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A M Iu Review Recession to Recovery, 1960-62 A tla n ta , May • 1962^ C a s e S tu d y in F le x ib le M o n e ta r y P o lic y MAY 2 3 1962 FEDERAL RESERVE BANK OF Also in this issue: F u n c t io n o f t h e F e d e r a l R e s e r v e S y s te m . A n efficient o n eta ry m ec h a n ism is in d isp en sa b le to th e ste a d y d e v e lo p e d o f th e n a tio n ’s re so u rces a n d a rising sta n d a rd o f living. T h e fu n c tio n o f th e F ed era l R e se rv e S y s te m is to fo ste r a flo w o f cred it a n d m o n e y th a t w ill fa cilita te o rd erly e c o n o m ic g ro w th a n d a stable dollar.— t h e f e d e r a l r e s e r v e s y s t e m : P U R P O S E S AND F U N C T IO N S HESITANT RECOVERY IN ALABAMA SIXTH DISTRICT STATISTICS DISTRICT BUSINESS CONDITIONS Monetary policy decisions are made in response to the current state of the American economy. Because our economy is complex, monetary policy making and its execution must, therefore, be complex. The necessity for making qualitative judgments only increases this com plexity. For example, few persons would disagree with the general goals implied by the statement at the beginning of this article. Opinions do differ, however, with respect to the effectiveness of monetary policy in achieving these goals and with respect to which goals should be given priority in case of conflict. Furthermore, interpretations of current economic developments are by no means unanimous; nor is there com plete agreement as to which techniques could be best used in executing the chosen policy. The complexities involved in determining and executing monetary policy are exceptionally well illustrated in the period from early 1960 to the present. This was a period of both recession and recovery and, in addition, one in which special problems were created by the United States’ balance of payments position. The Economic Setting It is easy to see now that in early 1960 a change was taking place in economic activity from expansion to recession, but at the time it was not so evident. During the first few months of the year, our interpreta tions of the behavior of economic indicators were colored by memories of the optimistic forecasts for the “scintillating Sixties.” The falterings of certain key indicators were interpreted by some as merely reactions to the excessive expansion that had immediately followed the settle ment of the steel strike in late 1959. To certain others, they were seen as the expected pause before a renewed period of economic expansion. Before mid-1960 was reached, the “pause” turned out to be a prel ude to recession. Manufacturing, generally one of the first sectors to exhibit weakness during a period of business decline, again led the way. Manufacturers’ sales dropped steadily downward from the February 1960 peak and did not begin to rise again until after January 1961. Industrial production, after a period of hesitation, started moving down ward in May 1960. Manufacturing employment declined in response. Total nonfarm employment began to drop off after April 1960. The rate of unemployment rose steadily, reaching 7 percent by May 1961. In the past two y e a rs, the condition of the nation's economy has changed from one of recession to one of recovery. During this period, the Federal Reserve System has been operating to bolster the banking system's ab ility to meet expanding borrowing needs. The policy of increasing a v a ila b le member bank reserves first enabled banks to get out of debt to the Federal Reserve System and since mid-1960 has created a net free reserve condition. Just as it is hard to be sure that economic activity has reached a peak until after recession is well underway, it is also difficult to be sure that a recession has ended until recovery has gone on for some time. As the year 1961 progressed, however, it became more and more evident that a general improvement in economic conditions was in progress. Industrial production rose sharply in the months after February 1961, and a new record was set after June of that year. Later, the rate of expansion slowed slightly, but by March 1962 industrial production had reached a point more than 13 percent above the low of February 1961, and 4 percent above the pre-recession peak set in January 1960. Although the recession had its serious aspects for many sectors of the economy, its overall effects were relatively mild. Personal income, for example, continued to rise through a great part of 1960 and declined hardly at all— less than one percent— from October 1960 to February 1961. Total consumption expenditures ex hibited only a minor hesitation during the recessionary period, and most of this was caused by declines in spend ing for consumer durable goods; expenditures for services actually rose. If February 1961 is accepted as the low point, the recession lasted only nine months, a relatively short period of economic decline as measured by the history of preceding recessions. Despite the recovery in economic activity in 1961, un employment and unused capacity still remained sub stantial. Not until late 1961 did the rate of unemployment begin to decline, and in March 1962 it was still 5.5 per cent of the labor force. Increased reserves made it possible for member banks to expand th eir loans and investments substantially. An in crease in deposits and currency accom panied the growth in bank credit. 160 140 120 80 60 1951 1959 1960 1961 1962 1954 1956 1958 1960 —J 40 1962 An absence of inflationary pressures w as indicated by the downward d rift in w holesale prices, the m oderate rise in consumer prices, unused capacity to produce m ajor m aterials, and continued high unemployment. The competitive economic environment that had charac terized the economy for several years, in contrast to the tight market conditions of the early postwar years, has continued during economic recovery. At the end of 1961, wholesale prices, despite recovery, were actually lower than they had been a year earlier. Consumer prices in creased less than one percent in 1961, considerably more slowly than in the preceding five years. Although price trends indicated the need for less con cern about immediate inflationary problems, a balance of payments problem plagued the American people all during the 1960 recession and the recovery. In 1960, the surplus of American exports of goods and services over imports increased from the abnormally low level of 1959, partly because imports declined during the reces sion and partly because exports increased. The export surplus increased further in 1961, totaling $5.2 billion. Nevertheless, deficits in financial transactions with the rest of the world were much larger in 1960 and 1961 than in earlier years, chiefly because of the greatly in creased outflow of short-term capital; net deficits in the balance of payments thus continued. In 1960, $1.7 billion of the net deficit was settled by United States gold and the remainder, $2.2 billion, was settled by foreigners’ increasing their short-term claims on this country. Although the deficit was smaller in 1961, the United States continued to lose gold in the amount of $820 million, and short-term liabilities to foreigners rose $1.7 billion. . 2 • Setting the Goals In 1960, when it became clear that a recession was under way, a proper policy goal was to bring an end to this recession so far as was possible through monetary means. Recession turned to recovery in 1961, but the nation’s potential productive capacity was not yet being fully utilized, so the ultimate goal became one of laying the groundwork for further economic expansion. Protecting the dollar from the erosion of inflation at home was not an immediate problem. There was, how ever, a growing need to protect the position of the dollar abroad. Monetary policy goals, therefore, included action to ease the nation’s balance of payments difficulties. The power of the Federal Reserve System to help achieve these goals lay in its ability to expand member bank reserves and thus to increase the lending and invest ing ability of the member banks. Through this means, the System indirectly influenced the level of interest rates and the spending and savings activities of the entire economy. Consequently, over the entire period between June 1960 and March 1962, the System supplied member banks with about $1.4 billion in additional effective reserves, measured on a seasonally adjusted basis. The increased reserves have supported a near-record expansion in bank credit. In 1961 alone, commercial banks increased their loans and investments by $15.9 billion, an amount greater than the record credit expansion of 1958. The execution of m onetary policy during the past two years has been influenced by the continuing balance of payments deficit and the accompanying decline in the nation's gold stock. BA LA N C E OF PA YM EN TS In order to keep from stimulating the transfer of funds abroad because of interest rate differentials, the Federal Reserve System sought to avoid depressing short-term rates unduly. N T E R E S T ft A T E S United R A T E D IF F E R E N T IA L S i 1 United injdom /\ S Kingdom ■\ \ States West Germany Net Incentive to Transfer Funds lo New terk Techniques Used to Foster Credit Expansion Expansion in the reserve base and easier credit condi tions were achieved in a variety of ways. In the spring of 1960, open market policy was eased when the Federal Reserve System bought greater amounts of Treasury bills than was usual at that time of the year. The discount rate, the charge made to member banks for borrowing from the Federal Reserve, was lowered from 4 to 3y2 percent. In the summer, margin requirements against stock market credit were cut from 90 to 70 percent. The reserve base was increased as banks were allowed to count additional vault cash as a part of legal reserves, and as re serve requirements for the banks in the central reserve cities of New York and Chicago were cut one-half of a percentage point. In late summer, the discount rate was again lowered— this time to 3 percent. In the fall and early winter of 1960, member banks were allowed to count all vault cash as legal reserves, Even though free reserves w ere as g reat in 1960-61 as in 1958, short-term rates declined less. Long-term rates did not rise as much as during the recovery of 1958-59 and have recently declined. Treasury Bills uhh because the Federal Reserve supplied commercial with more reserves, bank liquidity improved in 1961, banks increased in importance as a source of credit. Sources for d ata used in the charts: Industrial Production, Member Bank Reserves, Reserves and Borrow ings, Bank Loans and Investments, Deposits and Currency, U. S. Gold Stock, Interest Rates, Interest Rate Differentials, Commercial Bank Liquidity, Sources of New Credit: Board of Governors, Federal Reserve System. Gross National Product: U. S. Dept, of Commerce. Prices: Bureau of Labor Statistics, U. S. Dept, of Labor. Unemployment and Unused Capacity: Board of Governors, Federal Reserve System and U. S. Dept, of Labor. Balance of Payments: U. S. Dept, of Commerce. Short-Term Interest Rates: Board of Governors, Federal Reserve Sys tem and Federal Reserve Bank of New York. Long-Term Interest Rates: Board of Governors, Federal Reserve Sys tem and M oody’s Investor’s Service. Commercial •3 • and reserve requirements at the central reserve city banks were lowered again by one percentage point. After Febru ary 20, 1961, the Federal Reserve System began to supply some additional reserves by purchasing longer-term securi ties rather than confining its purchases entirely to short term issues. In December 1961, the Board of Governors authorized an increase in the maximum rates banks could pay on savings and other time deposits. Throughout 1961, open market operations contributed towards maintaining ease in bank reserve positions, and this condition con tinued during the early months of 1962. The member banks’ first response in the spring of 1960 was to use the additional available reserves to reduce their borrowings from the Federal Reserve. By the end of that year, member banks were practically out of debt. By the middle of 1961, their excess reserves— the differ ence between actual and required reserves— exceeded reserves secured by borrowing by a substantial amount. Expressed in technical terms, the banks had turned from a net borrowed reserve position— reserves secured from borrowings exceeding excess reserves— to a free reserve position— excess reserves exceeding borrowings. During 1961 and the early months of 1962, free reserves have ranged from $381 million to $696 million. Relative sta bility in prices has made it possible for the Federal Re serve System to continue conditions of relative monetary ease, even after economic recovery was well underway. The banks initially used the additional reserves to in crease their holdings of U. S. Government and other securities, since loan demand was moderate. As recovery developed, however, loan expansion became more im portant. The greater lending and investing activity by the banks was accompanied by an increase in deposits and currency. During the second half of 1960, demand deposits and currency rose at a seasonally adjusted annual rate of 1.6 percent. The rate increased to 3.5 percent in 1961. Al though in the early months of 1962 the level of demand deposits after seasonal adjustment has changed little, there has been a sharp increase in the growth of time deposits. All of the actions of the monetary authorities helped improve the liquidity of commercial banks and their ability to lend. In addition to acquiring more reserves, these banks improved their lending power by shifting to shorter-term securities. Interest Rates and the Balance of Payments An essential part of the execution of monetary policy during this period was to supply reserves in a way that would not excessively depress short-term interest rates and thus add to the United States’ balance of payments difficulties. Short-term funds tend to move to those areas of the world where their earnings will be the greatest. Thus, if short-term interest rates in this country had been depressed unduly by the monetary authorities in their efforts to promote recovery and economic growth, trans fers of short-term funds out of the country might have been stimulated and this nation’s balance of payments deficit worsened. As it turned out, in 1960-61 short-term rates, as meas ured by the yield on Treasury bills, did not decline to the level reached in the recession of 1958, although, as measured by excess reserves, monetary ease was as great. The bill rate never averaged less than 2.2 percent for any month in the recent period, whereas in 1958 it fell to 0.8 percent. Some of the firmness in the rates on Treasury bills resulted from the Treasury Department’s concentrating its borrowings of new money in the form of short-term securities. The Federal Reserve reduced to some extent the direct impact its open market operations might have had in depressing short-term bill yields by switching some of its purchases from short-term to intermediate- and long term issues, beginning in early 1961. In the initial part of the present recovery, short-term rates remained relatively firm. Long-term rates rose less than in the comparable phase of the 1958-59 recovery, despite heavy demands for long-term funds. In recent months long-term rates have declined. A rapid growth of bank credit and a substantial flow of savings into financial institutions supplied some of the long-term funds. In addition, the Treasury supplied long-term funds to the private sectors of the economy by purchasing long-term securities for investment accounts. To a lesser extent, Federal Reserve purchases of longer-term securities may have kept rates from rising. The concentration of Treasury and Federal Reserve purchases of longer-term securities during the months of March, April, and May 1961, when corporations and state and local governments were bor rowing heavily, may have helped to push rates down. Whatever the reasons, so far in the recovery period a large volume of long-term financing has been accom plished without a substantial increase in long-term rates. Flexible M onetary Policy For about two years now, the Federal Reserve has been operating to bolster the banking system’s ability to meet expanding borrowing needs. The steadily increasing total of effective member bank reserves that has resulted from these operations, however, conceals a flexibility in adapt ing to changes in the economic environment and in using a variety of techniques in executing policy. Changes in the economic environment itself suggested to some extent the appropriate policy steps to be taken. The accumulating evidence of the recession of 1960 pointed out that a policy of restraint was no longer needed and that a stimulative policy would be desirable. A con tinuing high rate of unemployment and an under-utiliza tion of resources suggested the desirability of a policy to encourage further expansion; the absence of inflationary price pressures lessened the dangers that such a policy might otherwise incur. At the same time, another aspect of the economic en vironment— the balance of payments problem— pointed to the desirability of conducting open market operations in such a way as to minimize downward pressures on short term interest rates. The behavior of interest rates and of the credit and capital markets during the period, more over, have from time to time suggested modifications in ( Continued on Page 6) . 4 . Hesitant Recovery in Alabama When we discussed Alabama’s economy in this Review last summer, it seemed that the state would soon be ex periencing record levels of employment as well as of income. But it turned out that nonfarm employment, ad justed for seasonal variation, rose sharply only through July 1961, a mere three months after recovery got under way. This measure increased slightly between July and November, then declined steadily through March. At this point it stood barely above the recession low, whereas it increased 5.7 percent in the comparable months following the 1957-58 recession. Personal income also began to increase after April 1961. It continued to expand until November as the average number of hours worked each week and hourly earnings in manufacturing advanced beyond the rise in employment, then dropped substantially in December and January. Both personal income and manufacturing em ployment rebounded in February, and the latter declined only slightly in March. What accounts for this marked hesitancy in Alabama’s recovery? A look at the charts reveals part of the answer. Recovery nationally has been moderate, and major indi cators show that Alabama’s economy has become quite sensitive to national developments. Nonagricultural em ployment and personal income in Alabama began to turn up two months after the February 1961 trough of the national recession. Nevertheless, they increased in roughly the same proportions from February through November as in the nation. Toward the close of the year, economic activity in Alabama weakened in contrast to further expansion nationally, but since January 1962 has recov ered part of the lost ground. Before looking at the factors that caused relative weak ness in income and employment in Alabama after No vember, let us review developments that took place up through that month. Improvement in the manufacturing sector, particularly in iron and steel, and in related coke and coal production led the recovery that took place through mid-summer. Consumers, judging from the be havior of the seasonally adjusted index of retail sales developed by the University of Alabama’s Bureau of Business Research, tended to strengthen recovery forces by sharply increasing their spending as incomes rose. If the initial recovery rate was to be sustained, further stimulation from outside the state was apparently needed. A strong enough stimulus, however, was not forthcoming. A slower rate of increase in national industrial produc tion and a temporary standstill in manufacturing employ ment were mirrored in Alabama’s manufacturing activity. Most segments of the state’s manufacturing employment changed little from July through November. Employment in primary metals began to turn down after August, but because of new short-term contracts, there were offsetting employment gains in transportation equipment in the Birmingham area. Employment in activities other than manufacturing also changed little during this period, after seasonal adjust ment. Notably, state and local government employment, Recovery in Alabam a's economy since last spring has been w ea k e r than in the com parable period following the 1957*58 recession. Various indicators reveal the sensitivity of Alabam a's economy to the nation's; special circumstances account for w eakness in income and em ployment in the state around the turn of the ye a r. Percent >961»100, Seas. Adj. Percent • 5 • which continued to expand without interruption during the recession, leveled off after schools reopened in Sep tember. The relative weakness that prevailed in Alabama’s economy after November was centered in iron and steel production. Expanding at about the same rate as nation ally until the fourth quarter of 1961, output in this sector dropped off substantially after October, while increasing further in the U. S. as a whole. This divergence probably reflects differences in the product mix of Alabama mills and those in the North. The latter tend to produce greater proportions of rolled steel products, and with auto pro duction strong during the fourth quarter of 1961, the de mand for sheet steel was relatively high. Alabama’s steel manufacturers, on the other hand, specialize in pipes, wires, bars, and rails. Because imports of some of these commodities competed vigorously with domestic produc tion, Alabama’s steel output may have been particularly affected. The sharp drop-off in seasonally adjusted nonfarm employment in January was largely attributable to a labor dispute in iron and steel foundries. Then, too, bad weather reduced employment in some other areas of production. By February, however, striking iron and steel workers returned to their jobs, and manufacturing employment increased more than seasonally. Although a decline in nonmanufacturing employment was more than offset ting, personal income and retail sales rose sharply. Recent signs of improvement in economic activity and past responsiveness to changes at the national level sug gest that Alabama will make further gains this year, pro vided the U. S. economy continues to advance. The early settlement of a labor contract in steel should have a sta bilizing influence on the state’s economy. At least we can be confident that economic activity will not be affected by a speculative buildup of steel inventories followed by a major national strike, such as occurred in 1959. Just how much steel production will increase, however, is hard to predict, especially since the impact of greater foreign competition is hard to assess. At least one large contract order— an oil pipeline scheduled to be laid between Texas and New York— should improve Alabama’s steel output this year. In construction activity some promising factors are also evident. Highway construction apparently is continuing to boom, which should help Alabama’s cement industry. A statewide program of improving and expanding airport facilities is underway. Various water projects in northern Alabama are slated to bring in Federal expenditures in the fiscal year beginning July. All these activities should be reflected in nonresidential construction contract awards. During the eight months ended February 1962, such awards measured 25 percent less than in the comparable months of a year earlier because of a decline in the public works and utilities component. Differences in economic structure among various areas of Alabama make it improbable that developments in 1962 will be uniform throughout the state. This has been illustrated in the past. For example, from 1960 to 1961, the Tennessee Valley, which includes the tri-city area of Florence, Sheffield, and Tuscumbia and Huntsville, showed rapid growth compared with the state as a whole. Mobile, where growing pulp and paper and chemicals industries are located, fared better in 1961 than the industrial cities of central Alabama. A l b e r t A . H irsch This is one of a series in which economic developments in each of the Sixth District states are discussed. Developments in Georgia’s economy were analyzed in the April R e v i e w , and a discussion of Mississippi’s economy is scheduled for a forthcoming issue. RECESSION TO RECOVERY (Continued from Page 4) the techniques to be used in executing policy. The record since early 1960, if it does nothing more, demonstrates once again that monetary policy making re mains a complicated and difficult task. Policies adopted, and techniques used to execute these policies, may be appropriate at one time and inappropriate at another. The economic environment itself provides a setting, and since that environment is affected not only by the deci sions of millions of Americans but of people throughout the world, the constant changes that take place are not always easily predictable. Only through flexibility can monetary policy be adapted to the continually changing economic scene. „ _ _ C h a r les T. T aylor Bank Announcements The F irst N ation al Bank o f B elleair Bluffs, L argo, Florida, a new ly organ ized m em b e r bank, open ed fo r business on A p ril 13 and began to rem it at p a r fo r checks draw n on it when received from the F ederal R eserve Bank. Officers are H arold H. U nder w ood, President; W illiam S. D ew s, V ice P resident; Paul P. M orse, Cashier; and Jam es A . P eterson, A ssistan t Cashier. C apital totals $350,000, and surplus and un divided profits, $420,000 . On A p ril 15, the Social C ircle Bank, Social Circle, G eorgia, a n on m em ber bank, began to rem it at par. Officers include C leon E. M oore, P resident; E. L . Sanders, E xecu tive Vice P resident; Sidney Berger, V ice P resident; and M ary S. Chandler, Cashier. C apital totals $50,000, and surplus and un divided profits, $99,109. The tab le on Debits to In d ivid u a l Demand Deposit Accounts, which has been omitted this month, is scheduled to reap p ear in the June R EV IEW . Copies of the current tab le a re a v a ila b le upon request to the Research Department of this B ank. REVISION IN SIXTH DISTRICT STATISTICS Beginning w ith this issue, the statistical tab le on page 7 is pre sented in a revised form , m aking it possible fo r us to show ad d i tio n al statistical series an d , in some cases, more up-to-date in for m ation. A pp earing fo r the first time are the follo w in g statistical series: instalm ent credit at com mercial b a n k s; construction em ployment; farm em ploym ent; insured unem ploym ent; ave rag e w eek ly hours w orked in m an ufactu rin g ; and member bank loans and deposits in leading cities. The furn iture store sales indexes and the turnover o f dem and deposits w ill no longer be shown. A ll indexes h ave been changed from the 1947-49 base to the new standard base o f 1957-59, recommended by the Bureau of the Budget and g enerally being adopted by o rg anizations prepar ing indexes. These indexes are presented as percentages o f the averag e during the base period, i.e., 1 9 5 7 -5 9 = 100. Data fo r the preceding months not shown in the tab le m ay be obtained upon request from the Research Departm ent o f this B ank. • 6 • S ix t h D is t r ic t S t a t is t ic s Seasonally Adjusted (All data are indexes, Latest Month (1962) One Month Ago 1957-59 = 100, Two Months Ago SIXTH DISTRICT INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . . Farm Cash R e c e ip t s ........................................ Crops ............................................................... Livestock ......................................................... Department Store S a l e s * / * * ....................... Department Store S t o c k s * ............................. Instalment Credit at Banks,* (Mil. $) New Loans......................................................... Repayments................................................... PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................ Manufacturing.............................................. Apparel......................................................... Chemicals................................................... Fabricated M e t a ls .................................. Food............................................................... Lbr., Wood Prod., Furn. & Fix. . . . Paper ......................................................... Primary M e ta ls ........................................ Textiles ................................................... Transportation Equipment . . . . Nonmanufacturing........................................ Construction.............................................. Farm Employment.............................................. Insured Unemployment, (Percent cf Cov. Emp. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Manufacturing P a y r o lls .................................. Construction Contracts*.................................. R e sid e n tia l................................................... All O th e r......................................................... Electric Power P ro d u ctio n **....................... Cotton Consum ption**.................................. Petrol. Prod, in Coastal La. and Miss.*‘ FINANCE AND BANKING Member Bank Loans* All B a n k s ......................................................... Leading C i t i e s .............................................. Member Bank Deposits* All B a n k s ......................................................... Leading C i t i e s .............................................. Bank D e b it s * / * * .............................................. unless indicated otherwise.) One Year Ago Latest Month (1962) One Month Ago Two Months Ago One Year Ago G EO RGIA Feb. 37,411 111 Feb. 112 Feb. Feb. 108 Mar. 110 118 Mar. 36,505 114 111 104 113 115 36,850 107 95 113 107 118 35,093 115 121 108 104 110 Mar. Mar. 136 124 142 130 124 127 120 123 Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. Feb. Feb. Feb. Feb. Mar. Mar. 105 104 114 100 105 105 97 102 94 96 99 105 94 91 4.1 40.9 121 133 112 151 120 109 150 105 104 114 100 104 105 96 102 94 96 101 106 94 85 4.5 40.9 121 99 100 99 130 104 146 105 103 113 100 104 105 94 101 91 96 98 105 89 83 5.0 37.4 112 92 103 83 122 101 142 103 100 107 101 101 104 94 103 89 95 85 104 90 96 6.1 39.9 109 90 92 88 119 91 129 Mar. Mar. 132 131 130 128 129 127 123 123 Mar. Mar. Mar. 121 120 127 120 119 121 117 118 119 111 111 113 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . Feb. Farm Cash R e ce ip ts........................................Feb. Department Store S a le s * * ............................ Mar. 6,917 Ill 113 6,693 103 103 6,823 113 103 6,431 109 104 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Mar. M anufacturing..............................................Mar. Nonmanufacturing........................................Mar. Construction..............................................Mar. Farm Employment..............................................Mar. Insured Unemployment, (Percent of Cov. Emp.) Mar. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Mar. Manufacturing P a y ro lls .................................. Mar. 105 102 106 102 84 3.9 39.9 119 105 102 106 105 80 4.5 39.9 118 105 101 106 97 77 5.1 37.9 111 101 98 103 96 91 6.8 39.5 106 136 126 132 133 124 126 133 122 121 129 114 115 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . Feb. Farm Cash R e ce ip ts........................................Feb. Department Store S a le s * / * * .......................Mar. 5,624 101 102 5,558 114 105 5,560 112 97 5,339 98 100 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Mar. Manufacturing..............................................Mar. Nonmanufacturing........................................Mar. Construction..............................................Mar. Farm Employment..............................................Mar. Insured Unemployment, (Percent of Cov. Emp.) Mar. Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Mar. Manufacturing P a y ro lls .................................. Mar. 98 94 99 80 100 7.1 41.3 105 99 93 100 79 89 6.6 42.9 110 98 93 100 75 81 5.6 38.3 101 98 95 99 79 101 7.6 40.6 101 128 Ill 120 126 111 112 126 110 108 113 104 Feb. Feb. Mar. 2,843 109 104 2,847 148 108 2,759 113 100 2,647 93 98 Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. 108 110 107 98 91 4.8 40.7 127 108 109 108 96 79 5.5 40.9 127 107 108 107 89 79 6.4 34.1 105 105 102 106 94 95 7.4 38.9 107 Mar. Mar. Mar. 148 127 140 145 124 136 146 124 128 131 116 123 Feb. Feb. Mar. 5,980 96 103 5,898 106 100 5,834 102 97 5,670 97 96 Mar. Mar. Mar. Mar. Mar. Mar. Mar. Mar. 104 106 103 118 90 5.0 41.0 121 104 106 103 118 86 5.4 40.8 120 103 105 102 102 82 5.9 38.0 112 102 103 102 109 93 7.1 39.8 109 Mar. Mar. Mar. 134 124 130 133 123 119 130 119 116 123 113 117 FINANCE AND BANKING Member Bank L o a n s ........................................Mar. Member Bank D ep osits.................................. Mar. Bank D e b its **................................................... Mar. LO UISIANA FINANCE AND BANKING Member Bank Loans*........................................Mar. Member Bank Deposits*.................................. Mar. Bank D e b its * / * * ..............................................Mar. 100 M ISSISSIPPI INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) A LA BA M A INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . Farm Cash R e ce ip ts.................................. . Department Store S a le s * * ....................... PRODUCTION AND EMPLOYMENT Nonfarm Employment.................................. . M anufacturing........................................ Nonmanufacturing.................................. Construction........................................ Farm Employment........................................ . Insured Unemployment, (Percent of Cov. Emp).) Avg. Weekly Hrs. in Mfg., (Hrs.) . . Manufacturing Payrolls . . . . . FINANCE AND BANKING Member Bank L o a n s ....................... Member Bank Deposits . . . . Bank D e b its * * .................................. . Feb. Feb. Mar. 5,127 107 111 4,936 111 106 5,126 110 100 4,813 104 105 Mar. Mar. Mar. Mar. Mar. 101 97 103 92 84 4.5 40.8 116 101 97 104 91 82 5.1 41.0 115 102 95 105 90 80 5.7 35.9 102 101 93 104 94 92 6.9 39.1 101 Mar. Mar. Mar. 133 119 124 129 117 122 132 116 116 127 113 111 PRODUCTION AND EMPLOYMENT Farm FINANCE AND BANKING TENNESSEE FLORIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) . Feb. 10,920 Farm Cash R e ce ip ts........................................Feb. 115 Department Store S a le s * * ............................ Mar. 141 PRODUCTION AND EMPLOYMENT Nonfarm Employment........................................Mar. 112 M anufacturing..............................................Mar. 119 Nonmanufacturing........................................Mar. Ill Construction..............................................Mar. 92 Farm Employment..............................................Mar. 96 Insured Unemployment, (Percent of Cov. Emp.) Mar. 3.6 Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Mar. 41.8 Manufacturing P a y ro lls .................................. Mar. 145 FINANCE AND BANKING Member Bank L o a n s ........................................Mar. 128 Member Bank D eposits.................................. Mar. 121 Bank D e b its **................................................... Mar. 125 10,573 109 127 10,748 113 125 10,193 134 127 112 118 111 90 94 3.8 41.9 146 111 117 110 90 97 4.1 40.8 142 108 113 107 87 101 5.1 41.2 132 125 120 121 124 117 124 121 111 115 INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Farm Cash R e ce ip ts.................................. Department Store Sales*/** . . . . PRODUCTION AND EMPLOYMENT Nonfarm Employment.................................. M anufacturing........................................ Nonmanufacturing.................................. Construction........................................ Farm Employment........................................ FINANCE AND BANKING Bank Debits*/* *For Sixth District area only. Other totals for entire six states. **Daily average basis. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U.S. Bureau of Mines; elec. power prod., Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. NOTE: The series on manufacturing payrolls has been revised by adjustment to the Dept, of Commerce annual estimates of manufacturing income. • 7 • D I S T R I C T B U S I N E S S C O N D I T I O N S I I I I I I | I I I I I I I I I I I j I I I I I I I I I I I j I I I _ Billio n s of D ollars Annual R ate - S«as, Adj. Personal Income. M ,tost m easures of District business activity posted better than se a sonal gains in March. Consumer spending increased following the record level of personal income reached in February. Member bank loans rebounded from the previous two months’ lull, and consumer credit outstanding at com mercial banks showed the largest monthly gain .in almost two years. Farm employment continued to expancif^as favorably f a th e r * helped increase the normal pace of spring work. On the othef ftah4- ‘^ w a r m employment, which had registered substantial gains in the previous two months, remained un changed, as a moderate rise in manufacturing was offset by declines in other sectors. ^ IS v* Consumer spending strengthened som ew hat during M arch, p artia lly reflecting the sizab le increase in personal income in February. Bank debits, a measure of total spending, advanced for the second consecutive month to a record high. Sales at furniture stores pushed to the highest volume in two years. Sales at household appliance' stores, however, remained virtually un changed, and department store sales declined during March. Preliminary April figures show a slight further decline in department store sales. More compre hensive figures for February indicate that consumer spending rose substantially in that month. Sales of firms operating one to ten outlets increased, and sales tax collections rose markedly. v* G ains in manufacturing em ploym ent w ere w idespread , occurring in a ll District states except A labam a. In most states, however, the gains were more than offset by decreases in nonmanufacturing employment. Manu facturing production workers put in a full work week during March, averaging the same number of hours as in February. Manufacturing payrolls also held at an advanced level. Construction em ploym ent showed additional slight im provem ent in March. The latest three-month average of construction contracts rose to a new high, largely because of a big utility project in Tennessee. Cotton consumption, an index of activity in the District’s important textile industry, rose substantially to the higjhest volume in nearly three years. i* u* The pace quickened in the farm economy as farm ers pushed ahead with their spring w ork. Improved weather in most areas enabled them to accomplish field work and planting that had been delayed by rain. Spurred by these activities, farm employment rose in March. Marketings of livestock and poultry products also increased as farmers sold more milk, eggs, and pork. The index of prices received by farmers slackened in April as citrus, milk, hog, egg, and broiler prices declined. Recent trends in production and prices, how ever, indicate that cash receipts from farm marketings declined only slightly, if at all. * * * P ER C E N T OF R E Q U IR E D Substantial gains w ere registered in loans, investm ents, and deposits a t mem ber banks during March. Loans at banks in leading cities, seasonally RESERVES Excess Reserves A . ^ A *-4.6 Borrowings from V , F. R. Bank i i i i i I i i i i I960 i r, , ,■ P. 1961 t m fy *Seas. adj. figures; not an index. 3 i I i i m 1962 i adjusted, rose further during April. The increase in investments in March was concentrated at banks outside leading cities. Total member bank deposits, seasonally adjusted, also increased slightly, with time deposits again account ing for the gain. Deposits have trended upward in recent months in all states except Louisiana, where they have changed little since October.
@FedFRASER