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As the Nation Goes, So Goes the South? The Southerner who forecasts that his state’s income will change in re sponse to income changes throughout the country may be right. His chances of error may be large, however, if he estimates the change will be exactly like a national one. In support of his projection, our Southern forecaster could rightly argue that the virtually uninterrupted income growth in the Southeastern states since 1950 has been closely linked to the overall economic expansion. Warning him of the pitfalls of gen eralizations, we would point out the degree to which income changes in specific areas of the South responded to national changes and how these changes varied widely among states. Moreover, in any specific year, state income changes might be much less closely tied to national changes than over a period of several years. Measuring the relationship between year-to-year national and regional income changes provides some insight into the relative influences of local and national factors causing a change in a state’s income. Also, the expected effects on per capita income in this part of the Southeast associated with a change in overall per capita income sheds some light on the seeming paradox of this area’s faster-than-national rate of in come growth and the widening dollar gap between U.S. and South eastern per capita incomes. Growing Faster, but Still Lagging Probably the most meaningful measure of income change in terms of the economic well-being of the people in Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee—the states wholly or partly in the Sixth Federal Reserve District— is the growth in per capita income. In 1965, per capita income in the District was 77 percent as high as in the nation, compared with 68 percent in 1950. With the area’s population increasing at about the same rate as that of the U.S., the gain on the nation in the level of per capita income was the result of the faster growth rate of the District states’ total personal income. The annual average rate of increase in the District states’ per sonal income between 1950 and 1965 was 10.8 percent, compared with 8.3 percent nationally. This relationship has continued in 1966, with District personal income in the first half of 1966 up 10.4 percent from a year ago compared with 9.0 percent for the entire nation. The degree of association between District and national income changes is found in the answers to two questions: “At what rate does per capita income in this area change when per capita income for the entire U.S. changes one percent?” For convenience, we shall call this the “income flexibility” effect. It combines the influences of income change, population change, and the absolute level of per capita income in the District and its states. The second measure considers the question: “What is the expected actual change, expressed in dollar terms, in Dis trict per capita income associated with a one dollar change at the. na tional level?” This is termed the “income change” effect. Answers to these questions were determined mathematically by using simple linear regressions. Results of the regression analysis show that for the 1950-1965 period Chart I: Personal Income Sixth District and United States 1950-65 60 40 20 S ix th D is tr ic t S t a t e s P e r c e n t , U. S . P e r C a p i ta 80 70 '5 1 ’5 3 '5 5 ’5 7 '5 9 ’6 1 ’6 3 ’6 5 60 Expected Changes in Per Capita Personal Incomes Associated with National Changes Change expected when U.S. per capita incom e changes by A rea A la b a m a F lo r id a G e o r g ia L o u is ia n a M is s is s ip p i Tennessee S ix t h D is t r ic t 1 percen t $1.00 1 .3 1 .1 1 .3 1 .1 1 .2 1 .2 1 .2 $ 0 .8 4 .9 3 .9 2 .7 7 .6 6 .8 1 .8 7 an annual rate of change of 1 percent in national per capita income was associated with a 1.2-percent change in the District’s per capita income. In other words, the Dis trict’s rate of change was greater than the nation’s. Responses varied somewhat among the District states. In Alabama, for example, a 1.3-percent change in per capita income was associated with a change of 1 percent in na tional per capita income, whereas the figure for Louisiana and Florida was 1.1 percent. In each of the District states, however, the rate of change was greater than the corres ponding national rate. On the other hand, computations show that the actual change, expressed in dollar terms, in national per capita income was accompanied, on average, by a smaller dollar change in the District states. When the nation’s per capita income changed by one dollar, the expected change in the District’s per capita income was 87 cents. The expected changes varied among District states, ranging from a high of 93 cents in Florida to a low of 66 cents in Mississippi. In all the states, however, the expected “income change” effect was less than one dollar. The reason for the contrast between the relative posi tion of the changes in the District, measured by the “in come flexibility” and the “income change” effects, is caused by the lower levels of per capita income in the District states. Although per capita income in this region has advanced relative to the nation, a gap of over $600 still remains. Thus, by starting at a lower level, a given dollar change has more impact, expressed as a percentage change, in this region than nationally. Nevertheless, the http://fraser.stlouisfed.org/ 70 Federal Reserve Bank of St. Louis District’s greater-than-national rate of change was not large enough to narrow the dollar gap. For an actual change (“income change” effect) in the District’s per capita income to equal a national per capita income change would require, on average, an “income flexibility” effect of about 1.4 percent, instead of the 1.2 percent found from the 1950-1965 relationship. Thus, with an “income flexibility” effect of 1.4 percent, the dollar gap between District and national per capita in comes would have remained approximately the same over this period. With a value less than 1.4 percent, the gap could be expected to widen, as it did from 1950 to 1965. To narrow or eliminate the gap already existing would re quire a still larger “income flexibility” value. Thus, while the District’s rate of per capita income growth has generally exceeded the nation’s, it has not been great enough to narrow the dollar gap between District and national per capita incomes. Responding to Local and National Changes The “income flexibility” and “income change” effects help explain the reaction of District per capita income nor mally expected from a change in national per capita in come. However, despite the very definite and obvious “tiein” between changes in District and national incomes, there are reasons why an income change for some specific year may not resemble past ones. A difference in the industrialmix of the District’s economy, which could result in a differential impact from a shift in the national demand for various products or specific local developments, could cause a more divergent swing in income than would nor mally be expected. The sources of total personal income in the District have become increasingly more similar to the national pat tern. Agricultural income, once a more important source of District income, now accounts for the same proportion as in the nation. But important differences still remain. Manufacturing income makes up 22 percent of the na tion’s income, but only 17 percent of the District’s. On the other hand, governmental sources contribute a larger pro portion of the District’s income. Since various types of activity respond differently to general economic changes, we would not expect two areas with dissimilar industry mixes to always behave alike. The larger the area, the more likely will its economy be diver sified and resemble the national economy. Thus, income changes for the entire Sixth District more nearly resemble national changes that do most of the states considered separately. What specific local factors cause the District states to respond differently to changes in national personal income than would normally be expected? The answer to this question, along with the overall national income picture, has an important bearing on the change in District incomes in specific years. The use of linear regressions also helps in answering this question. Specifically, the regression tech nique seeks to determine the year-to-year change in the District states’ total personal income associated with a cor responding change at the national level. Total personal in come is used since it is necessary to look at the influences of the various sources of income for specific years in ex plaining why deviations from the national trend occur. MONTHLY R E V IE W Using data for the 1950-1965 period, we determined the historical relation between U.S. and District income changes. About four-fifths of the yearly swings in District income could be explained directly by changes in the level of national personal income. Such a relation represents an average association between yearly income changes in Dis trict states and the entire nation. Deviations in specific years from this average relation reflect the influence of certain local factors. Thus, a comparison of the actual yearly changes in a state’s income, with the changes com puted from this historical relation, help pinpoint the years in which these local factors were particularly important. The most notable deviations occurred during the Korean War buildup of 1950-1951, the recession years of 19571958 and 1960-1961, and recently in 1963 (see charts). In 1951, the change in District income calculated from this historical relation was about 24 percent higher than that actually realized. Most of this deviation came from Florida’s actual change in personal income falling con siderably short of her predicted change. Closer examina tion reveals that income from Federal military expendi tures in Florida did not expand as rapidly as in other regions of the nation during the Korean War buildup. In come derived from this source advanced about 55 percent in Florida in 1951, compared with 72 percent in the na tion. Other District states’ income changes were about in line with their expected value. A movement in the opposite direction occurred in the 1957-1958 period, as the actual change in District income was considerably above the calculated value. Deviating from the 1950-1961 period, most of the District states experienced the same trend. During 1957-1958, incomes rose only moderately. The slower rate of advance at the national level, however, was more severe than in the Dis trict, as income from mining, construction, and manufac turing in the nation fell sharply. The District fared much better than did most other areas, as personal income rose by 5.1 percent, compared with only a 2.5-percent rise for the nation. It is tempting to conclude that the District’s economy is more stable than the nation’s during recessions. But let us first look at the District’s performance during the 1960-1961 recession, when realized income changes in each of the six states, fell short of the changes expected from the national trend. District income from agricultural sources fell by 2 per cent in 1960, while the nation experienced a 2-percent ad vance. Prices received for cotton, a major cash crop in the District, were down considerably. Since a large propor tion of the nation’s cotton is produced in the Southeast, a drop in the price of this commodity adversely affected District farm incomes. In addition, farm income in Louisi ana dropped sharply because of poor weather and gen erally falling prices for most commodities. Total farm cash receipts in that state declined nearly 5 percent during the year. Construction activity in the nation also weakened, but moderate gains in incomes from this source were still maintained. The construction industry’s contribution to District income declined in 1960, mainly in Louisiana where a 6.5-percent drop was experienced. The closing of certain military bases in southwest Louisiana augmented Digitized S E Pfor T E FRASER M B E R 1 9 66 C h a r t II: A c t u a l a n d in C a lc u la t e d C h a n g e s P e rso n a l In co m e Sixth District States 1950-65 M illio n s o f D o lla r s M illio n s of D o lla rs declines in this industry. In New Orleans alone, the value of residential construction dropped nearly 30 percent. De clines were also recorded in Baton Rouge and Lake Charles. Thus, deviations from actual and expected changes in District income during the recession year of 1960 were centered largely in only two industries. These special and occasional factors are mainly responsible for causing Dis trict income to fluctuate more or less than the national trend in certain years. Since the recession of 1960-1961, gains in District in come each year have moved steadily upward. The same pattern emerges for the nation, except in 1963 when income growth was not as rapid as the year before. Income from agriculture actually declined in 1963 in the nation, while large gains were sustained in the District. In fact, each of the major sources of income grew more rapidly in the Dis trict. Particularly noteworthy was the 7.1-percent increase in Federal military income, compared with only a 1.6percent rise for the nation. Within certain states, other factors occasionally cause continued on page 74 • 71 • The Roller Coask Louisiana rides an economic roller coaster. Whether the economy swings up or down, it moves relatively more in the Pelican state than in the nation. Swings in economic activity follow swings in investment. An upswing in invest ment, be it in the nation or Louisiana, typically brings about a prodigious growth of income. Downswings dampen income growth. Because of her industry mix, Louisiana feels both more intensively than does the nation. Today this Sixth District state is enjoying the upward ride. Wallets are fatter and payrolls longer than they have ever been. Today’s boom rivals that of the mid-1950’s. Like the earlier boom, this one is based on an upswing in investment activity centered in the petrochemical indus tries. Further accentuating the sharpness of the state’s rapid, investment-fueled climb out of the recession was the placement of contracts for assembly of Saturn booster rockets at the Michoud facility (pictured above) and a construction boom in New Orleans. The addition of one new manufacturing facility does not normally affect an entire state’s economy so significantly, but the Michoud facility is no normal installation. At its peak, it employed 12,000 persons. In contrast, the state’s entire petroleum refining and related products industry employed less than 11,000. Income Follows Investment Between 1955 and 1957, plant and equipment expendi tures increased tremendously in Louisiana and the nation. Paralleling this increase was a 30-percent rise in Lou isiana’s personal income from 1954 to 1957. Today the nation is again experiencing a boom in new plant and equipment expenditures which seems to be outdistancing the 1950’s boom. But, during the last three-year period for which we have figures (1963-1966), personal income in Louisiana rose 28 percent, a bit less than the increase during the earlier period. The greater impact on Louisiana of upswings and downswings in investment expenditures can be seen in personal income figures. Investment reached a peak in the state and the nation in 1957 and fell violently from 1958 to 1960. An uptrend was noticeable by 1963. Personal income in the state and the nation reflects this fluctuation Digitized •for7 FRASER 2 * vividly. Personal income rose 18.7 percent in the nation from prosperous 1957 to recessive 1961. In Louisiana, however, personal income rose only 10.5 percent over the same period. But after the current investment boom got underway, the picture changed radically: While personal income in the nation rose only 7.9 percent from 1964 to 1965, it rose 11.9 percent in the Bayou state. Employment figures, of course, show a similar pattern. According to the United States Department of Labor, the nation gained in nonagricultural employment between the 1957-1958 and 1960-1961 recessions, but Louisiana actually suffered a slight decline in average employment. Like the rest of the South, Louisiana is attracting a sizable chunk of the current “investment pie” because of her typically Southern nexus of natural resources, labor, and balmy climate. Unlike other District states, however, Louisiana’s greatest magnet for capital is the oil beneath her soil and coastal waters. Of course, her timber, sulphur, major crops, and the extensive waterways which provide cheap transportation and meet the needs of industries re quiring large quantities of water, also draw a great deal of investment. Current investment, however, is dominated by the petrochemical industries. The Role of Petrochem icals Both the importance of and the growth of petrochemical industries can be seen in employment figures. Employ ment in crude petroleum and natural gas production, ex panding rapidly since 1963, currently exceeds 48,000, which is significantly higher than the figure of the earlier boom period. Another unusually large industry in Louisi ana, due to her stature as a pipeline employer, is trans portation and public utilities. Nearly 10 percent of non agricultural employment (over 89,000)— more than is employed in all durable goods manufacturing— is in the transportation and public utilities sector. While employ ment in crude petroleum and natural gas producing indus tries exceeded 1957 employment last year, employment in transportation and public utilities did not do so until this year. Employment in the heavily automated petroleum refining and related products industry, a relatively small employer, has declined since 1957. The billions invested in U. S. offshore petroleum opera tions (pictured on opposite page) are paying off hand somely for Louisiana. Tidelands oil has catapulted the Pelican state from its third-place ranking behind California a few years ago to its current second-place position as an oil producer. Bolstered by the output of oil wells lying be neath Gulf waves, crude petroleum began the year running well ahead of last year. Led by Louisiana and Texas, oil and natural gas production has been expanding through out the nation this year. The chemicals and allied products industry has been the real spark plug for recent employment growth in man ufacturing, a particularly important sector of the economy because of the spill-over into construction, wholesale trade, real estate, and other nonmanufacturing trades. Chemical employment, ahead of the 1957 level since MONTHLY R E V IE W feet in Louisiana 1964, grew by more than 4 percent from June 1965 to June 1966. The importance of the chemical industry is indi cated by the sizable part of value added by manufacture in Louisiana in 1963 when the last Census of Manufac turers was taken. While petroleum and coal products took a 14-plus-percent bite of the total, chemicals’ 22-plus per cent far outshadowed this showing. It even outdistanced the share contributed by the much larger, but contrastingly labor-intensive, food and kindred products industry, which accounted for nearly 20 percent. Structure Fosters Extreme Response In conjunction with petrochemicals, construction employ ment, another significant employer, plays a key role in accentuating the response of the state to investment changes. Construction employment expands enormously as investment increases, but it falls just as rapidly when investment declines. Construction jobs lost due to a fall in investment are often not offset by employment in the facilities built by construction workers. This is because so much investment is in the petrochemical plants where the employment-to-investment ratio is very low. In recent years growth in construction employment has been a real “speed merchant,” expanding, as of June, nearly 65 per cent since 1960. Average employment through June was 13 percent above the average for the entire year of 1965. Employment today stands well over 90,000. National em ployment in this volatile industry rose a much lower, but still respectable, 15.2 percent from 1960, and average employment through June was nearly 5 percent higher than during 1965— well below Louisiana’s gain. Expan sion in construction employment has been extremely rapid in petrochemical-rich Lake Charles and Baton Rouge, northern terminus of the “chemical corridor” beginning at New Orleans. Absolute gains, are largest, however, in the Crescent City, New Orleans. Construction employment is closely tied to residential building and investment expenditures. In Louisiana con struction employment currently exceeds total employment in durable goods industries by 18,000. In the recession year of 1961, construction employment led by more than 4,000; in the high-tide year of 1957, it was ahead by well over 11,000. The unusual importance of manufacturing industries such as food and kindred products and lumber and wood products also has a bearing on Louisiana’s greater reac tion to fluctuations in investment. Both are relatively lowpaying employment because of the low value added per worker. They have traditionally been labor-intensive. But, in recent years, the chain saw and the rise of large man aged forests, owned or leased by timber-using companies, has drastically reduced employment in lumber and wood products. Nevertheless, lumber and wood products retains its long-time hold on the first-place position as a durable goods employer. Though its relative size has decreased, it still remains more important in Louisiana than in the nation. In nondurable goods the same relationship holds for food and kindred products, but its relative importance Digitized FRASER S E Pfor TEM B E R 1 9 66 After sh ow in g com paratively little ch an ge betw een 1958 and 1961, L ouisiana’s em p loym en t has sin c e grown more rapidly than in th e nation. Periods of sign ifican t in crease in plan t and eq u ip m en t exp en d i tu res are characterized by larger in c r e a se s in personal incom e than are periods of m ild growth or actual d eclin e. E x p e n d itu re s for N ew P lant an d E quipm ent, L ouisiana . Millions of Dollars 250 200 J _____ i_____i—......l J ..........t____ J_____ L Personal Income - Billions of Dollars . . ■ i l l 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 C ontrasting tren d s in em p loym en t are evid en ced by in d u stries relatively m ore im portant in Louisiana than in th e nation. Thousands Thousands ‘ First six months of year. • 73 • has declined much less. In 1950 lumber and wood prod ucts accounted for only 10 percent of the nation’s employ ment in durable goods, whereas it accounted for 59 per cent of Louisiana’s. Today the state’s percentage has fallen to 22 percent. In 1950, food and kindred products made up 25 percent of the nation’s nondurable goods employ ment; in Louisiana it accounted for 40 percent. Today the Louisiana percentage is down to 36 percent. When investment is up, the relative importance of these comparatively low-paying industries becomes less. With investment high in recent years, the reduction in the im portance of food and kindred products has continued un abated, although there has been a slight rise in the actual employment level in this industry since 1963. Economic Outlook Despite some weaknesses in Louisiana’s economy, pros pects for the continuation of the current level of activity in the Bayou state for the rest of the year seem likely. But whatever happens, it seems reasonable to expect that, because the state’s industrial structure remains rather fluctuation prone, Louisiana will continue to experience the “roller coaster effect.” C a r o l e E . S c o t t This is one of a series in which economic developments in each of the Sixth District states are discussed. De velopments in Alabama’s economy were analyzed in the July 1966 R e v i e w , and a discussion of Mississippi’s economy is scheduled for a forthcoming issue. • Copies of the revised editions of A R e v i e w o f G e o r g i a ’ s E c o n o m y , 1960-66, and A R e v i e w o f T e n n e s s e e ’ s E c o n o m y , 1960-66, are now available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. B a n k Announcem ents On July 11, T h e B e a c h B a n k o f V e r o B e a c h , Vero Beach, Florida, opened as a nonmember bank and began to remit at par for checks drawn on it when received from the Federal Reserve Bank. Officers include L. S. Tiller, Presi dent, and W. H. Hicks, Vice President and Cashier. Capital totals $300,000, and surplus and other capital funds, $105,000. The C i t i z e n s B a n k , Warrenton, Georgia, a nonmember bank, began to remit at par on August 1. A newly organized nonmember bank, the S p r i n g f i e l d C o m m e r c i a l B a n k , Springfield, Florida, opened on August 3 and began to remit at par. Officers are M. G. Nelson, President; Hugh A. Nelson, Vice President; and Bobby M. Pitts, Cashier. Capital amounts to $200,000, and surplus and other capital funds, $60,000. On August 15, T h e B a n k o f C o m m e r c e a n d T r u s t C o m p a n y , St. Francisville, Louisiana, a nonmember bank, began to remit at par. The F i r s t N a t i o n a l B a n k o f W a y n e s b o r o , Waynes boro, Mississippi, opened on August 23 as a member bank and began to remit at par. O. D. Mason, Jr., is President, and Mrs. Opal Givens is Cashier. Capital is $200,000, and surplus and other capital funds, $300,000. The M id - W a y B a n k , Opelika, Alabama, a newly or ganized nonmember bank, opened on August 30 and began to remit at par. The officers are Sam Morgan, Jr., Presi dent, and Jack Anderson, Vice President. Capital totals $175,000, and surplus and other capital funds, $175,000. • 74 • A s the N a tio n Goes . .. continued from page 71 large deviations between the actual and calculated changes in income. Generally, however, changes in Alabama, Geor gia, and Tennessee closely parallel those of the entire nation. Florida, with about one-fourth of her income com ing from the trade and service sector, is very vulnerable to sudden changes in income. The accompanying charts also show that, of any District states, Mississippi is proba bly the least tied to national developments in specific years. Future Income Changes Based on historical relations, the best indicator of the likely change in the District’s income is what happens at the national level. But in appraising the likely income change in the District for some specific year, we are also reminded that “as the nation goes, the South does not always follow.” Certain local factors, such as a drought or a storm, may cause the agricultural sector’s contribution to District income to move differently from that of other areas. The impact of government spending, especially for defense, may affect District income differently than in the nation. Other factors, such as the development of local natural resources or shifting national demands, may re sult in a differential impact on District income. It would be rare if local income changes behaved exactly like a change at the national level. The task of forecasting a state’s income would be con siderably easier if it were only necessary to look at the national trend. In addition to the underlying national in fluences, a multitude of local factors must also be consi dered. In an effort to improve his estimates, the Southerner who forecasts his state’s income must be familiar with the separate influences of these local developments and incor porate them into his predictions. j Q e W . M c L e a r y N o t e s on Regression Simple regression analysis measures the relationship between two variables. For our purposes, the rela tionship was assumed to be linear, i.e., one represented by a straight line of the form Y = a + bX, where (X) and (Y) are the related variables and (a) and fb) are the coefficients to be determined. The (b) coefficient determined from the analysis represents an estimate of the average amount by which the two vari ables are related; the (a) coefficient is a constant and serves to adjust the line up or down according to the initial level of the two variables. First of all. we computed the relationship of changes in per capita income between the U.S. and the District and between the U.S. and individual District states for the years 1950-1965. In this case, (Y) represents the change from the previous year in the District states' per capita income and (X) the change from the previous year in U.S. per capita income. Both of the variables are expressed in actual dollar changes. The results of the analysis were: Alabama: Y = -2.00 + 0.84X Florida: Y = -1.12 + 0.93X Georgia: Y = -1.10 + 0.92X Louisiana: Y = —3.51 + 0.77X Mississippi: Y = —1.00 + 0.66X Tennessee: Y = —1.73 + 0.81X District: Y = -1.86 + 0.87X The coefficient of determination, which measures the percentage of the total variation in (Y) explained by the corresponding variation in (X), indicates a high degree of association between the two variables in each state. The standard error of estimate shows the average amount by which the actual (Y) value de viated from the regression line. With the exception of Mississippi, the standard errors of estimate were con siderably smaller than the mean of their respective (Y) values. The mean value of Mississippi’s per capita income changes was only about twice as large as her standard error. Each of the (b) coefficients was sig nificantly larger than the standard error, meaning that the estimated coefficients are reliable estimates for this sample data. The (b) coefficients shown in the above equations relate by how much (Y) should change with a given change in (X), expressed in dollar terms. These actual changes are converted to an expected percentage change by multiplying each of the coefficients by the ratio of the average level of U.S. per capita income to the average level of each of the various states’ per capita income for the 1950-1965 period. These per centage changes are shown in an accompanying table of the text. A second set of regressions was determined for each of the states using changes in total personal income (expressed in millions of dollars) instead of per capita personal income. The results of the analysis were: bama: Y = -90.75 + .017X rida: Y = 237.23 + .022X •rgia: Y = -123.35 + .026X lisiana: Y = -33.92 + .015X sissippi: Y = 10.50 + .006X nessee: Y = -18.67 + .015X District: Y = -19.17 + .102X The coefficients of determination for the equations for Alabama, Georgia, Tennessee, and the District were fairly high. Lower values for the remaining states indicate their lower degree of association with U.S. income changes. The (b) coefficients, judging by the small size of their standard errors, were highly signifi cant. Standard errors of estimate for each equation were considerably smaller than the mean of the as sociated (Y) value. Using these equations, the year-to-year change in each state’s income was calculated from the change occurring in U.S. income. These calculated values are plotted in the accompanying charts, along with the actual changes which occurred. 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 esto ck .................................................. 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 anufacturing................................ Construction .................................... Farm E m ploym 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 tia l............................................. All O th e r .................................................. Electric Power Production**.................. Cotton C onsum p tion**........................... Petrol. Prod, in Coastal La. and Miss.** FINANCE AND BANKING Member Bank Loans* All B a n k s .................................................. Leading C i t i e s .................................... Member Bank Deposits* All B a n k s .................................................. Leading Cities .................................... Bank D eb its* /* * ......................................... une 52,862 uly 186 151 une 134 une une 160 One Month Ago Two Months Ago 52,460r 52,988r 47,442 186 183 169 140 149 127 141 146 120 144 153 131 284 259 258 229 uly uly 270 270 uly uly uly uly uly uly uly uly uly uly uly uly uly uly 131 131 162 127 145 130 130 160 124 142 125 124 152 105 115 117 105 167 131 126 69 131 131 162 125r 146 llOr 104 115 116r 104 168r 131 128 69 103 113 114 104 168 130 127 69 101 110 112 100 July July July July July June July Aug. 1.8 41.5 164 151 175 139 117 205 1.6 41.6r 174 161 185 137 117 204 1.6 41.6 159 163 156 140 118 203 2.4 41.3 157 170 147 128 114 183 111 120 232 216 206 192 July Aug. July 180 168 192 179 166 179 177 161 182 160 151 167 6,544 164 139 7,080r 172r 142 July July July July July 121 121 123 129 84 121 120 122 130r 73 121 120 121 130 67 118 117 118 121 84 July July 2.1 41.7 2.0 41.9r 1.9 41.6 2.6 41.7 . July . July . July 220 177 176 218 177 171 216 174 164 197 160 160 FINANCE AND BANKING FLORIDA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) June 14,977 216 Manufacturing P a y r o lls........................... July 124 Farm Cash R e c e ip t s ................................June 15,075r 15,082r 13,353 212r 209 190 152 160 99 July July July July July 142 145 142 111 50 142 143 142 lllr 65 141 141 141 108 96 136 136 136 109 83 July July 1.9 42.4 1.5 42.Or 1.4 42.3 2.2 41.9 . July . July July 241 182 184 239 180 173 234 176 181 211 162 163 FINANCE AND BANKING Bank Debits* 131 129 133r 142r 59 130 128 132 141 54 124 121 126 138 83 July July 1.4 41.0 1.2 41.Or 1.1 41.1 1.8 41.1 July July July 250 198 206 255 193 195 247 197 194 214 173 178 June July June 8,050 167 147 7,942r 164r 129 8,069r 163 151 7,304 157 126 July July July July July 120 113 123 137 67 120 112 122 136 74 120 111 122 138r 80 114 108 116 122 80 July July 1.9 42.7 2.0 42.4r 2.2 42.8 3.0 42.6 . July . July . July 221 158 185 212 154 168 214 154 168 192 141 154 4,098r 203r 144 4,118r 203 150 3,663 182 138 131 143 127r 132 59 126 135 122 128 70 Avg. Weekly Hrs. in Mfg., (Hrs.) PRODUCTION AND EMPLOYMENT Nonfarm Employment . . . . Farm E m ploym en t....................... Insured Unemployment, (Percent of Cov. Emp.) . . . Avg. Weekly Hrs. in Mfg., (Hrs.) FINANCE AND BANKING Member Bank Loans* . . . . Bank Debits*/* MISSISSIPPI INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) June 4,031 202 Manufacturing P a y r o lls........................... July 180 Farm Cash R e c e ip t s ................................June PRODUCTION AND EMPLOYMENT Nonfarm Employment . . . . July July July July 132 142 127 133 68 131 143r 127 133 62 . July . July 1.7 41.6 1.6 41.6r 1.7 41.5 2.4 41.0 FINANCE AND BANKING Member Bank L o a n s * ........................... July Member Bank Deposits* . . . . . . July Bank D e b its* /* * ........................... . . . July 214 193 210 183 210 186 169 164 TENNESSEE INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) June Manufacturing P a y r o lls........................... July Farm Cash R e c e ip t s ................................June 3,497 186 148 8,377 r 187r 130 8,473 182 127 7,535 163 127 July July July July July 134 141 130 154 76 133 141 129 154r 80 132 139 128 153 74 125 130 123 142 76 July July 1.9 40.7 1.7r 41.5r 1.7 41.2 2.5 40.4 FINANCE AND BANKING Member Bank Loans* . . . . . . . July Member Bank Deposits* . . . . . . July Bank D eb its* /* * ........................... . . . July 235 173 207 235 177 188 231 172 197 203 158 178 Insured Unemployment, (Percent of Cov. Emp.) . . . Avg. Weekly Hrs. in Mfg., (Hrs.) . . . . Insured Unemployment, Insured Unemployment, Avg. Weekly Hrs. in Mfg., (Hrs.) 9,043 171 140 PRODUCTION AND EMPLOYMENT PRODUCTION AND EMPLOYMENT Manufacturing 9,888r 10,101r 188r 183r 150 136 131 128 132 129 65 78 236 222 One Year Ago July July July July July Farm Employment . . Insured Unemployment, LOUISIANA INCOME AND SPENDING 122 June 10,142 187 July 156 June One Two Month Months Ago Ago PRODUCTION AND EMPLOYMENT 154 125 7,165 172 158 PRODUCTION AND EMPLOYMENT Nonfarm E m p lo y m e n t........................... M anufacturing......................................... N onm anufacturing................................ C o n s tr u c tio n .................................... Farm E m ploym en t.................................... Insured Unemployment, (Percent of Cov. E m p .)....................... Avg. Weekly Hrs. in Mfg., (Hrs.) . . . GEORGIA INCOME AND SPENDING Personal Income, (Mil. $ FINANCE AND BANKING 238 221 7,145r 169 150 Latest Month (1966) 133 109 July Aug. ALABAMA INCOME AND SPENDING Personal Income, (Mil. $, Annual Rate) June Manufacturing P a y r o lls ........................... July Farm Cash R e c e ip t s ................................ June I O O , u n le s s in d ic a te d o th e r w is e .) One Year Ago 277r 247 111 = Avg. Weekly Hrs. in Mfg., (Hrs.) *For Sixth District area only. Other totals for entire six states. **Daily average basis. r-Revised. Sources: Personal income estimated by this Bank; nonfarm, mfg. and nonmfg. emp., mfg. payrolls and hours, and unemp., U. S. Dept, of Labor and cooperating state agencies; cotton consumption, U. S. Bureau of Census; construction contracts, F. W. Dodge Corp.; petrol, prod., U. S. Bureau of Mines; 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. NOTE: Debits to Demand Deposit Accounts for July available upon request to the Research Department, Federal Reserve Bank of Atlanta, Atlanta, Georgia 30303. S E P T E M B E R 1966 • 75* DISTRICT BUSINESS CONDITIONS ^ .A n n u a l R a t* A d j. P e r s o n a l In c o m e N o n fa r m E m p lo y m e n t In the midst of the sum m er vacation season, the District’s economy also took a breather. The growth in nonfarm jobs slowed, pushing the July insured unemployment rate above the year’s previous low. Consumer spending slackened. Reduced availability of mortgage credit and sharply rising interest rates continued to depress housing. Loans and investm ents at District banks declined in August. Adverse growing conditions have affected some crops, but the overall agricultural picture looks bright. U* ^ M fg . E m p lo y m e n t A v e r a g e W e e k ly H o u r s ' M fg . P a y r o lls Strikes in nonm anufacturing and contrasting changes in m anufacturing slowed growth in nonfarm jobs in July. Offsetting gains and losses left man ufacturing jobs unchanged. Chemicals, food, and primary metals registered sizable increases, while transportation equipment jobs shrank as a result of early auto model changes. Although strikes occurred in airlines and construc tion industries, nonmanufacturing jobs, spurred by notable gains in government payrolls, advanced smartly. v* C o n s t ru c tio n C o n tr a c ts In d u s t r ia l U s e o f E le c tric Pow«*i C o tto n C o n s u m p t io n B a n k D e b its Sharply declining automobile sales in July resulted in a slowdown in gains of total retail sales and instalm ent credit. Loans for purchases of automobiles and other consumer goods dropped significantly from the previous month and year-earlier levels. Advances in repair and modernization and personal loans were not large enough to offset declines in other categories. Extensions of all types of loans were only slightly higher than repayments. Thus, total instalment credit continued its slower growth rate. Leading indicators suggest that the reduction in residential building is now becoming more acute. In recent months interest rates have risen sharply, and marked declines in the availability of mortgage credit have oc curred. Contract volume in construction other than housing continues buoyant, however, so that the total still exceeds that of last year. Construction employ ment is also holding up well in all District states except Georgia, where labor disputes have contributed to a significant slowdown. v* Fa rm C a s h R e c e ip t s 6-m o . m o ving o v« ro g « M em ber Bank Loans District banks were pressured to limit credit expansion in August by sharply lower rates of increase in time deposits and greater-than-seasonal reductions in demand deposits. Both loans and investments declined. Large weekly reporting banks showed small decreases in business loans even though demand for such loans appears very high. Bank borrowings continued to advance. M em ber Bank Deposlts^^ B o r r o w in g s fro m F. R. B a n k s “ Seas. adj. figure; not an index. Good yields for most crops are expected this harvest season. The peanut crop will be large, but heavy insect infestations are reducing cotton prospects. The outlook for citrus and sugarcane crops is good. Record prices were re ceived at all 28 Florida and Georgia flue-cured tobacco markets even though sales were near the 1965 level. Broiler production continues well above last year as prices remain strong. Egg production is also advancing. Retail fluid milk prices have advanced in several District states, as milk production has declined. N o t e : D a t a o n w h ic h st 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 to e lim in a te s e a s o n a l in flu e n c e s.
@FedFRASER