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Atlanta, Georgia May • 1961 Managing the System Open Market Account SIXTH DISTRICT STATISTICS The securities portfolio of the Federal Reserve System is called the Open Market Account. Composed almost entirely of U. S. marketable securities, the Account’s resources exceeded $26 billion as of late April of this year. This makes the Account roughly two and one-half times greater than the total resources of the nation’s largest commercial bank, and over 50 percent greater than the assets of the biggest insurance company. The System’s securities portfolio is composed largely of issues matur ing in less than one year. As of late April, these comprised about 55 percent of the total portfolio. Issues maturing between one and five years made up another 35 percent, and those maturing in more than five years, the remaining 10 percent. Only about one-tenth of the preponderant short-term issues, however, are the very shortest type: Treasury bills. The great bulk— over 80 percent— are certificates and notes. The System acquired a large amount of these two types of securities during the Korean War, and as the original issues have matured, it has exchanged them for other certificates and notes. Today, the System’s holdings of certificates are nearly as large as those of all other investors combined. Of bills, notes, and bonds, the System holds considerably less than the totals owned by other investors. SIXTH DISTRICT INDEXES System Holdings of U. S. Government Securities, 1938-61 Also in this issue: WILL WARM WEATHER THAW GEORGIA'S ECONOMY? DISTRICT BUSINESS CONDITIONS Billions of Dollars Billions of D ollars % sm < Ban6<f M ost of th e in cre a se in th e System 's p o rtfo lio to o k p la ce d u ring W o rld W a r II, w h en it in cre a se d ro u g h ly ten fo ld to $ 2 4 b illio n . The size of the Account sin ce th a t tim e h a s ra n g e d b e tw e e n $17 b illio n a n d $ 28 b illio n . System Holdings of U. S. Government Securities D aily A verag e for W eek Ended April 26, 1961 Type Am ounts ($Millions) Percent of Total 1,974 Bills Certificates 5,001 16,418 Notes 2,835 Bonds Total 26,228 7.5 19.1 62.6 10.8 100.0 Am ounts ($Millions) Percent of Total 1 year or less 14,646 1 to 5 years 9,578 5 to 10 years 1,853 Over 10 years 151 Total 26,228 55.8 36.5 7.1 0.6 100.0 Maturity But, altogether, the System holds nearly one-seventh of the marketable Government debt. Obviously, changes in any investment account of this size must have an impor tant influence on the prices of Government securities. Influence on Prices An influence on the prices of Government securities, and in turn on the current interest rate, as measured by the yield, is not confined to the Federal Reserve System. The actions of any large institution, whether it be public or private, have a somewhat similar influence on the price of the commodity (in this case, Government securities) that it buys and sells. Buying increases the demand for the se curities in the market and tends to raise their price, thus lowering the yield. Selling, on the other hand, adds to the total volume of securities in the market and tends to re duce the price and raise the yield. The importance of System transactions in the Govern ment securities market cannot be attributed solely to the size of its portfolio. Commercial banks hold about twice as many Government securities, and the net change in holdings often exceeds that of the Reserve System holdings. One unique thing about System transactions, however, is the size of operations of the System on a day when it is in the market. Transactions often exceed $100 million in one day and several hundred million dollars in a week. In 1958 the System bought outright nearly $7 billion of se curities, sold or redeemed $4 billion, and bought several billion dollars of additional securities under repurchase agreements. Another thing that makes the System’s role in the Government securities market different from the role of private participants is the greater resources at its com mand. Whereas others can buy only as long as they have cash or assets convertible into cash, the Federal Reserve can pay for its security purchases by creating money. This power is limited only by the gold reserves that it holds. Thus, although System purchases have the same direct effects on the prices of securities as do other purchases of equal amounts, the potential buying power of the System magnifies its influence on the market. Even small System operations may cause fairly large price changes if market observers expect additional System action. Impact on the M oney Supply There is another important technical difference between System and private transactions. When one individual buys securities from another, total private bank deposits, the most important part of the money supply, do not change. Suppose the buyer pays by check. His bank balance then goes down, but the bank balance of the seller goes up as soon as he deposits the check with his bank. Results are different when the Federal Reserve buys or sells securities. Any time the System enters the market, it changes reserves and contributes to changes in bank de posits. When the System buys securities, it pays by a check drawn on the Federal Reserve Bank. Purchases of securi ties by the System, therefore, result in an increase in the reserve balance of the commercial bank where the seller keeps his account, as well as in an increase in the seller’s balance. Conversely, when the System sells securities, the result is a smaller bank balance for the purchaser and a corresponding decline in the reserve balance of his bank. The economic effects of the flow of reserves into and out of the banking system as the result of open market operations (that is, the buying and selling of Government securities) are far broader than the immediate effects of the transactions on the securities market. Additional re serves supplied the commercial banks through Federal Re serve purchases of securities can encourage credit expan sion by the commercial banks amounting to several times the amount of reserves supplied. On the other hand, when the System sells securities, the withdrawal of reserves from the banking system can result in a contraction of bank credit far greater than the amount of securities sold. The potential effect on total borrowing and on spending in the economy thus can be very great. Moreover, if in expanding credit the commercial banks buy Government securities, the impact of their purchases on the prices and yields may be far greater than the direct impact of Federal Reserve purchases. Economic Goals The economic effects of the increases or decreases in re serves on the money supply and on interest rates are obvi ously more far-reaching than the direct effects of System transactions on the prices of Government securities. Therefore, the System’s motive for buying and selling must be different from that of private investors if the Sys tem is to carry out its major responsibility of helping bring about high level production, maximum employment, and stable prices. While private investors generally deal in securities for maximum returns on their investments, those responsible for the System Account base their deci sions primarily on expected economic results. Like any private investment managers, those who man age the Account are constantly faced with decisions. Should the Account do any buying or selling at all? If so, how much, and what kind of securities? Securities ma ture from time to time. If the Treasury offers other securi ties in exchange for maturing issues, should the Account accept the offer; and if there is a choice of several, which security should it accept? Or, if the Treasury pays off the maturing securities in cash, should the System re invest the proceeds; and if so, in what maturities? Responsibility for the Account The general policy for System open market operations is made by the twelve-man Federal Open Market Commit tee. The permanent members of this Committee are the seven members of the Board of Governors and the New York Reserve Bank president. The presidents of the other Reserve Banks take turns filling the remaining four posi• 2 • tions. But all of them usually attend the policy meetings, which are held in Washington about every three weeks. The policies laid down by the Open Market Commit tee are carried out by the Federal Reserve Bank of New York. This Bank— chosen because it is located in the na tion’s financial center—has been the agent of the System since 1923. At each meeting, the Committee gives instruc tions to the Manager of the Account, who is a senior of ficer of the Federal Reserve Bank of New York. The decisions the Account Manager makes in execut ing the instructions are influenced to some extent by dayto-day events in the money and securities markets. Sup pose bad weather delays checks in transit between banks? Bank reserves would pile up because the Reserve Banks, following a certain schedule, give credit to member banks before physical collection is completed. A sharp increase in reserves resulting from this sort of condition may encourage banks to buy securities in large volume and temporarily make credit easier than the economic situa tion warrants. If it is deemed desirable to offset some or all of these reserves, the Manager usually sells securities. Government securities dealers are the source of securi ties purchased and sold for the System. These dealers, numbering less than twenty, are specialists in Govern ment securities. The total dollar volume of business they do is several times larger than that done on the New York stock exchange. Composition of System Account, 1946-60 I ■ ‘ S 'S ...S Certificates nn H M n to c xg:and Notes . ........ ' A is :: ■ ■ ■ ■ • :Vvv;-.:' - ■ ~-V ’C-' . — K- 1948 1958 I960 Although the System from 1951 until recently has conducted its operations alm ost entirely in Treasury bills, these securi ties m ake up only one-tenth of the System's total portfolio. especially the very shortest (Treasury bills), can easily be held until maturity and are easily sold because banks use them to adjust their positions and corporations like to invest their idle money in them. Of these short-term securities, Treasury bills are a favorite and are traded more than any other. Commercial banks and corporations own about one-third of the total bills outstanding. A recent study made for the Joint Eco nomic Committee shows that, even though bills have ac counted for less than one-fifth of the marketable debt, trading in bills has for many years been greater than trad ing in all other securities combined. Maturities exceeding five years have been traded in much smaller volume, ac counting for around 10 percent of the total trading. Whereas dealers carry large inventories of short-term securities (especially bills), their holdings of intermedi ate- and long-term bonds are very small. In the week end ing April 5, 1961, dealers held only $135 million of se curities due after five years, but they held about $1.6 bil lion of securities maturing in one year or less and more than $200 million in one- to five-year maturities. Most dealers, therefore, cannot handle a large order for longor even intermediate-term bonds at the prices they quote. They try to obtain them from insurance companies, sav ings banks, and other institutional investors that own the bonds. Since many of these institutions consider their bonds to be permanent investments, a sizable price change is usually necessary to induce them to sell large Technical Considerations The composition and maturity structure of the public debt, preferences various investors show for certain securi ties, and other technical considerations influence decisions to conduct operations in certain types of securities. For one thing, a large part of the Federal Government debt is short-term. The average length of the debt is about four and one-half years; about two-fifths matures within one year. So long as such a structure exists, the Treasury is more frequently in the market to sell or redeem short-term issues than those with longer maturities. Less frequently it sells or refunds longer-term securities, either to keep the length of the debt from shrinking or to increase it. Be cause Federal Reserve operations are large and purchases are frequently followed rather quickly by sales, the System portfolio must consist of securities that can be sold or re deemed readily without upsetting the securities market. Dealing in short-term securities has other technical ad vantages to the Reserve System. Short-term securities, Total Marketable U.S. Government Debt December 31, 1960 Total M arket able Debt ($ Millions) Commercial Banks........................ Federal Reserve Banks . . . . Nonfinancial Corporations . . Insurance Companies................... U.-S. Government Agencies and Trust F u n d s............................. Mutual Savings Banks................... Savings and Loan Associations . . All Others...................................... T o ta l...................................... . . . . . . . . . . . . . . . . . . Composition of Portfolio for Each Major Investor Group ( Percent) Percent of Outstanding Marketable Debt Held by Each Major Investor Group Total Bills Certificates Notes Bonds Securities Bills Certificates; Notes Bonds 54,259 27,384 10,741 9,000 12.9 11.7 52.1 3.8 4.7 33.2 12.4 1.6 31.2 45.7 15.9 15.3 51.2 9.4 19.6 79.3 28.7 14.5 5.7 4.8 17.7 8.2 14.2 0.9 14.0 49.2 7.2 0.8 33.0 24.4 3.3 2.7 34.8 3.2 2.6 8.9 8,117 5,943 2,454 71,115 189,015 7.3 2.4 6.6 31.5 20.9 5.7 2.4 2.3 6.5 9.8 21.8 20.0 20.8 21.5 27.1 65.2 75.2 70.3 40.5 42.2 4.3 3.1 1.3 37.6 100.0 1.5 0.4 0.4 56.7 100.0 2.5 0.8 0.3 25.2 100.0 3.5 2.3 1.0 29.8 100.0 6.6 5.6 2.2 36.1 100.0 • 3 • amounts of bonds. Also, because longer-term issues are only redeemable at par several years hence, the price of such securities varies more than that of short-term issues. Pegging the M arket In addition to these technical considerations, there are economic factors influencing the decisions of the System to buy or sell and to choose short- or long-term securi ties. Should decisions be based primarily on the effect on reserves or on the direct effect on prices and interest rates? The experiences in World War II and postwar years until 1951 demonstrated some of the difficulties a central bank can get into when decisions to buy and sell are based primarily on maintaining a given pattern of interest rates. The System agreed to buy all issues offered it during World War II at or near the historically low level of interest rates that prevailed when the war began: 3/8 percent on 91-day bills, 7 /8 percent on one-year certificates, and 2-1/2 percent on long-term bonds. After the war ended, the System continued this policy of buying at the established rate (or price) any securities that investors wished to sell. With few exceptions, these rates were identical to those established during the war. Insurance companies and other lenders knew they could get higher rates on their loans than they could earn on the Government securities, so they sold large amounts of bonds. Most of the bonds in the System portfolio today were acquired during that period. By making these pur chases, the System added to bank reserves at a time when bank credit already was ample and prices of goods and services were rising. On the other hand, decisions to buy or sell since 1951 have been based primarily upon the effect such operations would have on member bank reserves. This policy, it was thought, could best be carried out by buying and selling short-term securities. There have been some exceptions to this general policy. In the summer of 1958, conditions in the Government securities market became disorderly, and the Open M ar ket Committee then felt obliged to buy some long-term securities and support a Treasury financing that had been threatened with failure. D ealer Transactions in U.S. Governm ent Securities, 1960-61 P e rce n t Pe,C |0 0 :i Year or Less-! The I 9 6 0 Record The 1960 record, which was published as part of the An nual Report of the Board of Governors for 1960, illus trates the factors taken into consideration in making deci sions to buy and sell. At the January 12 meeting of last year, the Committee reaffirmed the previously existing policy directive calling for operations with a view to “restraining inflationary credit expansion in order to further sustainable economic growth and expanding employment opportunities.” As soon as it became apparent that credit demands had di minished and that economic expansion had slowed down, policy shifted. Thus, the directive adopted at the March 1 meeting provided that operations should be conducted toward “fostering sustainable growth in economic activity and employment while guarding against excessive credit expansion.” Translated into actual operations, this re sulted in buying securities and adding to available reserves. As business slackened further, open market policy be came increasingly directed toward stimulating credit. Ac cordingly, the Committee on May 24 changed the policy directive to “fostering sustainable growth in economic ac tivity and employment by providing reserves needed for moderate bank credit expansion.” Open market buying was subsequently stepped up, and on August 16, the in structions were changed to “encouraging monetary expan sion for the purpose of fostering sustainable growth in economic activity and employment.” The last change in the directive during 1960 was made on October 25. The Committee then decided in favor of operations that would continue to supply reserves necessary for stimulating the domestic economy “while taking into consideration cur rent international developments.” Change in Policy International developments have recently caused the Sys tem to change its normal conduct of operations in the hope that purchases and sales of different maturities would assist the United States in solving its balance of payments problem. This problem was being aggravated by the movement out of the U. S. of short-term capital funds that were attracted by the higher short-term rates abroad. On February 20, the System announced that it would buy notes and bonds, some of which had a maturity exceeding five years. For the System to have concentrated purchases entirely on Treasury bills or other short-term securities would have placed the full impact of System buying on these securities, and rates on them would probably have declined. This might have encouraged a further outflow of funds to foreign countries. In the nine weeks ending April 26, the System added $427 million of notes and $293 million of bonds to its portfolio. At this point, it is too early to evaluate these operations, but they illustrate the problem inherent in deciding how the Account is to be managed. „ _ H arry B ran d t Governm ent securities d ealers provide an active m arket for bills and other short-m aturity instruments. Trading in long term bonds is rela tiv ely sm all. A d dition al copies o f this article are availab le upon request to the R esearch D epartm ent, F e d e ral R eserve B an k o f A tlanta, A tlan ta 3, G eorgia. •4 • Will Warm Weather Thaw Georgia’s Economy ? A popular rhyme tells us that “April showers bring May flowers,” suggesting that the hardships of winter will give way to the hope of spring. This year’s April showers may also have cleared away some of the doubt concerning the course of Georgia’s economy. Those who are wearied by the wintry climate that has afflicted the state’s business during the past few months may find signs of spring in the various measures of economic activity. A good indicator of a state’s economic temperature is the level of its employment. According to this measure, Georgia has been undergoing a cooling-off period for about nine months. This is one month longer than the average downward trend in employment during the three previous postwar recessions. If it were possible to use this kind of history as a guide, we should expect a turnabout at any time. Following our historical analysis further, however, we find that in past downturns, Georgia’s em ployment dropped less and for a shorter period of time than was the case for the nation as a whole. In the recent recession, jobs in Georgia began to decline before they did in the nation, and the drop was sharper. The pattern of recovery, therefore, might also be different. ECONOMIC INDICATORS Georgia 111111111111111111j111 i i 1111111 i i i i 111111111111111111111 i i 111 1947*49=100 __ Seasonally Adjusted 129 — » -■ .......... — N o n fa rm Em p lo ym e n t M fg. E m p lo y m e n t Manufacturing Employment Slumps Georgia’s job decline has been largely confined to manu facturing activities. At least three important developments have influenced the decline: Textile mill production, which involves almost one-third of Georgia’s manufactur ing jobs, has dropped significantly in recent months. National demand for the major durable goods that Georgia produces has been declining. And completed contracts in industries that produce primarily for the Government have resulted in reduced work forces. Textile mill production in Georgia apparently dropped sharply throughout 1960. Seasonally adjusted cotton con sumption, a measure of textile activity, dropped 17 per cent during the year in the Sixth District. Since Georgia’s production accounts for over 60 percent of the District’s use of cotton, the state’s decline probably parallels that of the area. Georgia textile mills employed 5,000 fewer workers at the end of 1960 than they did a year earlier. Slackened demand for automobiles and construction materials in the nation has accounted for a substantial part of the loss of jobs in Georgia. Employment in lumber and wood industries—mostly sawmills— declined about 13 percent between March 1960 and March 1961. Auto mobile assembly plants have been operating on reduced schedules for several months. In addition, Georgia’s larg est manufacturing employer, an aircraft company, reduced its employment sharply as Government contracts were completed. B a n k Debits Dept. S to re S a le s Mem ber Bank Loans Mem ber Ban k D e p o s it s Personal Incomes Increase Despite the decline in manufacturing employment, total personal income in Georgia was higher in 1960 than in • 5 • 1959, and it has continued to increase during the early months of 1961. This is because the number of jobs in most nonmanufacturing industries have continued to rise. State and local governments, for example, employed about 5 percent more people in 1960 than during the previous year. Substantial job gains were also recorded in services and at banks, insurance companies, and other financial institutions. Furthermore, average earnings in most types of employment rose during the year. Georgians have not been spending all their increased incomes. Indeed, most measures of spending declined toward the end of 1960 and have remained unchanged since early winter. Bank debits, an indicator of overall spending by individuals, businesses, and governments, reached a peak in September. After adjustment for large month-to-month fluctuations, they have moved in a side ways direction since then. Consumer spending at furniture and department stores declined gradually between the early summer of 1960 and the end of the year, then dropped sharply. It has shown little change since January. Sales tax receipts, a measure of total retail spending, followed a similar trend. Most measures of savings have increased in recent months because incomes were maintained and spending declined. Savings and loan associations in Georgia re ported a 13-percent increase in shares for the year ended March 31, 1961. Time deposits at Federal Reserve mem ber banks increased throughout the year at a better-thanseasonal rate. A real upturn in Georgia business activity may well de pend upon a rise in manufacturing employment. What are the signs, if any, that portend a spring warm-up? The index of cotton consumption remained unchanged in the early months of 1961 after a steady decline that began in the spring of 1960, which indicates a possible end to the downward production trend in the important textile industry. Auto manufacturers are mildly optimistic about the outlook in their industry, and, with national sales up in March and April, production has increased. The con struction industry is expecting an upturn in new housing starts, which should boost the state’s lumber output. The aircraft manufacturer recently received a billion-dollar Government contract that is expected to stabilize employ ment immediately and provide substantially more jobs in the near future. All these events, if they occur, will mean an end to the decline, if not the beginning of an upturn. incomes but at the same time are subject to wide cyclical changes. As recently as 1948, almost a third of Georgia’s labor force worked on the farm. In 1960, agriculture accounted for only 15 percent of total employment. There have also been important changes within the nonfarm sector. In 1948, fewer than one out of ten manufacturing jobs were in transportation equipment, machinery, metals, and other durable goods industries subject to large fluctua tions in production. By 1960, one-fifth of factory jobs were in this category. Thus Georgia has a larger propor tion of its labor force in jobs that are sensitive to national business conditions. Furthermore, a higher percentage of people in Georgia than in the United States work in in dustries that felt greater-than-average cutbacks in the recent recession. One result of the employment shifts that have taken place has been a substantial increase in Georgia’s personal income. Along with this, however, has come an increased sensitivity to swings in the business cycle. Most Georgians, nevertheless, will herald the long-run benefits provided by the new types of employment. R o b e r t M. Y o u n g Bank Announcements On April 1, the newly organized nonmember Cumber land County Bank, Crossville, Tennessee, opened for business and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Offi cers include J. W. Penland, President; Ben H. Draughn, Junior Executive Vice President and Cashier; and Mrs. Jerry Banks Lane, Assistant Cashier. Capital totals $160,000, and surplus and undivided profits $160,000. The newly organized nonmember Island Bank, Anna Maria Island, Holmes Beach, Florida, opened for busi ness on April 25 and began to remit at par. Officers are H. S. Moody, Chairman of the Board; Clarence E. Brewer, President; F. P. Stanley and R obert R. Moses, Vice Presidents; and Mel G. Akins, Cashier. Capital totals $200,000, and surplus and undivided profits Georgia's Economy Dips More Than the Nation's Georgia’s employment declined more than the nation’s during the recent recession. The drop in consumer spend ing was sharper than it was in the rest of the country. Incomes did not increase as much as those in the nation. All of these trends ran counter to past experience. The previous postwar downturns all affected Georgia to a much smaller extent than they did the nation. Why did Georgia’s economy dip further than the na tion’s during the recession? For one thing, the state is more dependent upon economic activities that yield high $75,000. On April 25, the Bank of Waynesboro, Waynesboro, Georgia, a par-remitting bank, became a member of the Federal Reserve System. M. King Tucker is President; Mims R. Oliver, Vice President; Reuben L. Rockwell, Executive Vice President; William H. Harper, Jr., A s sistant Vice President; James W. Nichols, Cashier; Mrs. Naomi O. Scott and Mrs. M yrtis Lovett, Assistant Cashiers. Capital stock totals $150,000, and surplus and other capital accounts $240,000. • 6 • Sixth District Indexes Seasonally Adjusted (1947-49 = 100) I9 6 0 SIXTH DISTRICT FEB. Nonfarm Employment.................................. 143r Manufacturing Employment . . . . 125r A p p a re l................................................... 194r C h e m ic a ls..............................................134r ............................ 193 Fabricated Metals F o o d .........................................................116r Lbr., Wood Prod., Fur. & Fix. . . 79r paper.........................................................168r Primary Metals .................................. ..100 T e x t ile s ................................................... 88r Transportation Equipment . . . . 206r Nonmanufacturing Employment . . . 150 Manufacturing Payrolls .............................221r Cotton Consumption**.................................. 95 Electric Power Production**..........................375 Petrol. Prod, in Coastal Louisiana & M ississippi**.........................226 Construction C o n tra c ts * ............................ ..345 Residential................................................... ..366 All O t h e r ................................................... ..327 Farm Cash Receipts........................................124 Crops............................................................... 96 L iv e s t o c k ................................................... 176 Department Store S a le s * / * * .......................175 Department Store Stocks*...............................224 Furniture Store S a l e s * / * * .........................143 Member Bank D e p o s its * .............................181 Member Bank L o a n s * .................................. ..342 Bank D e b its*................................................... ..292 Turnover of Demand Deposits* . . . . 156 In Leading C itie s ........................................168 Outside Leading C i t i e s ............................ 120 ALABAMA Nonfarm Em ploym ent.............................125 Manufacturing Employment . . . . 107 Manufacturing Payrolls.............................191r Department Store S a le s * * .......................158 Furniture Store S a l e s .............................133 Member Bank Deposits............................ 160 Member Bank L o a n s.................................. ..283 Farm Cash R eceip ts.................................. 122 Bank Debits ................................................245 FLORIDA Nonfarm Employment***.......................201r Manufacturing Employment*** . . . 206r Manufacturing P ayrolls...............................363 Department Store S a le s * * .........................240 Furniture Store S a l e s .............................174 Member Bank Deposits............................ ..239 Member Bank Lo a n s.................................. ..554 Farm Cash R eceip ts.................................. ..206 Bank Debits ................................................419 GEORGIA Nonfarm Em ploym ent.............................137r Manufacturing Employment . . . . 123r Manufacturing Payrolls.............................213r Department Store S a le s * * .......................164 Furniture Store S a l e s .............................127 Member Bank Deposits.............................160 Member Bank Lo a n s.................................. ..270 Farm Cash R eceip ts.................................. 134 Bank Debits ................................................264 LOUISIANA Nonfarm Em ploym ent.............................131 Manufacturing Employment . . . . 95 Manufacturing Payrolls.............................181r Department Store Sales*/** . . . . 150 Furniture Store S a le s * .............................192 Member Bank Deposits* .......................159 Member Bank L o a n s * ............................ ..317 Farm Cash R eceip ts.................................. 90 Bank D e b its * ................................................220 MISSISSIPPI Nonfarm Em ploym ent.............................137 Manufacturing Employment . . . . 135r Manufacturing Payrolls............................ ..248r Department Store Sales*/** . . . . 149 Furniture Store S a le s * ............................ 99 Member Bank Deposits* .........................204 Member Bank L o a n s * ...............................429 Farm Cash R eceip ts.................................. 91 Bank D e b its * ............................................. ..245 TENNESSEE Nonfarm Em ploym ent............................ 125r Manufacturing Employment . . . . 125r Manufacturing Payrolls............................ ..223r Department Store Sales*/** . . . . 145 Furniture Store S a le s * ............................. 95 Member Bank Deposits* .......................164 Member Bank L o a n s * ...............................301 Farm Cash R eceip ts.................................. 90 Bank D e b its * ................................................250 JUNE MAR. APR. MAY 142 125r 195r 134r 191r 115 79 166r 94r 89r 205r 149 216r 94 387 144r 126r 197r 137r 191r 116 79 169r 98 88r 210 152r 227r 95 363 144r 126 198r 137r 196r 118r 80r 170r 99 88r 210r 151 230r 94 366 143 126r 198r 138r 196r 117r 79 167r 99 88r 205r 151r 233r 93 375 228 333 360 311 121 95 179 162 225 128r 181 345 285 153 167 119 224 333 356 315 126 100 188 192 223 149 180 347 274 148 167 114 222 351 384 325 132 111 185 176 223 145 180 349 271 163 181 126 124 105r 188r 156 112 161 289 125 244 126r 108 194r 176 127 159 296 122 239 201r 205r 352 245 157 238 552 171 404 1961 JULY AUG. SEPT. OCT. NOV. DEC. JAN. FEB. MAR. 143 126r 199r 137r 196r 117r 78 169r 97 89r 197r 150r 236r 93 382 143 125r 196r 137r 197r 117 78 166r 95 88r 199r 150r 228r 90 385 143 124 193r 132r 193r 120 77 167r 91r 87r 199r 150r 221r 85 373 142 123r 188r 131r 190r 119 76r 166r 92r 86 205r 150r 220r 83 372 142 122r 188r 131r 188r 117 76 165r 88 85 185r 150 217r 83 369 141 122r 189r 133r 189r 116 75 164r 89 85r 190r 149 218r 79 390 142r 121r 187r 133r 191r 118r 73r 163r 86r 84r 191r 150 213r 78 401 141 121r 187r 133r 189r 118r 73r 164r 87r 84r 190r 150r 212r 79 383 141 121 186 134 184 118 73 165 86 83 183 149 214 79 n.a. 220 371 387 359 132 98 192 183 227 142 180 349 281 159 183 119 220 370 376 365 127 83 194 194 227 147 183 351 265 162 179 129 221 361 367 357 155 147 189 178 232 143 183 354 279 167 190 124 223 353 362 346 149 134 188 185 230 135 185 353 283 158 175 120 232 337 364 316 167 157 186 189 231 141 188 353 263 152 159 113 233 322 305 336 156 131 201 179 235 140 188 352 281 153 162 111 250 286 300 276 132 94 199 187 233 134 189 359 279 151 163 119 239r 307 286 324 134 97 191 177 224r 133 189 351 285 162 176r 125 242 313 326 303 145 123 191 181r 221r 123r 192 355 277 156 168 116 247 n.a. n.a. n.a. n.a. n.a. n.a. 178 220p 118p 189 353 279 155 167 122 126 108r 196r 162 128 159 298 131 239 126 108r 199r 171 127 159 293 123 244 126 108r 200r 178 126 160 291 124 233 126 107r 192r 170 119 162 293 123 256 125 105r 182r 166 117 164 292 150 257 125 103r 187r 166 120 169 293 182 245 125 103r 183r 155 110 165 294 130 252 124 102r 175r 165 111 167 299 121 246 125 lO lr 175r 158 109 169 300 115 251 123r lO lr 175r 156r 105 170 299 126 242 123 101 177 166 99 167 303 n.a. 252 203r 206r 370 274 181 237 553 217 380 203r 209 389 260 175 235 551 225 395 202 209r 392 264 167 236 553 187 431 202r 208r 407 277 167 242 557 204 388 202r 208r 403 263 203 240 564 270 425 202r 208r 392 256 172 241 560 248 415 201 r 207r 399 261 156 246 561 212 400 201r 207 384 268 168 248 551 196 415 201r 208r 384 276 164 250 560 232 407 200r 206r 368 264 156 247 550 266 409 200r 207r 374 264r 149 252 556 264 393 200 209 373 287 145 247 556 n.a. 411 136r 124r 208r 156 120 159 271 146 252 138 124r 218r 170 142 159 271 153 251 137 124r 226r 169 132 160 275 144 252 136 123r 223r 164 135 160 275 150 263 136 123r 228r 175 134 161 278 125 252 135 123r 220r 159 137 164 286 215 258 135 121r 213r 168 134 166 288 160 274 135 121r 211r 172 144 170 286 204 249 134r 118r 205r 158 138 169 291 120 257 134 119r 205r 164 135 170 289 148 256 134r 117r 199r 157 123 169 285 144 263 134 116r 200r 155 120r 173 292 152 254 133 116 204 166 124 172 292 n.a. 266 130 95 184r 150r 172 159 328 94 238 132r 96r 188r 156 176 160 329 89 227 132 r 96r 184r 152 175 159 334 101 225 131r 95 181r 161 184 158 334 119 242 131r 96r 182r 159 203 161 335 102 215 130 95 r 181r 152 145 159 334 91 228 129r 94 173r 148 161 164 332 113 248 129r 94 170 151 159 163 329 115 209 128 93 168r 140 167 164 323 137 222 128 93r 175r 155 172 166 331 113 229 129 92r 177r 151 164 165 319 93 206 129 91r 173r 151 152 167 322 103 204 128 92 176 155 139 163 314 n.a. 232 136 135r 256r 153r 94 202 425 115 247 137 136r 252r 169 100 198 427 101 238 136r 137r 247r 154 113 199 429 105 224 135r 136r 257r 175 107 197 431 97 245 135 r 135r 256r 175 112 198 433 104 244 134r 134r 250r 153 100 194 425 98 256 135r 132r 238r 149 95 196 431 121 254 135r 132r 242r 158 84 204 431 141 243 135r 133r 239r 151 101 199 433 162 260 134r 131r 240r 164 124 209 460 136 256 137r 130r 244r 149 93 204 442 86 240 136r 129r 237r 146 92 205 446 99 236 136 130 244 154 lOlp 207 442 n.a. 267 124r 125r 211r 137 98 164 304 86 239 128r 127r 231r 159 103 164 305 100 231 127r 127r 228r 146 111 163 309 95 241 127r 127r 229r 155 107 165 309 102 238 127r 128r 230r 167 93 170 313 109 229 127r 127r 231r 151 98 167 314 113 238 126r 128r 224r 157 96 166 311 106 234 126r 126r 221 r 164 101 171 313 122 219 125r 124r 218r 156 98 169 314 143 241 124r 123r 217r 157 96 170 328 86 229 124r 123r 215r 147 83 170 315 96 242 124r 123r 216r 154r 89 176 319 99 238 124 123 217 150 92 176 310 n.a. 251 *For Sixth District area only. Other totals for entire six states. n.a. Not Available. p Preliminary. r Revised. **Daily average basis. ***New seasonal factors affect revisions. NOTE: Indexes of nonfarm and manufacturing employment and payrolls have been revised on the basis of new benchmark data for 1960. 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. •7 • D IS T R IC T B U S IN E S S C O N D IT IO N S I I I II I I I I I I | I I II II I I I I I I | I I I I II I I I I I I I f9 4 7 * 4 9 * 1 0 0 Seasonally Adjusted 135 ^ 1 I 1 I _______ 11 Nonfarm Employment - Oom e important economic indicators strengthened in March, which suggests that the economic contraction of recent months may be end ing. The average work week in manufacturing, seasonally adjusted, rose, and manufacturing payrolls increased. Also, the latest three-month average of construction contracts, based partly on March data, rose for the second month. Steel mill output improved substantially further in both March and April, and crude oil production in Coastal Louisiana and Mississippi rose to a near-record level in March. ^ o Other economic indicators, however, do not exhibit much strength, and some are weakening, which calls for a cautious attitude in assess ing current economic trends. Nonfarm employment, seasonally adjusted, was virtually unchanged in March. Manufacturing employment remained unchanged also, but non manufacturing employment dropped back slightly. Employment in construc tion activity, seasonally adjusted, continued to decline in March. But during the first three months this year, total nonfarm employment has shown signs of stabilizing in Florida, Tennessee, and Louisiana. Employment, therefore, could be holding at current levels. This possibility is also indicated by the stability in the last three months in cotton consumption, a measure of textile produc tion. v* v* Farmers became more active as winter ended and spring began. They pushed ahead with their spring planting, although somewhat unevenly because cold, wet weather hampered field work. In some places, adverse weather damaged farmers’ seeded crops. Employment on farms, seasonally adjusted, increased in March, and farmers stepped up their shipments of live stock and poultry products. Also, their cash receipts from marketings, season ally adjusted, increased substantially in February, the latest month for which data are available. ^ Consumers evidently have maintained their spending, but as yet they show little tendency to buy more heavily. Department store sales, seasonally adjusted, rose moderately during April, according to preliminary figures. Meanwhile, final figures for March showed a slight decline in sales from the previous month. Sales declined the most in the Baton Rouge, Jack sonville, and St. Petersburg-Tampa areas. Household appliance store sales in creased more than they usually do in March. On the other hand, furniture store sales, seasonally adjusted, declined for the sixth consecutive month, the largest decline occurring in southern Louisiana. U* Consumers reduced their instalment debt outstanding for the sixth consecutive month. A fractional increase in bank automobile debt outstand ing was offset by a decline in other consumer goods paper. Consumers in creased their savings in time deposits somewhat less than is usual. ^ Bank lending remained w eak, but bank reserves were plentiful and bankers' capacity to make loans remained large. Member bank loans declined slightly in March, and loan data for banks in leading cities indicate a continued weakness in April. Average interest rates on business loans at Atlanta and New Orleans banks declined somewhat from the first half of December to the first half of March. Meanwhile, investments at member banks leveled off in February and March, following a sharp increase in January. Investments at banks in leading cities indicate an increase in April.
@FedFRASER