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BuammRei/mJ MONTHLY IN THIS IS SU E FEDERAL RESERVE BANK of CLEVELAND— Local Trade Patterns: Census Showings. . .2 Notes on Federal Reserve Publications... .9 Small Increase in Steel Capacity in 1959.10 A fr U l, t $ 6 0 Around the Fourth District.................. 12 RETAIL SALES Percentage Change from 1954 to 1958 I— -5% ALL SALES AUTO and PARTS Dealers GENERAL MERCHANDISE Stores FURNITURE and APPLIANCE Stores APPAREL Stores +15% +20% +25% -------1 U.S. m 4th DISTRICT (17 Metropolitan Aroas) Local Trade Patterns: Census Showings examination of local developments trict sales, dollar volume was up 11 percent, in trade is made possible twice in each as shown on the cover chart. decade by the publication of the comprehen A portion of the 1954-58 increases, both sive Census of Business taken by the U. S. and Districtwide, may be ascribed Bureau of the Census for years ending in nationwide to changes in prices which were, on the aver “ 4” and “ 8”. With the recent release of the age for all consumer in the na preliminary reports for the retail trade series tion, 5.5 percent greatercommodities in 1958 than 1954. of 1958, it is possible to outline some of the Although the extent of price changesinvaried local patterns of retail trade that have devel for different types of commodities, the 5.5 oped within the Fourth Federal Reserve Dis percent price gain may be used as a very trict during recent years. general guide in discounting the dollar vol The two census years, 1954 and 1958, which ume to obtain a broad estimate of change in provided the working material for this com physical volume. Physical volume of sales in parative analysis, were both marked by reces the District is thus estimated to have been sion lows and subsequent recoveries. The approximately 4 percent greater in 1958 as three intervening years were characterized by contrasted with a gain of close to 11 percent an economy that was in a generally expand in the nation. ing phase until the latter half of 1957. The 1954-58 rise in retail sales was also due subsequent downturn was more pronounced in The part the expansion of the population. than the 1953-54 dip in both the nation and Althoughto the growth for the the Fourth District. In both recession peri Fourth District population paralleled that nation ods, however, a greater impact on economic with an increase of 7.5 percent,ofthetheDistrict conditions was witnessed within the Fourth population change exceeded the estimated District than was evidenced nationally. This in physical volume of sales. The Dis was a normal reaction largely attributable to change trict share of total United States retail trade the sizeable concentration in the District of by dollar volume dropped from 8.3 percent recession-sensitive heavy industry, including in 1954 to 7.7 percent in 1958. Per capita primary metal, automotive, and metal prod sales in the Fourth District, which had closely ucts producers. matched the corresponding figure for the U. S. in 1954, fell somewhat short of the U. S. District vs. National Changes figure four years later in 1958. In the latter year per capita figure was $1,057; The change in total retail sales between in thetheU.District S. it was $1,152. 1954 and 1958 showed a relatively stronger A comparison of percentage change of sales position for the country as a whole than that for the Fourth District. Reaching a total by kinds of business establishments between volume in 1958 of $15,450 million, retail sales the Fourth District metropolitan areas and in the Fourth District were only 10 percent the United States underscores the differential above the 1954 level as against a correspond impact on retail trade of the 1957-58 adjust ing nationwide increase of more than 17 per (i) The 1958 figures used for total retail sales and the dis cent.(1) In the seventeen metropolitan areas tribution of sales by establishment groups for the United as a whole are based on a preliminary release of the reporting almost three-fourths of total Dis U.StatesS. Bureau of the Census. A c l o se 2 ments in business activity in a few categories. One of these, the auto group, representing about one-sixth of all sales, carries significant weight. (See Table 1.) Although the general merchandise stores in the District registered a percentage gain about equal to that of the nation, there was a difference in their share of total sales. While stores in this group accounted for almost 15 percent of all District sales in 1958, they represented only 11 percent of total national sales. The percentage changes in sales for a combination of general merchandise stores, apparel stores, and furniture and appliance stores, on the other hand, showed a gain of almost 14 percent in the District against a 16 percent gain in the nation. 1954-58 percentage changes in sales, reflect ing dissimilarities in local conditions, ranged from a gain of close to 100 percent, in Leslie County in southwestern Kentucky, to a de cline of 26 percent, in Pike County, Ohio. Since the map indicates dollar volume changes, unadjusted for price differences, the counties having increases of up to 5 per cent may actually have handled a lower vol ume of commodities in 1958 than in 1954. The counties which show a gain of 5 to 10 percent may be considered to have had only a slightly better trade situation in 1958 than in 1954. Counties with trade volume between 10 and 20 percent larger in the later census year may be described as average when com pared with the District and national records of 10 and 17 percent, respectively. Gains of over 20 percent denote substantial differences County Patterns in trade volume between the census years. Within the District, changes in the dollar Comparatively few counties experienced a volume of retail trade at the county level, as smaller dollar volume of sales in 1958 than recorded on the large map on page 5, indi in 1954. cate a wide diversity of performance. The Outstanding on the map of changes by county is the large number of high percent age gains in Kentucky. The gains in Fayette Table 1 and adjacent counties were associated with industrial expansion. Relatively higher pay RETAIL SALES rolls in the mining or construction segments BY KIND OF BUSINESS of the labor force, and in fewer cases in man ufacturing, appear to be responsible for a Percentage Change relatively more favorable dollar volume of From 1954 to 1958 1958 retail sales in many of the other Ken 4th District tucky counties having sizeable gains. Boone Metropolitan United County, Kentucky, adjacent to the counties Areas States included in the Cincinnati metropolitan area, + 28% + 26% Gasoline Service Stations experienced a population and trade growth Drug and Proprietary Stores + 24 + 28 associated with the Cincinnati area. In Pen General Merchandise Stores + 21 + 20 dleton County, bordering the same metro Food Stores + 16 + 19 politan area, the gain in trade corresponds to Eating and Drinking Places + 14 + 13 increases in total payrolls of workers em Specialty Stores + 10 + 8 ployed in manufacturing and trade occu Apparel Stores + 5 + 11 pations. Furniture and Appliance Stores + 14 Other than the counties in Kentucky, there + 5 Lumber, Bldg. Materials, and were only seven in the District which had Farm Equipment Stores + o + 6 significant percentage increases in trade vol — 2 Auto and Parts Dealers + 3 ume between 1954 and 1958. Lake and Geauga Nonstore — 3 + 16 counties in northeastern Ohio have been Total Sales + 17 + 11 experiencing rapid increases in population 3 associated with the development of the Cleve land area. In three counties along the Ohio River, two in Ohio and one in West Virginia, the decline in rural populations has been off set by an increase in industrially-employed urban populations with undoubtedly higher per capita incomes. Union County, Ohio, directly northwest of Columbus, and Warren County in northern Pennsylvania also had high relative volumes of trade in 1958. The counties which reported a poorer vol ume of trade in 1958 than in 1954 are, with the exception of one cluster, fairly well scat tered. The cluster of counties in south cen tral Ohio experienced a temporary expansion in employment in the early ’fifties during the construction of a large atomic energy plant. This gave rise to a high level of sales in 1954 relative to those in 1958. The relative decline in employment following the con struction period was probably accentuated in Scioto County, on the Ohio River, by recession-induced unemployment and the gener ally declining farm economy of the area. The relative declines in trade volume re corded in the three counties of northwestern Ohio may also be largely attributed to the indirect effects of contractions in industrial production during 1958 both within the counties and in the factories of the indus trialized Fort Wayne area just west of the state boundary. Ashtabula County, in north east Ohio, suffered a reduction in employee earnings in 1958 in response to the sharply reduced lake shipments of raw materials for primary metals producers. The declines in sales volume in Kentucky counties may be associated with declining farm and mining economies, (Wolfe and Breathitt Counties), a poor tobacco-crop year in 1958 (Lawrence County), the discontinu ance of an industrial plant (McCreary County), and a temporary enlargement of construction payrolls in 1954 (Jackson County). The large majority of the counties had trade volumes in 1958 ranging up to 20 per cent better than those in 1954. In the highly 4 industrialized counties there appears a cor relation between the relative strength of re tail trade in 1958 and the dependence of employment on heavy industries. In a num ber of the counties having a normally high percentage of employment in motor vehicle or vehicle parts industries, trade volume was only slightly better in 1958. Some of these were Lucas County (Toledo), where recession-induced employment cuts were ag gravated by strikes, and Hamilton, Butler, and Clark counties in southwestern Ohio. However, many of the industrial counties had diversified sources of income, only part of which was reduced by the 1958 business adjustments. In such cases, declines in earn ings in some industries were offset to a great extent by the stability of earnings in other lines of work, or by an expansion of the eco nomic base. In such counties the volume of retail sales in 1958 ranged between 10 and 20 percent better than sales in 1954, the relative pattern previously described as “ average”. Many of the rural counties characterized by declining farm or coal mining economies showed only very slight or modest percentage gains in dollar volume of trade between the census years. Among these are a group in southern Kentucky, and a group in south eastern Ohio, where lightly industrialized counties interrupt the pattern, and scattered counties in western Pennsylvania, including Fayette County on the southern border, which for many years has been largely de pendent upon coal mining. Metropolitan Patterns The patterns of retail trade within the metropolitan areas of the District exhibit clearly the relative shifts in growth from central cities to suburban communities.(2) In Table 2, the 1954-58 percentage changes in dollar volume of sales are listed for each metropolitan area as a whole, and separately for central cities, other incorporated places, and the remaining unincorporated areas. The (2) Note that the suburban communities referred to here lie within the standard metropolitan statistical areas, which are defined in census terms to include one or more entire counties. CHANGES IN RETAIL SALES, 1954 to 1958 Source of data: U.S. Bureau of the Census Table 2 RETAIL SALES IN METROPOLITAN AREAS Metropolitan Areas (Ranked according to volume of retail sales, 1958) Pittsburgh, Pa.............................................. Cleveland, O h io ........................................ Cincinnati, Ohio and Ky........................... Columbus, O h io ......................................... Dayton, O h io ............................................. Akron, O h i o ............................................. Toledo, O h io ............................................. Youngstown, O h io .................................... Canton, O h io ............................................. Wheeling-Steubenville, Ohio and W. Va. Erie, Pa......................................................... Huntington-Ashland Ohio, Ky., and W. Va. (2) ................................ Lorain-Elyria, O h i o ................................ Hamilton-Middletown, O h i o ................ Lexington, Ky.............................................. Springfield, O h i o .................................... Lima, O h io ................................................. % Change 1954-1958 % of Area Sales, 1958 Total Central Other Re Central Other Re Area City Inc. mainder City Inc. mainder Sales Places Places (l) (i) (i) (i) (i) (l) 4- 12 4 65 31 + 13 4- 6 + 24 + 106 17 64 19 + 7 + 1 + 1 + 41 8 86 6 + 16 + 15 + 42 + 12 20 17 + 10 + 2 4- 18 + 45 63 68 22 10 + 11 + 2 4- 32 + 59 17 79 4 + 7 — 3 4- 90 4- 73 48 32 20 + 11 + 2 4- 7 4- 48 52 34 14 + 13 + 11 4- 7 + 31 48 36 16 + 7 + 1 4- 11 4- 18 17 11 71 + 4 + 1 — 5 4- 29 74 14 12 + 20 + 21 4- 7 + 36 16 + 10 + 8 4- 5 4- 23 69 15 10 5 85 + 5 + 1 4- 12 + 37 (3) (3) 16 + 29 + 18 84 4- 148 (3) (3) 18 82 + 3 — 4 4- 50 18 77 5 + 13 + 9 — 4 + 37 (1) Detailed data for the Pittsburgh Metropolitan Area have not yet been released by the U. S. Bureau of the Census. (2) The Huntington-Ashland Area includes two counties in West Virginia located in the Fifth Federal Reserve District. (3) There are no reports from other incorporated places. share of the metropolitan markets held by each of these community groups in 1958 is also listed as an aid in weighing the relative significance of the changes. In the first column of the table, “ Total Area Sales”, it will be noted that the rela tionships between 1958 and 1954 sales ranged from a slight difference of plus 3 percent in the Springfield area to an increase of 28.5 percent in the Lexington area. Lexington was the only metropolitan area wholly within the District which had a percentage change in sales exceeding the 17 percent national gain. The Huntington-Ashland area registered a gain of 20 percent; however, most of this increase in trade took place in the portion of this metropolitan area located in the Fifth Federal Reserve District. The increase in 6 trade in the Columbus area was only one per centage point below the national figure. The percentage gains for central cities (second column of Table 2) are for the most part considerably lower than the area aver ages; in two cases there were declines in dol lar volume between the census years, i.e., in Toledo and Springfield. The central cities of the Lexington, Columbus, and HuntingtonAshland areas returned the highest percent age gains. The central city of Canton had a percentage gain in trade which equalled the average for all metropolitan area sales, 11 percent. The trade changes for the sum of suburban cities and towns in each area (“ Other incor porated places” in the table) varied widely from a plus 90 percent in the Toledo area to CLEVELAND and LORAIN METROPOLITAN AREAS Retail Sales in Cities and Towns Size o f circle in dicates 1958 v o lu m e of sa le s (Millions of dollars ) 1,500 123456789101112131415- CLEVELAND, (city) O. L0 R A IN ,0. LAKEW OOD, O. ELYRIA, O. CLEVELAND HEIGHTS, O. EUCLID, O. SHAKER HEIGHTS, O. PARM A, O. PAINESVILLE, O. MAPLE HEIGHTS, O. EAST CLEVELAND, O. FAIRVIEW PARK, O. WILLOUGHBY, O. SOUTH EUCLID, O. BEDFORD, O. 16- BEREA, O. C o lo r of circle in d ica te s c h a n ge , 1954 to 1958 Decrease o up to +10% +10% to + 2 0 % + 2 0 % or more 7 CINCINNATI METROPOLITAN AREA COLUMBUS METROPOLITAN AREA H A M IL T O N See Cleveland - Lorain M a p for KEN T O N 1234- CINCINNATI, O. COVINGTON, KY. NEWPORT, KY. N O R W O O D , O. 5678- c>! READING, O. LOCKLAND, O. CHEVIOT, O. ERLANGER, KY. a minus 5 percent in the Erie area. Eight of the 15 metropolitan areas having commercial centers in this category revealed higher per centage gains in suburban cities and towns than in the central cities. The percentage gains in trade between 1954 and 1958 in the unincorporated portions of the metropolitan areas were consistently high. Three maps show in greater detail the pat tern of trade changes in cities and towns of four metropolitan areas: Cleveland and Lo rain, Cincinnati, and Columbus. On these maps, each circle represents a city or town which had a population of 2500 or more in 1950, and is centered on the location of the political unit. (The perimeter of the circles should not be confused with political bound aries as the circle size represents the volume of retail sales in 1958.) In the Cleveland area the principal growth was to the east and southeast of the central 8 explanation of circles 1- COLUMBUS, O. 2- WHITEHALL, O. 3- UPPER ARLINGTON, O. 4- WESTERVILLE, O. city. The greatest changes were registered in Willowick, near the western boundary of Lake County, and in Solon in the southeast corner of Cuyahoga County. The percentage changes between 1954 and 1958 were 393 and 227 percent, respectively. The gain in Solon was closely associated with the introduction of new industry. Among the suburban com munities, Maple Heights and Parma had the greatest increases in dollar volume of trade. Two large and older commercial centers, Lakewood and Cleveland Heights, suffered percentage losses in retail sales of 10 and 5 percent, respectively. In the Cincinnati metropolitan area both the central city and suburban cities and towns showed a less favorable relative posi tion of retail sales in 1958. With the excep tion of Newport and Covington in Kentucky, which had limited percentage gains of about 5 percent, and Norwood, an industrial en clave of Cincinnati which had an 18 percent loss, the suburban towns were characterized by small volumes of sales and revealed a mixed pattern of percentage changes between the two census years. The Columbus area was one of the bright spots in the Fourth District retail picture of 1958. In the city of Columbus the dollar vol ume of increase between the two census years exceeded that of all other cities in Ohio. Sub urban expansion of retail trade was note worthy in Whitehall and Upper Arlington. Since the principal function of the central city of Columbus is government, its economy was little affected by the business recessions of the census years. In the patterns of sales by kinds of busi ness there was considerable variation from the 17-area averages. In all the metropolitan areas, retail sales in 1958 at food stores, serv ice stations, and drug stores were consistently above those of 1954. The sales through serv ice stations in Springfield, however, were up considerably less than in other areas. Spring field was also the only area where sales in the general merchandise group in 1958 fell below the 1954 level. Ten of the seventeen metropolitan areas suffered depressed auto market conditions of sufficient magnitude in 1958 to cause the dol lar volume of auto and auto parts sales to drop below 1954 levels. Auto sales in Toledo were down by almost 20 percent; in Hamilton-Middletown, 16.5 percent; Erie, 13 per cent; Cincinnati, 10.7 percent. At the other end of the scale, the two areas which showed greater strength in nearly all groups in 1958, Columbus and Lexington, also had large per centage gains in auto sales, amounting to 20 and 36 percent, respectively. It should be remembered that comparisons of the volume of trade between two years, which are separated by a four-year interval, may or may not be coincident with the gen eral rate or direction of growth. Sharp and episodic changes in the trade volume of a local area, a county or a smaller unit, are often characteristic of the areas having a highly specialized and therefore narrow eco nomic base. NOTES ON FEDERAL RESERVE PUBLICATIONS “ TREASURY-FEDERAL RESERVE STUDY OF THE GOVERNMENT SECURITIES MARKET” Parts II and III of a study of the Government securities market which has been prepared jointly by the United States Treasury Department and the Fed eral Reserve System are now available. Part II is a factual and analytical report on the performance of the Govern ment securities market in 1958, including a speculative episode. Part III deals with specialized and technical subjects suggested by the informal consultations and the factual records of 1958. (Part I, published in July 1959, summarizes the informal consultations that were conducted with persons associated with or in formed about the market.) Copies of all three parts may be obtained now by writing to the Publi cations Section, Board of Governors of the Federal Reserve System, Wash ington 25, D. C. The price is f 1.00 for each part, or f 2.50 for the set of three. Complimentary copies are available to libraries and teachers at edu cational institutions upon request, if business addresses are provided. 9 Small Increase in Steel Capacity in 1959 I h e 937,300 tons of steel-making capacity added by the nation’s steel industry in T 1959 was the smallest increase in recent years, representing a gain of only about 1 percent. By comparison, in 1955, which was also a year of recovery from recession, the industry added 2.6 million tons of capacity. Despite the smallness of the increase, steel capacity as of January 1, 1960, at 148.6 million tons, appeared to be more than adequate for the 120-125 million tons of output currently forecast for 1960. There were several reasons why the 1959 addition to steel ingot capacity was small. The first was the recession of 1957-58, which STEEL INGOT CAPACITY January 1 of each year i-------//------------------------------------------- M illio n s of N e t Tons ■48 *51 *52 ’53 ’54 ’55 '56 '57 ’58 ’59 '60 10 caused a retrenchment in capital expendi tures in industry generally. The other factors related specifically to the steel industry. After the very large expansions in basic steel capacity from 1956 through 1958, the industry devoted a larger share of its capital expenditures in 1959 to increasing and im proving its finishing capacity, that is, the equipment which converts raw steel into the products used by steel consumers, such as sheets, strip, bars, and wire. Finally, con struction work of all kinds at steel plants in 1959 was delayed by the steel strike. The capacity of steel mills in the Fourth Federal Reserve District totalled 58.6 million tons as of January 1, 1960, indicating a net increase of only 75,000 tons during 1959. As a result of this small increase, which repre sented a gain of only one-tenth of one per cent, the proportion of the nation’s steel capacity accounted for by mills in the Fourth District declined further in 1959, as shown in the chart. Since 1948 the District’s share of the total has shrunk from 45 percent to 39.4 percent, as steel capacity has expanded more rapidly in other sections of the nation, principally the Chicago area and the far west. The decline in the District’s share of na tional steel capacity in 1959 occurred despite the fact that the Pittsburgh area, the largest producing area, accounted for 60 percent of the national increase. For the District as a whole, the gain of about 500,000 tons of ca pacity in the Pittsburgh area was largely offset by reductions in installed capacity at Youngstown and Portsmouth, Ohio. In terms of individual plants in the District, 1959 changes in capacity ranged from an increase FOURTH DISTRICT SHARE OF NATION'S STEEL CAPACITY January 1 of each year ,-------/ / ------------------------------------ Percent of U.S. '48 '51 ’52 ’53 ’54 '55 '56 ’57 '58 '59 '60 of 172,000 tons at Munhall, Pennsylvania, to a decline of 500,000 tons at Portsmouth. Large increases were made at mills in Aliquippa, Pittsburgh, Monessen, and Farrell, all in Pennsylvania, and at Lorain, Ohio, while a substantial reduction occurred at one mill in Youngstown. Largest Increase in Electric Furnaces Nationally, additional electric furnace ca pacity installed in 1959 amounted to 900,000 tons, or virtually all of the net increase in capacity. The much smaller increases in basic oxygen furnace and open-hearth capacity were partly offset by a further reduction in Bessemer furnace capacity. One mill in the District accounted for almost all of the na tional increase in basic oxygen capacity, and all of the change in Bessemer capacity took place within the District, which contains almost 90 percent of the national capacity of this type of furnace. Following the national trend, the largest part of the increase in District steel capacity was in electric furnace capacity. Specialty steel producers in the Pittsburgh area ac counted for most of the additional electric furnace capacity in the District. Even after these additions, however, the Canton-Warren area contains the largest concentration of this type of steel capacity in the District. Some indication that the basic steel capac ity of the nation will be expanded somewhat more in 1960 than in 1959 is provided by the expansion plans announced by major steel producers and, in addition, the latest esti mates of plant and equipment spending for 1960 reported to the Department of Com merce and the Securities and Exchange Com mission. According to those data, the iron and steel industry anticipates spending 50 percent more for plant and equipment in 1960 than it spent in 1959. Because of the large amount of excess steel ingot capacity, however, it seems unlikely that additions to basic steel capacity will be as large in 1960 as the 1956-58 average. 11 Awuuui. the fyountU ^blibU ct — BANK DEBITS IN MARCH (11 Medium-size Cities, Fourth District) March 1960 3 mos. ended March 1960 % change from % change from year ago year ago +26% +24% + 18 + 16 +12 + 8 + 10 +13 + 9 + 5 + 7 + 9 + 8 + 7 + 5 + 7 + 4 + 5 + 3 + 9 + 2 + 1 • • • Several barometers of Cleveland business responded quickly to the longawaited break in the weather that came in the last week of March. Automobile sales were vigorous and spring residential construction expanded briskly. Al though unemployment has apparently not yet started to decline, the rate of increase in claims was considerably reduced. # • • Responding to better weather and the approach of Easter, department store sales in the Fourth District made a sharp spurt early in April. The unadjusted sales figure for the week ended April 2 was 32% greater than the year-ago week. After allowance for the differences in the date of Easter, the effective margin over the year-ago week may be estimated as 18%. Lexington Warren Wheeling Mansfield Springfield Lima Hamilton New Castle Covington-Newport Zanesville Middletown Ky. Ohio W. Va. Ohio Ohio Ohio Ohio Pa. Ky. Ohio Ohio * * * • * * Reports by Fourth District department stores for February show that instalment sales were 11% larger than during the year-ago month. Cash sales and charge-account sales were up from a year earlier by 3% and 2%, respectively. Commercial and industrial loans at 26 weekly reporting banks in the Fourth District advanced $2 million during the last week of March, marking the fifth consecutive weekly increase. Trade establishments were the largest net borrow ers during the week. The above items are based on various series of District or local data, which are assem bled by this bank and distributed upon request in the form of mimeographed releases.) 12
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