the A ctu ally, the forecasts o f tw o m a jo r types of ex p e n d itu re s o n g o o d s an d services— c o n su m p tio n and total in ve stm en t— registered o n ly sligh tly lo w e r scores for accu ra cy than the overall G N P forecast. (G o v e rn m e n t expend itu res, w h ile c o n sid e re d by the m o d e ls, w ere n ot in c lu d e d in o u r d isc u ssio n o f the forecasts, sin ce they w ere d e te rm in e d o u tsid e each o f the five e c o n o m e tric m o dels.) M o r e sp ecifically, c o n su m p tio n e x p e n d i tures p ro v id e d a lift to the e c o n o m y that w as, in the m ain, forecaste d by the m o d e ls. T he m o d e ls, h o w ever, u n d e rsh o t the a m o u n t o f total in ve stm en t exp e n d itu res by a slig h tly w id e r m a rgin than c o n su m p tio n . Bu sin e ss fixed in ve stm en t w as o n ly slig h t ly stro n ge r than ex pe cted ; residential in ve stm en t w as c o n sid e ra b ly m o re robust. T hus, the m o d e ls fell b e lo w target in so m e sectors that w ere so u rc e s o f strength in the e c o n o m y for 1971, particu larly in residential b u ild in g. In ve n to ry in v e stm e n t p ro ve d to be a d is a p p o in tm e n t in a d d in g fuel to the 1971 recovery. A lth o u g h this c o m p o n e n t o f in v e stm e n t ex p e n d itu re s increased, it d id n ot s h o w the strength that the m o d e ls anticipated. Lack o f o p tim ism o n the part o f b u sin e ssm e n , app arently, h eld d o w n the actual a m o u n t o f in ve n tory in v e stm e n t to less than 50 percent o f w h at the five m o d e ls, o n average, had forecast. N e t exports a lso fell far sh o rt o f the o p tim ism c o n ta in e d in the m o d e ls ' average fo re cast. W h e re a s the m o d e ls p ro jected a gra d u al im p ro v e m e n t in the net export situ ation d u rin g the year, p ro n o u n c e d de te rio ration w as the actual result. Basic to this w as the uncertain ty ov e r intern ation al m o n e ta ry and trade d e v e lo p m e n ts and a p ro lo n g e d d o c k strike, w h ic h a ggra va te d an a lready tro u b le d trade balance. A t the sam e tim e, even th o u g h the m o d e ls accu rate ly p re d icte d the path o f the e c o n o m y in 1971 as a w h o le , they w ere less accu rate in their forecasts o f the quarte rly pattern d u r in g the year. A s the chart indicates, the m o d e ls erred, p articu larly in fo re c astin g the rate o f inflation for in d iv id u a l quarters. T he expected s lo w in g in the rate o f price increase forecaste d by the m o d e ls in the first an d se c o n d quarters o f 1971 d id n ot take place. M o re o v e r, real e c o n o m ic grow th , w h ic h h ad turned o u t greater than expe cted in the first quarter, slo w e d to a 3 .4 -percent a n n u al rate in the se c o n d quarter, sh o rt o f w h a t had been forecast by the five m o d e ls. Then, too, the p rojected u n e m p lo y m e n t rate in the se c o n d quarte r w as slig h tly b e lo w the actual rate. Partially b e c au se the e c o n o m y w as n ot im p ro v in g as expected, the A d m in is tra tio n dra stically c h a n ge d 39 Forecasts were less accurate on developments during the year % ch g ., a n n . rate, from prev. q tr. Real GN P —8 — 7 -6 — 5 —4 — 3 'X. + 0 P r ic e s (G N P d e fla to r ) % ch g ., ann . rate. from prev. q tr. — 5 — 4 - 3 U n e m p lo y m e n t R a t e % of lab or fo rce - 6 * --------- - - 4 - 5 A, i I I II i III IV 0 1971 increase. W h y ? W it h the e n a c tm e n t o f the 9 0 -d a y freeze a n d later p ric e c o n tro ls, p ric e s in the final tw o q u a rte rs o f the y ear in c re a se d m u c h less than the five m o d e ls p re d ic te d at y e a r-e n d 1970. A s a result o f u n d e r s h o o tin g in the first tw o q ua rte rs a n d o v e r s h o o t in g in the fin a l tw o quarters, the m o d e ls w e re re a so n a b ly accu ra te in the a n n u a l p ric e forecast, p re d ic tin g o n ly a slig h tly lo w e r rate o f p rice incre a se than a c tu a lly o c c u rre d . W h ile the p rice freeze a n d p o st-fre e z e d e v e lo p m e n ts h a d a sh a rp d a m p e n in g in flu e n c e on p rice increases, the N e w E c o n o m ic P r o g r a m 's effects o n real e c o n o m ic g ro w th h a ve b e e n less certain. It s h o u ld b e n ote d , h o w e v e r, that real e c o n o m ic g r o w th in the fo u rth q u arte r p e rk e d u p m o re r a p id ly than h a d been forecaste d, a n d the u n e m p lo y m e n t rate reced ed slig h tly — rather than risin g slig h tly to w a rd the e n d o f the year as p re d ic te d . T h e O u t lo o k fo r 1972 Last y e a r's a g re e m e n t a m o n g the five m o d e ls (and a lo n g w ith m a n y o th e r forecasts) s h o w e d a stro n g d iv e rg e n c e fro m the fo re c a st re le a se d b y the C o u n c il o f E c o n o m ic A d v iso r s. T h e C o u n c il, w h ile r e c o g n iz in g that " . . . a c o n s id e r a b le b o d y o f o p in io n . . . ex p e cts the G r o s s N a tio n a l P r o d u c t to be in the ran ge b e tw e e n $1,045 b illio n a n d $1,050 b illio n , . . ." set as a " t a r g e t " the fig u re o f $1,065 b illio n fo r the 1971 G N P .3 T h e C o u n c il's O u t lo o k fo r 1972. T h is year, the C o u n c il se e m s to be in c lo se r a g re e m e n t w ith m o st forecasts, be they e c o n o m e tr ic o r ju d g m e n ta l. T h e C o u n c il p u ts the p ro sp e c tiv e rise in the 1972 G N P at " a b o u t $100 b illio n , " the in cre a se in real o u tp u t at " a b o u t 6 p e r c e n t," a n d an increase in p rice s o f " a r o u n d 3 1/4 p e rc e n t ."4 A c c o r d in g to the C o u n c il, it a lso se e m s lik e ly that, ex ce pt fo r in v e stm e n t in n e w h o u se s, every m a jo r c a te g o ry o f e x p e n d itu re s w ill rise m o re o r d e c lin e less than in 1971. Better p e r fo r m an c e s a n d incre a se s are lik e ly in in v e n torie s, ex p o rts relative to im p o rts, Federal G o v e r n m e n t p u rc h a se s o f g o o d s a n d services, a n d c o n s u m e r e x p e n d itu re s. T h e recent rise in total sale s d u r in g a p e rio d o f g e n e ra lly u n c h a n g e d in v e n to rie s w a s v ie w e d as a p r o p e llin g fa c to r fo r futu re in v e n to ry increases. T h e g r o w th in o u tp u t, the Job D e v e lo p m e n t C re d it (the 7 -p e rc e n t in v e stm e n t tax credit), a n d recent d e p r e c ia tio n lib e ra liz a tion u n d e rlie the p ro je c te d s p e e d u p o f b u sin e s s its p o lic y in m id -A u g u s t . O f cou rse, the five m o d e ls d id n ot p re d ic t the N e w E c o n o m ic Progra m . Yet, the fiv e -m o d e l a n n u a l fo re c ast o f p rice s c a m e fairly c lo se to the actual a n n u a l rate o f p rice 40 “Economic Report of the President, 1971, p. 84. Fiscal 1972 Budget projections were also based on a $1,065 billion GNP for the calendar year, 1971. 4Eco n o m ic Report of the P resident, 1972, p. 25. M O N T H L Y R E V IE W 6-p e rc e n t a n n u a l real g ro w th rate),w ill b u sin e s sm e n in v e stm e n t in p la n t a n d e q u ip m e n t. A s v ie w e d b y the C o u n c il, c o n s u m e r e x p e n d itu re s w ill be b o lste re d by risin g e a rn e d in c o m e s, tax re d u c tions, larger S o c ia l S e c u rity b e n efits, a n d gre ater c o n fid e n c e in the future. T h e recent re a lig n m e n t o f w o r ld c u rre n c ie s is e x p e cte d to stre n gth e n net exports. T h e Federal b u d g e t s h o u ld further stim u la te the e c o n o m y . A $25.5 -b illio n d e ficit is p ro je cte d for fiscal year 1973. T h e f o llo w in g table, u p o n w h ic h Federal b u d g e t receip ts are estim a te d , p r o m o d ify these in v e stm e n t p la n s? T h e a n sw e r to these a n d o th e r q u e stio n s w ill d e te rm in e w h e th e r the rise in the e c o n o m y w ill be m o re o r less than p re dicted . In short, u n fo re se e n e c o n o m ic , p o litic a l, o r so cia l c h a n g e s c o u ld o c c u r in 1972 that w o u ld alter the a c c u ra c y o f to d a y 's e c o n o m ic forecasts, be the y go v e rn m e n t, private, e c o n o m e tric , o r j u d g m ental. H o w e v e r, the five m o d e ls that w e lo o k e d at last y ear w ere, in the m ain , o n target. M o s t likely, v id e s fu rth er in sig h t into the C o u n c il's for 1972. e c o n o m ic forecasters, in ge ne ral, w o u ld b e h a p p y if the y c o u ld c o n siste n tly m a tch this 1971 fo re p ro sp e c ts c a stin g r e c o r d . * E c o n o m ic A s s u m p t io n s in th e Fe d e ra l Budget (C a le n d ar Y e a rs in B illio n s) D escription G ross National Product 1970 Actual 1971 E stim a te 1972 Estim ate $974.1 $1,047 $1,145 P erso nal incom e 803.6 857 924 Corporate profits before tax es 75.4 85 99 Reprints of the March 1971 article “Econometric Models: What They Are and What They Say for 1971” are still available. For those unfamiliar with the concept of econometric model build ing, this article explains how models are con structed and how they are used. So urce: O ffice of M anagem ent and Th e Budget Prices a n d u n e m p lo y m e n t are a lso a n tic ip a te d to m o v e in the d e sire d d ire c tio n s. T h e C o u n c il ex pe cts p rices to be h e ld in c h e c k by c o n tin u e d o p e ra tio n o f the e c o n o m y at le ss-th a n c a p a c ity rates a n d a lso b y the effects o f the p ric e -w a g e -re n t c o n tro l system . U n e m p lo y m e n t is e x p e cte d to fall a n d be in the n e ig h b o r h o o d o f 5 p e rce n t b y y e a r-e n d . W ill these p re d ic tio n s turn o u t to be a ccu ra te ? T h e C o u n c il re c o g n iz e s that the se 1972 estim ates, like all e c o n o m ic forecasts, are s u b ject to a c o n sid e r a b le m a rgin o f p o s s ib le error. It is c o n c e iv a b le that a n u m b e r o f eve n ts n o w u n fo re se e n c o u ld c h a n g e the e c o n o m ic p ictu re for better o r w orse . For e x a m p le , the C o u n c il a ssu m e s in its fo re casts that p e rso n a l sa v in g w ill c o n tin u e at a h ig h e r than n o rm a l rate. Yet, it is p o ssib le that c o n su m e r s w ill lo w e r the ir s a v in g rate fro m its h isto ric a lly h igh level as the u n e m p lo y m e n t rate d e clin e s. S o m e e c o n o m is ts h a ve a ttrib u te d m u c h o f last y e a r's c o n s u m e r c o n se rv a tism to c o n c e rn o v e r the h igh u n e m p lo y m e n t rate. T h u s, a lo w e r u n e m p lo y m e n t rate m ig h t be se lf-r e in fo r c in g by s im u lt a n e o u s ly b o o s t in g c o n s u m e r c o n fid e n c e a n d sp e n d in g , th u s g iv in g an a d d e d lift to the e c o n o m y . O n the o th e r h a n d , w h ile the m o st recent C o m m e r c e -S E C su rv e y in d ic a te s that b u sin e s sm e n in te n d to increase their p la n t a n d e q u ip m e n t s p e n d in g b y 10.5 p e rce n t in 1972, it m u st be re m e m b e re d that the level o f c a p a c ity u tiliz a tio n in m a n u fa c tu r in g is low . S h o u ld the e c o n o m y fail to e x p a n d at the fo u rth q u arte r 1971 rate (clo se to a FE D ER A L R ES ER V E BAN K O F A TLA N TA Bank Announcements F E B R U A R Y 1, 1972 NORTHSIDE C O M M U N IT Y BANK St. Petersburg, Florida Opened for business as a nonmember. Officers: Richard C. Johnson, chairman; George Ruppel, president; Robert F. Guthrie, vice president and cashier. Capital, $400,000; surplus and other capital funds, $350,000. F E B R U A R Y 25, 1972 UNITED N A T IO N A L BANK OF WESTLAND Hialeah, Florida Opened for business. Officers: George E. Stock, chairman; Frank Smathers, Jr., vice chairman; Peter J. Hardiman, president; A. R. Roy, Jr., senior vice president; June Daryman, Edward C. Duncan, Jr., W illiam D. Duncan, Ralph J. Fairbairn, Edgar H. Nugent, Jr., Robert L. Schumann, vice presidents; Hans B. Berggren, James D. Grady, Arthur Lewis, assistant vice presidents; Jose E. Alonso, cashier; Davy L. Garrett, Jr., assistant cashier; and Kenneth F. Everly, auditor. Capital, $600,000; surplus and other capital funds, $400,000. 41 C o a l: R o a r in g A g a in ! by Brian Dittenhafer "The reports of my death are greatly exaggerated." Thus did Mark Twain lay to rest the rumors of his reported demise in Europe. Reports of the death of the coal industry in the United States are equally false. After a 20-year hiatus, during which it lost major markets in transportation and home heating, coal production has rebounded strongly in response to increased demands for coal to fuel electric generators. Coal is the largest single source of energy used in generating electricity, and the use of electricity has doubled during the past ten years. There was much talk in the past of the importance nuclear power would assume in providing for electricity production. Although new and exciting, nuclear power for the generation of electricity has not lived up to its expectations. Problems of ecology, thermal pollution, and rapidly increasing costs have prevented the electricity industry from installing the amount of nuclear capacity it had anticipated. The U. S. Bureau of Mines estimates that electricity generation will increase by 400 to 500 percent by the year 2000, with the largest source of energy continuing to be coal. Seen A n y C o a l Lately? Coal is used to produce half of all the electricity we use in this country, so even if you have not seen any coal lately, it provides energy that is important to your everyday life. A glance at the map shows that where you live makes a great deal of difference in determining how much coal you "use" when you consume electricity. In the Southeast1, for example, the proportion of electrical energy produced by coal varies from zero in Louisiana to 81 percent in Alabama. Transportation costs for coal are high relative to its value at the mine; therefore, the cost of using coal increases rapidly as distance from the mine increases. Thus, coal provides a larger portion of the electricity for states containing coal fields and a lesser portion for those states that do not. Even if you live in an area where coal is not used to generate electricity, coal is important to you as a raw material and fuel to make the many manufactured products we all tend to take for granted. These products have not always been at our disposal, and coal has been instrumental in making them a part of our lives. 'The terms Southeast and Sixth District are used interchangeably in this article and refer to the states of Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee. M O N T H L Y R E V IE W Coal is used close to the mine because of high transportation costs C O A L ’S C H A N G IN G M A R K E T S Percent 1100 % of total e le c tric a l energy su p p lied by co al in 1969 M in in g a n d M a n u f a c t u r in g 50 Home Heating T ra n sp . U se s E le ctric Power Generation '45 Since the early days of the industrial revolution, when steam power began to replace muscle power, industrial growth has depended upon an abundant coal supply. Nowhere was this truer than in the United States. As industry developed and railroads spread throughout the country, the need for coal to power industry and provide fuel for transportation became enormous. Added to these demands was the desire for a cheap, efficient source of heat for homes. To meet these requirements, the production of coal in the United States expanded from 100 million tons in 1880 to 573 million tons in 1926. The Depression caused output to drop to a low of 310 million tons in 1932. Production continued at this level until the demands of World War II led to a major increase in output. By 1947, the production of coal reached a record high of 630 million tons. From this peak, production trended downward, hitting its most recent low in 1961—when only 403 million tons of bituminous coal were mined. Between 1961 and 1970, coal production increased by nearly 50 percent, to a level only slightly below its all-time high. The reasons for this steep decline and sudden resurgence can be found in the chang ing markets for coal. C h a n g in g M arkets In 1945, the two largest markets for coal were sales to the transportation industry—where coalburning locomotives were hauling most of the nation's freight—and retail sales—where coal was heating most of the nation's homes. Together, these markets accounted for 45 percent of the coal sold in this country. Yet, by 1970, these same FE D ER A L R ESER V E BANK O F ATLA N TA ’50 ’55 ’60 ’65 ’70 markets consumed only 2 percent of a slightly smaller volume of domestic production. At present, the electric utility industry, which quadrupled its purchases of coal between 1945 and 1970, is the largest market for coal. But the change in the markets for coal was not a smooth one. Between 1945 and 1961, total consumption of coal in transportation and home heating declined by 219 million tons. Electric utility usage of coal increased by only 108 million tons, however, leaving a net decline in demand during the 16-year period of 111 million tons, or 17.6 percent. Since 1961, demand from electric utilities has increased enough to more than offset other losses. In fact, this sector increased so strongly it outran all the estimates and forecasts on coal consumption, resulting in a critical shortage of coal in 1970. The coal industry has a history of over-capacity, and production has always been able to meet the demands of the economy, except when interrupted by strikes or some other unforeseen event. During the 1960's, coal prices were low and, although the growth market was the sale of coal to electric utilities, that market was expected to be taken over by nuclear power. Coal did not seem to have much of a future, and certainly did not seem to be the industry in which to invest large amounts of capital. For various reasons, nuclear power plants were not completed on schedule, and the power companies found themselves unable to supply the increasing demands for electricity except through the use of coal-powered generators. This demand quickly absorbed the excess capacity of the coal industry, but the needs of the utilities still could not be met. The result was a coal shortage in 1970, which caused coal users to dig deeply into their reserves of coal, drawing them down to uncomfortably low levels. Since then, the market price of coal has soared; production has expanded; and stocks have returned to more normal levels. 43 Soaring prices reflect increases in demand and costs 1967= 100 _ S p o t m a r k e t p r ic e in d e x -2 0 0 A n n . avg. ’4 5 '5 0 '5 5 '6 0 '6 5 ’7 0 The second-largest market for coal is the coke industry, accounting for 17 percent of total con sumption in 1970. Coke is a product of coal produced by heating certain grades of coal in sealed ovens. In the sealed oven, gases are given off that can later be used to make other products. What remains is a dull, gray, porous mass called coke, consisting largely of fixed carbon—which is vital to the production of steel from iron ore. Not all coal can be used for coking, so coal that can be coked, called metallurgical coal, has a higher value per ton than other types. The volume of coal used in this market depends upon the amount of steel produced, and domestic steel production has not been strong in recent years. In addition, increased efficiency in both the coke industry and the steel industry has caused a steady decline in the amount of coal needed to produce a ton of steel. These effects combine to forestall significant expansion of this market in the United States. However, exports of metal lurgical coal have become increasingly important, since foreign steel production has expanded. In addition to providing energy, coal is vital to the process of producing steel from iron ore, and, therefore, is vital to the Sixth District's primary metals industry. Indeed, coal is so important to the steel industry that the District's largest mine is owned by a steel corporation. It produces nearly 10 percent of the coal mined in the Southeast. The existence of a primary metals industry in Alabama is dependent upon the coincident occurrence of metallurgical coal and 44 iron ore. Therefore, besides the 7,000 workers employed directly in the coal industry in the Sixth District, coal makes a contribution to the employ ment of 45,000 other District workers who hold jobs in primary metals. Coal is mined in only two Sixth District states: Alabama and Tennessee. Alabama produced 20.5 million tons of coal valued at $166 million in 1970, whereas Tennessee produced 8.2 million tons worth $40.4 million. These two states, which rank eighth and ninth in national production, accounted for more than 4 percent of the coal mined in the United States in 1970. Much of the coal mined in Alabama is of the special quality used in making coke, and it has a high value per ton. The average value of coal at the mine in the United States in 1970 was $6.26 per ton, but in Alabama the value was $8.09. Most of Tennessee's coal is burned to generate electricity and had a value of only $4.90 per ton in the same year. The local impact of the industry is, of course, much greater than its impact on the entire District or even on a single state. In Alabama, two-thirds of the coal is mined in Walker and Jefferson Counties, and about the same proportion of the 5,000 people employed in coal mining in the state are concentrated in these two counties. Much the same situation prevails in Tennessee. In that state, over 50 percent of the coal is mined in Anderson, Campbell, and Claiborne Counties, and slightly less than half of Tennessee's 2,000 coal industry workers are concentrated in that three-county area. Coal mining is a relatively highly paid occupation and, therefore, contributes more income to an area than is indicated by employment figures. For example, in August 1971, just before the wage freeze, average hourly earnings in the coal industry were $4.76, while those in all manufacturing were $3.56 per hour. C h a n g in g P r o d u c tio n Despite the high pay, the image of coal as a dying industry comes complete with pictures of poor mining families and breadwinners unemployed for long periods of time. Mining employment de clines have indeed been sharp, but since 1967 employment has been relatively stable. Although production increased substantially, fewer men are employed today than in 1961. A glance at the next chart shows the tremendous effect of increased productivity that has taken place during the past ten years. The reasons for the growth in productivity are not hard to find, since new machines have been developed for the industry, giving each miner more and better equipment with which to work. Perhaps the increased use of the strip mining method—an extremely low cost way to mine coal— has had an even more powerful effect on the growth in productivity. M O N T H L Y R EV IEW P r o d u c t io n r e v iv e s . . . M illio n s o f to n s I I I I I I I I I I I I I I I I I I I II I I I I with fewer workers . . . Avg no of daily w o rk e rs each producing more coal per day ( th o u s .) Tons per m a n -d a y ’4 5 ’5 0 '5 5 ’6 0 ’6 5 ’7 0 Coal is mined by two principal methods: under ground mining and strip mining. Underground mining essentially involves digging a tunnel or sinking a shaft into the ground and ripping the coal from the earth. This is the method most of us picture when we think of coal mining operations, and it is the method that accounted for just over half of total U. S. coal output in 1970. Mining coal in this manner is dangerous, but the new Mine Health and Safety Act of 1969 was designed to put strict regulation on underground mines, with the aim of improving the safety record of the F E D ER A L R ESER V E BANK O F ATLA N TA industry. There have been many improvements in the machines used in underground mining, but it is still the highest cost method of mining coal. According to mine operators, the new safety act is making underground mining even more expensive and causing the closing of many small mines in which new equipment cannot be economically installed. About 40 percent of the coal produced in the U. S. is strip mined, and the proportion of coal mined by this method is steadily increasing. Within the Sixth District, more than half the coal is mined by this method, which involves removing or stripping the earth and rock that lie over the coal, exposing the coal seam. This is accomplished by using the largest machines ever to move on land, "walking" draglines and power shovels. After the seam is exposed and the coal blasted loose, it is loaded onto trucks or rail cars for transporta tion and further processing. This method of mining has several advantages. First, it is the cheapest method of mining coal because more tons per man-day can be mined than in underground mining. Second, coal seams which are too thin to be mined by the underground method can be successfully strip mined, thereby increasing the amount of recoverable reserves of coal. The obvious disadvantage is the destruction of the countryside that occurs in the process. Industry and government are now working to ensure the recla mation of mined areas and to minimize the damage to nature. C h a n g in g Stru cture Historically, coal has been an industry of many small operators, each having the ability to expand his operations without much notice or fanfare. Nationally, and in the Sixth District, this pattern is changing. Increased requirements for very expensive capital equipment and the requirements of the new Mine Safety Act have combined to accelerate a trend toward consolidation in the industry. With the economies offered by largescale operations, further consolidation and con centration is more, rather than less, likely. In addition to concentration, the capital needs of the industry have caused the acquisition of several large producers by noncoal interests. For example, between 1965 and 1969, companies with oil as their primary product acquired ownership of more than 17 percent of the productive capacity of the coal industry. One reason why oil companies are interested in coal production is because of the possibility that petroleum products, such as gasoline, fuel oil, and pipeline natural gas, will one day be produced from coal. Research into this type of conversion has been going on for at least 20 years without noticeable commercial success. With shortages 45 predicted in natural gas and petroleum supplies, however, some coal operators see conversion of coal to petroleum products opening a huge future market for coal, with that future not many years away. The U. S. export market rem ains erratic % of total production M a r k e t in g A rr a n g e m e n ts There are several methods of marketing coal and the importance of each is changing as the industry changes. The mine operator may sell his coal directly in the open or "spot" market or, more likely, to a broker. The broker typically buys coal from many small mines in order to fulfill a larger contract or contracts. This method of marketing is used primarily by small operators and is gradually dying out as the number of small operators declines. Coal is also sold under long-term contract, with a provision for the coal to be sold on a cost-plus-profit basis. This type of contract is usually entered into by a large electric company or steel company that has known and anticipated needs for large amounts of coal. The arrangement provides some security of operation for both mine operator and coal user, since a known quantity of coal will be delivered and sold. Thirdly, coal is sold to a parent company by what is known as a captive mine. The coal from such a mine is not sold on the market at all but moves from the mine to its end-use without change of ownership. This method of "marketing" coal is used primarily by utility and steel companies that have large anticipated needs for coal and can therefore justify the expense of running their own mine. F in a n c in g Capital equipment costs are extremely high, with the capital needed to get into even the very smallest strip mining operation ranging upward from $250,000. For example, the large "walking" dragline, only a part of the equipment needed to operate a large strip mine, characteristically costs several million dollars. District banks provide working capital for mine operators, much as they would for any other business, and they may participate in and help to arrange loans with other institutions to finance capital equipment. However, most of the financing of equipment is usually made through equipment dealers themselves, tapping national rather than local capital markets. C o a l Exports The United States is the largest coal-exporting nation in the world. It will probably remain so in the foreseeable future, since more than twofifths of the world's known reserves are located in this country. In 1970, the export market absorbed 70 million tons of coal, about 12 percent of U. S. 46 i i i i i i i i i i i i i i i i i i i i i i i i i i o ’4 5 ’5 0 ’5 5 ’6 0 ’6 5 ’7 0 production. Exports, however, have proved to be very volatile. In the postwar era, their volume has varied, largely according to the vagaries of international oil supply. In the late Sixties, a more constant demand for U. S. coal was recognized when Western Europe and Japan began buying metallurgical quality coal in large quantities. About two-thirds of the coal exported from the United States is used by the importing countries to produce coke. In the future, therefore, it is likely that the trend in exports of coal will depend more upon production of and demand for steel than upon international oil supplies. Canada lost her historical position as the largest foreign market for U. S. coal in 1969, when Japan imported more than 21 million tons of coal from the United States, 5 million tons more than Canada. Exports in 1970 reached their highest level since the Suez Crisis in 1956-57, but fell off in 1971, as recessionary business conditions in Europe and Japan lessened demands for metallurgical coal. U. S. exports of coal to countries outside North America were 25 percent below 1970 levels, while shipments to Canada and Mexico were only slightly below their year-ago level. In the Sixth District, exports have expanded even more rapidly than in the nation. In 1970, about 687 thousand tons of coal were shipped through the Port of Mobile, using the Alabama State Dock facilities. In the twelve-month period ending October 31,1971, the Alabama State Docks handled more than one million tons of coal through their facilities, an increase of 63 percent in only one year. It is estimated that 95 percent of this coal came to the Port of Mobile by barge from the Birmingham area. In the Port itself, there are handling facilities to transfer the coal directly from barge to the overseas vessel. Plans are under way to export 1.25 million tons of Alabama coal per year through the Port of Pascagoula, Mississippi. This facility is scheduled for opening in 1974. Plans also call for the Port of Mobile to spend $15 million on coal handling M O N T H L Y R EV IEW facilities to acquire the capability of shipping 4,000 tons per hour by 1976. This would allow the Port of Mobile to handle 5 million tons of coal in 1976. These plans for expansion in port facilities are only necessary because of expected expansion of foreign demand. At least one Alabama company has a long-term contract to sell large amounts of coal overseas, and similar contracts have been talked about with other companies. The market for high-value, metallurgical coal—which makes up most of Alabama's export production—is not as strong as in 1971 because of cutbacks in steel production in coal-importing countries. These cutbacks will probably be temporary, however, and the long-term outlook is for continued expan sion in exports. C o a l's Future The standard of living to which we have all grown accustomed in the United States demands tremendous inputs of energy: energy to power our cars, to heat our homes, to wash our dishes, and to do the multitude of other chores that we have come to expect machines to perform for us. The United States doubled its consumption of energy between 1960 and 1970 and reliable authorities predict that we will use half again as much in 1980. In the face of this tremendous demand for energy, how is the United States fixed for energy reserves? To answer that question, we need to look at our present energy sources. In 1969, fuels provided 95 percent of all the energy used in this country, including energy used to power automobiles. Coal provided 20 percent; oil, 43 percent; and natural gas, 32 percent of the total amount of energy used. Electricity generated by water power provided another 4 percent of the total, and nuclear power accounted for the rest—about 0.2 percent in 1969. This pattern of energy usage is likely to change in the future. Athough providing only one-fifth of the total energy used, coal makes up four-fifths of the total energy reserves of the United States. If all of our anticipated energy requirements between 1970 and the year 2000 were supplied by oil, it would require 590 billion barrels of crude oil. That's about 17 percent more oil than we ever have reason to expect to find in the United States. If all that energy were supplied by coal, it would require the equivalent of 170 billion tons of bituminous coal, which is slightly less than 11 percent of the coal reserves already explored and mapped. No fuel except coal can currently claim to have enough known reserves to supply our anticipated energy needs until the year 2000. This includes uranium, which at present levels of technology has less than one percent of the proved recoverable energy resources in the United States. FE D ER A L R ES ER V E BANK O F ATLA N TA If we continue to use coal at 1970 levels of usage, we have known recoverable reserves of coal for the next 1,000 years. In mid-1970, the U. S. Bureau of Mines estimated that by the year 2000 the United States will annually consume at least twice, and perhaps four times, as much coal as was used in 1970. Exactly how much we will use will depend pri marily upon how much coal is converted into petroleum and natural gas. The median estimate is that we will need 1,975 million tons of coal in 2000, or three times as much as we mined in 1970. It would seem, then, that the future of coal is assured—but is it? As was mentioned above, a large part of the coal produced in the United States is mined by strip methods. Strip mining leaves ugly scars on the countryside if the mines are not properly reclaimed. If society wishes to have its wilderness areas restored to something approach ing their natural beauty, it will be required to pay for this in the form of higher prices for coal. Many states now require strip mine operators to post bond, certifying that they will reclaim the land after it has been mined. Close to home, the Tennessee Valley Authority, which buys more than half the coal produced in Tennessee, is making changes in its coal purchase procedures in an attempt to require that strip miners reclaim the land they have mined. A second major problem that must be solved is that of sulphur dioxide pollution. It is now possible to remove most of the soot and fly ash from the emissions of coal burning plants, but the removal of sulphur dioxide has proved to be difficult. One method of sulphur abatement is to burn only fuel low in sulphur content, thus reducing the amount of sulphur available to react with oxygen and, thus, form sulphur dioxide. Some cities now require that fuels burned in their jurisdiction be low in sulphur. This requirement has resulted in some low sulphur Alabama coal being transported to new markets in the Midwest. But there is not enough low sulphur coal to meet our energy needs, so the solution lies in finding a method of removing the sulphur after the coal is burned. According to utility industry sources, there is still some question about the effectiveness of the sulphur abatement equipment offered on the commercial market. Coal's future is one of high potential, but it also holds some unsolved problems. Coal has huge amounts of energy reserves that will be called upon to supply the United States with energy in the future. However, it must find ways to erase its image as a despoiler of the land and, in coopera tion with government and other industries, must find ways to solve the air pollution problem. We can have both a high energy-using country and a clean environment; the problem lies in finding the technology. ■ 47 BANKING STATISTICS B illio n — 30 $ _ DEPOSITS 12 Net Demand Total Deposits' 11 -2 7 /V 8.5 — 16 Loans (net)' 7.5 —15 5.4 Investments** Savings' 5.0 4.6 J iii i i I ii i ii i iii i iI i ti ii i t D J J D J J 1970 1971 1972 J i i i i i I i i • i i i i t *i i I i i i i i i i D J J D J J 1970 1971 1972 LATEST MONTH PLOTTED: JANUARY Note: All figures are seasonally adjusted and cover.all Sixth District member banks. ‘Daily average figures **Figures are for the last Wednesday of each month. S IX T H D IS T R IC T B A N K IN G NOTES BUSINESS LOANS C u m u la tiv e c h g . M illio n $ fro m % e n d o f p re v . y r. c h g ., y r . e n d ’7 1 f r o m y r . e n d ’7 0 - 20 A ll m e m b e r b a n k s 10 A la . F la . G a. L a .* M is s .* T e n n .* ■ ^ D istrict p o r t io n 48 M O N T H L Y R EV IEW BUSINESS LENDING A T DISTRICT BANKS: STRENGTHENING T he lo n g -a w a it e d str e n g th e n in g o f b u sin e ss lo an d e m a n d at large c o m m e r c ia l b a n k s in the Sixth Federal R ese rve D istric t a p p e a rs to h a ve b e gu n . S iz a b le g a in s in b u sin e ss lo a n s w e re re c o rd e d in D e c e m b e r , eve n after a llo w in g fo r the str o n g in crease that is n o rm a l at that tim e o f the year. G r o w th c o n tin u e d t h r o u g h o u t Jan u ary a n d the first h a lf o f February o f this year, p e r io d s that are n o r m a lly a sso c ia te d w ith se a so n a l d e c lin e s in b u s i n ess loans. T h is stren gth is n o t yet o v e rw h e lm in g , h o w e v e r, a n d m a y b e p artly a ttrib u tab le to sp ecial factors. T h e rejuve nate d g ro w th in b u sin e ss le n d in g d id n o t take p la c e at all la rge c o m m e r c ia l ba n ks, n o r d id all c a te go rie s o f b u sin e ss lo a n s stren gthe n . F igure s fro m 23 large b a n k s that rep ort the ir lo a n s by b o rr o w e r's typ e o f b u sin e ss s h o w e d that in cre ase d b o r r o w in g b y m a jo r d u r a b le g o o d s m a n u factu rers a n d b y firm s in v o lv e d in textile, app are l, o r leath er p ro d u c t io n a c c o u n te d fo r the m ajority o f the d o lla r b u sin e ss le n d in g g r o w th at these banks. T h is tu rn a ro u n d is a w e lc o m e d sw itc h fro m the w e a k n e ss in b u sin e ss lo a n s d u r in g 1970 a n d 1971. Even t h o u g h b u sin e ss le n d in g at 32 la rge b a n k s in 1971 w a s u p 5 p e rce n t o v e r the 1970 level— a year w ith v irtu a lly n o g r o w th — the ga in w a s o n ly h a lf as gre at as the a d v a n c e s m a d e in 1968 o r 1969. B u sin e ss le n d in g in 1971, a y e a r o f e c o n o m ic re c overy, d id n o t f o llo w the u su al p o st-re c e ssio n g ro w th pattern. In the three recovery p e r io d s f o l lo w in g the e c o n o m ic d o w n tu r n s o f 1957-58, 196061, a n d 1966-67, b u sin e ss le n d in g w a s d e c id e d ly stro n g e r d u r in g the se c o n d six m o n th s o f recovery than d u r in g the first six m o n th s. Just the reverse h a p p e n e d d u r in g the 1971 recovery p e rio d . G r o w th in the first h a lf (up 3 percent) w a s stro n g e r than that o f the se c o n d h a lf (up 2 percent). B U S IN E S S LO AN S Change From P revious Y ear 23 Large B an ks Durable goods mfg. N ondurable goods mfg. M ining W holesale and R etail Trade Transp ., Com m ., & P. U. Construction Se rv ice s 1971 (M illion 1970 - 4 -4 2 + 1 -1 0 + 17 -1 4 + 23 + 6 +20 - 8 + 9 -1 9 -2 8 + 6 $) 1969 +31 +58 +14 + 29 + 43 + 19 +86 str o n g stim u la tio n to e x p a n d p ro d u c tio n a n d re b u ild o r e x p a n d in v e n to rie s that it has received d u r in g o th e r recovery p e riod s. M o re o v e r , m a n y c o r p o r a tio n s e x p e rie n c in g in cre a se d sale s w e re a b le to satisfy their n e e d s fo r w o r k in g cap ital th r o u g h in tern ally ge n e rate d fu n ds. T hus, o n ly lig h t d e m a n d s fo r w o r k in g cap ital d e v e lo p e d . S lu g g is h s p e n d in g fo r n e w a n d e x p a n d e d m a n u fa c tu rin g facilitie s in the D istric t su p p re s se d still fu rth er the rise in the d e m a n d fo r fu n d s fro m ban ks. A n n o u n c e m e n t s o f su c h in v e stm e n ts in 1971 w e re w e ll b e lo w 1970 levels. C o n tin u e d h ea vy use b y c o r p o r a tio n s o f lo n g term n o n b a n k fin a n c in g — sale s o f sto c k s a n d b o n d s — a lso c o n trib u te d to the w e a k n e ss in b u s i n ess lo an d e m a n d . S o m e c o r p o r a tio n s u se d p o r tio n s o f fu n d s received fro m the sale o f lo n g -te rm d e b t to repay the ir sh o rt-te rm b a n k b u sin e ss loans. Faced w ith w e a k lo an d e m a n d a n d p le n tifu l fu n d s, b a n k e rs in this D istrict, as in o th e r regio n s, re d u c e d the ir p rim e rate fro m a h ig h o f 8V2 p e r cent in 1970 to less than 5 p e rce n t b y ea rly 1972. A t the sa m e tim e, n o n p r im e c u sto m e rs a lso received re d u c tio n s in their lo an charges. T h e m ild n e ss o f the e c o n o m ic recovery w a s an T h is recent ren ew al o f b u sin e ss lo a n g ro w th s h o u ld c o n tin u e a n d stre n gth e n if b u sin e s sm e n d e c id e to re b u ild in v e n to rie s that h a ve be en re d u c e d by the in cre a se d g r o w th in sales a n d o rd e rs d u r in g the last c o u p le o f m o n th s. A n im p ro v e d p ro fit p o sitio n a n d the tax c re d it o n n e w in v e stm e n ts are ex p e cte d to h e lp sp e e d u p p la n t a n d e q u ip m e n t sp e n d in g , and , if that m ate rialize s, s h o u ld a lso h e lp increase d e m a n d s fo r b a n k credit. B u t if b u s i n e ssm e n c o n tin u e to f o llo w co n se rv a tiv e in v e n tory p o lic ie s a n d rely h e a v ily o n n o n b a n k a n d in ternal fin a n c in g , d e m a n d s fo r b a n k c re d it are u n likely to rise sp e c ta c u la rly in the n ear future. u n d e r ly in g fac to r b e h in d last y e a r's s lo w b u sin e ss lo an d e m a n d . B u sin e ss d id n o t receive the sa m e JOSEPH E. ROSSMAN, JR. W h ile b u sin e ss b o r r o w in g activity (as m e a su re d a g a in st g a in s d u r in g p re v io u s n o n re c e ssio n a ry years) w a s g e n e ra lly w e a k in 1971, the greatest im p a c t o f the s lu m p w a s o n le n d in g to n o n d u ra b le g o o d s m a n u fa c tu r in g firm s a n d c o n stru c tio n firm s. A t the 23 large ba n ks, lo a n s to n o n d u ra b le g o o d s m a n u fa c tu rin g firm s d e c lin e d $42 m illio n , c o n tra stin g sh a rp ly w ith the $ 2 0 -m illio n increase in 1970. Lo an s to c o n stru c tio n firm s d e c lin e d $14 m illio n further in 1971, after fa llin g $28 m illio n in 1970. FE D E R A L R ES E R V E BANK O F A TLA N TA 49 S ix th D i s t r i c t S t a ti s ti c s S easonally Adjusted (All d a t a L a t e s t M o n th S IX T H are indexes, O ne M o n th A go Two M o n th s A go M a n u f a c t u r i n g P a y r o l l s ........................ F a r m C a s h R e c e i p t s .................................. C r o p s .................................................................. ........................................................... L iv e s to c k I n s t a l m e n t C r e d i t a t B a n k s * ( M il. $ ) N e w L o a n s .................................................... R e p a y m e n ts ................................................ Jan. D ec. D ec. D ec. 142 126 142 132 140 123 141 126 137 116 105 116 132 106 D ec. D ec. 414 342 442 364 411 347 341 338 112 14 1 L a t e s t M o n th 114 107 108 106 105 104 108 115 106 105 104 109 105 N o n f a r m E m p l o y m e n t .................................... M a n u fa c tu rin g ................................................ N o n d u r a b l e G o o d s .................................. Food ............................................................ T e x t i l e s ...................................................... A p p arel ...................................................... Paper .......................................................... P rin tin g a n d P u b lis h in g . . C h e m i c a l s ................................................ D u r a b l e G o o d s .......................................... L b r ., W o o d P r o d s . . F u r n . & F ix . S t o n e , C la y , a n d G la s s . . . . P r i m a r y M e t a l s .................................. F a b r ic a te d M e ta ls . . . . M a c h i n e r y ................................................ T ra n s p o r ta tio n E q u ip m e n t . . N o n m a n u fa c tu r in g .................................... C o n s t r u c t i o n .......................................... T r a n s p o r ta tio n .................................... T r a d e ............................................................ F in ., in s ., a n d r e a l e s t . . . . S e r v i c e s .................................................... F e d e r a l G o v e r n m e n t ....................... S ta te a n d L o cal G o v e rn m e n t. . F a rm E m p l o y m e n t .......................................... U n e m p lo y m e n t R a te ( P e r c e n t o f W o r k F o r c e ) ...................... In s u re d U n e m p lo y m e n t ( P e r c e n t o f C o v . E m p . ) ........................ A v g . W e e k l y H r s . in M f g . ( H r s .) . . . C o n s t r u c t i o n C o n t r a c t s * .............................. R e s i d e n t i a l .......................................................... A ll O t h e r ............................................................ E le c tr ic P o w e r P ro d u c tio n * * . . . . C o t t o n C o n s u m p t i o n * * .................................. P e t r o l . P r o d , in C o a s t a l L a . a n d M is s .* * M a n u f a c t u r i n g P r o d u c t i o n ........................ N o n d u r a b l e G o o d s .................................... Food .................................................................. T e x t i l e s ............................................................ A p p arel ............................................................ Paper ................................................................ P r in tin g a n d P u b lis h in g . . . . C h e m i c a l s .................................................... D u r a b l e G o o d s ................................................ L u m b e r a n d W o o d .................................. F u r n i t u r e a n d F i x t u r e s ...................... S t o n e , C la y , a n d G la s s . . . . P r i m a r y M e t a l s ........................................ F a b r i c a t e d M e t a l s .................................. N o n e le c tric a l M a c h in e r y . . . . E le c tr ic a l M a c h i n e r y ........................ T r a n s p o r ta tio n E q u ip m e n t . . . F I N A N C E A N D B A N K IN G L oans* A ll M e m b e r B a n k s .................................... L arg e B a n k s ...................................................... D e p o s its * A ll M e m b e r B a n k s .................................... L arg e B a n k s ...................................................... B a n k D e b i t s * / * * ................................................ M e m b e r B a n k L o a n s .................................... J a n . M e m b e r B a n k D e p o s i t s .............................. J a n . B a n k D e b i t s * * ......................................................J a n . 5 .2 4 1 .0 111 102 162 116 119 115 116 120 102 116 124 112 106 108 103 104 105 107 114 106 104 101 106 103 112 162 103 115 110 112 120 101 122 114 118 113 106 107 102 104 104 108 115 106 104 101 106 103 113 162 101 110 115 113 114 120 102 122 118 112 106 108 105 104 103 110 115 106 105 101 107 106 112 160 104 114 114 113 113 118 116 102 119 M a n u fa c tu rin g P a y r o l l s .............................. J a n . F a rm C ash R e c e i p t s .................................... D e c . N o n fa rm E m p l o y m e n t ...................................J a n . M a n u f a c t u r i n g ................................................ J a n . N o n m a n u fa c tu r in g .................................... J a n . C o n s tru c tio n ...............................................J a n . F a r m E m p l o y m e n t ...............................................J a n . U n e m p lo y m e n t R a te ( P e r c e n t o f W o rk F o r c e ) . . . . Jan . A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . Jan. F IN A N C E AND 166 151 169 163 147 158 162 149 159 141 131 131 145 151 138 135 136 177 140 117 122 109 125 133 98 122 107 124 127 108 124 129 119 109 121 132 97 3 .9 4 1 .2 3 .5 4 0 .8 188 175 194 182 172 196 177 170 197 160 151 157 140 136 141 114 138 108 127 117 112 112 112 103 116 103 116 103 116 3 .9 4 1 .0 G E O R G IA IN C O M E M a n u fa c tu rin g P a y r o l l s .............................. J a n . F a rm C ash R e c e i p t s .................................... D e c . EM PLO Y M EN T 2 .5 4 1 .2 172 209 137 169 91 119 258 2.6 4 1 .0 195 236 155 168 86 120 222 200 229 171 168 86 121 220 3 .0 4 0 .7 127 127 126 164 90 132 245 222 258 177 257 267 204 161 282 300 189 181 174 198 251 384 635 392 176 257 269 205 161 267 302 193 181 174 195 250 401 635 398 175 255 266 159 257 304 191 179 175 199 249 405 638 400 169 236 265 199 165 266 286 168 182 172 209 246 353 627 346 Jan . Jan . 171 157 166 151 163 148 146 133 Jan. Jan. Jan. 156 141 174 153 135 174 152 134 174 135 124 145 258 202 210 Jan . D ec. 143 135 139 129 137 102 132 107 106 108 116 106 106 106 104 106 106 106 104 107 108 106 121 EM PLO Y M EN T N o n fa rm E m p l o y m e n t ...................................J a n . M a n u f a c t u r i n g ................................................ J a n . N o n m a n u fa c tu r in g .................................... J a n . C o n s t r u c t i o n .............................................. J a n . F a r m E m p l o y m e n t .............................................. J a n . U n e m p lo y m e n t R a te ( P e r c e n t o f W o rk F o r c e ) . . . . Jan. A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . Jan. F IN A N C E AND 113 104 118 115 93 101 111 110 110 87 3 .7 4 1 .2 4 .0 4 0 .4 B A N K IN G M e m b e r B a n k L o a n s ....................................J a n . M e m b e r B a n k D e p o s i t s .............................. J a n . B a n k D e b i t s * * ......................................................J a n . 164 141 182 156 137 182 152 136 181 138 123 153 134 109 128 126 120 129 127 99 L O U I S IA N A IN C O M E M a n u f a c t u r i n g P a y r o l l s ..............................J a n . F a rm C a s h R e c e i p t s ■ ....................................D e c . EM PLO Y M EN T N o n fa rm E m p l o y m e n t ...................................J a n . M a n u f a c t u r i n g ................................................ J a n . N o n m a n u fa c tu r in g .................................... J a n . C o n s tru c tio n .............................................. J a n . F a r m E m p l o y m e n t .............................................. J a n . U n e m p lo y m e n t R a te ( P e r c e n t o f W o rk F o r c e ) . . . . Jan . A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . J a n . F IN A N C E A N D 107 103 108 95 85 106 102 107 93 85 6.8 6 .0 4 2 .9 4 2 .3 6 .5 4 2 .4 B A N K IN G M e m b e r B a n k L o a n s * .................................... J a n . M em ber B ank D e p o s its * . . . . Jan. B a n k D e b i t s * / * * ................................................ J a n . M a n u f a c t u r i n g P a y r o l l s ..............................J a n . F a rm C a s h R e c e i p t s .................................... D e c . 152 147 141 149 144 150 147 144 146 133 126 131 152 135 111 149 148 95 135 103 111 110 101 111 112 110 102 110 110 111 EM PLO Y M EN T 50 121 B A N K IN G M e m b e r B a n k L o a n s .................................... J a n . M e m b e r B a n k D e p o s i t s .............................. J a n . B a n k D e b i t s * * ......................................................J a n . M IS S IS S IP P I 4 .9 4 0 .6 EM PLO Y M EN T IN C O M E . . O ne Y ear A go F L O R ID A IN C O M E . Two M o n th s A go F I N A N C E A N D B A N K IN G A LABAM A M a n u fa c tu rin g P a y r o lls F a rm C a sh R e c e ip ts . . O ne M o n th A go IN C O M E P R O D U C T IO N N o n fa rm E m p lo y m e n t M a n u fa c tu rin g . . N o n m a n u fa c tu r in g C o n s tru c tio n . . F a rm E m p lo y m e n t . o th e rw is e .) U n e m p lo y m e n t R a te ( P e r c e n t o f W o r k F o r c e ) ........................ J a n . A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . Jan . S P E N D IN G EM PLO Y M EN T AND indicated O ne Y ear A go D IS T R I C T IN C O M E A N D unless N o n fa rm E m p l o y m e n t ...................................J a n . M a n u fa c tu rin g ................................................ J a n . N o n m a n u fa c tu r in g .................................... J a n . C o n s tru c tio n ...............................................J a n . F a rm E m p l o y m e n t .......................................... J a n . 112 114 I ll 110 98 113 116 98 M O N TH LY R EV IEW L a t e s t M o n th O ne M o n th A go Two M o n th s A go O ne Y ear AND Two M o n th s A go O ne Y ear A go 112 112 112 108 115 118 107 115 115 108 115 123 EM PLO Y M EN T U n e m p lo y m e n t R a te ( P e r c e n t o f W o rk F o r c e ) A v g . W e e k ly H rs . in M fg . ( H r s .) F IN A N C E O ne M o n th A go L a t e s t M o n th N o n fa rm E m p l o y m e n t .................................. J a n . M a n u fa c tu rin g ................................................J a n . N o n m a n u fa c tu r in g ....................................J a n . C o n s t r u c t i o n .............................................. J a n . F a rm E m p l o y m e n t ..........................................J a n . U n e m p lo y m e n t R a te ( P e r c e n t o f W o rk F o r c e ) . . . . Jan. A v g . W e e k l y H r s . in M f g . ( H r s . ) . . . J a n . B A N K IN G M em ber B ank L oans* M em ber B ank D e p o s its * B a n k D e b its * /* * . . . 168 149 158 175 152 166 153 136 139 170 149 167 113 108 116 137 94 3 .8 4 0 .9 4 .5 4 0 .5 TEN NESSEE F IN A N C E AND B A N K IN G IN C O M E M a n u fa c tu rin g P a y ro lls F a rm C a s h R e c e ip ts Jan . D ec. 144 170 142 109 134 139 104 * F o r S i x th D is tr ic t a r e a o n ly ; o t h e r t o t a l s f o r e n t i r e s ix s t a t e s M e m b e r B a n k L o a n s * ....................................J a n . M e m b e r B a n k D e p o s i t s * ..............................J a n . B a n k D e b i t s * / * * ................................................J a n . 102 * * D a i ly a v e r a g e b a s is fP r e lim in a ry d a ta 168 147 154 r -R e v is e d N .A . 163 146 154 N ot 162 145 159 144 130 134 a v a ila b le Note: Indexes for bank debits, construction con tracts, cotton consum ption, em ploym ent, farm cash receipts, loans, deposits, petroleum production, and payrolls: 1967 = 100. S o u rc es: M a n u fa c tu rin g p ro d u c tio n e s tim a te d All other indexes: 1957-59= 100. b y th is B a n k ; n o n fa rm , m fg . a n d s t a t e a g e n c i e s ; c o t t o n c o n s u m p t i o n , U .S . B u r e a u o f C e n s u s ; c o n s t r u c t i o n M in e s ; in d u s t r ia l u s e o f e le c . c a lc u la te d by th is B an k . p o w er. Fed. P o w e r C o m m .; fa rm cash n o n m f g . e m p ., m fg . p a y ro lls a n d c o n tra c ts , F. W. D odge r e c e ip ts and fa rm e m p ., h o u rs, a n d D iv ., M c G r a w - H ill U .S .D .A . O t h e r u n e m p ., In fo rm a tio n in d e x e s based U .S . S y s te m s on d a ta D e p t, o f L a b o r a n d C o .; p e tro l, c o lle c te d by p r o d ., th is c o o p e ra tin g U .S . B ank. B u re au A ll of in d e x e s Debits to Dem and D eposit Accounts Insured Commercial Banks in the Sixth District (In T h o u s a n d s o f D o lla rs ) P e rce n t C hange P e rce n t C hange J a n . 1 9 7 2 fro m J a n . 1 9 7 2 fro m Jan. 1972 D ec. 1971 Jan. 1971 D ec. 1971 S T A N D A R D M E T R O P O L IT A N S T A T IS T IC A L A R E A S 3 B irm in g h a m . . G ad sd en . . . . H u n ts v ille . . . M o b i l e ........................ M o n tg o m e r y . . T u s c a lo o s a . . . . . . . . . . . . . . . F t. L a u d e r d a l e H o lly w o o d . . . . J a c k s o n v ille . . . . M i a m i .................................... O rla n d o .............................. P e n s a c o la ........................ T a l l a h a s s e e ........................ T a m p a - S t . P e te . . . W . P a lm B e a c h . . . 3 ,0 0 9 ,1 1 6 7 9 ,2 8 8 2 5 3 ,1 6 5 8 2 5 ,2 7 0 4 9 3 ,6 3 7 1 5 8 ,0 4 5 2 ,1 2 2 ,6 9 5 7 3 ,3 7 6 2 2 2 143 6 7 5 ,7 6 4 4 0 9 ,3 1 4 1 3 3 ,0 4 0 1 ,5 6 4 ,5 0 6 2 ,7 8 6 ,2 7 8 5 ,4 0 7 ,1 9 2 r 1 ,2 2 4 ,9 2 5 3 9 3 ,6 7 5 5 0 2 ,7 4 2 3 ,1 1 6 ,2 6 9 8 7 6 ,0 0 9 1 ,3 0 0 ,2 4 8 1 ,9 7 0 , 6 7 7 4 ,2 5 9 ,3 9 1 9 1 2 ,9 3 5 3 1 0 ,2 3 4 2 2 7 ,7 6 9 2 ,6 0 7 ,6 3 8 7 7 9 ,5 6 2 A l b a n y .................................... 1 5 6 ,4 6 2 1 6 0 ,2 4 6 A tla n ta .............................. 9 ,5 3 7 ,0 0 8 1 0 ,7 0 4 ,7 8 0 A u g u s ta .............................. 3 8 8 ,3 7 6 4 4 0 ,4 8 4 ........................ 3 5 0 ,8 4 0 3 9 1 ,9 7 2 C o lu m b u s M a c o n .................................... 4 3 0 ,8 6 8 4 4 7 ,5 4 9 Savannah ........................ 4 1 8 , 1 7 0 4 6 3 ,5 5 0 r 1 3 2 ,6 4 2 7 ,9 5 9 , 2 0 0 3 4 8 ,9 0 6 2 9 4 ,4 6 6 3 6 8 ,5 3 5 3 6 0 ,8 2 9 . . . . B a to n R o u g e L a f a y e t t e .............................. L a k e C h a r le s . . . . N ew O rle a n s . . . . 8 1 8 ,6 3 2 1 8 5 ,5 7 9 1 8 2 ,2 1 0 3 ,1 6 3 ,5 2 8 r B i lo x i —G u l f p o r t Jackson . . . 1 ,6 4 9 , 4 2 9 2 ,5 4 9 , 2 7 4 5 ,3 2 3 ,5 3 3 1 ,1 1 8 , 5 6 7 3 6 7 ,6 1 1 5 3 7 ,1 8 5 3 ,0 5 5 ,6 2 7 9 0 4 ,0 0 4 2 ,6 4 7 ,5 9 9 8 6 ,5 1 1 2 8 7 ,9 9 1 8 6 6 ,8 4 1 5 3 6 ,4 2 8 1 5 9 ,5 4 8 1 ,0 1 1 ,8 0 7 2 0 5 ,7 8 9 2 0 9 ,8 0 8 3 ,2 2 2 ,7 3 6 2 0 3 ,3 9 8 1 ,0 0 9 ,0 0 9 9 7 5 ,8 0 1 2 1 2 ,6 9 2 2 0 6 ,5 8 0 3 ,6 8 8 ,7 3 2 1 9 0 ,0 1 3 1 ,0 9 3 ,2 2 6 C h a tta n o o g a . . . . 1 ,0 3 8 ,2 7 2 1 ,1 0 1 , 4 8 5 K n o x v i l l e .............................. 6 8 4 ,1 9 7 7 7 9 ,7 9 8 N a s h v i l l e .............................. 2 ,3 9 0 , 7 1 4 2 ,5 7 5 ,6 2 4 OTHER + 14 - 8 -12 - 5 8 1 +42 + 8 + 14 + 22 + 21 + 19 + 27 +29 + 25 +23 + 19 + 13 6 + 17 + 16 -10 -10 - 4 + 19 + 17 + 16 + 24 +11 +2 + 15 1 6 5 ,1 9 0 8 4 8 ,2 0 8 1 ,0 1 5 ,3 6 0 6 2 6 ,6 3 5 1 ,8 9 3 ,0 3 9 9 5 ,3 9 1 1 2 4 ,6 4 7 6 9 ,2 8 2 8 2 ,2 8 0 9 9 ,4 6 4 5 0 ,0 2 2 B a r t o w .................................... 4 5 ,8 7 4 4 4 ,0 2 5 B r a d e n to n ........................ 1 3 1 ,4 0 3 1 4 2 ,7 8 1 B re v a rd C o u n ty . . .2 3 9 , 6 2 4 2 8 6 ,8 5 7 r D a y to n a B e a c h . . .1 5 0 , 4 9 4 1 3 3 ,6 8 1 F t. M y e r s — N. F t. M y e rs . . . 1 8 5 ,8 3 1 1 9 0 ,0 2 5 4 2 ,2 5 2 1 1 6 ,9 3 6 2 4 2 ,9 4 4 1 1 4 ,1 6 5 1Estimated 8 8 ,9 1 7 1 1 5 ,9 2 9 5 8 ,8 0 6 1 6 7 ,5 6 4 FED ER A L R ESERV E BANK O F A TLAN TA Jan . 1971 D ec. 1971 Jan . 1971 -10 -2 8 +23 + 9 +42 1 6 1 ,3 1 6 2 2 9 ,4 2 3 5 4 ,0 9 4 1 3 9 ,5 6 5 3 0 ,3 0 5 7 3 8 ,7 0 6 2 5 3 ,1 4 5 1 ,4 6 4 ,1 4 7 1 3 9 ,6 3 4 1 7 8 ,3 8 6 2 3 8 ,1 1 2 5 4 ,2 6 1 1 3 9 ,0 8 5 3 3 ,0 7 9 7 3 2 ,3 4 6 2 4 5 ,7 3 9 1 ,6 5 6 ,1 7 4 1 2 8 ,1 0 9 1 2 6 ,0 8 9 1 8 6 ,0 5 4 4 9 ,7 9 1 9 8 ,0 7 9 2 5 ,0 3 7 6 2 5 ,0 2 2 1 9 3 ,1 1 7 1 ,3 5 5 ,6 0 8 1 0 6 ,6 8 9 A th e n s .............................. B r u n s w ic k . . . . D a l t o n .............................. E l b e r t o n ........................ G a in e s v ille . . . . G r i f f i n .............................. L a G r a n g e ........................ N ew nan ........................ R om e .............................. V a l d o s t a ........................ 1 2 6 ,4 0 5 7 9 ,2 0 3 1 5 1 ,9 9 0 1 6 ,2 8 2 9 9 ,8 8 1 5 2 ,6 9 5 3 2 ,0 1 8 3 9 ,3 8 8 1 1 4 ,3 7 6 8 8 ,6 5 8 1 4 6 ,5 4 3 8 6 ,6 2 8 1 6 2 ,0 9 2 1 8 ,7 8 8 1 0 2 ,0 1 7 5 5 ,3 5 1 3 2 ,6 1 6 4 7 ,5 0 5 1 2 3 ,8 3 2 8 5 ,7 2 2 1 4 0 ,9 8 7 6 2 ,3 0 7 1 2 4 ,5 6 3 1 6 ,6 5 2 9 5 ,0 5 8 4 7 ,3 0 2 2 6 ,1 9 5 2 8 ,6 3 1 9 7 ,0 1 7 6 7 ,4 8 8 —15 - 9 - 6 -1 3 - 2 - 5 - 2 -1 7 - 8 + 3 A b b e v i l l e ........................ A le x a n d ria . . . . B u n k i e .............................. H am m ond . . . . N ew Ib e r ia . . . . P la q u e m in e . . . T h ib o d a u x . . . . 1 6 ,9 8 5 1 9 2 ,3 0 7 9 ,0 0 6 5 9 ,8 5 3 5 4 ,1 3 6 1 7 ,7 4 6 4 1 ,3 4 3 1 9 ,2 9 1 1 8 0 ,2 6 2 1 0 ,4 8 7 6 1 ,1 8 0 5 5 ,1 2 3 1 5 ,8 5 9 3 6 ,3 4 6 1 6 ,1 7 5 1 8 4 ,3 9 0 8 ,4 8 7 4 9 ,7 2 8 5 3 ,4 4 8 1 7 ,7 8 3 3 7 ,9 4 8 + 7 -1 4 - 2 - 2 + 12 + 14 H a ttie s b u rg . . . . L a u r e l .............................. M e r i d i a n ........................ N a tc h e z ........................ P a s c a g o u la — M o ss P o in t . . . V ic k s b u rg . . . . Y a z o o C i ty . . . . 9 7 ,6 3 2 5 3 ,7 7 2 9 4 ,5 5 4 4 9 ,6 0 2 9 8 ,4 3 5 5 8 ,5 9 4 9 8 ,3 9 1 5 2 ,0 3 7 8 2 ,4 0 3 5 1 ,6 1 4 7 8 ,9 7 1 4 1 ,5 6 5 - 1 0 7 ,5 1 2 5 4 ,3 6 8 3 9 ,1 1 7 1 2 0 ,4 7 0 6 0 ,2 4 8 3 6 ,9 8 2 8 7 ,9 3 6 5 7 ,4 1 9 3 5 ,5 3 4 -11 -1 0 + 6 B r i s t o l .............................. J o h n s o n C i ty . . . K in g s p o r t . . . . 1 1 2 ,5 8 8 1 2 6 ,2 1 5 2 0 0 ,0 7 1 1 2 7 ,0 1 7 1 3 8 ,9 6 7 2 0 6 ,2 7 6 1 0 0 ,2 4 8 1 1 9 ,1 5 1 1 7 0 ,3 9 7 G a in e s v ille . . . . L a k e l a n d ........................ M o n ro e C o u n ty . . O c a la .............................. S t. A u g u s tin e . . . S t. P e te r s b u r g . . . S a r a s o t a ........................ T a m p a .............................. W in te r H a v e n . . . + 17 + 18 + 9 +12 D is tric t . + + + 4 0 0 8 0 3 +21 + 18 +31 -12 +8 + +31 9 +27 +22 -2 +11 +22 + 5 +38 + 18 +31 T o ta l . . . -12 1 8 4 5 +6 +20 + 18 + 4 +20 -11 - 9 3 +20 . 5 4 ,8 6 2 ,1 7 6 5 7 ,6 7 4 ,4 2 1 r 4 5 ,8 8 2 ,2 1 0 r - 5 A la b a m a ! . . . . F lo rid a ! ........................ G e o r g i a } ........................ . 6 ,8 3 0 ,6 1 6 . 1 9 ,4 4 4 ,4 3 3 . 1 4 ,1 6 6 ,7 2 3 . 5 ,8 9 9 ,6 5 4 . 2 ,2 9 1 , 2 0 1 . 6 ,2 2 9 ,5 4 9 6 ,6 0 3 ,5 0 7 1 9 ,8 8 2 , 8 8 3 r 1 5 ,5 8 7 , 7 3 1 r 6 ,3 3 3 ,2 2 6 2 ,4 0 5 , 8 3 4 6 ,8 6 1 ,2 4 0 5 ,2 7 1 ,7 2 5 1 5 ,6 7 3 ,5 4 1 1 2 ,0 3 4 ,3 1 7 5 ,4 7 4 , 5 5 3 r 1 , 9 3 6 ,9 0 1 5 ,4 9 1 , 1 7 3 + - 3 2 9 +30 +24 + 18 - 7 5 9 + 18 + 13 L o u is ia n a ! * • • • M is s is s ip p i!* • . T en n e sse e!* • • • -Includes only banks in the Sixth District portion of the state; partially estimated im a te d . D ec. 1971 + 18 +20 +11 CENTERS A n n i s t o n .............................. D o t h a n .................................... S e l m a .................................... Jan. 1972 Jan. 1971 P a r tia lly e s tim a te d . +8 N A —N o t a v a ila b le . 51 D istric t B u sin e ss C o n d itio n s 174 - 1967=100 - S e a s . A d j. Nonfarm Employment '72 '69 *Seas. adj. figure; not an index Latest plotting: January—except mfg. production and farm receipts, December E x p a n sio n in the re g io n a l e c o n o m y is b e c o m in g m o re b r o a d ly b a se d . A lt h o u g h the p a c e o f a u t o m o b ile sale s a n d c o n stru c tio n is n o w m o re s u b d u e d than in late 1971, e m p lo y m e n t h a s s h o w n w id e s p r e a d incre a se s in b o th m a n u fa c tu r in g a n d n o n m a n u fa c tu r in g . C o n s u m e r a n d b u sin e s s lo a n d e m a n d fr o m b a n k s has e x p a n d e d further. W it h a gric u ltu ra l p rice s e d g in g u p w a rd , farm cash receip ts are at a n e w h igh . January D istric t's da ta la b o r in d ic a te m arket. fu rth er The fir m in g g a in s w ere in the e v e n ly sp re a d a m o n g m a n u fa c tu r in g a n d n o n m a n u fa c tu r in g sectors. C o n s tr u c tio n e m p lo y m e n t, w h ic h h e ld u p m u c h better than se a s o n a lly a n ticip a te d , w a s p artic u larly b u o y a n t. A c o n tin u e d le n g th e n in g o f the facto ry w o r k w e e k w a s a n o th e r b righ t spot. A v a ila b le in fo rm a tio n su g g e sts that the u n e m p lo y m e n t rate d r o p p e d in January fo r the fou rth c o n se c u tiv e m o n th . In January, the v a lu e o f c o n stru c tio n c o n tra c t a w a rd s d e c lin e d . N o n r e sid e n tia l a w a rd s w ere d o w n fo r the s e c o n d c o n se c u tiv e m o n th . R e sid e n tial a w a rd s w e re a lso off, b u t fo r the first m o n th sin ce O c to b e r . N e v e rth e le ss, the level w a s tw o -th ird s h ig h e r than it w a s in January 1971. S a v in g s a n d lo an a sso c ia tio n s e x p e rie n c e d record d e p o sit in flo w s in January, in d ic a tin g c o n tin u e d a v a ila b ility o f a m p le fu n d s to su p p o r t c o n stru ctio n . T h e stre n gth in b a n k le n d in g that d e v e lo p e d late last y ear carried o v e r in to the first tw o m o n t h s o f this year. A t the larger D istric t ban ks, c o n s u m e r a n d real estate lo a n s c o n tin u e d to ad v an ce , a n d b u sin e ss lo an d e m a n d w a s stre n g th e n e d b y in c re a se d b o r ro w in g on the part of d u r a b le and n o n d u ra b le g o o d s m a n u fa c tu r in g firm s. T o ta l d e p o s it ga in s c o n tin u e d to be o u tp a c e d b y re cord tim e d e p o sit in flo w s, sin ce g a in s in h o u s e h o ld , b u sin e ss, a n d g o v e r n m e n t tim e d e p o sits re m a in e d strong. C o n s u m e r in sta lm e n t c re d it at c o m m e r c ia l b a n k s c o n tin u e d to e x p a n d in January. T h e a m o u n t o f the increase, h o w e v e r, w a s m u c h sm a lle r than in an y o f the last three m o n th s o f 1971. T h is w a s p rim a rily the result o f re d u c e d g a in s in a u t o m o b ile cre dit a n d n o n a u to m o t iv e c o n s u m e r g o o d s credit. In January, sale s o f d o m e s tic a lly p r o d u c e d cars w e re o n ly m o d e r a te ly strong. A v e r a g e p rice s re ce iv e d b y farm e rs e d g e d u p w a rd in January, in sp ite o f a 2 2 -p e rc e n t d e c lin e in e g g p rices. S h a rp p rice incre a se s fo r h o g s a n d b ro ile rs p ro v id e d m o st o f the stre n gth o f the p rice a d v an c e , b u t c o tto n , c orn , a n d gra p e fru it p rices a lso m o v e d higher. E g g p rices c o n tin u e d to d e c lin e in February, b u t p rice s o f all m e at a n im a ls retain ed their strength. Farm cash receip ts in 1971 to ta le d $5.8 b illio n , $400 m illio n a b o v e the 1970 figure. NOTE: Data on which statements are based have been adjusted whenever possible to eliminate seasonal influences. 52 MONTHLY REVIEW March 1972
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