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In t h is i s T h e * T re a su ry S o m e o n e E ls e 's C o n s u m e r P e lic a n A d v e rse D e b t: A sse ts C r e d it S ta te C ra n k s B u ffe te d E c o n o m ic U p b y H e a d w in d s D is t r ic t B a n k in g N o te s D is t r ic t B u s in e s s C o n d it io n s The Treasury Debt: Someone Else's Assets b y W illia m N . C o x , III W h e n M a r k T w a in w a s a sk e d h o w he felt a b o u t b e in g 70, he sa id that a lth o u g h he re c o g n iz e d it, he d id n 't realize it. P e rh a p s w e are p ro n e to re c o gn iz e , b u t n o t realize, the m irro r im a g e o f debt. For eve ry b o rro w e r, there has to be a c o r r e s p o n d in g lender. For eve ry o n e o f us w h o p ay s interest o n de bt, there has to be s o m e o n e else w h o a d d s that interest to his in c o m e . For e v e ry o n e w h o o w e s a fin a n c ia l liability, there h as to b e s o m e o n e else w h o h o ld s an asset. U n ite d States T re a su ry d e b t is n o e x ce p tio n to the rule: W h a t is d e b t to the T re a su ry has to b e c o u n te d as s o m e o n e e lse 's asset. W h a t is a fin a n c ia l lia b ility to the T re a su ry is— to s o m e o n e else w h o h o ld s the T re a su ry 's d e b t o b lig a t io n — a fin a n c ia l asset, m u c h like a sh are o f sto c k o r a b a n k a c c o u n t o r a c o rp o ra te b o n d . T h e s o -c a lle d n a tio n a l d e b t has as its n e c e ssary c o u n te rp a rt a sto c k o f assets o w n e d b y s o m e o n e else. W h o O w n s T h e T re a su ry D e b t ? W h o s e a sse ts? W h o is this " s o m e o n e e ls e " w h o o w n s the T re a su ry d e b t? In answ e r, w e m ig h t b o r r o w a lin e fro m the c u rre n t e c o lo g ic a l d e b a te a n d say, " W e h a ve m e t the 's o m e o n e else ' a n d he is u s." W e — the A m e r ic a n p u b lic — o w n m o st o f the n a tio n a l debt. T o see this, let's take a lo o k at the figu re s: O n the last d a y o f June 1971, the T re a su ry 's g r o ss p u b lic d e b t a m o u n t e d to $398.1 b illio n .1 O f this total, 49 p e rce n t o r $197.0 b illio n w a s h e ld as fin a n c ia l assets b y p rivate in v e sto rs in the A m e r ic a n e c o n o m y . A n o t h e r 43 p e rce n t w a s h e ld w ith in the G o v e r n m e n t itself: 26 p e rce n t o r $102.9 b illio n b y G o v e r n m e n t a g e n c ie s a n d trust fu n d s a n d a n o th e r 16 p e rce n t o r $65.5 b illio n b y the Federal R ese rve Syste m . T h e r e m a in d e r rested in the h a n d s o f fo re ig n investors. T h e lio n 's sh are o f the total p u b lic de bt, then, is h e ld b y p rivate investors. Private in d iv id u a ls he ld $78.1 b illio n o f this— in c lu d in g $24.9 b illio n in the fo rm o f the fa m ilia r U. S. sa v in g s b o n d . A fe w h u n d re d 1Primary source for public debt data is the Treasury Bulletin. The data cited in this article are conveniently summarized in the Federal Reserve Bulletin, page A-42. Monthly Review, Vol. LVI, No. 10. Free subscription and additional copies available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. 182 M O N T H L Y R E V IE W T h e A m e r ic a n p u b lic o w n s a lm o s t h a lf of the T re a su ry d e b t State and Local Gov’ts. $21.4 Billion Gov’t Agencies and Trust Funds $102.9 Billion Other Financial Institutions $23.8 Billion fo r the sa k e o f in v e stin g in fin a n c ia l securities. B u sin e sse s ofte n fin d that the y h a ve fu n d s o n h a n d fo r su c h th in g s as the su b s e q u e n t p a y m e n t o f in c o m e taxes; the y ofte n in ve st these fu n d s te m p o ra rily in T re a su ry securities, rather than let the m lie idle. W h e n a b u sin e s s se lls c o rp o ra te b o n d s to fin a n c e its a d d itio n s to p la n t a n d e q u ip m e n t, fo r instance , it u su a lly fin d s there is a la g b e tw e e n the tim e it b o rr o w s the fu n d s a n d the tim e it p ays the m out. In the interim , c o rp o ra te m o n e y m a n a g e rs ofte n p la c e the m o n e y in T re a su ry -d e b t assets. State a n d lo ca l g o v e r n m e n ts Federal Reserve $65.5 Billion Private Individuals $78.0 Billion Foreigners $32.7 Billion fo llo w a sim ila r p ra ctice fo r a b o u t the sa m e reasons. T h e se g o v e r n m e n ts' tax receip ts a n d b o n d sale s are rarely tim e d to c o in c id e w ith their e x p e n d itu re s; s o w h e n excess fu n d s are te m p o ra rily a va ila b le , the y fin d their w a y in to T re a su ry o b lig a tio n s. T h e T re a su ry de bt, therefore, fo r m s a large liq u id p o o l o f fin a n c ia l assets that serve the Total: $398.1 Billion as of June 30, 1971 Source: Treasury Bulletin d o lla rs sta sh e d a w a y in T re asu ry se cu rities m a y n o t se e m like m u c h to each o f us in d iv id u a lly . B u t w h e n the se h o ld in g s are c u m u la te d o v e r m illio n s o f h o u s e h o ld s , w e fin d that w e as in d iv id u a ls h o ld d ire c tly a su rp risin g p ro p o r tio n o f the n a tio n a l d e b t— m o re , in fact, than either the c o m m e r c ia l b a n k s o r the Federal R ese rve Syste m . T h u s, the " s o m e o n e e ls e " to w h o m the T re a su ry o w e s the n a tio n a l d e b t is us. W e as in d iv id u a ls h a ve an a d d itio n a l in d ire ct stake in the T re a su ry d e b t b e c a u se o f o u r direct interests in b u sin e sse s a n d fin a n c ia l institu tio ns. A n in d iv id u a l w h o has in ve sted in a m u tu a l fu n d o r p e n sio n fu n d , fo r instance , m a y n o t realize that a su b sta n tia l p o rtio n o f this in v e stm e n t has b e e n rein vested in T re a su ry d e b t o b lig a tio n s. N e v e rth e le ss, this is u su a lly the case. Likew ise, c o m m e r c ia l ba n ks, sa v in g s a n d lo a n a sso c ia tio n s, a n d in su ra n c e c o m p a n ie s rein vest the d e p o sits a n d sh ares b e lo n g in g to us— the ir c u sto m e rs— in T re a su ry se curities. O n the last d a y o f June 1971, c o m m e r c ia l b a n k s a n d m u tu a l sa v in g s b a n k s h e ld $63.9 b illio n o f T re a su ry debt, w h ile in su ra n c e c o m p a n ie s a n d o th e r n o n b a n k fin a n c ia l in stitu tio n s, togeth er, h e ld a n o th e r $23.8 b illio n . A lt h o u g h the se assets are h e ld b y the fin a n c ia l in stitu tio n s th e m se lv e s, w e h a ve an in d ire ct c la im o n th e m th r o u g h o u r d ire ct c la im s o n the se institu tio ns. N o n fin a n c ia l b u sin e sse s a n d state a n d lo ca l g o v e r n m e n ts a lso o w n a siz a b le share o f the T re a su ry d e b t— $10.1 b illio n a n d $21.4 b illio n , respe ctive ly— eve n th o u g h n e ith e r is in b u sin e ss FED ERA L RESERVE B A N K O F A T LA N TA d iffe re n t o b je c tiv e s o f v a rio u s investors. R e c o g n iz in g this, the T re a su ry has ta ilo re d its issu e s to the in v e stm e n t n e e d s o f the p u b lic b y o ffe r in g d e n o m in a tio n s r a n g in g fro m the w e ll-k n o w n $18.75 to m illio n s o f d o lla rs, b y o ffe rin g m atu rities fro m three m o n th s to thirty years, a n d eve n b y o ffe r in g sp e c ial issu e s that can b e u se d fo r p a y m e n t o f c o rp o ra te in c o m e taxes o r fo r c re d it o n Federal estate taxes. W it h o u t the a va ila b ility o f this p o o l o f T re a su ry debt, p rivate in ve stors w o u ld be m u c h m o re lim ite d in the ir c h o ic e o f fin a n c ia l assets. If p rivate in ve stors o w n 49 p e rce n t o f the fin a n c ial assets rep rese nted b y T re a su ry debt, w h o o w n s the rest? A lm o s t all the rest is o w n e d w ith in the G o v e r n m e n t sector. G o v e r n m e n t a g e n c ie s a n d trust fu n d s h o ld a b o u t o n e -fo u rth o f the total T re a su ry d e b t— $102.9 b illio n b y m id -1 9 7 1 — a n d the Federal R eserve Syste m o w n s a n o th e r o n e -six th — $65.5 b illio n . T h e fact that these assets are o w n e d w ith in the G o v e rn m e n ta l se cto r itself m ean s, in effect, that the G o v e r n m e n t has b o rr o w e d this m o n e y fro m itself. A s w e shall see in a m o m e n t, this is b e c a u se the T re a su ry 's interest p a y m e n ts o n this p o rtio n o f the d e b t are v irtu ally nil. G o v e r n m e n t a g e n c ie s a n d trust fu n d s o w n T re asu ry se cu rities fo r the sa m e reason s that b u sin e sse s a n d state a n d lo ca l g o v e r n m e n ts d o : T h e y fin d they h a ve fu n d s o n h a n d b e tw e e n receipt a n d p a y o u t a n d w a n t to in ve st the m in in te re st-b e arin g securities. T h e S o c ia l Se cu rity T ru st Fund, fo r instance, receives S o c ia l S e c u rity d e d u c t io n s fro m o u r p a y c h e c k s as reve n u e a n d then p ays o u t b e n e fits to e ld e rly a n d d isa b le d m e m b e rs o f o u r p o p u la tio n . S in c e this Fun d n o r m a lly takes in m o re than it p ay s ou t, it reinvests the b a la n c e in T re a su ry securities. F urtherm ore, this e x a m p le a p p lie s g e n e ra lly to 183 the h o st o f G o v e r n m e n t trust fu n d s a n d a g e n c ie s— w h ic h togeth er, as w e h a ve said, o w n a b o u t o n e -fo u rth o f the fin a n c ia l assets issu e d b y the Treasury. T h e Federal R ese rve Syste m , h o ld e r o f a n o th e r o n e -six th o f the T re a su ry de bt, is p e rh a p s the o n ly Y e a r in a n d y e a r out, the F ed r e tu rn s a lm o s t a ll the in te re st in c o m e it re c e iv e s fro m the T re a su ry Million $ h o ld e r that d o e s n o t b u y T re a su ry se cu ritie s fo r in v e stm e n t p u rp o se s. In ste ad , the Fed b u y s se cu ritie s as a m e a n s o f p r o v id in g b a n k reserves to the e c o n o m y . P a y m e n ts fo r Federal R ese rve p u rc h a se s o f T re a su ry se cu ritie s are m a d e w ith c h e c k s d ra w n o n the Federal R ese rve itself, w h ic h e v e n tu a lly are d e p o site d as a d d itio n s to c o m m e r c ia l b a n k s ' reserve a c c o u n ts w ith the Fed. A s the A m e r ic a n e c o n o m y has g r o w n o v e r the years, its n e e d for m o n e y (d e p o sits) has g r o w n apace. S in c e a d d itio n a l m o n e y (d ep osits) can o n ly be p ro v id e d w ith a c o m m e n su ra te e x p a n sio n in b a n k reserves, the Federal R ese rve S yste m has sy ste m a tic a lly p ro v id e d the n e e d e d reserves to the b a n k in g sy ste m a n d to the e c o n o m y b y b u y in g T re a su ry se curities. Fed p u rc h a se s o f T re a su ry secu rities, u n lik e th o se o f a n y o th e r h o ld e r, are c o n tin g e n t o n the e c o n o m y 's n ee d fo r m o n e y a n d b a n k reserves, rather than o n the p ro sp e c ts fo r interest a n d price a p p re c ia tio n that attract o th e r investors. T h e reader w h o has k e p t his p e n cil h a n d y w ill fin d that all b u t $32.7 b illio n o f the T re asu ry d e b t at the e n d o f June 1971 has b y n o w been a c c o u n te d fo r— $365.4 b illio n o f the $398.1 b illio n o u tsta n d in g . T h e re m a in d e r is he ld b y fo re ig n in v e sto rs— so m e private, so m e p u b lic. In e ith er case, th e y h ave in ve sted in T re asu ry se cu rities fo r b a sic a lly the sa m e rea son s as p rivate d o m e s tic in ve stors: to realize in c o m e fro m their d o lla r b a la n c e s.2 T h e T re a su ry 's In te re st P a y m e n ts A re S o m e o n e E lse 's In c o m e W e h ave seen that the T re a su ry 's d e b t o b lig a tio n s c o n stitu te the in v e stm e n t assets o f s o m e b o d y else, a n d w e h ave seen w h o that s o m e b o d y else tu rn e d o u t to be. N o w , let us turn to a related a sp e c t o f the t w o -sid e d nature o f T re a su ry debt, n a m e ly that T re a su ry interest p a y m e n ts c o n stitu te a so u rc e o f in c o m e to th o se w h o receive them . reason why the Treasury's foreign creditors are usually discussed separately is that, for the most part, foreigners are not subject to the U. S. Government's taxing power, which is what ultimately backs up the Treasury's debt obligations. Complete redemption of the domestically held Treasury debt would involve a redistribution from domestic taxpayers to domestic debt holders—most of whom are the same people. 2O n e 184 1966 Source: 1967 1968 1969 1970 of the Board of Governors of the Federal Reserve System Annual Reports T h e interest p a y m e n ts re c o rd e d o n the T re a su ry 's b o o k s are large. D u r in g 1970, the T re a su ry a c c ru e d interest p a y m e n ts o f $19,304 m illio n . A t the e n d o f that year, it w a s p a y in g interest at an a n n u a l rate o f $21,210 m illio n , re p re se n tin g an e ffective interest rate o f a b o u t 5 1/2 p e rce n t o n the t h e n -o u ts ta n d in g d e b t o f $389.2 b illio n . T h is rate a n d the se a m o u n t s are m u c h ove rsta te d , h o w e v e r, b e c a u se the y d o n o t reflect the fact that the T re a su ry taxes the in c o m e re p re se n te d by its o w n interest p ay m e n ts. Private in v e sto rs a lm o s t in v a ria b ly realize this. W h e n y o u tell the o w n e r o f a T re a su ry b o n d that the interest he receives o n it is p art o f his in c o m e , he w ill q u ic k ly p o in t o u t that the in c o m e is taxable a n d that his after-tax in c o m e is sig n ific a n tly lo w e r than the interest in c o m e . T h e exact n u m b e rs w o u ld d e p e n d o n the tax rates le vie d a g a in st the p a rtic u la r in d iv id u a l o r b u sin e ss o r fin a n c ia l in stitu tio n , o f c o u rse , b u t his p o in t w o u ld still be a ccu ra te : A su b sta n tia l p o rtio n o f the T re a su ry 's interest p a y m e n ts to p rivate in v e sto rs in the A m e r ic a n e c o n o m y are return ed to the T re a su ry in the fo rm o f taxes o n the in c o m e it con stitutes. (U n d e r recen tly e n a cte d le gisla tio n , s o m e fo re ig n in v e sto rs in T re a su ry se cu rities a lso return part o f the ir interest in c o m e to the Treasury.) Let us n o w lo o k at the r e m a in in g interest in c o m e — that w h ic h the T re a su ry p ay s to in ve stors w ith in the Federal G o v e rn m e n t. G o v e r n m e n t a g e n c ie s a n d trust fu n d s h e ld $102.9 b illio n in T re a su ry se cu ritie s b y m id -1 9 7 1 , as w e have seen, a n d the Federal R e se rve Sy ste m h e ld M O N T H L Y R E V IE W a n o th e r $65.5 b illio n . T h e T re a su ry p a y s interest o n the se se cu ritie s; yet, th e ir h o ld e rs o b v io u s ly are n o t su b je c t to Federal in c o m e taxes. W h a t h a p p e n s to the in c o m e ? U n lik e the p riv a te -in v e sto r situ a tio n w h e re p art o f the interest in c o m e is return ed to the Tre asu ry, in the G o v e r n m e n t in v e sto r c ase v irtu a lly all the interest in c o m e is returned. It is w id e ly k n o w n that the Federal R ese rve S y ste m receives interest fro m the T re a su ry o n its p o r tfo lio o f securities. T h e interest in 1970 a m o u n t e d to $3,772 m illio n . W h a t is n o t so w id e ly re c o g n iz e d , h o w e v e r, is that the Federal R e se rve p a id 93 p e rce n t o f this in c o m e — $3,494 m illio n — righ t b a c k to the T re a su ry .3 T h e d iffe re n c e — $278 m illio n — w a s u se d to d e fra y o p e r a tin g e x p e n se s o f the Federal R ese rve S y s te m .4 T h e Federal R ese rve is n o t su b je c t to Federal in c o m e tax, b u t it is su b je c t to a sp e c ial tax (on Federal R e se rve n otes), w h ic h serves as a le ga l v e h ic le fo r re tu rn in g this in c o m e b a c k to the Treasury. In this respect, 1970 w a s a typ ica l year. O u t o f the interest p a y m e n ts it receives, th e Federal R ese rve u su a lly returns w e ll o v e r n in e -te n th s to the T re a su ry in the fo rm o f the sp e c ia l tax o n Federal R e se rve notes. Finally, in the case o f interest p a y m e n ts m a d e to G o v e r n m e n t a g e n c ie s a n d trust fu n d s, w e are left w ith the realization that here the G o v e r n m e n t is b o r r o w in g fro m itself. O f cou rse , the T re a su ry p a y s interest to the se w ith in G o v e r n m e n t in stitu tio n s, b u t the receip t o f this sim p ly m e a n s th at a like a m o u n t o f b u d g e ta r y T re a su ry interest p a y m e n ts to the trust fu n d s a n d a ge n c ie s, therefore, rep rese nt a tran sfer sim ila r to an in te rd e p a rtm e n ta l tran sfer o n the b o o k s o f a c o r p o r a tio n o r a m o n g the m e m b e rs o f the sa m e h o u se h o ld . Summing Up T h is article h as d e sc rib e d s o m e b a sic facts a b o u t the T re a su ry debt. It has stressed the t w o -s id e d n ature o f the T re a su ry 's d e b t, p o in t in g o u t that fo r eve ry d o lla r the T re a su ry has b o rro w e d , s o m e b o d y else has received a fin a n c ia l asse t in the fo rm o f a T re a su ry security. M o r e o v e r , fo r e ve ry d o lla r o f interest the T re a su ry has p a id ou t, w e h a ve se en that s o m e b o d y else h as received that interest as an a d d itio n to his in c o m e . In a sk in g w h o that " s o m e b o d y e ls e " is w h o o w n s the T re a su ry de bt, w e h a ve fo u n d that the A m e r ic a n p u b lic itself o w n s m o s t o f it, eith er d ire c tly th r o u g h in d iv id u a ls, in v e stm e n ts o r in d ire ctly th r o u g h c la im s o n b u sin e sse s, fin a n c ia l in stitu tio n s, a n d state a n d lo ca l g o v e rn m e n ts. W e a ls o fo u n d that a g e n c ie s a n d trust fu n d s w ith in the G o v e r n m e n t itself o w n a b o u t a q u a rte r o f the de bt, that the Federal R ese rve Sy ste m o w n s a n o th e r sixth, a n d that fo re ign e rs h o ld a sm a ll rem ain der. W e w e re the n a b le to g o a step fu rth er a n d d e sc rib e w h a t h a p p e n s to the interest in c o m e the o w n e r s receive fr o m the T reasury, a n d to realize that m u c h o f the p a y m e n ts m a d e by the T re a su ry in interest are return ed to the T re a su ry in taxes. fu n d s d o e s n o t h a ve to b e raised a n d a p p ro p ria te d . O f co u rse , in d iv id u a ls, b u sin e sse s, a n d fin a n c ia l in stitu tio n s a c c o u n t fo r s o m e o f the return ed interest, b e c a u se the y p a y in c o m e taxes o n the ir of the Board of Governors of the Federal Reserve System, 1970, Tables 7 and 8. Additional Federal Reserve income—about $106 million—largely resulted from loans made to commercial banks and from foreign currency operations. 4Of this, $41 million was paid to member banks as a statutory 6-percent dividend on Federal Reserve Bank stock. interest in c o m e . T h e G o v e r n m e n t 's o w n a g e n c ie s a n d trust fu n d s use the ir interest receip ts fro m 3Annual Report the T re a su ry in lieu o f a p p r o p r ia te d fu n d s, w h ic h m e an s, in effect, that all o f the ir receip ts fro m the T re a su ry are returned. T h e Federal R ese rve Syste m , finally, returns a lm o s t all o f the interest it receives fro m the T re a su ry — n o r m a lly m o re than 90 cen ts o u t o f e a ch d o lla r received— in the fo rm o f a sp e c ia l tax o n Federal R ese rve n otes. ■ MIAMI D F F I C E D P E N 5 The Miami office of the Federal Reserve Bank of Atlanta opened in Coral Gables, Florida, on October 1. This new facility will provide the 13 counties of southern Florida with certain check collection and coin services; however, the Fed's Jacksonville branch will still be responsible for the area of the State not served by the Miami office. FED ER A L RESERVE B A N K O F A T LA N TA 185 Consumer Credit Cranks Up by Emerson Atkinson R ecen tly, c o n s u m e r s h a ve be en re ly in g m o re ex te n siv e ly o n in sta lm e n t d e b t to stretch their b u y in g p o w e r — m u c h m o re so than in late 1 970 a n d early 1971. T h is h as b e e n true in the Sixth Federal R ese rve D istric t and , g e n e ra lly sp e a k in g , in the rest o f the n a tio n as w ell. By Feb ru ary 1971, it w a s e v id e n t that the e x p a n sio n o f c o n s u m e r in sta lm e n t c re d it o u ts ta n d in g at c o m m e r c ia l b a n k s in the Sixth D istric t w a s u n d e r w a y — in c o n tra st to little o r n o e x p a n sio n d u r in g the p re v io u s three m o n th s. In fact, in N o v e m b e r 1970, total in sta lm e n t c re d it o u ts ta n d in g , after se a so n a l ad ju stm e n t, h ad a c tu a lly d e c lin e d (-$4.2 m illio n ). In D e c e m b e r , the n et c h a n g e w a s p o sitiv e ($2.6 m illio n ), b u t in Jan u ary 1971 c o n s u m e r in sta lm e n t c re d it o u ts ta n d in g a ga in d e c lin e d (-$3.1 m illio n ). S in c e then, h o w e v e r, the increase in c o n s u m e r c re d it activity has b e e n siz a b le : O n average, c o n s u m e r in sta lm e n t cre d it for the t w o 3 -m o n th p e r io d s f o llo w in g January e x p a n d e d $27 m illio n a n d $23 m illio n , re sp e ctiv e ly — c o m p a r e d w ith n o e x p a n sio n (a ctu ally a c o n tra c tio n ) d u r in g the p re v io u s three m o n th s fro m N o v e m b e r th r o u g h January. N a tio n a lly , c o n s u m e r in sta lm e n t d e b t o u ts ta n d in g has a lso e x p a n d e d , after a s lu g g is h p e rfo rm a n c e at the e n d o f 1970 a n d the b e g in n in g o f 1971. In O c t o b e r 1970, the a m o u n t o u ts ta n d in g d e c lin e d (-$82 m illio n ); in N o v e m b e r , c re d it falte re d c o n s id e r a b ly (-$302 m illio n ); b u t in D e c e m b e r , the m o v e m e n t w a s reversed a n d c re d it g re w slig h tly ($21 m illio n ). By Jan u ary a n d F eb ru ary o f 1971, it w a s e v id e n t that c o n s u m e r s w e re s t e p p in g u p their use o f in sta lm e n t cre d it; sin ce then, la rge m o n th ly e x p a n sio n s o f c re d it have c o n tin u e d . U n lik e D istric t in sta lm e n t cre d it o u ts ta n d in g , w h ic h in c lu d e s o n ly cre d it o u ts ta n d in g at c o m m e r c ia l ban ks, total in sta lm e n t c re d it o u ts ta n d in g n a tio n a lly in c lu d e s c o n s u m e r in sta lm e n t c re dit o u ts ta n d in g at c o m m e r c ia l ban ks, fin a n c e c o m p a n ie s, retail ou tlets, a n d o th e r fin a n c ia l lenders. N a tio n a lly , a n d p re su m a b ly w ith in the D istrict, c o m m e r c ia l b a n k s h o ld a b o u t 40 p e rce n t o f c o n s u m e r in sta lm e n t paper, h a v in g a c q u ire d it b y m a k in g lo a n s d ire c tly to c o n s u m e r b u y e rs o r b y p u r c h a s in g it fr o m retailers.1 in sta lm e n t credit at commercial banks, nationally, has closely resembled the behavior of total consumer credit. 186 M O N T H L Y R E V IE W C o n s u m e r s stre tc h th e ir b u y in g p ow er in the D is t r ic t . . . R e c e n t C o n s u m e r C re d it M o v e m e n t s in P e rsp e ctive Million Net chg. in instalm ent credit outstanding at com m ercial banks Seas. adj. -4 0 -2 0 III. . , I l l L + — 0 -2 0 1969 1971 1970 . . . a n d in the n a tio n Million $ Net chg. in total instalm ent credit outstanding Seas. adj. - 800 T h e recent p ic k u p in c o n s u m e r c re d it a ctivity is w h a t o n e m ig h t h a ve expe cted . N a tio n a lly , the effects o f c h a n g e s in c o n s u m e r c re d it activity a p p e a r p ra c tic a lly in stan tly; that is, c o n s u m e r cre d it o u ts ta n d in g b e g in s to e x p a n d as s o o n as the e c o n o m y m o v e s o u t o f a recession a n d q u ic k ly s h o w s sig n s o f either in c re a sin g less o r o f d e c lin in g w h e n e c o n o m ic activity starts to turn d o w n . In the D istrict, o n the o th e r h a n d , c o n su m e r d e b t is m u c h slo w e r in its re sp o n se to c h a n g e s in e c o n o m ic activity. T h is can b e p artly e x p la in e d b y the d iffe re n c e in the m a k e u p o f c o n s u m e r d e b t statistics at the D istric t a n d n a tio n a l levels, in a d d itio n to the fact that the u p s a n d d o w n s in e c o n o m ic activity n a tio n a lly are n o t s im u lt a n e o u s ly v isib le re gio n a lly . W h a t 's to C o m e ? -4 0 0 * J l -2 0 0 1969 1970 It is e vide n t, then, that recen tly c o n su m e r s have be en u sin g c re d it m o re e x te n siv e ly than in ear lier m o n th s. In v ie w o f the p ic k u p in e c o n o m ic activity, t h o u g h slo w , a n d the e x p e cte d a d d e d stim u lu s o f e x ecu tive a n d le gisla tiv e e c o n o m ic a ctio n s, it is re a so n a b le to ex pe ct that c o n s u m e r c re d it w ill c o n tin u e to e x p a n d d u r in g the c o m in g m o n th s. ■ 1971 W h y th e In c re a se in C o n s u m e r B o r r o w in g ? M o s t o f the e x p a n sio n in c o n s u m e r cre d it at D i s trict b a n k s h as b e e n cen te red in a u to lo an s, the result o f im p ro v e d a u to sales. O t h e r c o n s u m e r g o o d s c re dit— w h ic h in c lu d e s c re d it ex te n d e d fo r the p u rc h a se o f h o m e a p p lia n c e s, furniture, je w elry, m o b ile h o m e s, a n d b o a ts— has a lso sh o w n a m a rk e d increase. S u c h in fo rm a tio n , w h ile in d ic a tiv e o f h o w c o n su m e r s are u sin g a v a ila b le credit, a lso is h e lp fu l in a sse ssin g the curren t b e h a v io r o f re tail s p e n d in g at the D istric t level, sin ce re g u larly p u b lish e d retail sale s figu re s are n o t available . T o p ro v id e us w ith a m o re d e ta ile d p ictu re o f the re la tio n sh ip b e tw e e n m v e m e n ts in D istric t c o n s u m e r cre d it a n d retail sales, c h a n g e s in the tw o series n a tio n a lly w e re in ve stigated . A s m ig h t b e expe cted , c h a n g e s in c o n s u m e r c re d it e x te n sio n s fo r a u t o m o b ile s w e re c lo se ly related to a u to sales. L u m b e r sale s a n d h o m e repair lo a n s w e re a lso c lo se ly related, b u t n o t as c lo se ly as a u to sale s a n d a u to loan s. T h e re la tio n sh ip b e tw e e n c h a n g e s in o th e r typ es o f re tail sale s a n d c o n s u m e r lo a n s w a s n o t as clear, p o s s ib ly b e c a u se o f b a sic d iffe re n c e s in data c la ssific a tio n s fo r the tw o series. FED ER A L RESERVE B A N K O F A T LA N TA A P P E N D IX The measure most often used in describing the expansion or contraction of consumer instalment credit is net change in credit outstanding—or extensions minus repayments. The relationship among outstanding credit, extensions and repay ments is somewhat unique because it involves one stock and two flows. A flow is a movement of economic units over a period of time. The income statement of a firm is a good example of this concept. On the other hand, a stock is an accum ulation of economic units at some particular moment in time. Using the example of the firm again, the balance sheet best exemplifies this concept. The total amount of outstanding instalment credit at some point in time is the accumulation of net changes between extensions and repayments. A clearer picture may result by an example using actual consumer credit data of commercial banks in the Sixth District. In June, total consumer credit outstanding (the stock concept) at commercial banks was $4,347.1 million. In July, $396.8 million of credit was extended (the flow concept) and $360.4 million was repaid (the flow concept). The difference between June extensions and repayments was $36.4 million, (a positive number, since extensions were greater than repay ments) and was added to the previous outstanding amount of $4,347.1 million in June. As a result, total consumer credit outstanding at commercial banks in July was $4,383.5 million. 187 Pelican State Buffeted by Adverse Economic Headwinds by Joseph E. Rossman, Jr. S in c e o u r last re v ie w o f the L o u isia n a e c o n o m y ,xthe e c o n o m ic flig h t p ath o f the P e lican State has be en b u ffe te d by a d v e rse e c o n o m ic h e a d w in d s. In the late Sixties, L o u isia n a 's e c o n o m y la g g e d b e h in d that o f the n atio n , a n d in 1970 L o u isia n a sh a re d m a n y o f the sa m e e c o n o m ic d is a p p o in tm e n ts as the n ation. In the past, L o u isia n a has g e n e ra lly felt d o w n s w in g s in e c o n o m ic activity m o re in te n se ly than the re m a in d e r o f the c ou n try. T h is pattern has c o n tin u e d , as in d ic a te d b y a re v ie w o f L o u isia n a 's 1970 e c o n o m ic p e r fo r m a n c e a n d by her p e rfo rm a n c e thu s far in 1971. T w o facto rs that c o n trib u te d to the n a t io n w id e re c e ssio n — c u tb a c k s in d e fe n se s p e n d in g a n d w in d in g d o w n o f the sp a c e p r o g r a m — hit L o u isia n a e s p e c ia lly hard in 1970. C u t b a c k s in the M i c h o u d A s s e m b ly fa c ility re d u c e d e m p lo y m e n t to 1,858 in 1970 fro m a level o f 3,506 in 1969. D u r in g the first half o f 1971, e m p lo y m e n t at the a sse m b ly fac ility sta b iliz e d s o m e w h a t b e lo w the 1970 level. A s a result o f D e fe n s e D e p a rtm e n t c u tb a c k s, L o u isia n a 's m ilita ry p rim e c o n trac ts fo r 1970— $300 m illio n — w e re 25 p e rce n t b e lo w th o se o f 1969— $390 m illio n . L o u isia n a 's p e a k y ear w a s 1967, w h e n o v e r $650 m illio n in m ilitary p rim e c o n trac ts w e re a w a rd e d . O r d n a n c e m a n u fa ctu re rs w e re a m o n g th o se h ard est hit, sin ce p rim e c o n tra c to rs in this c la ssific a tio n d r o p p e d fro m a h igh o f $158 m illio n in 1968 to $68 m illio n in 1970. B e c a u se o f the c u tb a c k s d u r in g 1970 a n d the early p o rtio n o f 1971, a b o u t 2,000 o r d n a n c e w o rk e rs w e re a d d e d to the u n e m p lo y m e n t rolls in N e w O r le a n s . W h ile it is d iffic u lt to e stim ate the total n u m b e r o f w o rk e rs a ffe cte d b y the d r o p in d e fe n se c o n tra c t figu res, c u tb a c k s o f D e p a rtm e n t o f D e fe n s e ( D O D ) e m p lo y e e s are k n o w n . D e fe n s e c u tb a c k s d ire c tly re d u c e d D O D e m p lo y e e s — b o th m ilitary a n d c iv ilia n — 15.3 p e rce n t (e q ual to a lo ss o f 7,000 m ilitary p e rso n n e l a n d 800 c iv ilia n w o rk e rs d u r in g 1970). N o n fa r m E m p lo y m e n t U p S lig h tly N o n fa rm e m p lo y m e n t gro w th in the Pe lica n State d u r in g 1970 w a s slig h tly better than that o f the nation. L o u isia n a 's n o n fa rm e m p lo y m e n t in c re a se d by half a percent, w h ile the n atio n d id n o t register a ny g ro w th . M a n u f a c t u r in g e m p lo y m e n t d e c lin e d 3 p erce n t; the d u r a b le g o o d s se c to r d e c lin e d 6 percent, a n d the n o n d u ra b le g o o d s se cto r s h o w e d a very sm a ll gain. Mohn E. Leimone, "A rea Diversity in Louisiana's G row th," this pp. 42-45. Review, March 1970, M O N T H L Y R E V IE W 188 u n e m p lo y m e n t rate a v e r a g in g o v e r 6.5 p e rce n t d u r in g the first six m o n th s o f 1971, c o m p a r e d w ith 6 p erce n t in the n ation. N o n fa r m e m p lo y m e n t g a in e d stren gth d u r in g the latter part o f 1970 and, fe e lin g the results o f the G M strike settlem ent, incre a se d d u r in g the first q u arte r o f 1971. T h e su rge w a s n o t su stain e d , h o w e v e r, after in v e n to rie s a n d o rd e rs u n fille d d u r in g the strike w ere fille d, a n d n o n fa rm e m p lo y m e n t d e c lin e d in sp r in g a n d su m m e r. M a n u f a c t u r in g e m p lo y m e n t c o n tin u e d to e x h ib it the greatest w e a k n e ss a m o n g the m a jo r n o n fa rm e m p lo y m e n t c a te g o rie s— w ith 1,000 less e m p lo y e e s in July 1971 than in July 1970. L o u isia n a 's g ro w th in total p e rso n a l in c o m e m a tc h e d that o f the n a tio n — 7.5 percent. T h is 7 .5-pe rce nt ga in w a s gre ater than the 1969 increase o f 6.2 percent. In cre ase s in w a g e s b r o u g h t o n b y in fla tio n m o re than o ffse t w a g e s a n d salarie s lo st b y the in c re a se d n u m b e rs o f u n e m p lo y e d . T ra n sfer p a y m e n ts— S o c ia l S e c u rity a n d u n e m p lo y m e n t c o m p e n s a tio n — p ro v id e d a d d itio n a l su p p o rt. T ra n sfe r p a y m e n ts incre a se d n early 18 p e rce n t in 1970, a n d w ith this g r o w th p a sse d the $1 -b illio n m ark, w h ic h a c c o u n te d fo r 10.5 p e rce n t o f total p e rso n a l in c o m e . P re lim in a ry data fo r the first q u arte r o f 1971 in d ic a te a fraction al p e rce n ta ge ga in o f o n ly $1 m illio n in total p e rso n a l in c o m e . In c o m p a r iso n , the n a tio n 's n o n d u ra b le g o o d s se ctors d e c lin e d o n e percent, a n d the d u ra b le g o o d s se cto r d e c lin e d 5.5 percent. C o n tr a c t c o n stru c tio n e m p lo y m e n t w a s a lso a ffe cte d b y a d v e rse e c o n o m ic w in d s — d e c lin in g m o re than 6 p e rce n t in 1970. H ig h interest rates d u r in g the b e g in n in g m o n th s o f 1970, la b o r- p rices a n d in cre a se d u n e m p lo y m e n t rates b y w a t c h in g his e x p e n d itu re s c lo se ly — a pattern typ ical m a n a g e m e n t c o n flic ts re su ltin g in strikes, a n d h e sita tio n o n the p art o f c o rp o ra tio n s, b r o u g h t o f c o n su m e r s a cro ss the cou ntry. L o u isia n ia n s lim ite d their use o f n e w in sta lm e n t d e b t at o n b y the recession , all c o n trib u te d to a s lo w d o w n in c o n stru c tio n activity. C o n s tr u c tio n e m p lo y m e n t, c o m m e rc ia l ban ks. Sale s o f n e w a u t o m o b ile s s h o w e d frac tio n a l gains, w h ile retail b u ild in g m aterial sale s d e c lin e d 12 percent. H o u s e h o ld s p la c e d a large p o rtio n o f their sa v in g s in b a n k s a n d sa v in g s a n d lo an a sso c iatio n s. T h e c o n s u m e r c o n tin u e d to f o llo w his c o n se rv a - a lre a d y re d u c e d b y the 1969 1 2 -p e rc e n t d e c lin e , fell to 1964 le vels in m id-1970. C o n str u c tio n e m p lo y m e n t c o n tin u e d to be d e p re sse d d u r in g the first h a lf o f 1971, d e sp ite str o n g increase s in co n trac ts fo r resid en tial b u ild in g co n stru ctio n . N o n b u ild in g c o n stru c tio n con tracts, d o w n b y o n e -th ird , a c c o u n te d fo r the w e a kn e ss. A s a result o f o ffsh o re o il w e ll fires a n d oil sp ills in early sp rin g, m in in g e m p lo y m e n t d u r in g 1970 d r o p p e d an a ve rag e o f 1,000 m e n fro m 1969 levels. O i l lease sale s w ere c a n c e le d im m e d ia te ly after the a d v e rsitie s a n d w e re re o p e n e d D e c e m b e r 15, 1970. M u c h o f the d r o p in e m p lo y m e n t c o n siste d o f c re w s in v o lv e d in the e x p lo ra tio n a n d d r illin g o f n e w w ells. D e s p ite the m isfortu n e, c o asta l L o u isia n a 's c ru d e p e tro le u m p ro d u c tio n s h o w e d g a in s o f n ea rly 12 p ercen t, m a tc h in g p ro d u c t io n g a in s o f 11 p e rce n t in 1969. C o n s u m e r s B e c o m e C a u tio u s In 1970, the Lo u isia n a c o n s u m e r reacted to risin g R a n k s o f U n e m p lo y e d S w e ll L o u isia n a 's u n e m p lo y m e n t c o n tin u e d to b e m o re severe than that o f the n atio n , w ith the FED ERA L RESERVE B A N K O F A T LA N TA 189 tive s p e n d in g path d u r in g the first q u a rte r o f 1971. Bu t b y late sp rin g, the c o n s u m e r h a d a d o p te d a p re v io u s h igh o f $714 m illio n a ttain e d in 1967. A t $604.5 m illio n , u p 5 p e rce n t o v e r 1969 figu re s, le ss-c a u tio u s a ttitu d e a n d in c re a se d his p u rc h a se s o f b o th d u r a b le a n d n o n d u ra b le g o o d s. A u t o m o b ile a n d retail b u ild in g m aterial sale s fo r the first six m o n th s o f 1971 w e re h ig h e r than d u r in g the sa m e p e rio d a y ear a g o b y 12 p e rce n t a n d 19 percent, the 1970 total w a s the third h ig h e st in the S ta te 's history. In cre ase s in m ate rial c o sts a n d c o n str u c tio n w a g e s gre atly w e a k e n e d the real stre n gth o f this gain. P e tro le u m re fin in g a n d c h e m ic a ls a c c o u n te d respectively. A t the sa m e tim e, c o n su m e r s e x p a n d e d their b o rr o w in g , w ith v irtu a lly every c a te g o ry o f c o m m e r c ia l b a n k in sta lm e n t lo a n s s h o w in g an increase. C o n s tr u c tio n A c tiv ity Still W e a k A w a r d s fo r c o n stru c tio n activity, re c e iv in g stro n g s u p p o r t fro m n o n b u ild in g c o n stru c tio n , a d v a n c e d 7 p e rce n t in 1970. H o w e v e r, in crease d m aterial c o sts a n d h ig h e r w a g e s m u st have w ip e d o u t all o f this gain. W e a k n e s s w a s a p p a re n t in b u ild in g c o n stru c tio n con trac ts; its total v a lu e d e c lin e d 2 p e r cent. N o n r e sid e n tia l c o n stru c tio n con tracts, w ith a 1 3 -p e rc e n t sta te w id e d e c lin e in d o lla r value , o ffse t the residen tial c o n stru c tio n ga in o f 7 p erce n t in d o lla r value. In ge ne ral, m e tro p o lita n areas s h o w e d d e c lin e s in at least o n e c o n stru c tio n area; Lafayette a n d Lake C h a rle s s h o w e d d e c lin e s in b o th resid en tial a n d n o n re sid e n tia l c o n stru c tio n aw ards. N e w O r le a n s , h o w e v e r, s to o d ap a rt fro m o th e r L o u isia n a m e tro p o lita n areas; it ex p e rie n c e d s tr o n g g a in s in b o th resid en tial a n d n o n re sid e n tia l c o n str u c tio n — g a in s o f 26 p e rce n t a n d 51 percent, respectively. D a ta fro m the first h a lf o f 1971 in d ic a te a str e n g th e n in g in the b u ild in g c o n stru c tio n se cto r a n d a sh a rp re d u c tio n in the n o n b u ild in g c o n stru c tio n sector. C o n tr a c t v a lu e s fo r n o n b u ild in g c o n stru c tio n w e re d o w n o n e -th ird fro m th o se o f the sa m e p e rio d in 1970, w h ile b o th residential c o n stru c tio n (re giste rin g n early a tw o -th ird s ga in in d o lla r v alue ) a n d n o n re sid e n tia l c o n stru c tio n (re giste rin g a o n e -th ird ga in in d o lla r v alue ) s h o w e d s tr o n g gains. N e w O r le a n s c o n tin u e d to ex p e rie n ce s tr o n g c o n stru c tio n gro w th , w ith the d o lla r v a lu e o f resid en tial c o n stru c tio n u p 87 p erce n t a n d n o n re sid e n tia l c o n stru c tio n up 30 percent. O t h e r m e tro p o lita n areas in L o u isia n a sh a re d in the g ro w th o f resid en tial c o n stru c tio n d u r in g 1971; the gre atest g ro w th o c c u rre d in the Baton R o u g e area, w h ic h registered an 8 8 -p e rc e n t gain. N o t all the m e tro p o lita n areas, h ow e v e r, s h o w e d g ro w th in n o n re sid e n tia l co n stru ctio n . Lafayette a n d Lake C h a rle s each e x p e rie n c e d d e c lin e s o f 18 p erce n t a n d o n e percent, respectively. In fla tio n H u rts R eal V a lu e o f C a p ita l In v e stm e n t C a p ita l in v e stm e n t fo r n e w p la n t a n d e q u ip m e n t in 1970, a c c o r d in g to the L o u isia n a D e p a rtm e n t of C o m m e r c e a n d In d u stry , w a s w e ll b e lo w the 190 fo r $465.9 m illio n o f the a ctu a l $ 6 0 4 .5 -m illio n total. R e c e n t u n o ffic ia l fig u re s— b a se d o n n e w sp a p e r reports a n d p re ss releases— fo r the first h a lf o f 1971 in d ic a te that a n n o u n c e m e n ts o f c ap ita l in v e st m e n t a ctivity w e re b e lo w th o se o f the sa m e p e r io d 1970. T w o m a jo r n e w fac ilitie s to be b u ilt in B a to n R o u g e w ill e v e n tu a lly p ro v id e an im p o r ta n t b o o st, h o w e v e r. T h e p r o p o s e d n e w p la n ts in c lu d e an Enjay C h e m ic a l fac ility ($75 m illio n ) at B a to n R o u g e a n d the start o f a m a jo r c h e m ic a l c o m p le x b y O l in ($200 m illio n ) at Lake C h arle s. Farm O u t p u t Im p r o v e s For L o u isia n a farm ers, 1970 w a s a b u m p e r c ro p year, h e lp in g to o ffse t the lo sse s fro m the d r o u g h t o f 1969. T h e total v o lu m e o f p rin c ip a l c ro p s— so y b e a n s, su ga rc a n e , rice, a n d c o tto n — w a s 10 p e rce n t m o re than in 1969 a n d w a s the s e c o n d largest total c ro p p r o d u c t io n o n record. P r o d u c tio n w a s h ig h e r o n ly in 1968. C a s h receip ts fo r all farm c o m m o d itie s p r o d u c e d re a ch e d $648 m illio n — a ga in o f 6.9 p e rce n t o v e r 1969 cash receipts. But, increase s in farm o p e r a tin g e x p e n se s, p a rtic u la rly w a g e s, interest p a y m e n ts, a n d taxes m a tc h e d the g a in s in g r o s s farm in c o m e . In fact, total p r o d u c t io n e x p e n se s in c re a se d ju st s lig h tly faster than total receipts: 7.5 p e rce n t a g a in st 7 percent. O n b a la n ce , d e sp ite h ig h e r costs, the in d iv id u a l fa rm e r's in c o m e p o sitio n im p ro v e d in 1970. O n e g a u g e o f this im p ro v e m e n t w a s net in c o m e p er fa rm — w h ic h w a s ju st s lig h tly u n d e r the 1968 record. L o u isia n a fa rm s a lso d id better than the a ve ra g e U. S. farm in 1970. Early e stim a te s o f the 1971 c ro p p r o d u c t io n in d ic a te that 1971 s h o u ld b e a n o th e r g o o d y ear o f p ro d u c t io n fo r Lo u isia n a . Rice, c o tto n , a n d so y b e a n c ro p s giv e eve ry in d ic a tio n o f h ig h y ie ld s. S u g a r c a n e g ro w th , w h ile b e h in d 1970 g ro w th , still a p p e a rs very g o o d . T h e Port o f N e w O r le a n s w a s a n o th e r b rig h t sp ot, w ith fo re ig n c o m m e r c e t o n n a g e in c re a sin g 21 p erce n t o v e r the 1969 level. T o ta l im p o rt-e x p o rt t o n n a g e for 1970 w a s n ea rly 23 m illio n , a b o u t fo u r m illio n to n s a b o v e the P o rt's 1969 total. T h e a ve rag e a n n u a l g r o w th d u r in g the Six ties w a s 5 percent. First q u a rte r 1971 fo r e ig n c o m m e r c e at the Port o f N e w O r le a n s set n e w re c o rd s in t o n n a g e a n d v a lu e — a total o f 6,200,000 to n s v a lu e d at $921 m illio n . T o n n a g e fig u re s s h o w e d a 2 5 -p e r cen t increase o v e r the sa m e p e r io d in 1970, a n d the v a lu e o f the c o m m e r c e in c re a se d 26 percent. M O N T H L Y R E V IE W Future Will Be Brighter Banks Receive Strong Deposit inflows A s 197 0 p ro gre sse d , m e m b e r b a n k s in the so u th e rn t w o -th ir d s p o rtio n o f L o u isia n a e x p e ri T h e futu re p e rfo rm a n c e o f the L o u isia n a e c o n o m y e n c e d an p o lic ie s a im e d at c o n tr o llin g in fla tio n a n d stim u la tin g the n a tio n a l e c o n o m y . Local eve nts w ith in Lo u isia n a , h o w e v e r, w ill a lso p la y a p art in s h a p in g futu re e c o n o m ic p e rfo rm a n c e . T h e d o m e d sta d iu m c u rre n tly u n d e r c o n stru c tio n in N e w O r le a n s w ill have a p o sitiv e im p act. In cre ase d acre a ge a llo tm e n ts fo r the 1972 su g a rc a n e c ro p cu rre n tly p la n te d s h o u ld h e lp im p ro v e the a g r i cu ltu ral sector. R e n e w e d activity at the M ic h o u d A s s e m b ly c e n te r is a p o ssib ility , sin c e this site is b e in g c o n sid e r e d fo r the S p a c e S h u ttle Project. S h o u ld M ic h o u d b e se le cted, the im p a c t o n the N e w O r le a n s area w o u ld b e su b sta n tial. T w o n e w c on tracts fo r L A S H (Lighter A b r o a d Sh ip ) ship s, each in excess o f $80 m illio n , a w a rd e d to the A v o n d a le sh ip y a r d s in N e w O r le a n s w ill giv e a d d itio n a l stre n gth to the s h ip b u ild in g industry. A s the ove ra ll recovery o f the n a tio n 's e c o n o m y that is cu rre n tly u n d e r w a y g a in s m o m e n tu m a n d as lo ca l eve nts (just m e n tio n e d ) m a k e the ir p re se n c e k n o w n , L o u isia n a 's u n e m p lo y m e n t p ro b le m is likely to d e clin e . ■ a cc e le ra tio n in d e p o sit in flo w s— p a r tic u la rly tim e d e p o sits. D e c lin in g m o n e y m arke t rates, c o m b in e d w ith an increase in the m a x im u m interest rate that m e m b e r b a n k s are a llo w e d to p ay o n tim e a n d sa v in g s d e p o sits, h e lp e d m a k e b a n k tim e d e p o sits m o re attractive. T h e se d e p o sit in flo w s c o n tra ste d sh a rp ly w ith the 1969 e x pe ri e n c e w h e n m a n y L o u isia n a b a n k s su ffe re d d e p o sit lo sse s or, at best, very w e a k in flo w s. T h e ban ks, h o w e v e r, fo u n d that w h ile the y h a d a v a ila b le fun ds, lo a n d e m a n d w a s g e n e ra lly w e a k b e c a u se o f the s lu g g is h n e s s o f the e c o n o m y a n d the re lu c ta n ce o f c o n su m e r s to b o rro w . A c c o r d in g ly , the b a n k s u sed the se fu n d s to re b u ild their inve stm en ts, w h ic h they h a d r e d u c e d b y m o re than 7 p e rce n t in 1969 to m e et lo a n d e m a n d s. In p articu lar, they in cre a se d the ir h o ld in g s o f U.S. G o v e r n m e n t se curities. T im e d e p o s it in flo w s c o n tin u e d to stren gthe n d u r in g the first h a lf o f 1971, w h ile lo an d e m a n d re m a in e d slu g g ish . C lo s e to $225 m illio n in n e w tim e d e p o sits w e re received b y m e m b e r b a n k s in the so u th e rn tw o -th ir d s p o rtio n o f Lo u isia n a . T h e se w ill d e p e n d u p o n the su c c e ss o f cu rre n t e c o n o m ic sa m e b a n k s a d d e d $270 m illio n w o rth o f U. S. G o v e r n m e n t se cu rities to their p o rtfo lio s. Bank Announcements SEPTEMBER 1, 1971 BANKERS BANK O F FLORIDA Fo rt Lauderdale, Florida Opened for business as a nonmember. Officers: James S. Hunt, chairman; J. B. Patterson, president; William B. Lennan, executive vice president and cashier; and Robert K. Thompson, assistant vice president and cashier. Capital, $600,000; surplus and other capital funds, $150,000. SEPTEMBER 1, 1971 BANK O F TALLASSEE Tallassee, Alabama Opened for business as a par-remitting non member. Officers: A. B. Dopson, president; Mildred W. Blount, vice president; R. P. Bentley, vice president; and Virginia D. Warren, cashier. Capital, $250,000; surplus and other capital funds, $746,000. SEPTEMBER 8, 1971 SEPTEMBER 10, 1971 TRI-CITY BANK Palm Beach G a rd en s, Florida Opened for business as a nonmember. Officers: William D. Kendrick, president; and H. Richard McCord, vice president and cashier. Capital, $500,000; surplus and other capital funds, $250,000. SEPTEMBER 15, 1971 W ORTH AVENUE NATIONAL BANK Palm Bea ch , Florida Opened for business. Officers: C. Farris Bryant, chairman; George C. Slaton, president; H. M. Pausch, II, executive vice president; H. Loy Anderson, Jr., administrative vice president; Jesse Newman, vice president; Nellie M. Lynch, assis tant vice president; and Joan M. Rhoden, assistant cashier. Capital, $500,000; surplus and other capital funds, $500,000. SEPTEMBER 16, 1971 GW INNETT CO M M ERCIAL BANK La w ren ceville, G eorgia Opened for business as a nonmember. SEPTEMBER 29, 1971 BANK O F FLAGLER BEACH VILLAGE PLAZA PALMER NATIONAL BANK Flagler Beach, Florida Sarasota, Florida Opened for business as a nonmember. Officers: Charles E. Creal, president; Howell V. Peavy, vice president; and Joseph J. Seale, executive vice president and cashier. Capital, $200,000; surplus and other capital funds, $65,000. Opened for business. Officers: W. C. Coleman, president; C. D. Rollings, executive vice president; james K. Rowland, vice president and cashier; and K. D. Suggs, vice president. Capital, $800,000; surplus and other capital funds, $300,000. FED ER A L RESERVE B A N K O F A T LA N TA 191 B A N K IN G S T A T IS T IC S Billion $ D E P O S IT S T o ta l D e p o s it s * L o a n s (n e t) In v e stm e n ts * * J D J J 1969 1970 J 1971 DJ J 1969 D J J 1970 1971 LATEST M ONTH PLOTTED: AUGUST Note: All figures are seasonally adjusted and cover all Sixth District member banks. *Daily average figures **Figures are for the last Wednesday of each month. S I X T H B D I S T R IC T A N K I N FLO W G OF N FU N D S AT O D IS T R IC T T E M EM BER S BANKS Million $ 300 I -0 + 3 00 600 I I I 900 I C h a n g e s in M a jo r S o u r c e s o f F u n d s 300 I I -0 + I 300 600 900 I I l C h a n g e s in M a jo r U s e s o f F u n d s H N et D em and D e p o s it s O t h e r T im e D e p o s it s S a v in g s 600 D e p o s it s B o r r o w in g s a t F R B - A t la n t a J a n .-A p r. 1971 I 1 M a y-A u g . 1971 Loans U .S . G o v ’t S e c u r it ie s O th e r S e c u r it ie s N et Fe d e ra l F u n d s S a le s NotP: Data are not seasonally adjusted. 192 M O N T H L Y R E V IE W THE CHANGING FLOW OF FUNDS AT DISTRICT MEMBER BANKS T h e first fo u r m o n t h s a n d the s e c o n d fo u r m o n th s o f 1971 w e re t w o p e r io d s w h e n D istric t m e m b e r b a n k s e x p e rie n c e d m a rk e d c h a n g e s in b o th the so u r c e a n d v o lu m e o f the ir fu n d s. T h e se ban ks, in turn, m a d e sig n ific a n t sh ifts in the u se s o f su ch fu n d s. W h e n the in flo w o f d e p o sits w a s stro n g, the y sh a rp ly e x p a n d e d total b a n k c re d it a n d in c re ase d th e ir sale s o f o v e rn ig h t reserves in the F ederal fu n d s m arket. B u t w h e n d e p o s it in flo w s s lo w e d , b a n k s c u t b a c k the rate at w h ic h the y ex t e n d e d c re d it a n d re d u c e d the ir sa le s (o r in cre a se d the ir p u rc h a se s) o f F ederal fu n d s. T h r o u g h th e first fo u r m o n t h s o f this year, d e p o s it in flo w s w e re str o n g an d , thus, p ro v id e d D istric t b a n k s w ith a la rge a m o u n t o f a d d itio n a l reserves. G a in s in all typ es o f d e p o sits to ta le d m o re tha n $1,700 m illio n , an a d v a n c e o f 7 percent. A n d tim e d e p o s its (othe r than sa v in g s d e p o sits) a c c o u n t e d fo r n e a rly o n e -h a lf o f this increase, sp u rt in g 13 percent. C o n s u m e r s a d d e d n e a rly $700 m il lio n to th e ir tim e d e p o sit a c c o u n ts a n d an a d d i tio n a l $435 m illio n to their sa v in g s a cc o u n ts. T h e la rge d e p o s it g a in s e n a b le d b a n k s to incre a se their se cu ritie s $936 m illio n a n d to e x p a n d their lo a n s $350 m illio n . In the fo u r -m o n t h p e r io d fro m M a y th r o u g h A u g u s t, h o w e v e r, d e p o s it in flo w s tap e re d o ff to ju st $109 m illio n b e c a u se D istric t b a n k s e x p e ri e n c e d a net lo ss o f $232 m illio n in d e m a n d d e p osits. " O t h e r " tim e d e p o sits, w h ic h in c lu d e c o n s u m e r C D 's a n d la r g e -d e n o m in a tio n C D 's , rose $108 m illio n d u r in g these fo u r m o n th s. C o n s u m e r typ e tim e d e p o sits w e re u n c h a n g e d . In ste ad , so m e o f the la rge r D istric t b a n k s a c c o u n te d fo r the in cre ase b y a g g re s siv e ly b id d in g fo r la r g e -d e n o m in a tio n C D 's . States a n d the ir p o litic a l s u b d iv is io n s a c c o u n te d fo r m o s t o f the net rise in the se m o n e y m a rk e t instru m e nts. S o m e ba n ks, h o w e v e r, issu e d a la rge n u m b e r o f n e w C D 's to their c o rp o ra te c u s to m e r s a n d to in d iv id u a ls, o ffse ttin g the lo sse s e x p e rie n c e d b y b a n k s in o th e r p arts o f the D istrict. S a v in g s d e p o sits a c c o u n te d fo r m o re than t w o th ird s o f the g r o s s d e p o sit in flo w s fro m M a y th r o u g h A u g u s t, a lth o u g h the g a in s w e re o n ly half as la rge as the p re v io u s fo u r -m o n t h ad v an ce . T h e str o n g su rg e o f d e p o sits in the first fo u r m o n t h s o f the y ear p r o v id e d m a n y D istric t b a n k s w ith m o re fu n d s than the y c h o se to invest o r lend. C o n se q u e n tly , th e y in c re a se d the sa le o f their excess reserves in the Federal fu n d s m arket. D u r in g the next fo u r m o n th s, re d u c e d d e p o s it flo w s c a u se d m a n y o f the m e d iu m - a n d sm a ll-siz e b a n k s to cut back on th e ir Federal fu n d s FED ER A L RESERVE B A N K O F A T LA N TA sales. A t the sa m e ____________ Changes____________ April 1971 from Jan. 1971 Reserve City Banks Total Deposits Net Fed Funds Purchases Total Loans and Investments Country Banks Total Deposits Net Fed Funds Sales Total Loans and Investments Aug. 1971 from May 1971 (millions of $) 508 38 446 + 47 + 176 + 140 + 1209 + 202 + 840 62 438 + 577 + — + + — Data not seasonally adjusted tim e, the la rge r b a n k s ste p p e d u p the ir p u rc h a se s o f o v e rn ig h t reserves in the Federal f u n d s m arket. B o r r o w in g fro m the Federal R ese rve B a n k o f A tla n ta a ls o in crease d, re a c h in g a level n o t o b ta in e d sin c e D e c e m b e r 1969. T h e se c h a n g e s in d e p o s it g ro w th a n d reserve m a n a g e m e n t c a u se d the c o u n try b a n k s a n d the reserve city b a n k s to m a k e c o r r e s p o n d in g c h a n g e s in b o th c o m p o s it io n a n d v o lu m e o f the ir c re d it e x p a n sio n . From M a y th r o u g h A u g u s t, c o u n try b a n k s slo w e d their p a c e o f total c re d it e x p a n sio n . A lt h o u g h b a n k le n d in g a cce le rate d fr o m $266 m il lio n to $381 m illio n , the net increase in n e w se c u ri ties h o ld in g s w a s b e lo w that o f the p re v io u s fo u r m o n th s. In cre ase s in " o t h e r " se cu ritie s (m o stly tax-e x e m p t m u n ic ip a l o b lig a tio n s) d u r in g the M a y A u g u s t p e rio d w e re a b o u t thre e -fo u rth s o f the $ 3 9 5 -m illio n g a in d u r in g the J a n u a ry -A p ril p e riod . S lig h tly m o re than $100 m illio n in U . S. G o v e r n m e n t se cu ritie s w e re liq u id a te d . In a d d itio n , c o u n try b a n k s re d u c e d the ir Federal fu n d s sale s b y m o re than $400 m illio n . A t the reserve city ban ks, the pattern o f c re d it e x te n sio n w a s sim ilar. In ta n d e m w ith s lo w e r d e p o sit g ro w th , the se b a n k s in c re a se d the ir n et Fed eral fu n d s p u rc h a se s $176 m illio n . B o r r o w in g s fro m the Federal R ese rve B a n k o f A tla n ta a ls o increase d, to ta lin g $63 m illio n in A u g u s t. A s a g r o u p , reserve city b a n k s re d u c e d their in v e stm e n t h o ld in g s $127 m illio n , w ith m o st o f the d e c lin e c o n c e n tra te d in U. S. G o v e r n m e n t securities, p a rtic u la rly T re a su ry bills. H o ld in g s o f m u n ic ip a l o b lig a tio n s rose, b u t m o st o f this c h a n g e reflected the a d d itio n o f sh o rtm a tu rity state a n d lo c a l g o v e r n m e n t securities. N e v e rth e le ss, b a n k c re d it in c re a se d b e c a u se le n d in g a d v a n c e d $267 m illio n after a g a in o f o n ly $84 m illio n in the p re v io u s p eriod . JOHN M. GODFREY 193 Sixth District Statistics S e a s o n a lly A d ju ste d ( A ll d a t a a r e i n 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 i s e . ) Latest Month 1971 One Month Ago Two Months Ago One Year Ago SIXTH DISTRICT One Month Ago Two Months Ago One Year Ago 5.4 40.8 5.3 40.5r 5.1 40.7 4.9 40.4 . Aug. . Aug. . Aug. 153 143 290 147 141 283 150 141 271 138 124 249 . Aug. 146 105 143r 147 145 192 137 151 . . . . . Aug. Aug. Aug. Aug. Aug. 122 109 124 130 103 122 109 124 132 110 121 109 124 132 101 119 110 121 130 104 . Aug. . Aug. 3.9 41.3 3.8 40.9 4.1 41.1 3.5 40.5 Member Bank L o a n s ..................... . Aug. Member Bank D e p o sits................ . . Aug. Bank D e b its* *............................... . Aug. 168 167 367 167 163 371r 169 169 366 151 139 305 137 88 133 130 137 84 131 141 . Aug. . Aug. 111 103 115 105 93 111 102 115 106r 82 111 103 115 108 82 110 105 113 93 84 . Aug. . Aug. 3.9 39.5 4.3 40.4 4.0 40.6 3.6 40.1 Member Bank L o a n s ................. Member Bank D e p o sits............. . . Aug. Bank D e b its* *........................... 152 134 397 149 133 403r 148 133 405 135 115 332 134 147 133r 122 129 94 127 145 Aug. Aug. Aug. Aug. Aug. Aug. 104 100 105 80 80 6.8 104 100 105 80 77 6.5 104 99 105 79 75 6.6 104 100 105 82 72 6.2 . . Aug. 42.8 42.2r 43.0 42.5 . . Aug. 139 138 257 135 135 249 138 142 244 130 120 222 . . July 142 153 141 156 144 139 128 174 110 112 109 104 78 110 112 109 103r 96 109 111 108 104 90 108 108 109 109 93 Latest Month 1971 Unemployment Rate (Percent of Work ForceJt . . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. IN COM E AND SP E N D IN G Manufacturing P a y r o l l s .................Aug. Farm Cash R e c e ip t s ....................... July C r o p s ........................................July L iv e sto c k .................................... July Instalment Credit at Banks* (Mil. $) New L o a n s ................................. Aug. Repayments ..............................Aug. 138 110 56 131 137 135 167 130 138 139 198 134 131 143 179 134 411 370 381 364 379 361 348 307 112 105 106 102 104 104 104 115 106 104 100 104 102 112 160 104 114 108 113 114 119 116 101 120 87 112 112 110 106 107 106 107 103 104 103 109 115 105 104 99 103 105 107 107 104 105 FINANCE AND B AN KIN G Member Bank L o a n s .................... Member Bank D e p o s i t s ............. Bank D e b i t s * * .......................... FLORIDA IN COM E EM PLO YM EN T A N D PRODUCTION Nonfarm E m p l o y m e n t t .................Aug. Manufacturing ...........................Aug. Nondurable G o o d s .................Aug. ................................. Aug. Food T e x t i l e s ..............................Aug. Apparel ..............................Aug. P a p e r ................................. Aug. Printing and Publishing . . . Aug. C h e m i c a l s ...........................Aug. Durable G o o d s ....................... Aug. Lbr., Wood 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. Machinery, Elec. & Nonelec. . Aug. Transportation Equipment . . Aug. Nonmanufacturing .................... Aug. C o n s t r u c t io n ....................... Aug. Transp., Comm., Pub. Utilities Aug. T r a d e ................................. Aug. Fin., ins., and real est............. Aug. S e r v i c e s ..............................Aug. Federal G o v e rn m e n t............. Aug. State and Local Government . Aug. Farm E m p lo y m e n t.......................... Aug. Unemployment Rate (Percent of Work ForceJt............. Aug. Insured Unemployment (Percent of Cov. E m p .).................July Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. Construction C o n t r a c t s * .................Aug. R e s id e n t ia l................................. Aug. All O t h e r .................................... Aug. Electric Power Production** . . . . Ju|y Cotton C o n su m p tio n **....................^uly Petrol. Prod, in Coastal La. and M iss.**Yep Manufacturing P r o d u c t io n ............. June Nondurable G o o d s ....................... Food .................................... June T e x t i l e s ................................. June Apparel ................................. June P a p e r .................................... June Printing and Publishing . . . . June C h e m i c a l s ..............................June Durable G o o d s .......................... June Lumber and W o o d .................... June Furniture and F ix t u r e s ............. June Stone, Clay and G l a s s ............. June Primary M e t a l s ....................... June Fabricated M e t a l s ....................June Nonelectrical Machinery . . . . June Electrical M a c h in e r y .................June Transportation Equipment . . . June & Jtune FIN AN CE AN D B AN KIN G Loans* All Member B a n k s ....................... Aug. Large B a n k s ..............................Aug. Deposits* All Member B a n k s ....................... Aug. Large B a n k s ..............................Aug. Bank D e b its* /**..............................Aug. 102 104 104 105 115r 105 104 100 103 105 113 159r 101 114 109 112 160 103 114 109 112 112 114 119r 116 lO lr 113 119 116 120 88 101 121 4.8 4.7 2.8 40.6 133 181 85 167 2.8 2.8 40.7r 176 184 168 170r 89r 127r 253 218 177 243 278 199 166 261 295 174 177 166 40.8 189 199 179 166 89 124r 252 217 176 239 276 102 108 114 106 106 99 107 103 113 165 109 112 107 IN COM E 100 115 241 386 614 389 156 144 153 141 154 143 141 132 148 132 341 145 130 341r 149 136 337 127 117 287 300 181 180 169 207 244 404 629 392 210 ALABAMA 134 162 134 157 136 166 130 157 EMPLO YM ENT Nonfarm E m p lo y m e n tt....................Aug. Manufacturing .......................... Aug. Nonmanufacturing ....................Aug. C o n s t r u c t io n .......................... Aug. Farm E m p lo y m e n t...........................Aug. 106 105 106 107 83 106 106r 106 107r 79 106 106 106 105 81 106 109 105 194 Manufacturing Payrolls ............. . Aug. Farm Cash R e c e i p t s ...................., . July EMPLO YM ENT Nonfarm Employmentt . . . . .................... , Manufacturing N on m a n u factu rin g................. C o n s t r u c t io n .................... . Farm E m p loy m e n t....................... . Unemployment Rate (Percent of Work ForceJt • . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . , Aug. FINANCE AND BAN KIN G LO UISIAN A IN COM E Manufacturing Payrolls ............. Farm Cash R e c e i p t s ............. , . July E MPLO YM ENT Nonfarm Em ploym e ntt............. Manufacturing .................... Nonmanufacturing ............. C o n s t r u c t io n .................... Farm E m p loy m e n t.................... Unemployment Rate (Percent of Work ForceJt . . . Avg. Weekly Hrs. in Mfg. (Hrs.) . . . . . . . . . . . FIN AN CE AND B AN KIN G Member Bank L o a n s * ............. Member Bank Deposits* . . . . Bank D e b its* /** ....................... M IS S IS S IP P I IN COM E Manufacturing P a y r o l l s .................Aug. Farm Cash R e c e i p t s ....................... July FIN AN CE AN D B AN KIN G GEORGIA 4.5 201 Nonfarm Employment! ............. Manufacturing ....................... . N o nm anufacturing..................... C o n s t r u c t io n ....................... , Farm E m p loy m e n t....................... Unemployment Rate (Percent of Work Forceit • . • ., Avg. Weekly Hrs. in Mfg. (Hrs.) . . 117 115 166 260 293 173 176 167 207 240 380 619 384 261 EMPLOYMENT 112 112 . 2.9 40.4 113 141 87 168 95 127r 244 206 167 229 262 192 168 252 289 170 185 169 198 239 362 611 378 257 ?22 180 246 282 200 167 Manufacturing P a y r o l l s ............. Farm Cash R e c e i p t s .................... 101 IN COM E Manufacturing Payrolls . . . . Farm Cash R e c e i p t s ................. EM PLO YM EN T Nonfarm Em ploym e ntt............. Manufacturing .................... N o nm anufacturing................. C o n s t r u c t io n .................... Farm E m p loy m e n t.................... . . Aug. . . Aug. . . Aug. M O N T H L Y R E V IE W Latest Month 1971 One Two Month Months Ago Ago. One Year Ago Latest Month 1971 One Month Ago Two Months Ago One Year Ago 110 105 113 109 90 111 107 113 110 89 111 106 113 112 91 108 106 109 113 91 4.7 40.3 4.6 40.5r 4.9 40.4 4.7 39.8 154 139 332 152 136 341 150 143 329 140 124 280 EMPLO YM ENT Unemployment Rate (Percent of Work F o rce )t............. Aug. Avg. Weekly Hrs. in Mfg. (Hrs.) . . . Aug. 5.4 40.6 5.2 40.3 r 5.1 40.5 5.2 40.1 FIN AN CE AND BAN KIN G Member Bank L o a n s * ....................Aug. Member Bank D e p o s it s * .................Aug. Bank D e b its* /**..............................Aug. 163 145 342 158 146 315 157 149 325 142 132 294 137 214 129 134 T E N N ES SE E Nonfarm E m ploym entt....................Aug. Manufacturing .......................... Aug. N onm anufacturing....................... Aug. C o n s t r u c t io n .......................... Aug. Farm E m ploy m e n t.......................... Aug. Unemployment Rate (Percent of Work F o rc e lt............. Aug. Avg. Weekly Hours in M fg (Hrs.) . . Aug. FIN AN CE AND BAN KIN G 140r 138 Manufacturing Payrolls .................Aug. Farm Cash R e c e i p t s ....................... July **Daily average basis *For Sixth District area only; other totals for entire six states Member Bank L o a n s * ....................Aug. Member Bank D e p o s it s * ................ Aug. Bank D e b its* /**..............................Aug. tPreliminary data r-Revised N.A. Not available Note: Indexes for construction contracts, cotton consumption, employment, farm cash receipts, loans, deposits, petroleum production, and payrolls: 1967=100. All .other indexes: 1957-59=100. Sources: Manufacturing production estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U.S. Dept, of Labor and cooperating state agencies; cotton consumption, U.S. Bureau of Census; construction contracts, F. W. Dodge Div., McGraw-Hill Information Systems Co.; petrol, prod., U.S. Bureau of Mines; industrial use of elec. power, Fed. Power Comm.; farm cash receipts and farm emp., U.S.D.A. Other indexes based on data collected by this Bank. All indexes calculated by this Bank. Debits to Demand Deposit Accounts In s u re d C o m m e r c ia l B a n k s in th e S ix th D is tric t (In T h o u s a n d s o f D o lla r s ) August 1971 July 1971 August 1970 Percent C Itange Percent Change Year to August date 1971 8 mos. from 1971 July Aug. from 1971 1970 1970 Year to August date 1971 8 mos. from 1971 July Aug. from 1971 1970 1970 STANDARD METROPOLITAN STATISTICAL AREAS 2,309,264 85,051 237,308 720,533 467,933 153,345 1,914,094 72,172 213,145 643,896 371,027 121,281 + + + - 0 1 4 12 12 5 +21 +16 +16 +25 +42 +20 +14 +13 + 8 + 3 + 18 +14 Ft. Lauderdale— Hollywood . . . . 1,206,404 Jacksonville . . . . 2,506,061 M i a m i ................ 4,295,277 996,622 O r l a n d o ............. 338,023 Pensacola . . . . Tallahassee . . . . 420,808 T am p a-St. Pete. . . 2,507,598 W. Palm Beach . . 689,591 1,235,326 2,659,702 4,876,063r 946,022 332,883 352,667 2,525,857r 751,195 1,005,185 1,892,075 3,406,134r 771,279 276,713 220,258 2,043,640 587,656 - 2 - 6 -1 2 + 5 + 2 + 19 - 1 - 8 +20 +32 +26 +29 +22 +91 +23 + 17 +13 +16 +24 + 16 +23 +47 + 15 +11 A l b a n y ................ Atlanta ............. A u g u s t a ............. Columbus . . . . M a c o n ................ Savannah . . . . 139,321 9,477,851r 396,150 340,076 394,973 400,560 123,813 7,421,614 293,241 289,011 346,458 313,375 + + - 0 2 3 3 1 2 + 12 +25 +33 +22 + 15 +26 + 8 +14 +17 + 15 + 13 +17 Baton Rouge . . . 966,646 L a fa y e tte ............ 196,933 177,222 Lake Charles . . . New Orleans . . . . 3,257,025 955,593 195,397 183,966 3,194,933 807,276r 165,875 163,393 2,591,434 + + + 1 0 4 2 +20 + 19 + 8 +26 +18 + 9 + 9 +14 Biloxi—Gulfport . . 191,221 Jackson ............. . 1,025,981 190,397 967,887 174,175r + 0 873,377 + 6 + 10 + 17 +11 +14 - 5 - 8 + 2 + 7 +22 +26 + 12 +15 + 8 Birmingham . . . . Gadsden ............ Huntsville . . . . M o b i l e ................ Montgomery . . . Tuscaloosa . . . . Chattanooga . . . Knoxville . . . . Nashville . . . . 2,307,711 83,834 246,571 805,109 525,753 145,903 138,817 9,304,513 383,185 351,170 399,230 394,017 948,273 697,181 2,310,568 999,497 754,300 2,264,033 884,235 572,265 1,838,571 OTHER CEN TERS A n n i s t o n ............ Dothan ............. S e l m a ................ 89,654 115,375 54,858 89,215 116,913 53,027 78,786 89,012 47,664 + 0 - 1 + 3 +14 +30 +15 + 6 +22 + 5 Bartow ............. Bradenton . . . . Brevard County . . Daytona Beach . . Ft. Myers— N. Ft. Myers . . 32,264 104,057 220,686 123,782 40,210 119,798 224,045 124,123r 33,187 82,095 195,118 97,679 -2 0 -13 - 1 - 0 - 3 +27 +13 +27 + 0 +11 - 2 + 10 151,203 155,612 119,495 - +27 +23 'Includes only banks in the Sixth District portion of the state FED ERA L RESERVE B A N K O F A T LA N TA 3 tPartially estimated August 1971 G a i n e s v il le ............ L a k e la n d ............... Monroe County . . . O c a l a .................... St. Augustine . . . . St. Petersburg . . . S a r a s o t a ............... T a m p a ................... Winter Haven . . . . July 1971 August 1970 151,347 149,126 112,280 + 1 191,713 202,410 148,865 - 5 48,045 48,913 40,190 - 2 128,953120,741r 94,295 + 7 25,554 29,956 23,847 - 1 5 620,381 621,989r 452,197 - 0 188,483 201,534 147,014 - 6 1,295,809 1,287,955 1,125,235 + 1 99,022 108,594 73,144 - 9 +35 +29 +20 +37 + 7 +37 +28 +15 +35 +24 +17 +13 +15 + 5 +27 + 6 + 9 +18 Athens ................ B r u n s w i c k ............. D a l t o n ................... E lb e r t o n ................ G a i n e s v il le ............ G r i f f i n ................... LaGrange ............. N e w n a n ................ R o m e .................... V a l d o s t a ................ 176,586 71,772 146,109 16,519 105,526 52,351 46,044 33,867 106,230 84,461 171,011 80,248 130,516 16,380 97,148 49,792 28,173 36,893 119,486 75,343 129,999 + 3 +36 62,008 - 1 1 +16 115,572 +12 +26 18,099 + 1 - 9 91,021 + 9 +16 43,182 + 5 +21 23,231 +63 +98 27,526 - 8 +23 86,409 -1 1 +23 82,118 + 12 + 3 +43 +19 +14 -1 4 + 5 +15 +37 +11 +11 + 7 Abbeville ............. A le x a n d r ia ............. B u n k i e ................... H a m m o n d ............. New I b e r i a ............ Plaquemine . . . . T h i b o d a u x ............. 15,695 106,821 7,268 50,742 48,027 13,787 29,564 13,489 177,826 8,773 57,448 48,983 15,472 26,594 13,300 +16 150,952 - 1 0 7,419 - 1 7 46,931 - 1 2 38,871 - 2 14,157 - 1 1 23,965 +11 +18 + 7 - 2 + 8 +24 - 3 +23 + 5 + 7 + 7 +12 +12 - 2 +13 Hattiesburg . . . . L a u r e l ................... M e r id ia n ................ N a t c h e z ................ Pascagoula— Moss Point . . . . V i c k s b u r g ............. Yazoo C i t y ............ 91,188 52,047 91,429 46,272 93,680 49,541 83,001 45,104 79,231r - 3 +16 50,001 + 5 + 4 78,634 +10 +16 39,907 + 3 +16 +47r +5 + 4 + 4 120,824 56,718 35,649 99,138 58,343 38,622 91,393 +22 47,628 - 3 31,420r - 8 +32 +19 +13 +14 +12 + 8 B r i s t o l ................... Johnson City . . . . Kingsport ............. 105,708 119,238 180,764 113,772 136,919 195,815 93,591 - 7 100,344 - 1 3 173,290 - 8 +13 +19 + 4 +11 +13 + 5 District Total . . . . Alabama* .............. F l o r i d a * ................ G e o r g i a * ................ Louisiana** . . . . M ississippi** . . . . Tennessee** . . . . * Estimated 49,980,847 50,766,587r 40,382,129r - 2 +24 +14 5,935,106 5,746,886 16,221,507 17,089,817r 13,883,066 13,845,859r 5,721,870 5,650,723 2,259,900 2,173,094 5,959,398 6,260,208 4,865,127 + 12,839,051r ll,065,724r + 4,721,477r + l,854,264r + 5,036,486 - 3 +22 5 +26 0 +25 1 +21 4 +22 5 +18 +10 +18 +14 +14 +14 +11 r-Revised 195 District Business Conditions W it h th e o n se t o f the a u tu m n sp o rts se a so n , a str o n g k ic k o ff in re g io n a l n o tic e a b le . A c c o r d in g to latest a v a ila b le data, a fall o c c u r r e d in n o n fa r m tract v o lu m e fa ile d to ga in . C o n s u m e r d e b t o u t s t a n d in g a n d d o m e s tic van ces. A s e x pe cted , b a n k le n d in g p ic k e d u p c o n sid e r a b le y ard a ge . Farm lo ss, sin c e b u m p e r g ra in c ro p s a p p e a re d m o re certain. N o n fa r m e m p lo y m e n t re giste re d a slig h t d e c lin e in A u g u s t. Lack o f a ny sig n ific a n t stren gth in n o n m a n u fa c tu r in g e m p lo y m e n t, c o u p le d w ith e m p lo y m e n t lo sse s in the m a n u fa c tu r in g sector, c o n tin u e d to d e p re ss the la b o r m arket. E m p lo y m e n t lo sse s o c c u rre d t h r o u g h o u t the n o n d u ra b le g o o d s in d u strie s; p rim a ry m e ta ls p o ste d a sh a rp d r o p o ff a m o n g the d u r a b le g o o d s p ro d u ce rs. A fte r e d g in g d o w n w a r d d u r in g the tw o p re c e d in g m o n th s, the u n e m p lo y m e n t rate fo r A u g u s t in c re a se d to 4.8 percent. C o n s tr u c tio n c o n trac t v o lu m e d e c lin e d slig h tly in July; h o w e v e r, it r e m a in e d w e ll a b o v e le vels o f a y ear a g o . July's d e c lin e w a s sh a re d b y b o th resi d e n tial a n d n o n re sid e n tia l sectors. In late July a n d A u g u s t, m o rtg a g e interest rates sta b iliz e d after c lim b in g d u r in g the p re c e d in g tw o m o n th s; ex tre m e ly large in flo w s at sa v in g s a n d lo an a s s o c ia tio n s c o n tin u e d . C o n s u m e r in sta lm e n t c re d it o u ts ta n d in g at c o m m e rcia l b a n k s g r e w su b sta n tia lly in A u g u s t. A ll typ es o f lo a n s c o n trib u te d to the e x p a n sio n , th o u g h a u to lo a n s a n d p e rso n a l lo a n s s h o w e d the greatest strength. A u g u s t sale s o f d o m e s tic a lly p ro d u c e d e c o n o m ic a ctiv ity w a s still n o t e m p lo y m e n t. C o n s tr u c tio n c o n a u to sa le s s h o w e d s t r o n g a d p ric e s w e re th r o w n fo r a sh o rt a u t o m o b ile s w e re w e ll a h e a d o f the sa m e p e rio d o n e year ago. B a n k le n d in g r e b o u n d e d in late A u g u s t a n d c o n tin u e d s t r o n g th r o u g h ea rly S e p te m b e r. B a n k se cu rity h o ld in g s fell in S e p te m b e r, sin c e the larger ban ks, in p articu lar, s o ld m u n ic ip a l o b lig a tions. D e p o s it in flo w s p ic k e d up, w ith g a in s in in te re st-b e a rin g d e p o sits e x c e e d in g the g e n e ra lly w e a k in flo w s e x p e rie n c e d d u r in g the s u m m e r m o n th s. L a r g e -d e n o m in a tio n C D 's a d v a n c e d sh a r p ly, b u o y e d b y lo ca l g o v e r n m e n ts te m p o r a r ily in v e stin g the p ro c e e d s o f the ir b o n d sale s at lo ca l banks. Prices o f farm c o m m o d it ie s d e c lin e d slig h tly in A u g u s t b u t r e m a in e d a b o v e th e y e a r-e a rlie r level. T he p ro sp e c ts fo r a b u m p e r gra in c ro p d e p re sse d p rices fo r corn, rice, w heat, a n d so y b e a n s. B ro ile r p rices a lso d r o p p e d sh a rp ly fro m Ju ly's level, bu t the d e c lin e w a s la rge ly o ffse t b y an in c re a se in e g g prices. C r o p c o n d itio n s re m a in e d g e n e ra lly fa v o r a b le t h r o u g h o u t the D istric t, ex ce p t fo r H u rric a n e E d ith 's exte nsive d a m a g e to su g a r c a n e a n d c o tto n in so u th Lo u isia n a . T o b a c c o farm e rs in G e o r g ia re c e n tly c o m p le te d the h arvest o f the m o s t v a lu a b le c ro p in several years. N O TE: Data on w hich statements are based have been adjusted w henever possible to elim inate seasonal influences. 196 M O NTH LY REVIEW October 1971
@FedFRASER