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Monfhlu Review A Study of Checking Activity Atlanta, Georgia October • 1966 Vol. LI, No. 10 Also in this issue: SOUTHERN CONSUMER MARKETSGROWING, BUT CHANGING SIXTH DISTRICT STATISTICS DISTRICT BUSINESS CONDITIONS Did you know you have lazy money? Sometimes it is $10 of “mad money” in the bottom of the sewing basket and sometimes an extra amount in your checking account. Demand deposits are considered money, too. But lazy money is becoming less plentiful. As money be comes more expensive to obtain— i.e., as interest rates rise— it becomes more expensive to keep. Seldom have idle balances been potentially worth as much as they are today, and many people are taking this opportunity to put their money to work. Although we cannot trace the circulation of coins and currency, we can estimate how hard money is working by the activity of money held as demand deposits in commercial banks. This estimate should serve very well since most of the dollar volume of transactions involves checks. To measure checking account activity, bank debits are divided by the level of demand deposits. The result is demand deposit turnover, stated at an annual rate. The higher the rate of turnover, the faster check money moves in and out of accounts and the less time it spends, on average, lying idle. How much harder money has been working in recent years is revealed in the rising rate of turnover of demand deposits at reporting banks throughout the nation, shown in the chart on the following page. At any bank some accounts always work much harder than others. Deposits of businesses, for example, turn over more rapidly than those of individuals, and deposits of a stock brokerage firm have greater activity than those of business firms in general. Farmers, on the other hand, use their deposits less often than businessmen. Accounts of indi viduals who are paid monthly exhibit lower turnover rates than those of weekly-paid employees. And some people just naturally spend their money more quickly than others. A few utilize their accounts too well and frequently wind up overdrawn. Given the variety of customers served by banks, individual banks would not be expected to show the same turnover rates. One might anticipate, however, that the differences between rates would not be too pronounced. But a comparison of checking account activity at a number of Sixth District banks revealed large differences. In order to broaden the base for analysis, rates of demand deposit turnover were calculated for each of 404 member and nonmember banks which reg ularly report debits. This provided a measure of how hard the average checking dollar was working at each bank. We found a great deal of lazy money in many of our banks. The average checking dollar at all reporting banks was spent 22 times a year. At some banks, however, the average rate was over 50 times a year, while at others it was less than 6 times a year. We had expected the high turnover rates, which generally occurred at large banks in big cities, since their rates are often considerably higher than those found elsewhere. We had not foreseen the relatively large number of very low turnover rates. What would explain this lazy money? Why were checks so much more active in some banks than in others? Certainly, the types of cus tomers a bank serves and their characteristics would be the key to answering these questions. These influences on turnover could not be measured directly, because such information is unavailable. However, Turnover Rates of Demand Deposits At U. S. Reporting B anks Outside New York City 1943-64 A n n u a l R a te A n n u a l R a te Series on which chart is based was replaced by a new series in 1965. certain banking characteristics would tell something about the differences in checking activity. By contrasting traits of high and low turnover banks, perhaps we could better explain why some banks have customers who utilize their accounts more actively than others. From the list of bank characteristics available three were selected: size of bank, measured by total deposits; size of city; and the asset and liability structure. The first two represent the “customer-mix.” Large banks would be expected to have similar customers. Likewise, customers of banks in cities of the same size should be fairly homo geneous. Banks in Miami have customers more like those in New Orleans than those in Frostproof. Although bank size and city size are obviously related, we felt that retain ing both characteristics would give a better picture of the customer-mix than using either of the two alone. The third characteristic, asset and liability structure, was chosen because inspection of high and low turnover banks revealed a tendency for certain banks to be unlike other banks with respect to one or more asset or liability items. For example, one bank with a large percentage of state and local government deposits showed an extremely low turnover rate. Other low turnover banks had low loanto-deposit ratios. Whether these abnormalities reflected bank policies or special locational factors of the banks was impossible to determine. Since most loans are made by creating a demand deposit which is needed immediately, one would assume that a bank’s lending policy— as mea sured by its loan-to-deposit ratio— would affect the deposit turnover rate. Specific information on relationships between various asset and liability ratios and demand deposit turnover was not available. Therefore, we related each bank’s turnover rate to its asset and liability structure. The follow ing items were expressed as a percentage of total deposits for each bank (using data from June 1965 call rep o rt): de mand deposits of individuals, partnerships, and corpora tions; demand deposits of the U. S. Government; demand deposits of state and local governments; interbank de posits; cash; U. S. Government securities; state and local government securities; and loans. As a first approximation of the relationship between turnover and the characteristics chosen to represent • 78* customer-mix, the banks were grouped by deposit size and by city size (Table I). Bank size appears more closely related to deposit turnover than does city size. Deposit turn over rates increase as we move from the smallest to the largest banks, but within each deposit size class a very wide range of turnover exists. Note that among the small banks (under $2 million) turnover rates range from a low of 5.8 to a high of 33.8. And the extremes are not flukes. Various statistical measures combined show that turnover rates are not clustered around the average within the de posit size classes, indicating that the relationship between total deposits and demand deposit turnover is not espe cially strong. An arrangement of turnover rates by population size groups (also shown in Table I) suggests an even weaker relationship between turnover and size of city. Although deposit turnover rates increase as we move from the smallest to the largest city size class, the gain is not uni form. And there is little consistency of rates among banks in cities of the same size. The general conclusions to be drawn from Table I are relatively simple. Turnover of demand deposits tends to be high at large banks and at banks of various sizes in large cities. However, the main characteristic of the re lationship between total deposits and turnover or between size of city and turnover is the lack of uniformity of de mand deposit turnover rates among banks within given classes. One simply cannot accurately estimate banks’ turnover rates from deposit size or bank location. It was still possible that differences in turnover within deposit size class or city size class were related to the asset and liability structure. Using tables to compare turnover rates by each of the nine ratios involved in the composi tion of assets and liabilities seemed impractical. There fore, another approach—multiple regressions1 (relating two or more variables)—was employed. The result was the establishment of the degree of association between de1More specific results of the regressions employed here and elsewhere in this analysis of turnover are available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. Table I Turnover Rates of Demand Deposits At S e le c te d Sixth D istrict Banks D eposit Size G roup (T otal D eposits, in M illions of D ollars) U n d e 2 to 5 to 10 to 25 to 5 0 to 100 a D em an d D e p o sit T urn over (Annual R ate) R ange M ean N um ber o f Banks r 2 5 10 25 50 100 nd O ver 1 8 .1 1 8 .5 2 0 .6 2 0 .8 2 2 .2 2 4 .3 3 2 .3 5 .8 — 9 .7 — 7 .2 — 6 .6 — 1 4 .6 — 1 3 .1 — 1 8 .5 — 3 3 .8 3 5 .3 3 8 .4 5 1 .4 3 8 .5 3 9 .0 5 0 .1 19 47 65 151 63 28 31 A l l r e p o r t in g banks* 2 1 .7 5 .8 — 5 1 .4 404 5 .8 — 1 0 .6 — 7 .2 — 1 4 .4 — 9 .7 — 1 0 .7 — 1 2 .0 — 1 1 .8 — 3 3 .8 2 8 .5 4 3 .7 5 1 .4 3 9 .0 3 3 .8 4 6 .8 5 0 .1 33 36 34 41 85 60 58 57 C ity Size G rou p (P opulation, in Thousands) U n d er 5 5 to 10 10 to 15 15 to 25 2 5 to 5 0 5 0 to 100 10 0 to 2 5 0 2 5 0 to 6 5 0 1 6 .2 1 8 .6 2 1 .2 2 2 .3 2 0 .4 2 1 .5 2 5 .1 2 5 .6 ♦Banks for which debit information is available. M ONTHLY R E V IE W mand deposit turnover and various combinations of the bank characteristics chosen— asset and liability ratios, total deposits, and size of city— as well as relationships among these characteristics. The results of this investigation were disappointing. For the District as a whole, total deposits were somewhat more closely correlated with turnover than our tabular presentation had indicated, accounting for slightly less than a fourth of the variation in turnover. Other characteristics, city size and asset and liability ratios, generally showed weaker correlations with turnover. Those that were more highly correlated with turnover were also more closely related to deposit size, making them less useful as explan atory variables. Including characteristics other than total deposit size contributed little to an explanation of differ ences in turnover rates. Perhaps bank characteristics, at least the ones chosen, were rather poor substitutes for the characteristics of checking account holders. There was the possibility, how ever, that meaningful relationships existed in certain groups within the District. Several subgroup tests were made to ascertain this. Further analysis employed multiple regres sions, for the most part, to relate turnover to bank characteristics. Since turnover was more closely related to bank size than to any other single factor measured, banks in each deposit size class were grouped together. Within eight groups some fairly strong relationships were uncovered which had been “washed-out” by combining all 404 banks into one group. Size of bank was much more closely related to turnover among the large banks ($100 million and over) than in the group as a whole. This may reflect the more important role of business accounts at these banks. At larger banks the percentage of business deposits is probably more di rectly related to bank size. Given the higher rate of turn over of business accounts, this would explain the closer relationship between size and turnover. Consistent with continued on page 82 Southern Consumer MarketsGrowing, but Changing The ultimate goal of most economic activity in our mod ern economy is the satisfaction of human needs and wants. The remarkable ability of our economy to grow along with the insatiable appetites of consumers is one measure of its success. Thus, one mark of economic progress in the South is the growing level of consumption. Each year, about two-thirds of the growth in the na tion’s output of goods and services is channeled to con sumers. While higher prices generally account for some of the increase in consumer purchases, gains in per capita income in recent years have advanced at a much faster rate. Since 1955, consumer price increases have averaged less than 2 percent per year, compared with a national growth rate of over 5 percent in per capita incomes. In comes in the South advanced even faster, so that the Southerner’s economic well-being improved considerably. Changes in consumer buying habits, along with shifts in the population-mix, affect the size, structure, and loca tion of markets for various consumer goods. For the most part, changes in the buying habits of Southerners have resembled those of consumers elsewhere. Differences in the level of per capita income, as well as its rate of in crease, affect consumption patterns. While the Southerner’s income has been increasing at a faster rate, he still falls about $600 per year short of the national average. Fur thermore, differences in population characteristics— age distribution, ratio of rural-to-urban consumers, etc.— also affect spending. Let’s look more closely at the South—particularly the Sixth Federal Reserve District, or Alabama, Florida, Georgia, and parts of Louisiana, Mississippi, and Ten nessee. Just how does the Southerner spend his money? OCTOBER 1 9 66 What changes in his spending habits have occurred in recent years? Population and Income Increase According to the latest data available from the Censuses of Business on retail trade, Sixth District consumers re sponded to rising incomes between 1954 and 1963, as one would expect. While they continued to increase their spending at retail stores, the proportion of their income spent in this manner actually declined. Incomes advanced, on average, about 8 percent annually, compared with 6 percent for retail sales. Part of the reason for the smaller increase in retail sales was accounted for by con sumers’ expected higher rate of saving and a faster rise in outlays for services. Savings at selected financial in stitutions of individuals in the District rose by an annual average rate of 16 percent over this period. Consumers also increased their spending on selected services such as recreation and repairs by about 10 percent per year. Major factors determining the size of a consumer mar ket are the number of consumers and per capita income growth. Throughout the 1954-63 period, the District’s population grew by an average of 3 percent. If per capita spending had remained at the same level, the growth in population would have accounted for approximately threefourths of the rise in total retail sales. But with incomes rising faster than population, per capita incomes and spending also advanced. Changes in total population explain only part of the changes in total sales. Markets for specific types of con sumer goods and services also respond to variations in the • 79 • composition of population. Although no two consumers are likely to spend their money in exactly the same way, certain segments of the population generally follow similar spending patterns. Younger consumers will spend their incomes in a different manner than older persons. Individual and family needs and wants vary widely with the number and ages of children and the location of the family’s residence. As can be seen from the population pyramid chart, most of the District’s population increase during the 1950’s occurred in the nonproductive age groups. The number of 20-year-olds actually decreased, while those between 30 and 50 increased only slightly. The age groups of 50 and above gained in relative importance. For the first census period since data became available, the Dis trict experienced a net increase in population from migration, the entire gain being in the Sunshine state. These shifts greatly affected consumer markets. In order to see what effect higher incomes have on sales, it is helpful to remove the influence of population growth and look at per capita sales. With incomes and spending rising faster than population, per capita sales rose 30 percent, from $841 to $1,096, between 1954 and 1963. Alabama and Mississippi advanced the most rapidly, but remained below the other District states in actual level of per capita sales. Florida advanced the least, percentage wise, but moved to a level $300 above the District aver age. The varying rates of growth in sales mainly reflect differences in per capita income growth. Spending Patterns Change The lower the consumer’s income, the more restricted he is in his buying; he must purchase the essentials first. As his standard of living rises, he buys more items that are not actually necessary. The way he spends his additional income is reflected in changes in retail sales by type of business. With the exception of the general merchandise group, all categories of retail trade expanded more rapidly in the Sixth District than throughout the nation between Distribution of Population, by Age and Sex Sixth D istrict S ta te s, 1S50 and 1960 1954 and 1963. The rate of expansion of this group in other areas, however, was only slightly faster and prob ably reflects the greater concentration and importance of department stores in those areas. The proportion of retail sales accounted for by sales of this group are about the same in this District as in other parts of the country. The fastest growing sector of retail spending in recent years has been automobiles. Outlays for automobiles and parts in this District advanced nearly 70 percent from 1954 to 1963 and also increased as a percent of total sales. New car registrations rose by one quarter million. Instalment loans at commercial banks have aided the rise in sales, automobile loans accounting for most of the in crease in instalment debt at District banks in recent years. Accompanying the growth of car sales was an 83-percent surge in sales at gasoline service stations. Both automobile and gasoline service station sales claim more of the District’s retail dollar than the nation’s. In the South, with the population scattered over a wider area, the automobile is a more popular mode of transportation than in some other areas of the country. Food stores take the largest share of the retail dollar, however. Their sales increased about 7 percent annually from 1954 to 1963. Spending for basic items such as food generally declines in relative importance as incomes rise. Does this mean the District consumer has not be haved as he should? Not necessarily. A large part of this increase was accounted for by the surge in sales of convenience and prepared foods and non food items. Many housewives, if not the breadwinners, would probably vote for “TV” dinners as one of the greatest discoveries of modern science. The District consumer is not unlike his national coun terpart, who also allocates the largest share of his retail dollar to purchases at food stores. The average U. S. con sumer, however, spent the same proportion of his dollar at food stores in 1963 as he did in 1954, while in this District, food sales gained in importance. Consumers in the nation spent more on food eaten away from home. Increasing less rapidly and actually declining as a percent of total sales in both this District and the U. S. were the (1) lumber, building materials, and farm equip ment, (2) apparel, and (3) furniture and appliances groups. While consumers have apparently increased spending rather rapidly on furniture, household furnish ings, and appliances, some shift in the type of store making the sales has taken place. The trend is toward large department stores which carry complete lines of most consumer durable goods. (In the census classifica tion, these sales show up in the general merchandise group.) Sales at this type store in the District increased about 7 percent during each of the years in the 1954-63 period and now account for 12 percent of the retail sales dollar. Increased apparel sales at larger department stores no doubt contributed to the slower growth of sales at apparel specialty shops. Urbs and Suburbs Shift 1200 800 400 O O 400 THOUSANDS OF PERSONS 800 1200 The D istrict’s total pop ulation in 1960 e x c e e d e d th e 1950 level, but th e growth w a s prim arily in youn ger and older a g e groups. Digitized for • 8FRASER 0 • One of the most significant changes in consumer markets in recent years has been the changing location and con centration of sales resulting from the continuing rural-tocity migration. To the extent that population shifts also M ONTHLY R E V IE W reflect movements toward better paying jobs, sales should increase at a faster rate in those areas experiencing the greatest influx of population. We know from previous trends that growth in urban population has been accompanied by a corresponding con centration of sales in those areas. Until around 1940, there were consistent population increases in the city proper. Then, the upward movement of incomes and the growth in automobile sales during the 1940’s and 1950’s made moving to the suburbs possible. Since then, the suburbs have grown more rapidly than other areas. With this development, the suburban shopping center has become more important than Main Street. Aside from the mere relocation of the central market place, its char acter has changed. The suburbanite is probably younger, better educated, and has more children than his city con temporary. More than likely, he is also in a higher income bracket. This tends to lower the average income of his old neighborhood and enhance that of his new one. Living farther from work, his and his family’s needs are apt to be different from his city cousins’. The most complete data available for studying these trends in the District is by Standard Metropolitan Statis tical Areas (SMSA's). In addition to one or more central cities, the SMSA also includes an urban fringe, the “su burbs.” These fringe areas grew, on average, about three times as fast as the District’s total population during the period under study and about 1.5 times as fast as the SMSA’s. On the other hand, central cities were pressed to merely match the growth in total population. In order to analyze the shifts in sales associated with varying rates of population growth, we determined the average relationship between the percentage changes in population and retail sales for the SMSA’s as a whole, the central city, and the suburban area. The degree of association between percentage changes in population and sales is shown in the accompanying charts. The dotted lines show the average relationship be tween population and sales changes. The solid lines divide the chart into equal parts so that any point on it repre sents the intersection of equal amounts from the horizontal and vertical scales. Thus, the closer together the two lines, the more a percentage change in population is accom panied by an equal percentage change in sales. What, then, do these charts tell us? For one thing, they show that from 1954 to 1963 changes in total SMSA retail sales closely paralleled changes in population. Sig nificant differences appear, however, when the central city and the suburb are considered separately. Sales in central cities increased more slowly than population growth would indicate. On the other hand, sales in the rapidly expanding suburbs advanced considerably more than would be ex pected from the increase in population alone. Why did these differences occur? In addition to popula tion, total consumer spending is also dependent on the level of income. While sufficient local information is not available for comparing income levels in central cities and suburbs, a recent Department of Commerce study for the U. S. shows a considerably higher median family in come for the average suburban family than for the city family. If the District’s suburban areas follow this same pattern, and there is every reason to believe that this is the case, the higher income level of the suburban family explains the more rapid increase in sales for these areas. We can conclude that the rapid expansion in suburban markets reflects faster population growth and a more than proportionate concentration of buying power. What can we expect in the future? The continued sub urbanization and expansion of the District’s consumer markets are almost certain. Official estimates place the population of the six District states at approximately 31 million in 1980, up nearly 35 percent from the present level. If the same trends continue, nearly three-fifths of the population will live in the region’s 27 metropolitan areas, with the suburbs expanding more and more rapidly. The result may be the overlapping of suburbs so that a number of multi-cities will emerge. The number of indi vidual markets will also widen as advances in income continue to raise the South’s standard of living. J oe W. M c L eary Population and Retail Sales Changes Sixth D istrict M etropolitan Areas Standard Metropolitan __ Statistical Areas Retail s a le s generally sh ift w ith population m ovem en ts. The dash ed line sh o w s th e aver age relationship from 1954 to 1963 betw een p ercen t c h a n g e s in population and s a le s for the D istrict’s m etropolitan areas. The solid Digitized FRASER O C T Ofor BER 19 66 line in d ica tes th e relationship th at w ould ex ist if a ch a n g e in population alw ays exactly m atch ed th e p ercen t ch an ge in sa le s. The relationship w as fairly good for th e SMSA’s, but im portant d ifferen ces w ere found for the central c itie s and suburbs w hen considered sep arately. S a le s in cen tral c itie s expanded le s s rapidly than population sh ifts w ould in d icate, w hile s a le s in suburbs in creased more rapidly. • 81 • Debits to Demand Deposit Accounts A Study In s u r e d C o m m e r c ia l B a n k s in t h e S ix th D is t r ic t (In Thousands of Dollars) continued from page 79 this view was a very strong negative correlation between turnover and the ratio of time-to-total deposits. A bank in this size class, which has a relatively large share of its deposits in time deposits, is more likely to be serving individuals than businesses, especially in our District where corporate certificates of time deposits are not a major element of total time deposits. The data revealed many “exceptions” in Florida. For this reason, the banks were grouped by state. The asso ciation between turnover and the chosen characteristics, though weak for banks in the District as a whole, was strong in Alabama, Louisiana, Mississippi, and Tennessee. In Georgia, the association was moderate and in Florida almost nonexistent. In Louisiana, where the association was strongest, turnover was correlated very closely with bank size, city size, and the loan-to-deposit ratio. Size of city and size of bank were also closely related, as one would expect, but loan-to-deposit ratios showed relatively little correlation with either bank size or location. Thus, a bank’s deposit turnover in Louisiana could be described fairly accurately if the bank’s size or location and its loanto-deposit ratio were known. Banks in Florida, in contrast to those in Louisiana, were totally imponderable with regard to turnover rates. The many new banks springing up in metropolitan areas in Florida—the result of prohibition of branch banking— disrupted the “normal” relationship between bank size and city size, as well as several other correlations usually present. The result was a breakdown in the correlation between turnover and the factors measured. Since more reporting banks were located in Florida than in any other state, District results heavily reflected the Florida bank ing structure. The source of differences in checking account activity lies ultimately with differences in spending habits of cus tomers at various banks. For the District as a whole, we were unable to approximate these differences in customers by categorizing banks with respect to deposit size, loca tion, or asset and liability structure. These approximations worked very well for some states but not for others. From this investigation emerges a picture of banks, alike in size and location, similar in asset and liability structure, but quite different in checking account activities. P a u l A. C r o w e Annual turnover rates for 1965 are shown by Standard Metropolitan Statistical Areas and other centers in the Debits to Demand Deposit Accounts table on this page. Bank Announcements h e D e p o s i t N a t i o n a l B a n k o f M o b i l e C o u n t y , Prich ard, Alabama, a new member bank, opened on September 6 and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Nathan Taylor is President; E. E. Talbert, Vice President and Cashier; and J. D. Phillips, Assistant Vice President. Capital is $400,000, antPsurplus and other capital funds, $600,000. T 82* Digitized•for FRASER Percent Change Aug. 1966 Aug. 1965 STANDARD METROPOLITAN STATISTICAL AREASf Birmingham . . . . 1,450,377 1,247,100 Gadsden . . . . 66,392 57,480 162,432 Huntsville . . . . 183,085 460,313 414,724 Mobile .................. Montgomery . . . 343,526 276,225 Tuscaloosa . . . 90,965 76,211 Ft. Lauderdale— 519,006 458,626 Hollywood . . . Jacksonville . . . 1,410,076 1,233,678 Miami .................. 1,945,954 1,657,715 384,444 O r la n d o .................. 421,265 Pensacola . . . . 205,356 181,092 T am paSt. Petersburg 1,131,475 1,010,334 W. Palm Beach 378,288 311,810 Albany .................. 90,235 83,178 A t l a n t a .................. 4,459,831 3,810,083 273,444 202,541 A u g u s t a .................. Columbus . . . . 210,825 196,915 Macon .................. 238,071 193,214 Savannah . . . . 263,409 231,118 440,341 Baton Rouge . . . 563,860 Lafayette . . . . 120,975 101,988 Lake Charles . . 138,945 103,767 2,304,313 2,007,159 New Orleans . . . Jackson .................. 646,670 512,675 Chattanooga . . . 568,730 486,221 Knoxville . . . . 458,217 416,299 Nashville . . . . 1,382,445 1,249,128 OTHER CENTERS Anniston . . . . 64,499 57,078 Dothan .................. 56,913 45,984 .................. 41,776 Selma 33,128 Bartow .................. 35,976 31,557 Bradenton . . . . 57,044 42,692 209,867 Brevard County 194,467 Daytona Beach . . 86,087 75,116 Ft. Myers— N. Ft. Myers . . 64,688 54,750 Gainesville . . . 78,695 65,817 Lakeland . . . . 105,901 95,054 Monroe County . . 32,722 28,592 O c a l a ....................... 52,879 47,938 St. Augustine . . 22,355 17,839 St. Petersburg . . 281,676 237,995 Sarasota . . . . 91,888 78,336 .................. Tampa 636,617 588,958 Winter Haven . . 54,293 50,027 70,996 Athens .................. 63,782 Brunswick . . . . 40,529 39,615 Dalton .................. 79,942 78,658 Elberton . . . . 13,661 13,159 Gainesville . . . 72,148 66,343 Griffin .................. 32,354 29,492 LaGrange . . . . 22,600 19,457 Newnan .................. 27,442 25,639 R o m e ....................... 74,667 66,265 Valdosta . . . . 54,771 55,172 Abbeville . . . . 11,152 10,593 Alexandria . . . 124,151 105,694 Bunkie .................. 6,128 5,839 Hammond . . . . 33,460 26,713 New Iberia . . . 35,838 32,616 Plaquemine . . . 10,769 8,773 Thibodaux . . . . 21,984 17,080 Biloxi-Gulfport . . 105,761 85,432 Hattiesburg . . . 56,419 44,864 Laurel .................. 35,526 34,081 Meridian . . . . 70,848 61,151 N a t c h e z .................. 36,449 28,972 Pascagoula— Moss Point . . 52,983 53,681 Vicksburg . . . . 43,526 33,948 Yazoo City . . . . 46,892 46,295 Bristol .................. 74,722 61,936 Johnson City . . . 74,960 64,025 Kingsport . . . . 155,054 122,778 SIXTH DISTRICT, Total 28,079,638 24,441,707 Alabama^ . . . . 3,699,330 3,210,099 F lo r id a ^ .................. 8,091,308 7,174,511 Georgiat . . . . 7,158,613 6,199,922 3,902,286 Louisiana*t . . . 3,348,471 1,417,183 1,178,147 M ississippi*! ■ • 3,810,918 Tennessee*! . . . 3,330,557 Year-to-date 8 mos. 1966 Annual from Turnover 1965 Rates Aug. 1966 from July Aug. 1966 1965 +7 +8 + 11 + 11 +25 +3 + 16 + 16 + 13 + 11 +24 + 19 + 13 +9 +4 +9 + 12 + 15 32.4 18.7 22.6 25.0 25.1 20.0 -6 +7 -3 -2 +8 + 13 + 14 + 17 + 10 + 13 + 15 +3 + 14 +9 +6 20.4 36.3 25.1 24.8 26.8 +4 -7 -2 +8 +8 +8 +6 +4 -0 -7 +5 -4 +21 +2 +5 +5 + 12 +21 +8 + 17 +35 +7 +23 + 14 +28 + 19 +34 + 15 +26 + 17 + 10 + 11 + 10 +21 +8 + 13 +26 +6 + 11 + 11 +21 + 16 + 17 + 16 + 16 + 15 +9 + 12 25.2 19.6 30.5 39.9 28.6 25.5 28.5 30.1 25.3 18.6 15.3 29.5 26.4 29.8 24.9 35.6 -0 +8 +5 -3 -1 2 +2 -7 + 13 + 24 +26 + 14 +34 +8 + 15 + 15 + 12 + 17 + 15 + 17 -1 0 + 10 22.5 21.9 18.3 N.A. 18.3 25.0 21.4 -4 + 12 -1 +4 -1 0 +1 -2 -5 +9 +9 +4 -4 +2 -2 3 +4 -8 +8 + 16 +8 + 17 +4 +1 +7 +1 -0 -1 0 +3 + 10 -1 9 -2 +9 -0 + 18 +20 + 11 + 14 + 10 +25 + 18 + 17 +8 +9 + 11 +2 +2 +4 +9 + 10 + 16 +7 + 13 -1 +5 + 17 +5 +25 + 10 +23 +29 +24 +26 +4 + 16 +26 + 13 + 10 + 11 + 17 + 11 + 16 + 12 + 12 +8 +7 + 12 +1 +0 + 15 +6 + 15 + 18 +6 + 12 +5 + 14 + 13 +6 + 11 +8 + 19 + 11 + 18 +20 +3 +9 + 15 18.4 24.3 24.7 18.6 16.0 15.3 22.2 17.5 30.1 26.5 22.7 25.0 40.6 20.5 27.3 N.A. 20.9 N.A. 25.9 26.7 N.A. 18.7 N.A. N.A. 15.0 N.A. N.A. 18.9 19.4 19.4 20.2 N.A. +6 +5 +56 + 12 + 10 +1 +4 +9 +0 +6 -2 + 12 +5 -1 +28 +1 +21 + 17 +26 + 15 + 15 + 13 + 15 + 17 +20 + 14 + 13 + 18 + 15 + 13 + 12 + 17 + 12 + 11 + 12 + 12 + 16 + 15 + 12 18.8 N.A. N.A. 23.8 N.A. 35.9 • In c lu d e s only b a n k s in the Sixth D istrict portion of the state. fP a rtia lly estim ated. ^Estim ated. N . A . -N o t available. M ONTHLY R E V IE W Sixth District Statistics Seasonally Adjusted (A ll d a ta a re in d e x e s , 1 9 5 7 - 5 9 Latest Month (1966) SIXTH DISTRICT INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) Manufacturing P a y r o lls ............................ Farm Cash R e c e ip t s ................................ C r o p s ....................................................... L iv e sto c k .................................................. Instalment Credit at Banks, *(Mil. $) New Loans .............................................. R e p a y m e n t s .......................................... PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................. Manufacturing ..................................... Apparel .............................................. C h e m i c a l s ......................................... Fabricated M e t a ls ............................ F o o d ....................................................... Lbr., Wood Prod., Furn. & Fix. . . Paper ................................................... Primary M e t a l s ................................ Textiles .............................................. Transportation Equipment . . . N onm an ufactu rin g................................ Construction ..................................... Farm E m p loym en t..................................... Insured Unemployment, (Percent of Cov. E m p .) ....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . Construction C o n t r a c t s * ....................... R e s id e n t ia l.............................................. All O t h e r .................................................. Electric Power Production**.................. Cotton C on su m p tio n * * ............................ Petrol. Prod, in Coastal La. and Miss.** FINANCE AND BANKING Member Bank Loans* All B a n k s ................................................... Leading Cities ..................................... Member Bank Deposits* All B a n k s .................................................. Leading Cities ..................................... Bank D e b its* /* * ......................................... July 54,210 Aug. 188 149 July 126 July 157 July One Month Ago Two Months Ago 52,828r 52,445r 48,656 172 186 186 132 140 151 141 122 134 134 144 160 Aug. Aug. 292r 270 277 247 270 234 Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. Aug. 131 132 161 127 145 111 105 115 117 104 170 131 123 67 131 132r 162 126r 145 llOr 105 115 117 104r 168r 131 127 r 69 131 131 162 125 146 110 104 115 116 104 168 131 128 69 125 124 152 120 134 109 101 109 112 100 156 125 122 71 Aug. Aug. Aug. Aug. Aug. July July Aug. 2.0 41.6 139 137 141 144 117 205 1.6 41.6 174 161 185 137 118 203 2.4 41.6 143 173 118 132 109r 182 1.8 41.5 164 151 175 139 117 204 Aug. Sept. 240 223 238 221 236 222 209 194 Aug. Sept. Aug. 180 159 182 180 168 192 179 166 179 161 149 166 7,293 175 157 7,172r 172 158 7,078r 172 142 6,683 164 142 Aug. Aug. Aug. Aug. Aug. 123 121 123 129 79 122r 121 123 130r 84 122r 120 122 130 73 118 117 118 121 69 Aug. Aug. 2.0 41.5 2.1 41.7 2.0 41.9 2.5 41.3 FINANCE AND BANKING Member Bank L o a n s ................................ Aug. Member Bank D e p o sits ............................ Aug. Bank D eb its**.............................................. Aug. 224 178 173 220 177 176 218 177 171 199 163 157 PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................ M anufacturing......................................... N onm an ufactu rin g................................ Construction ..................................... Farm E m p loy m en t..................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . FLORIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) July 15,605 Manufacturing P a y r o lls............................ Aug. 220 137 Farm Cash R e c e ip t s ................................ July PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................ M anufacturing......................................... N onm an ufactu rin g ................................ C o n s t r u c t io n ..................................... Farm E m p loy m en t..................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . I O O , u n le s s i n d ic a te d o th e r w is e .) One Year Ago 259 265 ALABAMA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) July Manufacturing P a y r o lls ............................ Aug. Farm Cash R e c e i p t s ................................ July = 14,939r 15,069r 13,989 216 212 194 124 152 131 Aug. Aug. Aug. Aug. Aug. 142 147 142 110 53 142 145 142 112r 50 142 143 142 111 65 136 136 136 110 80 Aug. Aug. 2.0 42.6 1.9 42.5r 1.5 42.0 2.2 42.7 FINANCE AND BANKING Member Bank L o a n s ................................ Aug. Member Bank D e p o s its ............................ Aug. Bank D eb its**.............................................. Aug. 245 181 175 241 182 184 239 180 173 215 163 163 *For Sixth District area only. Other totals for entire six states. **Daily average basis. Latest Month (1966) GEORGIA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) July 10,137 Manufacturing P a y r o lls ........................... Aug. 188 Farm Cash R e c e ip t s ................................ July 135 PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................ M anufacturing......................................... N onm anufacturing................................ C o n s t r u c t io n ..................................... Farm E m ploym en t..................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . Two One Month Months Ago Ago 10,138r 186r 156 One Year Ago 9,884r 188 136 9,160 173 121 131 129 133 141r 59 125 121 126 138 77 Aug. Aug. Aug. Aug. Aug. 130 126 131 119 66 131 128 132 129 65 Aug. Aug. 2.1 41.3 1.4 41.0 1.2 41.0 2.0 41.2 FINANCE AND BANKING Member Bank L o a n s ................................ Aug. Member Bank D e p o s its ............................ Aug. Bank D eb its**.............................................. Aug. 252 197 196 250 198 206 255 193 195 219 176 177 LOUISIANA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) July Manufacturing P a y r o lls ............................ Aug. Farm Cash R e c e ip t s ................................ July 8,325 165 153 8,046r 165r 147 7,941r 164 129 Aug. Aug. Aug. Aug. Aug. 121 112 123 134 67 121r 113 123 137 67 120 112 122 136 74 114 107 116 122 79 Aug. Aug. 1.9 42.0 1.9 42.6r 2.0 42.4 2.8 42.7 FINANCE AND BANKING Member Bank L o a n s * ............................ Aug. Member Bank D e p o s i t s * ....................... Aug. Bank D e b its* /* * ......................................... Aug. 225 156 167 221 158 185 212 154 168 196 139 150 MISSISSIPPI INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) July Manufacturing P a y r o lls ........................... Aug. Farm Cash R e c e ip t s ................................ July 4,189 202 177 4,031 200r 180 4,098r 203 144 PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................ M anufacturing......................................... N onm anufacturing................................ C o n s t r u c t io n ..................................... Farm E m p loym en t..................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................ M anufacturing......................................... N onm an ufactu rin g................................ C o n s t r u c t io n ..................................... Farm E m p loym en t..................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . 7,412 155 137 3,698 185 155 Aug. Aug. Aug. Aug. Aug. 132 143 127 128 56 132 142 127 133 68 131 143 127 133 62 126 135 123 127 57 Aug. Aug. 1.6 41.1 1.7 41.2r 1.6 41.6 2.2 41.3 FINANCE AND BANKING Member Bank L o a n s * ........................... Aug. Member Bank D e p o s i t s * ....................... Aug. Bank D e b its* /* * ......................................... Aug. 283 228 205 284 214 193 277 210 183 221 173 178 TENNESSEE INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) July Manufacturing P a y r o lls........................... Aug. Farm Cash R e c e ip t s ................................ July 8,661 189 140 8,502r 185r 148 8,375r 187 130 Aug. Aug. Aug. Aug. Aug. 135 143 131 152 77 134 141 130 155r 76 Aug. Aug. 1.7 41.2 FINANCE AND BANKING Member Bank L o a n s * ............................ Aug. Member Bank D e p o s i t s * ....................... Aug. Bank D e b its* /* * ......................................... Aug. 231 174 195 PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t............................ M anufacturing......................................... N onm an ufactu rin g................................ C o n s t r u c t io n ..................................... Farm E m p loym en t..................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . 7,714 168 119 133 141 129 154 80 126 131 124 140 74 1.9 40.7 1.7 41.5 2.4 41.1 235 173 207 235 177 188 204 161 177 r-Revised. Sou rces: P erson a l in com e estim ate d by th is Bank; nonfarm , m fg. and non m fg. em p., mfg. payro lls an d hours, an d unemp., U. S. Dept, of Lab o r an d co op e ra tin g state a gen cies; cotton co n su m p tio n , U. S. B u re au of C e n su s; co n stru ction contracts, F. W. D o d ge Corp.; petrol, prod., U. S. B u re au of M in es; in d u stria l u se of elec. power, Fed. Power Com m .; farm c a sh receipts and farm emp., U.S.D.A. Other in dexes based on data co llected by th is Bank. All in d exes ca lc u la te d by th is Bank. Digitized FRASER O C Tfor OBE R 1966 • 83* DISTRICT BUSINESS CONDITIONS Boom conditions still prevail in many sectors of the District’s economy. Personal income hastened upward in August, while employment remained at near full employment levels. Patterns of seasonal employment were unusual because of strikes and the tau t labor market. A resurgence of business borrowing in Septem ber was accom panied by higher interest rates and firming of other term s and conditions. Construction activity declined further in August in the face of reduced availability of funds. Higher production of several crops and strong livestock prices keep the farm economy buoyant, although reduced cotton receipts are expected. - f t illio n * o f D o lla r s . A n n u a l Rato Mfg. P a y r o ll s Consumers’ ability to buy expanded, as personal incomes rose rapidly in August in all District states. Retail spending advanced, primarily in the nondurable categories. Automobile sales, partially recovering from the mid summer slump, continued to trail year-ago levels. Spending for other consumer durables, as measured by extensions of new loans at District banks, dropped. Tight labor market conditions distorted seasonal patterns. Industries normally adding workers to their payrolls were unable to do so in August and those usually experiencing a seasonal reduction in jobs maintained their labor force. An increase in the average workweek in manufacturing pointed to further signs of labor supply strains. Strikes by airline machinists and Atlanta carpenters in August and September contributed to a decline in nonmanufac turing jobs and boosted insured unemployment in related industries. ^ Cutbacks in construction jobs in all six states reflected earlier declines in housing starts. The August decline in both residential and nonresidential construction contracts, the sharpest this year, suggested a further shrinkage in building activity in coming months. Construction firms felt further pressure on their activity, as large banks tightened the rein on loans. Farm C ash R s c s lp t s Business loans made by large banks in the District rebounded strongly in Septem ber from an August slowdown. Banks surveyed in Atlanta and New Orleans reported much higher rates on business loans than three months ago. Additional firming of other terms and conditions included requiring higher compensating balances and greater emphasis on the applicant as a source of collateral business for the bank. Holdings of U. S. Government securities declined sharply at large banks and continued a steady downtrend at other member banks. Total time deposits were stagnant for the second con secutive month. Reserve requirements against time deposits (other than sav ings deposits) beyond the first $5 million were increased from 5 to 6 percent in mid-September. Maximum rates permissible on all time deposits under $100,000 were reduced from 5Vi to 5 percent. is* is1 is* Harvesting activities dom inate the District’s farm scene. Rice combining is almost complete in Louisiana and past the halfway mark in Mississippi. Early harvesting of soybeans reveals good yields, and total production should exceed all previous records. Cotton production will drop very sharply, since total acreages have been slashed about 30 percent. Farm cash receipts continue well above last year’s levels and should remain good throughout 1966. *Seas. adj. figure; not an index. N o t e : D a t a o n w h ich s t a te m e n t s a r e b a s e d h a v e b e e n a d ju s t e d w h e n e v e r p o s s i b l e t o e lim in a te s e a s o n a l in flu e n c e s.
@FedFRASER