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In T h i s Is s u e
Southeastern Ports
Loan Losses Surge in 1975
District Business Conditions

M O N T H L Y E V I E W
R
Fe d e ra l R e s e r v e B a n k o f A tla n ta
Federal Reserve Bank Of Atlanta
Federal Reserve Station
Atlanta, Georgia 30303
Address Correction Requested




BU LK RATE
U .S . P O S T A G E

PAID
A t la n t a , G e o r g ia
P e rm it N o . 2 9 2

Fe a tu re s :
Southeastern Ports.................151
Se a p o rts

in

th e

S o u th

a re

p l a y i n g a b i g g e r p a r t in t h e
r e g io n 's

e c o n o m ic

gro w th

th a n e v e r b e fo re .

Loan Losses Surge in 1975 . . .157
N ow Available:

M em ber

Estimating Sixth District
Consumer Spending
The

second

Federal

in

a

Reserve

series

of

Bank of At­

l a n t a W o r k i n g P a p e r s is n o w
available
copies

by

can

request.
be

Single

obtained

by

banks

D is t r i c t

e x p e r ie n c e d

lo a n

lo s s e s in 1 9 7 5

A tlanta,

Atlanta,

G eorgia

h ig h
a re

164

D e c l i n e s in e m p l o y m e n t a n d
c o n tra c ts

of

and

District Business
Conditions
th e

Bank

S ix th

c o v e r t h e ir lo s s e s .

m ent,

Reserve

th e

n o w s e t t in g a s id e r e s e r v e s to

w riting the R esearch D e p a rt­
Federal

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Review, Vol. LXI, No. 10. Free subscription
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v
.


S o u th e a s te rn P o rts
by Brian D. Diitenhafer

If the word "seaport" evokes images of rusty
ships alongside ramshackle buildings on
wooden piers and workmen who look as
worn as their surroundings, you haven't
visited a seaport in the Southeast recently.
Today's economy demands fast, reliable
transportation of raw materials and finished
goods, and the Sixth District ports have
modernized and expanded their ability to
handle many types of cargo to meet these
needs.1The presence of modern, efficient
ports is vital to the continued growth and
development of the Southeast, and the evi­
dence shows that area ports can meet the needs
of local and national shippers.
Despite recent growth in air cargo traffic,
virtually all international shipments travel by
water. Less than one-half of one percent of the
weight of international shipments originating
in or destined for the U. S. goes by air. Only the
most valuable cargoes are routinely transported
by air. Even when measured by the value of
shipments, 90 percent of our international
commerce travels by water. As international
’The Southeast here is defined to include those states wholly or
partly in the Sixth Federal Reserve District.
FEDERAL RESERVE BANK OF ATLANTA




trade grows in importance to the U. S. econ­
omy, the importance of District ports to the
region's economy increases.
Who Cares? Everyone should care about
ports because foreign trade is important to
many communities that are not seaports. Why
local industries are interested in international
trade may not be immediately apparent.
Indirect export relationships between industries
can take three basic forms. First, local firms may
supply exporters in other sections of the coun­
try; second, labor and other resources needed
by firms directly involved in export supply are
bought in the local community; and third, a
gain in the national economy caused by foreign
exports indirectly aids the local economy by
increasing demand for other products.
The community's stake in imports may be
less apparent. Generally, foreign trade takes
place only when the foreign goods are of a
higher quality or better price than those pro­
duced domestically. The consumer feels the
benefits of trade when he gets either better
quality goods or a lower price. However, im­
ports may cause specific injury to a local in­
dustry when imports are substituted for local
products. Because of the concentrated impact
151

TABLE

U. S. C U S T O M S

D IS T R IC T S

RANKED

BY V A LU E

CUSTOMS DISTRICT*
N ew York, N ew Y o rk
N ew O rle an s, L o u is ia n a
H o u sto n , T e x a s
N orfolk, V irg in ia
B a ltim ore, M a ry la n d
S a n F ra n c isc o , C a lifo rn ia
L o s A n g e le s, C a lifo rn ia
P ortlan d, O re go n
G a lve ston , T e x a s
P h ila d e lp h ia , P e n n s y lv a n ia
Seattle, W a s h in g t o n
M ia m i, F lo rid a
P ort A rth ur, T e xa s
M o bile, A la b a m a
C h a rle sto n , S o u th C a ro lin a
S a v a n n a h , G e orgia
C le ve la n d , O hio
T a m p a , F lo rid a
D uluth, M in n e s o ta
W ilm in g to n , N o rth C a ro lin a
B o sto n , M a s s a c h u s e t t s
S a n Juan, P u e rto R ic o
C h ica go , Illin o is
A n c h o ra g e , A la sk a
Detroit, M ic h ig a n
J a c k so n v ille , F lo rid a

OF TOTAL

W ATERBORNE

-Exports-------- --------------)

(--------Rank:
1974

1

Rank:
1964

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
21
22
23
24
25

1
2
3
4
7
5
8
11
6
9
14
20
10
12
17
18
15
24
16
22
21
29
13
28
19
26

Value:
1974
($ mil.)

Value:
1964
($ mil.)

10,793
9,613
4,809
4,725
3,555
2,953
2,541
2 ,199
2,137
1,893
1,429
1,126
1,102
1,097
798
7 66
712
701
696
527
411
4 11
384
3 00
230
185

6,062
2,373
1,124
1,015
714
784
569
445
744
5 20
290
132
461
381
163
160
274
117
254
122
126
30
3 12
32
155
55

EXPORTS

AND

IM P O R T S

(-------------- --------Imports------------ ---------- )
Rank:
1974
1
4
8
9
5
7
2
16
12
3
6
17
13
20
18
15
23
26
32
25
11
10
19
30
24
14

Rank:
1964
1
4
8
9
5
6
3
18
23
2
15
22
30
20
14
17
13
24
33
25
7
12
11
34
16
19

Value:
1974
($ mil.)

Value:
1964
($ mil.)

16,9 0 9
5,111
3,046
2,199
3,651
3,297
7,691
858
1,690
6,339
3,425
8 02
1,357
64 7
783
8 83
501
418
42
432
1,715
2,012
696
101
495
1,066

5,128
799
457
333
73 6
695
95 7
152
105
1,224
180
139
22
1 46
1 84
1 60
188
73
13
67
58 3
23 6
30 1
6
175
151

*1 9 7 4 d e fin itio n s of c u s t o m s d is tric ts h ave been used, e x ce p t “J a c k s o n v ille ” , w h ic h is the A tla n tic C o a s t port of the
T a m p a D istrict, an d "T a m p a ", w h ic h in c lu d e s o n ly the G u lf C o a st ports of that d istrict.
So u rc e :

U. S. D e p a rtm e n t of C o m m e rc e FT985.

o f i m p o r t s o n lo c a l in d u s t r ie s , w e u s u a lly h e a r

a s c o a l a n d p h o s p h a t e , a n d a g r ic u lt u r a l

m o r e a b o u t th e h a r m i m p o r t s c a u s e to lo c a l

p r o d u c t s , s u c h a s s o y b e a n s a n d rice , a re n o t

e c o n o m i e s a n d le ss a b o u t t h e b e n e f it s o f

i n c l u d e d in t h e n u m b e r o f j o b s c r e a t e d b y

o b t a i n i n g p r o d u c t s e it h e r i m p o s s i b l e o r m u c h

e x p o r t s . [T h e e x p o r t s o f h o m o g e n e o u s a g r i c u l ­

m o r e c o s t ly t o p r o d u c e d o m e s t i c a ll y .

tu ra l p r o d u c t s , s u c h a s s o y b e a n s , w h e a t a n d

T h e d ir e c t b e n e f it s o f f o r e i g n t r a d e a re

r ic e m a k e it i m p o s s i b l e t o d e t e r m i n e p r e c i s e ly

e a s ily d i s c e r n e d , a t le a s t f o r th e m a n u f a c t u r i n g

t h e o r i g i n o f t h e a g r ic u lt u r a l p r o d u c t s . S o it is

s e c t o r . In S ix th D i s t r i c t sta te s, t h r e e p e r c e n t o f

v ir t u a lly i m p o s s i b l e t o j u d g e a c c u r a t e ly th e

th e m a n u f a c t u r i n g e m p l o y m e n t h a s a d ir e c t lin k

e x te n t o f lo c a l e m p l o y m e n t g e n e r a t e d in th e

to e x p o r t sa le s . T h e n u m b e r o f w o r k e r s i n ­

p r o d u c t i o n o f a g r ic u lt u r a l p r o d u c t s f o r e x p o rt.]

v o l v e d v a r ie s f r o m a l o w o f 5 ,3 0 0 in M i s s i s s i p p i
to a h ig h o f 1 3 ,6 0 0 in G e o r g i a (s e e T a b le 3). A

IN T E R N A T IO N A L T R A D E A N D T H E P O R T S

to ta l o f n e a r ly 5 7 ,0 0 0 w o r k e r s in t h e S ix th D i s ­
tric t o w e t h e ir j o b s d i r e c t l y t o e x p o r t s o f m a n u ­

In th e d e c a d e e n d i n g in 1 9 7 5 , t h e p e r c e n t a g e

f a c t u r e d p r o d u c t s . T h e s e w o r k e r s , in tu rn ,

o f e x p o rts fro m

c o n s u m e j o c a l s e r v ic e s a n d p r o d u c t s w h ic h

d o u b l e d , i n c r e a s i n g f r o m 3.8 to 7.2 p e r c e n t o f

s p r e a d s t h e i m p a c t o f e x p o r t - r e la t e d e m p l o y ­

th e G N P . I m p o r t s f r o m a b r o a d , b o t h r a w

t h e U . S. e c o n o m y n e a r ly

m e n t t h r o u g h o u t th e c o m m u n it y . T h e se in ­

m a t e r ia ls a n d f i n i s h e d g o o d s , a ls o ro se ,

d ir e c t b e n e f it s o f f o r e i g n t r a d e a re n o t u s u a lly

c o n t in u in g a tre n d t o w a r d m o r e c o m p le t e

c o u n t e d b e c a u s e t h e y a r e h a r d e r t o r e c o g n iz e .
T h e s e fig u re s a p p ly

only

to m a n u f a c t u r e d

p r o d u c t s ; e x p o r t s o f m in e r a l p r o d u c t s , s u c h
152




in t e g r a t io n o f t h e w o r l d 's e c o n o m i e s . T h e v a s t
m a j o r it y o f U n i t e d S t a t e s f o r e i g n t r a d e m o v e s
b y w a t e r b o r n e t ra n s p o rta tio n , a n d s o u t h N O V EM B ER 1976, M O N TH LY REVIEW

eastern manufacturers routinely ship approxi­
mately 95 percent of their exports and imports
through District ports.
The growth of foreign trade moving through
the ports has been quite substantial. Between
1964 and 1974, the value of foreign commerce
moving through southeastern ports jumped
378 percent, outstripping the 296 percent gain
in total U. S. foreign commerce during the same
period. (See Chart 1.) In total, District ports
handled nearly 18 percent of the value of
U. S. imports and exports in 1974 and 20
percent of the weight of imports and exports
for the U. S. in that year.
In 1974, the New Orleans-Louisiana Customs
District rivaled the New York District in the
value of waterborne exports. This contrasts with
the performance of 10 years before, when the
value of New Orleans' shipments was only
approximately 35 percent of the New York
total. Table 1 shows the rank of U. S. Customs
Districts in 1964 and 1974. Based on the value
of exports, New Orleans ranks second in the
United States, and the Miami-Florida Customs
District moved from 20th to 12th in exports in
the 10-year period. New York retains its
position as the premiere seaport for imports
of waterborne commerce.
Southeastern seaports service ships from all
parts of the world. However, the bulk of their
exports, 45 percent by weight, eventually goes to
Europe or other North Atlantic ports outside the
U. S. Although the Southeast is geographically
near the Caribbean Basin, less than 16 percent
of the export flow from southeastern ports
moves to that area. Imports nearly reverse that
pattern of trade. More than half (52.8 percent)
of the imports flowing through the South
Atlantic and Gulf Coast ports originate in Carib­
bean Basin countries, while imports from
Europe and other North Atlantic areas account
for less than 15 percent of the total.
Not all the traffic moving through south­
eastern ports is international cargo. Interna­
tional freight ranges from 34 percent of the
total tonnage in Baton Rouge to 64 percent in
Savannah. The rest of the freight traffic through
the ports is destined for either intraport areas
or other U. S. ports. Movement of traffic
through the Intracoastal Waterway and the in­
land waterways system is substantial, and all
southeastern ports receive and ship a significant
amount of their traffic on the inland waterways
system. Even such seemingly landlocked cities
FEDERAL RESERVE BANK OF ATLANTA




TABLE

F R E IG H T

T R A F F IC

2

THROUGH

S IX T H

D I S T R I C T P O R T S , 1974
(sh o rt to n s)
Total
Tonnage

H a rb o r
S a v a n n a h H arbor, G eorgia
C o m m o d ity
R e sid u a l Fuel Oil
C ru d e P etrole um
G a so lin e
C la y
L im e sto n e

P e rce n t of
Total Port
Tonnage

9,698,679
1,632,035
913,095
7 8 9 ,1 3 4
678 ,6 3 0
6 2 8 ,7 4 2

Ja c k s o n v ille H arbor, F lo rid a
C o m m o d ity
R e s id u a l Fu el Oil
G a so lin e
D istilla te Fu el Oil
B u ild in g C e m e n t
P a p e r a n d P a p e rb o a rd

14,794,938

M ia m i H arbor, Flo rida
C o m m o d ity
R e s id u a l Fu el Oil
A sp h a lt, Tar a n d P itc h e s
S ta n d a rd N e w s p rin t P a p er
D istilla te Fuel Oil
M a c h in e ry, E xc e p t Elec trica l

41,1 4 1 ,4 0 7

T a m p a H arbor, Flo rida
C o m m o d ity
P h o sp h a te R o c k
G a so lin e
R e sid u a l Fuel Oil
C oa l a n d L ig n ite
S u lp h u r, L iq u id

40,918,807

M o b ile H arbor, A la b a m a
C o m m o d ity
Iron Ore a n d C o n c e n tra te s
C ru d e P e tro le u m
C oal a n d L ig n ite
A lu m in u m Ore, C o n c e n tra te s
M a rin e S h e lls, U n m a n u f.

33,153,954

P a s c a g o u la H arbor, M is s .
C o m m o d ity
G a so lin e
C ru d e P etrole um
R e s id u a l F u e l Oil
W h eat
A sp h a lt, T a r a n d P itc h e s

16.8
9.4
8.1
7.0
6.5

13 ,073,153

Port of N ew O rle a n s
C o m m o d ity
C ru d e P etrole um
R e sid u a l Fuel Oil
C oal a n d L ig n ite
G a s o lin e
G ra in M e ta l P ro d u c ts

5,204,118
2,328,648
1,221,714
3 9 5 ,3 7 9
267 ,8 0 0

2,459,468
156,385
137,096
124,868
8 7,217

17,696,150
5,215,535
3,839,957
3 ,4 8 0 ,8 4 9
2,161,457

10,609,430
4,487,795
3 ,970,669
2,028,251
1,579,906

3,600,768
1,425,126
1,249,960
919,466
902,111

35.2
15.7
8.3
2.7
1.8

59.4
3.8
3.3
3.0
2.1

43.3
12.8
9.4
8.5
5.3

32.0
13.5
12.0
6.1
4.8

27,5
10.9
9.6
7.0
6.9

1 4 4 ,189,409
23,742,085
9,537,581
8,751,137
5,776,086
5,016,691

P ort of B a to n R ou ge, La.
C o m m o d ity
C ru d e P etrole um
B a s ic C hem . & Prod. Nec.
A lu m in u m O res, Cone.
C orn
Soybeans

59,126,282

Port of La ke C h a rle s, La.
C o m m o d ity
C ru d e P etrole um
R e sid u a l Fu el Oil
B a s ic C he m . & Prod. Nec.
G a s o lin e
M a rin e S h e lls, U n m a n u f.

16.5
6.6
6.1
4.0
3.5

3 4 ,712,249

So u rc e :

6,491,438
4,939,173
4 ,792,753
3,464,072
3,106,729

7 ,486,188
6,273,876
3,296,683
2,741,686
1,381,618

11.0
8.4
8.1
5.9
5.3

21.6
18.1
9.5
7.9
4.0

D e p a rtm e n t of the A rm y C o rp s of E n ginee
W a te rb o rn e C o m m e rc e of the U nite d States,
C a le n d a r Y e a r 1974, P a rt 1 a n d Part 2.

153

TABLE 3
M A N U F A C T U R IN G
TO

JO BS

D IR E C T L Y

EXPORTS

RELATED

(1 9 7 2 )
(000)

A la b a m a

7.2

G e o rgia

13.6

F lo rid a

11.9

L o u is ia n a

6.9

M is s is s ip p i

5.3

T e n n e ss e e

12.0

S ix th D istric t S ta te s

56.9

So u rc e :

U. S. D e p a rtm e n t of C o m m e rc e , S u r v e y of the
O rigin of E x p o rts of M a n u f a c t u r in g E s t a b lis h ­
m e n ts in 1972.

as Nashville have access to major seaports be­
cause of the well-developed inland waterways
system of rivers and canals. The importance of
inland water traffic varies from port to port. It
is far more important to New Orleans, which
benefits from the entire Mississippi River in­
land waterways system, than it is to the port of
Savannah, which has only a minor large river
system to serve it.
The portion of traffic moving in international
commerce has stayed relatively the same
during the past ten years. For example, a port
such as Savannah, which in 1974 considered 64
percent of its traffic as either imports or
exports, had 65 percent of its traffic in the
same category in 1964. The port of Pascagoula
had only 27 percent of its cargo destined for
international trade in 1974, while in 1964, 31
percent of its tonnage was in that classification.
Total tonnage, both domestic and interna­
tional, moving through the ports has increased
significantly in the past decade. The rate of
growth varies from port to port, but the in­
creases range from nearly 40 percent in
Pascagoula, Mississippi, to 200 percent in
Miami. (See Figure 1). A great deal of the ton­
nage gain stems from an increase in the volume
of petroleum imports moving through the
ports. Even areas which produce petroleum are
now net importers of oil. Consequently,
residual fuel oil or crude petroleum is one of
the top five products in terms of tonnage for
each of the Sixth District ports. Other kinds of
products, even bulk commodities for which
southeastern ports are most noted, run a poor
fourth or fifth to petroleum products. For ex­
ample, exports of clay and limestone from
Savannah harbor account for only 13.5 percent
154




of the port's total tonnage, while crude oil
products make up more than 35 percent. Even
such a major general cargo port as New Orleans
shows crude petroleum and residual fuel oils
as the number one and two commodities in
terms of tonnage.
Ports Are Different. A coastal city identifying
itself as a seaport is likely to be organized
differently from other cities. Seaports attract
highly specialized workers and dedicate a
substantial portion of the industrial area to
port-related activities. Ports offer a number of
jobs in occupations peculiar to cities that
specialize in moving foreign commerce. Sea­
ports need specialized kinds of labor to help
move cargo and specialized kinds of financial
and business services to aid in the complex
paper work of international transactions. Cus­
toms brokers and foreign freight forwarders
provide some of these special services and are
the international traffic managers for importers
and exporters. These specialized workers,
although small in number, play a crucial role in
moving foreign commerce. They work closely
with the government officials in the Customs
Bureau of the U. S. Treasury and at the
Federal Maritime Commission, smoothing the
way through the complex of government
regulations, clearances, bank loans and
insurance for producers unfamiliar with the
red tape of moving goods in foreign trade.
Customs brokers assist importers in selecting
customs classifications and duties for each
product imported, handle bonding require­
ments, arrange for storage, negotiate insurance
and arrange for inspection services and inland
distribution. Foreign freight forwarders are
the export counterpart of the customs brokers
and arrange for ocean and air transportation,
negotiate U. S. government customs require­
ments, prepare invoices and assist clients in
buying and selling foreign exchange, prepare
drafts, and documents and arrange export
packaging. This kind of service, plus ware­
housing, packaging, marine insurance
brokerage and ship service and repair,
provides job opportunities different from
those of other cities.
The presence of a port greatly influences
the geographic arrangement of a city, with the
older part of a city generally associated with
the port activity. In many cases, the city owes
its original existence to the availability of a
good harbor. In addition, seaports have at­
tracted industries which process materials at
N O V EM B ER 1976, M O N T H L Y REVIEW

their point of transshipment from sea to land
conveyance, and these industries usually cluster
near the port area. Jobs in these industries are
directly linked to the ports and they provide
much employment beyond that outside the
realm of shipping goods and running a port.
Nearly every seaport in the Sixth District
has conducted a special study designed to
evaluate the economic impact of the port on
the surrounding area. An important feature of
these studies is the estimate of the number of
additional jobs created in the area because of
the presence of the port. Although the precise
employment multiplier calculated in these
studies varies from port to port, there is agree­
ment that the number of jobs generated is
several times the number directly employed in
port-related activities. For example, a study on
the impact of the port of Mobile upon the
Alabama economy, calculated a regional em­
ployment multiplier of three.2 In this way, the
direct employment impact of the port, 41,994
jobs, is estimated to generate a total of 125,000
jobs in Alabama's economy and $1.3 billion in
wages and farm income. The employment
multiplier can be interpreted to mean that for
each person directly employed in the port of
Mobile activities, approximately two secondary
or indirect jobs are generated. Studies, done
in other places and at other times for each of
the ports of the Sixth District, show similar
findings. We can confidently say that the ports
of the District generate employment far
beyond the immediate area and far in excess
of the number of people directly employed in
the ports.
Port Personalities. Each port in the District
has a personality formed by the type of goods
it handles. This personality in turn reflects the
commercial and industrial nature of the area
which is served by the port. Certain ports
specialize in the export of commodities, such
as phosphate rock in the port of Tampa. Others
are noted more for general cargo and the
frequency of ships calling at the harbor.
Railroad freight rates are monitored by and
posted with the Interstate Commerce Commis­
sion. In theory, goods should move through
the nearest port to minimize freight charges.
But because freight charges to many ports are
nearly identical, distance to many of the ports
in the District has less importance than the
2Prepared in 1973 by the Department of Economics, University of
South Alabama. A partial list of similar studies of other District
ports appears as Appendix A.
FEDERAL RESERVE BANK O F ATLANTA




schedule of ships docking or the specialized
services offered by the port. For example, a
freight shipment from the Midwest bound
through a port could be handled at either
Savannah or Jacksonville, depending upon the
availability of a ship in harbor on the date
when the shipper wants his goods to move. On
the other hand, a port such as New Orleans
has a large flow of commerce from a wide area
moving through a very highly developed river
system. Thus, the barge traffic moving down the
Mississippi collects goods and commodities
from the entire heartland of the United States
in the river system from the Rocky Mountains
to the Appalachians. In large measure, this flow
of water-borne traffic by inland waterways ac­
counts for the popularity of the port of New
Orleans and for the large volume and value
of goods flowing through it.
On the import side, the needs of the area
served by the port have a large impact on the
freight moving through it. Tampa, as another
example, handles a great deal of fuel oil in bulk
form from Caribbean refineries. The great
demand for oil stems from an electric gene­
rating station, requiring large quantities of fuel
oil for its operation. The port of Savannah im­
ports large quantities of jute destined for the
carpet mills in north Georgia, where it is used
as a backing for carpets and rugs. Table 2 shows
a breakdown of the most important products
moving through the major District ports based
upon their weight.
155

PORT MODERNIZATION
A visitor to the ports of the Sixth District
immediately sees the huge volume of new
construction designed to accommodate the
tremendous change in transportation tech­
nology, which has occurred during the past
fifteen years. For example, the image of a port
as a crowded warehouse area has given way to
wide-open areas designed to allow the stacking
of containers near the piers. Containers are
strong van-like carriers which can be moved by
truck, crane, ship, barge or airplane. A shipper
can pack a container at his plant and have it
unpacked at the ultimate destination. This
saves damage which might result from multiple
handling of less compact and protected ship­
ping crates. The efficiency of this method
makes it quite popular. During the past fifteen
years, the switch of conventional general cargo
ships to container ships has been virtually ac­
complished. The restructuring of loading areas
of ports, with paved open spaces near wharves
for quick stacking and loading when ships are
in port, is a direct result of this transition. A
sizable investment by ports over the past seven
years has been in facilities to accommodate
container ships. In addition to the new design
for piers and cargo areas, large cranes have
been installed at most District ports to accom­
modate the handling of large containers.
The ports have also changed to new bargecarrying ships that load both cargo and river
barges directly onto the ships to be unloaded
onto the inland waterway system at their ulti­
mate destination. Another relatively new
development is the roll-on, roll off, or "ro-ro"
van-carrying ship, which allows vans, heavy
machinery and other kinds of mobile cargo to
be driven directly into the ship.
Ports are constantly developing specialized
bulk cargo-handling facilities to accommodate
the types of cargo which are most important
to them. For example, Mobile harbor has a
specialized bulk-handling facility for coal, while
Lake Charles, Louisiana, has specialized bulkhandling facilities for grain. Form 1966 to 1972,
investment in such specialized facilities totaled
$26 million in South Atlantic ports and $21
million in Gulf ports. The high level of invest­
ment in these facilities is continuing, according
to the U. S. Department of Commerce.3
Port development in District ports is pro­

ceeding at a pace that will allow ports to
handle the cargo and the trade needs of the
District economy for years to come. For ex­
ample, advance cargo-handling facilities, like
container terminals, are still expanding. The
days when pier and a cargo shed would meet
the needs of a shipper are nearly gone. Large
berths to accommodate vessels of increasing
size and more acreage to provide container
storage space are needed, as are heavy cranes
and other equipment for servicing vessels.
The ability of southeastern ports to provide
relatively cheap and reliable transportation
is the key to their future. Southeastern ports
are moving to meet the needs of the region's
expanding industries and are making the
necessary investments to remain competitive
with other areas of the nation. ■

APPENDIX A
Selected Port Impact Studies

Clifton, David S., "The Economic Impact of
Georgia's Deepwater Ports", Industrial
Development Division Engineering Ex­
periment Station, Georgia Institute of
Technology, December 1973.
Drewry, Aubrey L., Jr., "Georgia's Foreign
Trade", Bureau of Business Research,
College of Business Administration, The
University of Georgia, Athens, Georgia,
1964.
Dunphy, Loretta M., Ph.D., and Semoon
Chang, Ph.D., Department of Econom­
ics, University of South Alabama,
Mobile, Alabama, December 1974.
Pender, David R., and Ronald P. Wilder,
"Impact of the State Ports Authority
Upon the Economy of South Carolina",
Division of Research, Bureau of Busi­
ness and Economic Research, College
of Business Administration, The Univer­
sity of South Carolina, September 1974.
Weir, Norman E., Ph.D., "The Impact of the
Port of Jacksonville on the Economy of
the Community", Jacksonville Univer­
sity, Jacksonville, Florida, 1965.

■ 'C o m m erce T o d a y , O c to b e r 29, 1973, p. 18.

156




N O V E M B E R 1 9 76, M O N T H L Y REVIEW

L o a n L o s s e s S u r g e in 1 9 7 5
b y John M. G o d f r e y

Loan losses at District member banks
increased sharply in 1975 and are the most
visible sign of banks' most recent loan problems.
While there is no way to measure some of the
other problems, such as the lost income from
reduced or suspended interest payments on
some substandard loans that have not been
written off, these losses are also undoubtedly
large. Faced with heavy losses, banks have
stepped up provisions for loan losses in an
attempt to insure that their loan loss reserves
are sufficient to cushion them against additional
losses, and these additional provisions have had
a major impact on bank earnings. Since banks
have had several years now to properly identify
all their problem loans and make sufficient
provisions for any eventual losses, they should
be able to hold the line on future provisions
and improve their earning outlook
District member banks charged off a postDepression record volume of uncollectable
loans during 1975. In 1975, these banks re­
ported loan losses of $305.5 million, up from
$200.6 million in 1974 and $101.6 million in
1973 (see Table 1). Loan losses as a percent of
total loans also surged. Banks charged off 1.19
percent of loans in 1975, an increase from 0.76
percent in 1974 and an average of only 0.49
percent from 1970 through 1973 (see Table 2).
The dollar volume of loan losses increased
$104.9 million last year and was concentrated
in several groups of banks. The large Tennessee
banks accounted for $30.8 million of the $69.1
million increase (45 percent of the total) in
loan losses among the large District banks. The
small- and medium-sized banks in Florida ac­
counted for a disproportionately large part of
the increase among these District banks. Of
the $35.8-million rise in losses among these
banks, the Florida banks added $25.3 million,
or 71 percent.
FEDERAL RESERVE BANK OF ATLANTA




Sixth District member banks had losses
proportionately greater than banks in general
over the last several years; nationally, they were
half as large. District banks accounted for 11.2
percent of all U. S. member banks' loan losses
in 1975 and 12.6 percent in 1974, while they
held only slightly over six percent of all mem­
ber bank loans. As a result, the losses at all
member banks were 0.65 percent of loans in
1975 and 0.39 percent in 1974, just about onehalf of the loss rate experienced by District
banks.
In the District, loan losses were heaviest in
Florida, Georgia and the District portion of
Tennessee; losses were much lower in Alabama
and the District parts of Louisiana and
Mississippi. Member banks in Florida, Georgia
and Tennessee accounted for 79 percent of
the District's losses, although they had only 67
percent of the District's loans.
The larger District banks generally have the
higher rate of loan losses. This was true in
1975. Increased losses at the larger banks are
attributed to their more active involvement in
lending involving real estate, especially apart­
ments, condominiums, commercial properties,
and land development, and the real estate
investment trusts. Also, they have not been
immune to increased losses on their primary
customers, commercial and industrial business
firms, and consumer loans. They charged off
1.34 percent of their loans, compared to the
remaining banks' 1.05 percent charge-off.
While loan loss rates rose for all size banks in
1975, the 48 large banks (defined here to in­
clude all Sixth District member banks with total
loans of $100 million or more as of December
1974) continue to report loss rates approxi­
mately one-third higher than other banks.
Seven large Tennessee banks charged off an
average of 2.04 percent of their loans, the
157

TABLE

1

LOAN LO SSE S
S ix t h D is t r ic t M e m b e r B a n k s
($ m i l l i o n s )

Banks

Large
Banks*

All

Other
Banks

D istric t

1973
1974
1975

101.6
2 0 0 .6
3 0 5 .5

63.6
130.8
199.9

38.0
69.8
105.6

A la b a m a

1973
1974
1975

13.6
21.1
26.2

6.0
10.3
12.2

7.6
10.8
14.0

F lo rid a

19 7 3
1974
1975

25.2
58.2
95.2

7 .4
23.5
35 .2

17.8
34.7
60.0

G e orgia

1973
1974
1975

32.7
68.7
87.2

27.3
56.9
69.0

5.4
11.8
18.2

L o u is ia n a * *

1973
19 7 4
1975

9.7
15.6
2 4 .8

7.0
10.3
20.5

2.7
5.3
4.3

M is s is s ip p i* *

19 7 3
1974
1975

6.1
8.8
11.7

4.7
7.0
9.4

1.4
1.8
2.3

T e n n e s s e e **

197 3
1974
1975

14.3
28.2
60.4

11.2
22.8
53.6

3,1
5.4
6.8

♦ B a n k s w ith lo a n s of $ 1 0 0 ,0 0 0 ,0 0 0 a n d o v e r a s o f D e c e m b e r 1 9 7 4
* * S ix t h D istric t p ortion

highest loss ratio for this group of banks in
the District. Tennessee's situation was strongly
influenced by two large banks that had re­
ported losses in excess of 3.5 percent of total
loans. One of these banks subsequently failed
because of additional loan losses. The seven
large banks in Georgia also had a high average
loss ratio of 1.69 percent.
The small- and medium-sized banks in the
District portion of Mississippi and Louisiana
had the lowest loss ratios. Compared with other
states in the District, the medium and small
banks in Alabama had higher loss ratios than
the large banks in the state.
RECOVERIES
When banks charge off a loan as a loss, they
generally make a conservative estimate of the
loss. That is, banks are more apt to overstate
than to understate the actual amount of the
loss rather than to have to make a second
adjustment. In this way, they may eventually
recover more from a loan than the reduced
value that is carried on their books. When
banks make these recoveries, the proceeds are
credited back to their reserves for loan losses.
From 1970 through 1973, District banks
typically recovered from $20 to $30 million a
158




year in loans that had previously been charged
off (see Table 3). These recoveries amounted
to between one-fifth and one-third of total
gross loan losses and sharply reduced the over­
all rate of loan losses.
During the last two years, the dollar amount
of recoveries has increased but not nearly as
much as gross loan losses. In 1975, recoveries
totaled nearly $50 million but represented only
16 percent of gross loans losses. While the ratio
of recoveries to gross losses has declined, this
change may be a reflection of banks' more
realistic estimates of what the actual losses are
when the loan is charged off. Or, the lower
rate of recoveries may be symptomatic of types
of loans being written off. To the extent that
these loans involve foreclosures on real estate
or asset swaps and banks are unable to quickly
sell the property that they have taken posses­
sion of, several years may elapse before banks
can sell property and establish their exact
losses. In these cases, and if they have taken
overly conservative write-offs, they may be re­
porting increased recoveries in the future.
BANK SIZE AND LOAN LOSSES
Although there was an increase in loan losses
last year, most District member banks did not
N O V EM B ER 1976, M O N T H L Y REVIEW

TABLE 2
LO AN

LO SSES
S ix t h

AS

A

PERCENT

D is t r ic t

OF TOTAL

M em ber

LO ANS

Banks

Banks

Large
Banks*

Other
Banks

All

D istrict

1973
19 7 4
1975

0.41
0.76
1.19

0.43
0.84
1.34

0.38
0.65
1.05

A la b a m a

1973
19 7 4
1975

0.42
0.57
0.67

0.34
0.51
0.58

0.51
0.65
0.78

F lo rid a

19 7 3
1974
1975

0.31
0.68
1.18

0.25
0.76
1.28

0 .3 4
0.63
1.13

G e o rgia

1973
1974
1975

0.59
1.22
1.61

0.66
1.34
1.69

0.39
0.87
1.35

L o u is ia n a * *

1973
19 7 4
1975

0.33
0.50
0.79

0.31
0.42
0.86

0.43
0.78
0.58

M is s is s ip p i* *

1973
197 4
1975

0.45
0.63
0.83

0.45
0.72
0.94

0.46
0.43
0.55

T e n n e s s e e **

1973
1974
1975

0.42
0.74
1.63

0.43
0.81
2.04

0.38
0.53
0.63

* B a n k s w ith lo a n s of $ 1 0 0 ,0 0 0 ,0 0 0 a n d o v e r a s of D e c e m b e r 19 7 4
* * S ix t h D istric t p ortion

write off an unreasonably large amount of
loans. The high rate of loan losses was caused
by a relatively small proportion of the District
banks. While the District average rate of loan
charge-offs was 1.19 percent last year, 70 per­
cent of the banks had losses of less than one
percent (see Table 4). Furthermore, nearly
one-half of the banks had losses of less than
one-half of one percent. While this was a
deterioration from previous years, loan losses
at most banks appear quite manageable.
Most banks were not confronted with large
loan losses, but some banks were quite hardhit. The number of banks with losses exceeding
one percent rose sharply in 1975. In 1974, only
107 of 646 member banks (17 percent) reported
losses of over one percent, but during 1975,
198 of 658 banks, or 30 percent were in this
category. In addition, 12 banks had severe
losses of over five percent in 1975 and one
moderate-sized Florida bank, with reported
losses of nearly eight percent, subsequently
failed. In contrast, there were only four banks
with losses over five percent in 1974.
Most District banks with high loan loss ratios
are smaller banks. Of the 198 banks in the Dis­
trict with losses exceeding one percent, 127
have loans outstanding of less than $25 million,
and they appear to represent the greatest
FEDERAL RESERVE BANK OF ATLANTA




problems. And of the 12 banks with losses over
five percent, nine have less than $25 million in
loans, with eight of the nine having less than
$10 million in loans outstanding. One of these
small banks, located in Georgia, reported losses
in excess of 12 percent and was later merged
into another bank to prevent its outright failure.
A higher proportion of the large banks did
have losses exceeding one percent, but none
reported severe losses of more than five per­
cent. Nineteen of these 44 large banks had
losses over one percent. Furthermore, twothirds of the very largest District banks— loans
of over $500 million— wrote off over one per­
cent of their loans last year.
RESERVES FOR LOAN LOSSES
Reserves for loan losses help banks absorb
the impact of loan losses and reduce the
impact of losses on earnings and the capital
structure of banks.1 For this reason, it is
beneficial that reserves rose not only absolutely
but relatively last year. Reserves as a percent
of loans equaled 1.60 percent at the end of
1975, up from 1.48 percent at the end of 1974.
This change marks an improvement over the
’See: "Accounting for Loan Charge-Offs,” this Review, August
1975.
159

TABLE 3
RESERVES

FOR

LO AN

LO SSES

S ix t h D is t r ic t M e m b e r B a n k s
($ m i l l i o n s )
1970

1971

1 9 72

1973

1974

1975

261.6

2 66.9

277.9

3 11.0

3 5 8 .8

3 9 2 .8

51.4

55.5

60.4

78.3

175.5

302.7

+ R e c o v e r ie s

18.6

25.4

30.4

29.8

36.1

48.6

+ O th e r T ra n sfe r s to R e s e rv e s

25.5

20.1

27.8

41.9

28.2

0.2

357.1

3 67.9

396.5

4 61.0

598.6

744.3

88.8

83.9

82.7

101.6

2 00.6

3 0 5 .4

1.4

4.5

2.9

2.3

8.0

27.4

266.9

279.5

3 1 0 .9

357.1

3 9 0.0

411.5

1 4 ,0 9 0

1 6 ,0 8 2

2 0 ,1 51

2 4 ,5 9 7

2 6 ,3 2 2

2 5 ,6 3 2

1.60

B e g in n in g B a la n c e
+ P r o v is io n for L o a n L o s s e s

Total R e s e rv e s
— G ro ss Loan L o sse s
- O t h e r T ra n sfe r s from R e se rv e s
E n d in g B a la n c e
TO TA L

LO A N S

R e s e rv e s a s %

of L o a n s

N et L o s s e s *
N et L o s s e s a s %

of L o a n s

1.89

1.74

1.54

1.45

1.48

0.63

0.52

0.41

0.41

0.76

1.19

70.2

of Loan s

G ross L o sse s a s %

58.5

52.3

71.8

164.5

2 56.8

0.50

0.36

0.26

0.29

0.63

1.00

♦ G r o s s lo s s e s m in u s re c ove rie s
Note:
S tru c tu ra l c h a n g e s a c c o u n t fo r the d iffe re n ce b etw e en the e n d in g b a la n c e in o n e ye a r a n d the b e g in n in g b a la n c e
in the fo llo w in g year.

low of 1.45 percent in 1973, but the coverage
is still substantially below that experienced in
the early 1970s. As a longer-run measure of
protection against capital impairment, the ratio
of reserves to loans is probably the most mean­
ingful measure.
Banks typically provide for loan losses by
allocating part of their income (a provision for
loan losses) to a reserve for loan losses. The
provision for loan losses is an expense item for
the bank even though it does not necessarily
involve any direct outlay by the bank at the
time it is made. When a bank actually ex­
periences a loss when a loan is charged off,
that loss is charged to the loan loss reserve.
While increased provisions for loan losses
directly reduce profits, loan losses do not
since they are charged against the loan loss
reserve.
At the end of 1975, reserves for loan losses
at District banks totaled $411.3 million, up from
$392.8 million at the beginning of the year (see
Table 3). Loan loss reserves actually increased
last year, in spite of record loan losses being
charged against these reserves, because banks
made provisions of $302.7 million to the re­
serves and had recoveries of $48.6 million.
Other minor transfers involving these reserve
accounts explain the remaining difference. If
banks expect to experience higher loan losses,
160




they generally increase their provisions for
losses. In 1974, gross loan losses exceeded pro­
visions for losses by $25.1 million, but in 1975
gross losses were nearly equal.
Some of the relative improvement in the
coverage of reserves to loans, however, re­
sulted from a decline in loans rather than the
increase in reserves. In two of the states with
large loan losses— Florida and Georgia— onehalf or more of the relative improvement oc­
curred because loans declined. In the other
state with large losses, Tennessee, there was
a relative improvement in reserves because
reserves rose 12 percent and loans rose only
slightly.
While the protection afforded by loan loss
reserves has improved as measured by the ratio
of reserves to loans, by another measure they
have deteriorated rather sharply. In the early
1970s, reserves exceeded net loan losses by
approximately five times in any one year. By
1974, the coverage had dropped to only two
and one-half times and in 1975 to even less,
about one and one-half times. This deteriora­
tion shows that without massive provisions in
a year like 1975 when losses are large, loan loss
reserves would be nearly depleted.
Making these massive provisions for loan
losses in order to maintain adequate reserves
had a major impact on District bank earnings.
N O V EM B ER 1976, M O N T H L Y REVIEW

TABLE 4
D IS T R IB U T IO N
LO A N -L O SS

OF

R A T IO

D IS T R IC T
AND

M EM BER

BANKS

OF LOAN

S IZ E

P O R T F O L IO

BY

1975
L o a n *L o s s R atio

Loans

Under .25

.25 - .50

.50 - .75

.75 - 1.00

1.00 - 5.00

Over 5.00

($ m illio n s)
U n d e r 10

Total

102

55

26

17

65

8

2 73

10-

25

45

48

33

13

53

1

193

25-

50

23

23

18

11

37

0

112

50 - 1 0 0

6

6

6

3

12

3

36

1 0 0 - 5 00

1

5

9

7

13

0

35

O ver 5 0 0

1

1

0

1

6

0

9

178

138

92

52

186

12

658

TOTAL

TABLE
RESERVES

FO R

5

LO AN

LO SSES

1975

S ix t h D is t r ic t M e m b e r B a n k s
($ m i l l i o n s )

Louisiana*

Mississippi*

Tennessee'1

Alabama

392.8

58.5

129.0

83.7

49.0

21.8

50.8

P ro v is io n fo r Loan
L o sse s

302.7

22.8

92.3

92.5

24.1

10.3

60.7

48.6

6.2

14.3

13.1

4 .4

2.2

8.4

0.2

0.0

0.1

0.0

0.1

0.0

0.0

744.3

87.5

235.7

189.3

77.6

34.3

119.9

3 05.4

26.2

95.2

87.1

24.8

11.7

60.4

27.4

.2

8.1

15.6

.7

.3

2.5

411.5

61.1

132.4

86.6

52.1

22.3

57.0

R e c o v e rie s
T ra n sfe r s to R e s e rv e s

TOTAL
G ro ss Loan L o sse s
O th e r T ra n sfe rs
from R e s e rv e s
E n d in g B a la n c e

Florida

Georgia

District
B e g in n in g B a la n c e

"D ist r ic t portion

In 1975, earnings, as measured by income after
taxes but before securities gains or losses,
totaled $296 million, down from $373 million
the year before. This $77-million drop in earn­
ings was more than offset by the $127-million
increase in one expense item, provision for loan
losses. The overall drop in bank earnings was
partly tempered by a sharp savings in income
tax liabilities from net payments of $53 million
in 1974 to net credits of $6 million in 1975.
PROSPECTS FOR FUTURE LOAN LOSSES
District member banks were hit hard by
loan losses in 1975. In making provisions for
loan losses in order to maintain adequate loan
loss reserves, banks experienced sharply lower
FEDERAL RESERVE BANK OF ATLANTA




earnings. The outlook for the southeastern
banks does look brighter, however. After two
years of exceptionally heavy loan charge-offs,
most banks have probably identified their most
serious loan problems and made adequate
provisions for most subsequent charge-offs.
Tight credit standards and an improving econ­
omy should boost the quality of new loans
they are making. If this is true, banks should
not be faced with the need to make massive
provisions in 1976. In the future, banks may
not need to make large additions to their
reserves for protection against loan losses.
Reserves can expand in line with the growth
in loans and reduced provisions for loan losses
in turn should have a positive impact on future
bank earnings. ■
161

S ix t h D i s t r i c t S ta tis tic s
S e a s o n a lly A d ju ste d
( A ll d a t a a r e in d e x e s , u n l e s s i n d i c a t e d o t h e r w is e . )

Latest Month
1976

One
Month
Ago

Two
Months
Ago

One
Year
Ago

Unemployment Rate
(Percent of Work Force)*** . . . . Aug.
Average Weekly Hours in Mfg. (Hrs.' - Aug.

SIXTH DISTRICT
INCOME AND SPENDING
M anufacturing Income . . . . . . . Aug.
Farm Cash Receipts . . . . . . . . July
Crops ................................... . . . . July
Livestock
........................... . . . . July
Instalm ent Credit at Banks*/ * (Mil. $)
New Loans .......................... . . . . July
Repayments ...................... . . . . July
Retail S a l e s .......................... ................. July

138.3
287.7
480.3
215.6

138.8
228.0
290.4

211.8

138.2
326.2
367.2
292.3

123.1
268.2
417.5
204.5

819
723
146.3

824r
779r
145.6r

815r
751r
142.9r

106.7
97.3
98.1
95.9
96.5
96.3
98.9
106.0
104.5
96.3

106.2
97.7
98.9
97.1
95.3
98.8

105.0
93.7
95.3
94.9
91.1
92.9
94.6
103.0
100.9
91.7
83.9
91.2
92.8
94.7

100.0

94.5

105.5
104.7
96.3
88.4
89.6
98.4
95.8
108.2
93.4
108.9
79.7
104.4
107.6
112.9
116.9
105.8
117.5
97.5

7.8

7.4

7.4

9.1

3.8
40.5
190
184
195
65.3

148.3
146.7
126.9
149.3
128.2
146.1
129.6
164.4
150.8
161.2
134.0
139.6
104.2

3.8
40.5
205
175
234
79.3
86.3
148.1
147.3
129.7
146.2
133.3
145.4
129.4
163.1
149.7
160.7
135.6
137.3
102.5

3.9
40.7
183
170
196
75.3
88.4
149.5
149.0
133.7
150.1
135.9
145.4
132.0
162.5
150.2
161.9
135.7
138.7

5.0
39.9
154
129
178
73.5
91.8
142.4
144.1
128.0
140.3
124.5
134.2
127.8
160.2
140.0
142.9
127.3
141.4

157.4
254.5
150.5

157.7
253.5
147.2

161.3
253.7
146.7

111.4
147.1
227.1
133.7

. Aug.
. Aug.

275

220

272
218

270
219

264
224

. Aug.
. Aug.
. Aug.

235
195
373

234
194
346r

237
343

INCOME
M anufacturing I n c o m e ...........................Aug.
. Aug.
Farm Cash Receipts . . . .
. July

140.2
304.9

138.7
391.2

125.9
285.8

86.6

111.8

90.9
98.2
96.3
108.5
94.5
109.7
80.3
104.2
108.3
112.7
116.6
106.5

6.9
40.7

6.6
40.9

7.9
40.1

. Aug.
, Aug.
. Aug.

295
242
332

294
243
319

293
247
322

264
225
282

Farm Cash Receipts

. Aug.
, July

139.2
442.4

135.5
240.1

134.8
255.7

410.5

. Aug.

109.0
97.9

111.0
9.6
41.0

121.2

112.2

102.2
112.8

121.0

EMPLOYMENT

. Aug.
. Aug.
, Sept.

110.8
61.7
98.6

109.9
97.5
111.9
62.3
99.2

. Aug.
. Aug.

9.6
41.1

9.2
40.9

. Aug.
. Aug.
. Aug.

295
262
402

. July

128.2
264.8

202.8

131.0
261.5

116.5
229.1

102.5
94.5
105.6
72.5
106.2

103.0
95.9
105.7
72.7
115.7

102.2
95.6
104.8
70.6

100.2

6.6

6.2

M anufacturing

Unemployment Rate
(Percent of Work Force)***

109.2
98.3

60.7
107.8

109.3
94.0

111.8
71.0
100.1
11.0
39.7

FINANCE AND BANKING

101.8
88.6

108.5
84.9
103.0
106.8

284
257
367r

278
258
348r

286
249
327r

112.8
115.2
106.2
117.0
90.5

100.0

133.0

EMPLOYMENT
Nonfarm E m p lo y m e n t ......................
M anufacturing
...............................
N o n m a n u fa c tu rin g ..........................
C o n s t r u c t io n ...............................
Farm Employment
...........................
Unemployment Rate
(Percent of Work Force) . . . .
Average Weekly Hours in Mfg. (Hrs.)

. Aug.
. Aug.
Sept.
. Aug.
. Aug.

40.0

40.1

Member Bank L o a n s ........................... . Aug.
Member Bank D e p o s i t s .................. . Aug.
Bank D e b i t s * * ...................................

256
195
432

M anufacturing I n c o m e ...........................Aug.
Farm Cash R e c e ip t s ............................... July

112.8
6.1

90.4
104.0
75.7
102.3

40.3

8.4
39.5

257
198
407

248
204
406

244
192
353

142.2
200.8

142.1
209.4

145.1
596.7

127.5
259.4

105.1
101.2
105.9
101.9
67.8

105.4
100.7
106.3
102.7
71.8

105.6
101.4
106.4
105.7
76.7

104.2
100.3
105.0
100.5
71.4

7.7
40.9

7.8
41.2

7.3
41.8

7.6
41.1

244
205
280

FINANCE AND BANKING

EMPLOYMENT
Nonfarm E m p lo y m e n t...........................Aug.
M anufacturing
....................................Aug.
N o n m a n u fa c tu rin g .............................. Aug.
C o n s t r u c t io n ....................................Aug.
Farm Employment
............................... Sept.
Unemployment Rate
(Percent of Work Force)*** . . . . Aug.
Average Weekly Hours in Mfg. (Hrs.) . Aug.
FINANCE AND BANKING

141.6
267.9

200

EMPLOYMENT
Manufacturing
Non m anufacturing

7.0
40.5

Bank Debits*

223
193
307

112.8

116.4
106.5
119.2
91.9

88.0

FINANCE AND BANKING
Loans*
All Member B a n k s ......................
Large Banks ....................................
Deposits*
All Member B a n k s ......................
Large Banks ....................................
Bank Debits*/**
...............................

One
Year
Ago

739
711
130.5

106.1
96.8
97.8
95.4
94.9
97.3
98.6
106.0
104.8
95.4
87.0
90.9
98.1
95.0
108.0
91.6
109.0
80.3
104.3
107.8

TWO
Months
Ago

FINANCE AND BANKING

EMPLOYMENT AND PRODUCTION
Nonfarm Employment . . . .
• Aug.
M anufacturing
......................
• Aug.
Nondurable Goods . . . .
• Aug.
F o o d ...................................
Textiles
..........................
* Aug.
Apparel
..........................
• Aug.
Paper ...............................
. Aug.
Printing and Publishing
- Aug.
C h e m i c a l s ......................
• Aug.
Durable G o o d s ..................
• Aug.
Lbr., Woods Prods., Furn. & Fix.. Aug.
Stone, Clay, and Glass . . . . Aug.
Primary M e t a l s ...................... . Aug.
Fabricated M e t a l s .................. ■ Aug.
M a c h i n e r y ............................... . Aug.
Transportation Equipment
. Aug.
N o n m a n u fa c tu rin g ........................... . Aug.
C o n s t r u c t i o n ........................... . Aug.
Transportation
...................... . Aug.
T r a d e ........................................ . Aug.
Fin., ins., and real est. . . . Aug.
S e r v i c e s ................................... . Aug.
Federal Government . . . .
. Aug.
State and Local Government • Aug.
Farm E m p lo y m e n t............................... . Sept.
Unemployment Rate
(Percent of Work Force) . . . .
. Aug.
Insured Unemployment
(Percent of Cov. E m p .).................. • Aug.
Average Weekly Hours in Mfg. (Hrs.) • Aug.
Construction C o n t r a c t s * .................. . Aug.
R e s id e n tia l........................................ . Aug.
All o t h e r ............................................ . Aug.
Cotton C o n su m p tio n * *...................... . July
Petroleum P r o d u c ti o n ...................... . Aug.
. July
M anufacturing Production . . . .
Nondurable G o o d s ........................... . July
Food
........................................ . July
Textiles
................................... . July
Apparel
.................................... . July
Paper
........................................ . July
Printing and Publishing . . . July
Chemicals ............................... . July
Durable G o o d s ............................... . July
Lumber and W o o d .................. . July
Furniture and Fixtures . . . . July
Stone, Clay, and Glass . . . July
Primary M e t a l s ...................... . July
Fabricated Metals . . . . . . July
Nonelectrical Machinery . . . July
Electrical Machinery . . . . July
Transportation Equipment
. July

One
Month
Ago

Latest Month
1976

. Aug.
. Aug.
. Aug.

M anufacturing I n c o m e ...........................Aug.
Farm Cash R e c e i p t s ............................... July

220

220

242

250

295

275

295

245

159.0
279.3

157.7
276.6

220

158.6
344.6

136.0
279.3

EMPLOYMENT
.
.
.
.
.

162




Aug.
Aug.
Aug.
Aug.
Sept.

109.0
98.2
113.8
121.7
108.2

110.0
98.8
115.0
118.4
117.7

109.3
99.0
113.8
123.1
116.7

107.6
96.8
112.3

120.8
110.1

. Aug.
* Aug.
• Aug.
. Aug.

106.8
99.2
110.4
99.4
78.3

107.2

106.9

98.6
73.5

109.7
99.2
87.4

100.0
110.6

101.1

103.8
95.0
108.0
87.5
67.8

N O V E M B E R 1976, M O N T H L Y REVIEW

One
Two
Month Months
Ago
Ago

Latest Month
1976
Unemployment Rate
(Percent of Work Force)*** . . .
Average Weekly Hours in Mfg. (Hrs.)

Aug.
Aug.

FINANCE AND BANKING
Member Bank L o a n s * ...........................Aug.
Member Bank D e p o s its * ...................... Aug.
Bank Debits*/** ................................... Aug.

One
Year
Ago

Latest Month
1976
EMPLOYMENT
Nonfarm E m p lo y m e n t...................... .
M anufacturing
...................... . . .
N o n m a n u fa c tu rin g ......................... .
C o n s t r u c t io n ............................... .
Farm Employment
........................... .
Unemployment Rate
(Percent of Work F o r c e ) ................. .
Average Weekly Hours in Mfg. (Hrs.) ,.

7.7
39.5
277
245
330

274
241
327

286
256
322

136.2
256.2

136.7
335.0

122.4
167.0

On*
Year
Ago

Aug.
Aug.
Aug.
Aug.
Sept.

103.7
94.5
108.4
80.7
78.3

103.9
95.1
108.5
80.4
73.5

103.8
95.8
107.9
76.2
87.4

102.3
91.5
107.8
92.4
67.8

Aug.
Aug.

7.2
40.5

6.7
40.6

6.4
40.8

9.0
40.2

FINANCE AND BANKING
Member Bank Loans* . . . . . . . Aug.
Member Bank Deposits* . . . . . . Aug.
Bank D e b i t s * / * * ...................... . . . Aug.

271
228
322

273
229
284

277
235
306

272
218
267

261
226
267

136.2
247.8

One
TWO
Month Months
Ago
Ago

TENNESSEE

. Aug.
July

Farm Cash Receipts

*For Sixth District area only; other totals for entire six states
***Seasonally adjusted data supplied by state agencies.

Note:

*Daily average basis

tPrelim inary data

r-Revised

N.A. Not available

All indexes: 1967 = 100, except mfg. incom e, em ploym ent, and retail sales, 1972 = 100.

Sources: M anufacturing production estim ated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. income 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 Div., McGraw-Hill Information System s Co.; pet. prod., U.S. Bureau of
Mines; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by th is Bank.
’Data have been bench m arked and new trading day factors and seasonal factors com puted using December 31, 1974 and June 30, 1975 Report of Condition data as bases.

D e b its to D e m a n d D e p o s it A c c o u n ts
I n s u r e d C o m m e r c i a l B a n k s in t h e S i x t h D i s t r i c t
( In T h o u s a n d s o f D o l l a r s )
Percent Change

August
1976

July
1976

August
1975

Percent Change

Year
to
August
date
1976
8 mos.
from
1976
July Aug. from
1976 1975 1975

August
1976
8 mos.
from
1976
July Aug. from
1976 1975 1975

5
5
1
2
4
1

+ 1
+ 19
+ 11

+ 11
+ 16
+ 16
- 1
+30
+ 8

819,986
410,238

- 5
- 1

+ 14
+34

+ 10
+ 9

5,721,135
126,915
454,105
1,366,658
1,004,816
311,182

4,650,630
111,127
381,442
1,375,618
811,103
275,700

933,334
551,035

987,013
553,832

+
+
+
-

+ 29
+ 14

+21

Bartow-LakelandWinter Haven
Daytona Beach . .
Ft. LauderdaleHollywood . . .
Ft. Myers . . . .
Gainesville
. . .
Jacksonville . . .
MelbourneTitusville-Cocoa
Miami
..................
O r l a n d o ..................
Pensacola . . . .
Sarasota
. . . .
T allahassee . . .
Tampa-St. Pete
W. Palm Beach

. 2,312,952
423,060
284,740
. 7,850,354

2,231,504
413,116
282,135
6,639,983

1,718,094
350,047
240,730
4,683,920

+ 4
+ 2
+ 1
+ 18

+21
+ 18
+68

+35

+28
+ 1
+ 5
+31

414,236
9,086,437
2,013,894
753,304
468,802
. 1,179,965
. 4,451,016
. 1,181,886

434,802
8,746,786
1,900,325
764,597
500,813r
1,052,835
4,586,188
1,226,125

388,511
6,863,257
1,562,267
511,494
472,517r
1,016,175
4,258,811
1,003,868

- 5
+ 4
+ 6
- 1
- 6
+ 12
- 3
- 4

+ 7
+32
+29
+47
- 1
+ 16
+ 5
+ 18

+ 3
+ 15
+ 19
+38
+ 2
+ 3
+ 8
+ 6

Albany ..................
A t l a n t a ..................
A u g u s t a .................
Columbus . . . .
Macon ..................
Savannah . . . .

210,082
25,035,432
848,398
573,225
819,230
1,439,498

204,945
23,808,021
825,159
543,208
818,129
1,459,306

184,743
19,988,137
572,449
478,190
848,542r
1,003,360

+
+
+
+
+
-

3
5
3
6
0
1

+ 14
+25
+48

+20

- 3
+43

+ 7
+ 15
+ 13
+ 11
+ 3r
+39

Alexandria . . . .
363,420
Baton Rouge . . . 2,221,969
502,481
Lafayette . . . .
325,456
Lake Charles . .
New Orleans . . . . 6,190,613

364,717
2,126,090
489,590
360,544
5,992,304

315,029
1,909,241
396,936
280,792r
5,990,043

- 0
+ 4
+ 3
+ 3

+ 15
+ 16
+27
+ 16
+ 3

+ 9
+ 3
+ 15
+ 13
+ 8

371,632
2,432,062

375,171
2,411,902

281,550
1,847,085

- 1
+ 1

+32
+32

+22
+21

Chattanooga . . . . 1,362,705
1,888,389
Knoxville . . . .
5,557,553
Nashville . . . .

1,357,950
1,916,801
4,799,057

1,286,858
1,529,949
4,390,548

+ 0
- 1
+ 16

+ 6
+23
+27

+ 4
+ 10
+ 10

3

+21

+16

Biloxi-Gulfport . .
Jackson ..................

OTHER CENTERS
Anniston
. .

154,682

August
1976
D o t h a n ......................
Selma
......................

STANDARD METROPOLITAN
STATISTICAL AREAS2
Birmingham . . . . 5,987,793
Gadsden
. . . .
126,885
Huntsville . . . .
460,064
M o b i l e ..................
1,391,314
Montgomery . . .
967,329
Tuscaloosa
. . .
307,196

Year

150,092

-10

242,467
95,043

July
1976
231,954
92,364

B r a d e n to n ..................
201,996
213,098
Monroe County . .
89,525
87,765r
O c a l a ..........................
220,482
222,625
St. Augustine . . .
52,566
51,181
St. Petersburg . . . 1,111,518
1,122,776
Tampa ...................... 2,363,859
2,437,604

August
1975

214,832 +
83,184 +
179,107
79,392
189,228
44,033
1,023,950
2,304,020

+
+
-

5 +13 +16
3+1 4 + 1 8
5
2
1
3
1
3

+13
+13
+17
+19
+ 9
+ 3

+ 4
—18
+ 2
+ 8
+ 9
+8

A t h e n s ......................
B ru n s w ic k ..................
Dalton ......................
E lb e r to n .....................
Gainesville
. . . .
Griffin
......................
L a G r a n g e ..................
N e w n a n ......................
R o m e ..........................
V a ld o s ta .....................

181,787
122,449
240,336
34,227
199,691
85,560
46,380
54,493
173,216
127,131

200,177
132,231
189,423
34,516
215,093
81,532
42,693
56,546
171,885
132,193

161,578
123,705
178,518
30,070
175,654
68,906
38,627
46,432
175,809
114,763

- 9 +13 +14
- 7 - 1 +7
+27
+35 + 2 4
1+ 1 4 + 22
7+ 1 4 +1 4
+ 5+2 4 +13
+ 9 + 2 0 +16
- 4 +17 +15
+ 1 - 1 + 9
- 4 +11 +10

A b b e v i l l e ..................
B u n k i e ......................
H a m m o n d ..................
New Iberia . . . .
Plaquem ine . . . .
T h ib o d a u x ..................

20,168
12,213
98,671
96,393
27,448
63,844

19,332
14,764
107,404
105,816
28,844
63,741

18,143
15,939
114,399
78,208
27,185
61,361

+ 4 +11
-1 7
-2 3
- 8 -1 4
- 9 +23
5 + 1
+ 0 + 4

H attiesburg . . . .
Laurel
......................
Meridian
..................
N a t c h e z .....................
PascagoulaMoss Point . . .
V ic k s b u rg .................
Yazoo City . . . .

179,311
99,598
159,367
71,699

173,169
105,934
147,344
63,833

150,536
84,495
127,313
56,064

+ 4 +1 9 + 1 4
- 6 +18 +19
+ 8 +25 + 9
+12
+28 +18

163,819
87,266
44,901

169,275
95,781
55,737

182,045 - 3 - 1 0 + 0
74,671 - 9 +17 +20
37,368 - 1 9
+20 +1 0

Bristol'1 .....................
Johnson City . . .
K i n g s p o r t ..................

233,922
174,277
399,227

237,071
181,066
397,410

DISTRICT TOTAL

124,747r 173,946 314,725 +

. . 110,458,542 106,373,332r 89,553,583r +

+ 9
- 7
- 6
+13
-1 2
- 2

1 +88 +48
4 + 0 + 4
0 +27 +23
4

Alabama
.................. 13,055,432 12,710,762 10,821,582 + 3
F l o r i d a ...................... 34,499,304 33,021,070r 27,031,156r + 4
G e o r g i a ..................... 33,918,525 32,653,073r 26,974,569r + 4
Louisiana'
. . . . 11,500,724 11,228,392 10,551,715r + 2 +
M ississippi1 . . . . 4,653,614
4,632,110
3,710,758 + 0
Tennessee' . . . . 12,830,943 12,127,925 10,463,803 + 6

+ 23 + 14r
+21
+28
+26
9
+25
+23

+12
+16r
+ 17r
+ 8r
+ 19
+11

'Conforms to SMSA definitions as of December 31, 1972.
^District portion only.
^Changes reflect structural changes in series.

FEDERAL RESERVE BAN K O F ATLANTA




163

D is t r ic t B u s in e s s C o n d i t i o n s

T h e S o u th e a st's e c o n o m ic e x p a n sio n falte re d in late su m m e r. E m p lo y m e n t d e c lin e d o v e ra ll a n d p e r fo r m e d
w e a k ly in m o st sectors. In c o m e s a n d c o n s u m e r s p e n d in g a d v a n c e d o n ly slig h tly . T h e v a lu e o f c o n str u c tio n
co n trac ts d e c lin e d . P o o r w e a th e r is ta k in g its to ll o n a gric u ltu re . B u sin e ss lo a n d e m a n d re m a in s w eak.
T h e u n e m p lo y m e n t rate rose slig h tly in A u g u s t,
w h ile total n o n a g r ic u ltu r a l e m p lo y m e n t d e cre ase d .
M a n u f a c t u r i n g e m p l o y m e n t d e c l i n e d in b o t h d u r ­
able an d n o n d u r a b l e industries. A pparel industry
j o b s i n c r e a s e d f o r t h e f i r s t t i m e in f i v e m o n t h s . N o n ­
m an u f a c tu rin g e m p l o y m e n t gains slo w e d , alth o u g h
co n s tru ctio n jobs rose for the s e c o n d straight m o n t h .
W e e k ly earn in g s grew , b u t the factory w o r k - w e e k
remained
unchanged . Manufacturing production
i n c h e d u p w a r d in J u l y , w i t h t h e g a i n s c e n t e r e d in
the tran spo rtatio n e q u i p m e n t industries.
D u r i n g July, total retail a n d d e p a r tm e n t store sa le s
s h o w e d o n ly slig h t in crease s. G a i n s f r o m a y e a r a g o
f o r d e p a r t m e n t s t o r e s a n d f o r all r e t a i l e r s w e r e v e r y
s t r o n g t h r o u g h A p r i l ; in m o r e r e c e n t m o n t h s , s a le s
g r o w t h s t a b il i z e d at l o w e r rates. Even w i t h a d e c l i n e
in Jul y, n e w a u t o r e g i s t r a t i o n s c o n t i n u e t o i n c r e a s e ,
c o m p a r e d t o l as t y e a r ' s l e v e l . M a n u f a c t u r i n g i n c o m e ,
w h i c h d e c r e a s e d s l i g h t l y in A u g u s t , h a s b e e n v i r t u a l ­
ly c o n s t a n t s i n c e F e b r u a r y .
T h e v a lu e o f c o n str u c tio n c o n trac ts fell in A u g u s t.
Although
residential
contract awards
increased
m o d e r a t e l y o v e r July figures, th e n o n - r e s i d e n t i a l
sector sh o w ed a considerable decrease. The value
o f n o n r e s i d e n t i a l c o n t r a c t s w a s d o w n in e a c h s t a t e
Note:

b u t T en n ess ee. Flows into savings a n d loan associa­
t i o n s s l o w e d in A u g u s t a n d e a r l y S e p t e m b e r , a n d
m o r tg a g e interest rates drifted d o w n w a r d .
D r y w e a th e r th r o u g h S e p te m b e r h a s re d u c e d c ro p
d e v e lo p m e n t a n d a cc e le ra te d sa le s o f b e e f cattle.
P r i c e s o f f a r m p r o d u c t s d e c l i n e d in A u g u s t , a n d
p relim inary d ata s h o w c o n t i n u e d re d u c tio n s for
b o t h l i v e s t o c k a n d c r o p s in S e p t e m b e r . H o w e v e r ,
cotton an d to b a c c o prices remain considerably
h i g h e r t h a n 1 9 7 5 's c o m p a r a b l e levels. Prices o f m e a t
a n i m a l s a r e d o w n as m a r k e t i n g s h a v e i n c r e a s e d ,
partially b e c a u s e of d ro u g h t-s tric k e n pastures. Loans
a t b a n k s in a g r i c u l t u r a l a r e a s c o n t i n u e d t o s h o w
brisk g r o w t h f r o m y e a r - e a r l i e r levels t h r o u g h m i d September.
M e m b e r b a n k d e p o s it g a in s re m a in stro n g . T i m e
a n d sa vings d e p o s i t in f lo w s w e r e large, a l t h o u g h th e
larger ban k s r e d u c e d th e v o l u m e of m o n e y m ark et
certificates of dep o sit. Business loan d e m a n d has not
in c r e a s e d at t h e lar ge r b a n k s , as s h o w n by t h e d ip
in l o a n s o v e r t h e m i d - S e p t e m b e r c o r p o r a t e i n c o m e
tax p a y m e n t d a t e . D i s t r i c t b a n k s h a v e b e e n l ar g e
p u r c h a s e r s o f U. S. T r e a s u r y s e c u r i t i e s a n d , in a n
a t t e m p t to g e n e r a t e h ig h e r returns, have b e e n
a d d i n g m o s t l y i n t e r m e d i a t e m a t u r i t y c o u p o n issues.

Data on w hich statem en ts are based have been ad justed w henever p o ssib le to elim in a te se a so n a l influences.

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N O V EM B ER 1976, M O N T H L Y REVIEW