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A P R I L
IN
THIS
1 9 6 8
ISSUE
Recent Trends in
Construction A ctivity .
.
2
An Economic P rofile
o f W h e e lin g ....................13
FEDERAL
RESERVE
BANK
OF
CLEVELAND
ECON OM IC REVIEW
RECENT TRENDS IN
CONSTRUCTION ACTIVITY
Total private and public construction usu
ally accounts for about one-tenth of economic
activity in the United States. Viewed in this
sim ple perspective, construction activity m ay
not seem to be of great importance. Similar
to other types of investment spending, how
ever, construction spending tends to have a
multiplied influence on economic activity,
generating an amount of final spending that
exceeds the original investment. It is not sur
prising, therefore, that construction h as a
m ixed influence on the course of general
business activity. At limes, construction is in
ph ase with the pace of business activity, thus
complementing or reenforcing in creases and
declines in economic activity. At other times,
construction is out of ph ase with the predomi
nant trend in the economy, thus tending to
m oderate sw ings in either direction. The b e
havior of construction spending during the
past few years provides exam ples of the re
lationship between construction and general
economic activity.
CONSTRUCTION ACTIVITY, 1960-1967
O v e rv ie w . From the third quarter of 1960
(which m arked the completion of a full cycle
in construction activity) through the fourth
quarter of 1967, construction activity ex
panded at an av erag e annual rate of 5.3 per
cent, and G ross National Product increased
2 FRASER
Digitized for
at an av erag e annual rate of 6.7 percent (see
Table I). For the period a s a whole, construc
tion activity w as not a m ajor stimulus to eco
nomic growth, at least insofar a s the record
of overall business activity is concerned.
Within total construction, the record w as
mixed, with public construction increasing
faster (7.4 percent) than GNP and private con
struction increasing at a slower rate (4.4
percent). The nonresidential component of
private construction performed more favor
ab ly than residential construction (5.8 percent
com pared with 3.3 percent).
The record of construction activity from the
third quarter of 1960 through the fourth quar
ter of 1967 cannot be characterized a s a
smooth, straight-line trend, which m ay be
implied by the figures cited above. In fact,
during the period under review, construction
activity underwent four sep arate and distinct
ph ases, including two p h ases of rapid in
crease, a ph ase of m oderate increase, and
one of outright decline. A review of develop
ments within each of the four p h ases m ay
help clarify the role played by construction
during 1960-1967.
First Phase: Third Q u arter
1960 — Fourth
Q u arter 1964. During this phase, the economy
w as in the early stag e s of recovery from the
1960-1961 recession, and total construction
APRIL 1 9 6 8
TABLE I
C han g es in G ross N ational Product and Construction Activity
Selected Periods
1960-1967
A v e ra g e A n n u a l Rates o f C h a n g e *
III 6 0
to IV 6 7
III 6 0
to IV 6 4
IV 6 4
to I 6 6
I 66
to IV 6 6
IV 6 6
to IV 6 7
In C u rre n t Prices
G ross N a tio n a l P ro d u c t...............................+
T o ta l c o n s t r u c tio n .......................... .......... +
6 .7 %
5 .3
+ 6 .0 %
+
9 .8 %
+
6 .7 %
5 .9 %
—(— 12.1
P u b l i c .........................................................+ 7 . 4
+ 5 .6
+ 1 4 .7
+ 1 . 6
+ 1 0 .4
P r i v a t e ......................................................... +
+ 4 .9
+ 1 0 .8
— 1 5 .8
+ 1 1 .7
—
4 .4
— 1 0 .5
+
+ 5 .0
N o n r e s id e n t ia l...............................+
5 .8
+ 5 .0
+ 2 3 .3
—
R e s i d e n t i a l .......................... ..........+
3 .3
+ 4 .8
+
— 2 9 .0
G N P less c o n s tru c tio n .......................... ..........+ 1 0 . 0
0 .6
+ 6 .1
+
9 .6
+ 4 .6 %
+
+ 3 .0
+
2 .8
+
9 .0
7 .6 %
+
3 .2 %
8 .4
— 1 4 .7
+ 1 1 .3
3 .6
+ 3 2 .1
+
5 .4
+
2 .8 %
+
6 .3
In C o n sta n t Prices
G ross N a tio n a l P ro d u c t............................... +
T o ta l c o n s t r u c tio n .......................... ..........+
Public
4 .7 %
2 .4
.................................................... + 4 . 3
+ 3 .4
+ 1 0 .9
—
3 .8
+
P r i v a t e .................................................... + 1 . 5
+ 2 .9
+
— 1 9 .3
+
6 .0
+ 3 .1
+ 1 8 .9
—
—
7 .0
N o n r e s id e n t ia l..................... .......... +
3 .2
R e sid e n tia l
-0 -
..........................
G N P less co n s tru c tio n .......................... .......... +
5 .0
+ 2 .6
+ 4 .8
—
+
7 .3
2 .5
7 .6
6 .5
— 3 2 .4
+
5 .4
6 .9
+ 2 3 .5
+
2 .4
* C a lc u la te d fro m se a s o n a lly a d ju s te d d a ta .
Sources: U. S. D e p a rtm e n t o f C om m erce, O ffic e o f Business Economics a n d F e d e ra l Re
expanded ai a slightly slower pace lhan GNP
(see Table I). Construction activity in the first
ph ase tended to p arallel the general recovery
in economic activity, but provided no add i
tional fillip to the recovery. Total private con
struction grew ai an annual rale of less than
5 percent over the entire period. Within pri
vate construction, nonresidential construction
w as sluggish until the end of 1963, and there
were only m odest gain s in homebuilding.
Public construction rose somewhat faster (5.6
percent) than private construction, but did
not alter the overall contribution of construc
tion to economic activity.
Bank o f C le v e la n d
surged forward at an even faster pace. A s a
result, the behavior of construction tended to
intensify the pace of general economic activ
ity. Both GNP and construction grew faster
in the second ph ase than in any of the four
ph ases. A rapid expansion in capital spend
ing that spurred private nonresidential build
ing, a s well a s a sharp increase in public
construction (especially of educational build
ings and highways), contributed to the
resurgence of construction activity. A s shown
in Table I, residential construction registered
only a slight increase in the period.
Third Phase: First Q u arter 1966 — Fourth
Second Phase: Fourth Q uarter 1 9 6 4 — First
Q u arter 1966. During the third phase, due in
Q u arter 1966. The growth of GNP during the
second ph ase w as at the high annual rate of
large part to a severe contraction in residen
tial construction, total construction activity
fell 10.5 percent at an annual rate. This helped
nearly 10 percent, and construction activity
3
ECON O M IC REVIEW
TABLE II
G ross N ational Product and Construction Activity
(seaso n ally adjusted)
1966-1967
1966
1*
1967
II
III
IV *
1
II
III
IV
$ 8 0 7 .3
(Billions o f d o lla rs , a t a n n u a l rate s)
G ross N a tio n a l P ro d u c t.....................
$ 7 2 5 .9
$ 7 3 6 .7
$ 7 4 8 .8
$ 7 6 2 .1
$ 7 6 6 .3
$ 7 7 5 .1
$ 7 9 1 .2
T o ta l c o n s t r u c tio n ..........................
7 9 .9
7 7 .4
7 5 .5
7 3 .5
7 5 .2
7 5 .2
7 9 .0
8 1 .8
..........................................
2 4 .6
24.1
2 3 .6
2 4 .9
26.1
2 5 .8
2 6 .8
2 7 .5
P r i v a t e ..........................................
5 5 .3
5 3 .3
5 1 .9
4 8 .6
49.1
4 9 .4
5 2 .2
5 4 .3
N o n r e s id e n t ia l.....................
2 8 .3
2 7 .5
2 8 .2
2 7 .7
2 7 .7
2 6 .3
2 6 .6
2 6 .7
Public
R e s i d e n t i a l ..........................
2 7 .0
2 5 .8
2 3 .7
2 0 .9
2 1 .4
23.1
2 5 .6
2 7 .6
G N P less c o n s tru c tio n ..........................
6 4 6 .0
6 5 9 .3
6 7 3 .3
6 8 8 .6
6 9 1 .1
6 9 9 .9
7 1 2 .2
7 2 5 .5
G ross N a tio n a l P ro d u c t.....................
$ 6 4 5 .4
$ 6 4 9 .3
$ 6 5 4 .8
$ 6 6 1 .1
$ 6 6 0 .7
$ 6 6 4 .7
$ 6 7 2 .0
$ 6 7 9 .6
T o ta l c o n s t r u c tio n ..........................
6 7 .8
6 4 .7
6 2 .2
6 0 .2
6 1 .3
6 0 .8
6 2 .3
6 4 .0
P u b l i c ..........................................
2 0 .8
1 9 .9
19.1
2 0 .2
21.1
2 0 .8
21.1
2 1 .6
P r i v a t e ..........................................
4 7 .0
4 4 .8
43.1
4 0 .0
4 0 .2
4 0 .0
4 1 .2
4 2 .4
N o n r e s id e n t ia l.....................
2 4 .2
2 3 .4
2 3 .7
2 3 .0
2 2 .9
2 1 .7
2 1 .5
2 1 .4
R e sid e n tia l
..........................
2 2 .8
2 1 .4
1 9 .4
1 7 .0
1 7 .3
18 .3
1 9 .7
2 1 .0
G N P less co n s tru c tio n ..........................
5 7 7 .6
5 8 4 .6
5 9 2 .6
6 0 0 .9
5 9 9 .4
6 0 3 .9
6 0 9 .7
6 1 5 .6
(Billions o f 1 9 5 8 d o lla rs , a t a n n u a l rate s)
* The firs t a n d fo u rth q u a rte rs o f 1 9 6 6 re p re s e n t the m ost re c e n t tu rn in g poin ts in to ta l constructio n a c tiv ity .
Source: U. S. D e p a rtm e n t o f C o m m erce, O ffic e o f Business Economics
io m oderate ihe growlh of GNP to an annual
rate of 6.7 percent (the av erage growth rate
over the entire period from the third guarter
of 1960 to the fourth guarter of 1967). The de
cline in private construction activity w as one
of ihe shortest but sharpest in ihe postw ar
period. Residential building experienced the
sharpest contraction in two decades, declin
ing at an annual rate of 29 percent. Nonresidential construction also declined, but only
by a modest amount (2.8 percent). Public con
struction w as slow ed by decreases in edu ca
tional, hospital, and other institutional-type
projects.
over 11 percent, nearly matching the record
attained during the second ph ase, and con
tributing important support to the advan ce of
GNP at a time when other sectors of the econ
omy were expanding more slowly. Because
a sharp and stead y adv an ce in residential
construction (see Chart 1 and Table II) w as
offset by sluggishn ess in public (particularly
highw ays and streets) and private nonresidential construction, total construction during
the first half of the fourth ph ase rem ained at
a level only slightly above that of the final
guarter of 1966. The sluggish n ess of total
Q u arter 1967. During the fourth phase, total
construction activity contributed to a slowing
of the p ace of economic activity during ihe
first half of 1967. After m idyear, construction
construction expanded at an annual rate of
advan ced ag ain from earlier reduced lows,
Fourth Phase: Fourth Q uarter 1966 — Fourth
4
C h a r t 1.
NEW C O N S T R U CT I ON PUT in PLACE by TYPE
United States
* N o t a v a ila b le .
S o u rc e o f d a ta :
U . S. D e p a r t m e n t o f C o m m e r c e , B u r e a u o f t h e C e n s u s
L a s t e n try :
F e b . '6 8 , A u g . '6 7
5
ECONOMIC REVIEW
reflecting continued strong expansion in pri
vate housing activity, som e strengthening of
private nonresidential building, and renewed
growth in public construction.
residential construction slipped further dur
ing 1967 a s a whole, and the remainder of the
recovery in construction w as accounted for
by a fairly sizable gain in public construction
GENERAL DEVELOPMENTS IN
1966-1967
In the fourth quarter of 1967, the total value
of construction1 (GNP basis) amounted to
$81.8 billion (season ally adjusted annual
rate). At that level, construction had recov
ered from the effects of a sharp contraction
in 1966 and w as $2 billion greater than at
the previous peak reached in the first quarter
of that year (see Table II). Developments in
the pattern of construction activity during
1966-1967 were determined largely by the
sw ings in private construction, particularly
the residential component (see Chart 1). For
exam ple, a s indicated in Table II, more than
90 percent ($6.1 billion) of the $6.4 billion de
cline in total construction activity in 1966 w as
accounted for by the residential component.
In comparison, nonresidential construction
receded m odestly during 1966, while public
construction, after slackening at m idyear, re
gained its previous high by the fourth quarter.
Sim ilarly, when construction activity recov
(see Table II).
Even after adjustm ent for chan ges in costs,
the contour of construction over the past
two years is essentially the sam e, except that
in terms of 1958 dollars, total construction in
the fourth quarter of 1967 fell considerably
short ($64.0 billion) of the previous high of
$67.8 billion in the first quarter of 1966 (see
Table II). Public construction w as the only
m ajor construction category in which the esti
m ated ph ysical flow (real terms) at the end
of 1967 w as greater than at the beginning
of 1966. Nevertheless, private building activ
ity, particularly residential, still accounted
for the bulk of both the contraction during
1966 and the recovery in 1967. A s m easured
by the U. S. Department of Commerce, the
sharp resurgence in private residential build
ing w as, however, accom panied by cost in
cre ases that exceeded those of any other
m ajor type of construction.
ered during 1967, the bulk of the increase in
total construction w as accounted for by the
residential component, or about 80 percent
($6.7 billion) of the $8.3 billion increase. Non1 The GNP series is more comprehensive than the con
struction expenditure series published by the U. S. Depart
ment of Commerce. The "structures" component of GNP is
obtained from new private and public construction put in
place, a s compiled by the U. S. Department of Commerce,
Bureau of the Census, plus estimated construction expend
itures for natural g a s and crude petroleum drilling, plus
commissions on the sale of structures, plus net transfers of
used structures from or to government.
6
SECTOR DEVELOPMENTS IN 1966-1967
Monthly d ata on the value of new con
struction put in place m ake it possible to
identify turning points in construction activ
ity, a s well a s to evaluate the sector-by-sector
details of the sw ings in construction activity.
The d ata in Table III are constructed so a s to
m easure chan ges from the most recent peak
and trough months in the total value of new
construction put in place.
As the table shows, private construction
accounted for all of the decline in total con
struction during 1966 and most of the advan ce
after late 1966. On the downside, while resi-
APRIL 1 9 6 8
TABLE III
V alu e of N ew Construction Put in Place in the United States
(se aso n ally adjusted)
A v e ra g e A n n u a l Rates o f C h a n g e
M a rc h *
N o v e m b e r*
F e b ru a ry p
(B illions o f d o lla rs , a t a n n u a l r a te s jf
T o ta l N e w C onstruction
Public construction
B u ildings
N o ve m b e r 19 6 6
to
F e b ru a ry 1 9 6 8
M a rc h 1 9 6 6
to
N o ve m b e r 19 6 6
1968
1966
(Billions)
(Billions)
— 1 2 .1 %
+ $ 7 .4 5
+ 1 0 .2 %
+
+
$ 7 8 .4 3
$ 7 1 .9 9
$ 8 1 .3 0
2 4 .5 3
2 4 .8 9
2 6 .3 0
+
0 .5 4
+
2 .2
8 .8 7
9 .4 4
n .a.
+
0 .8 6
+
9 .8
— $ 9 .6 6
1 .1 3
n .a.
n.a.
H ig h w a y s a n d stree ts
8.61
8 .2 5
n .a.
—
0 .5 4
—
6 .2
n.a.
O th e r p u b lic
7 .0 5
7.21
n.a.
+
0 .2 4
+
3 .4
n.a.
5 3 .9 0
4 7 .1 0
5 4 .9 0
—
'1 0 .2 0
P riv a te constructio n
4 .5
n.a.
n.a.
— 1 8 .4
+
6 .2 4
+ 13.1
1 9 .5 0
1 8 .6 6
1 9 .6 0
—
1 .2 6
—
6 .4
+
0 .7 5
+
4 .0
1 4 .0 7
1 3 .5 7
1 4 .1 0
—
0 .7 5
—
5 .4
+
0 .4 2
+
3.1
5 .4 4
5 .1 0
5 .5 0
—
0.51
—
9 .2
+
0 .3 2
+
6 .2
2 6 .3 3
2 0 .3 2
2 7 .1 0
—
9.01
— 3 2 .2
+
5 .4 2
+ 2 5 .9
N e w housing units
2 0 .3 3
1 4 .6 4
2 1 .1 0
—
8 .5 4
— 3 8 .9
+
5 .1 7
+ 3 4 .0
O th e r re s id e n tia l
6.01
5 .6 8
6 .0 0
—
0 .5 0
—
8 .2
+
0 .2 6
+
4 .5
8 .0 6
8.1 1
8 .2 0
+
0 .0 8
+
0 .9
+
0 .0 7
+
0 .9
N o n re s id e n tia l
In d u s tria l; c o m m e rcia l
O th e r n o n re s id e n tia l
R e sid e n tia l (n o n fa rm )
O th e r p r iv a te
n.a. N o t a v a ila b le ,
p P re lim in a ry .
* M onths re p re s e n tin g th e m ost re c e n t p e a k a n d tro u g h , re s p e c tiv e ly , in to ta l v a lu e o f new constructio n p u t in p la c e ,
f D e ta ils m a y n o t a d d to to ta ls beca use o f ro u n d in g .
Source: U. S. D e p a rtm e n t o f C om m erce, B ureau o f the Census
denlial construction accounted for the bulk
of the decline in private construction activity,
most a re a s of nonresidential building—indus
trial, commercial, and institutional ("other
nonresidential")—also participated to some
extent in the decline (see Table III and Chart
1). The slowdown in nonresidential construc
tion activity, which w as more m arked in 1967,
w as concentrated m ainly in spending for in
construction to resist the downward course
of the group a s a whole during 1966 w as
"other private," which is dominated by the
privately owned g as, electric, and telephone
utilities (see Table III and Chart 1).
In February 1968, the total value of new
construction put in place amounted to $81.3
billion (see Table III and Chart l).2 The recov
ery in total construction after November 1966
dustrial and com m ercial buildings, with such
spending declining irregularly through much
w as dominated by private building, mainly
reflecting an upsurge in construction of new
housing units. By late 1967, new residential
construction put in place w as above its recent
high in early 1966, though still somewhat
short of its absolute peak in November 1963.
Industrial and com m ercial building rem ained
of 1967. Contracts aw arded for industrial and
com m ercial buildings fell 30 percent between
February 1966 and January 1967. Private
educational, hospital, and other institutionaltype construction also turned down early
in 1966 and declined irregularly until the
middle of 1967. The only segment of private
- January 1968 w as the first month in which total construc
tion topped the previous high reached in March 1966.
7
ECONOMIC REVIEW
below the March 1966 level, a s well a s ils
early 1967 peak, holding down lotal nonresidential construction until January 1968, when
spending for business construction finally
showed som e strength (see Chart 1).
RESIDENTIAL CONSTRUCTION
Residential construction declined in 1966
after moving within a very narrow range dur
ing 1964 and 1965. The plateau-like movement
of homebuilding in 1964 and 1965 is revealed
by the behavior of private nonfarm housing
starts shown in Chart 2. Housing starts had
reached a high for the current economic ex
pansion in October 1963, and after declining
slightly through 1964, housing starts rose
som ewhat unevenly until the end of 1965. At
that time, starts were nearly 16 percent below
the 1963 peak. Most of the decline in total
housing starts during 1964 and 1965 occurred
in the western states, where starts fell by
more than one-half (see Chart 2). Elsewhere
during 1964 and 1965, starts rem ained rela
tively level and rose slightly in the North
Central region.
The w eakness in housing during 1964 and
1965 w as concentrated in the West; however,
reflecting the unusually tight monetary situa
tion that developed, every major region reg
istered a slump during the first ten months
of 1966. In the West, a further drop of about
a third in 1966 w as in part a continuation of
the earlier trend. From October 1966 to Feb
ruary 1968, total nonfarm housing starts in
creased by about 85 percent, recovering
nearly all of the 1966 decline. In that period,
the western states nearly doubled the month
ly rate of starts experienced in late 1966;
housing starts also rose strongly in other
8
regions of the country, though less so in the
Northeast.
RENTAL V A C A N CIES AND
HOUSING DEMAND
A s indicated by the trend of residential
rental vacan cy rates'5 in the West, the earlier
downturn in homebuilding activity in that
region seem s related to a previous expansion
that grad ually resulted in an excess of hous
ing capacity. In the late 1950's, the rental
vacan cy rate in the W est av eraged around
7 percent. By the middle of 1963, however,
the rate had moved up to around 10 percent
and, by the end of 1965, approached 12 per
cent (see Chart 3). Partly b ecau se of the very
high rale of activity earlier, the rise in the
rental vacan cy rate occurred even though
housing starts in the region had been declin
ing for about two years. The further drop in
housing starts in the W est in 1966 coupled
with continued rapid net in-migration to the
area, however, helped reduce the rental v a
cancy rate to about 8 percent in the spring
and summer of 1967, and then even lower in
the fall and winter. The return to a level more
typical of a decade earlier indicated better
balan ce between the supply of and dem and
for housing and provided a b a sis for the
further expansion of housing starts in that
region.
V acan cy rates in the South declined irregu
larly from mid-1961 to mid-1965, contributing
stability to the region's rate of housing starts
until the end of 1965. The housing decline
3 Renlal vacancy rales are used because they are a
sensitive m easure of the balance between supply and de
mand. V acancy rales for owner-occupied homes tend to
show relatively little change.
C h a rt 2.
NEW PRIVATE H O U S I N G STARTS and PERMITS*
United S ta tes
* R e c o rd e d
by Region
in 1 2 ,0 0 0
S o u rc e o f d a ta :
and Size
p e r m it- is s u in g
of S t r u c t u r e
p la c e s .
U . S. D e p a r t m e n t o f C o m m e r c e , B u r e a u
o f th e C e n s u s
L ast e n try :
F e b . '6 8
9
C h a rt 3.
RESIDENTIAL V A C A N C Y RATES*
United S ta tes
by R eg ion
and
Location
P e rce n t
P e rce n t
* P e rc e n t o f v a c a n t u n its to t o t a l e x is t in g u n its .
S o u rc e s o f d a t a :
U. S. D e p a r tm e n t o f C o m m e rc e , B u re a u o f th e C e n s u s a n d F e d e r a l R e s e rv e B a n k o f C le v e la n d
10
L a st e n try :
4Q
'6 7
APRIL 1 9 6 8
in the South in 1966 w as accom panied by a
further reduction in rental vacan cies, which
helped set the stag e for a vigorous recovery
of starts in 1967.
Housing starts were relatively strong in
the North Central states until the end of 1965.
A s shown in Chart 3, the rental v acan cy rate
for the North Central region fell sharply from
about 9 percent in mid-1963 to about 6 V2 per
cent during the second half of 1965. The fur
ther decline in the region's rental vacan cies
in 1966 seem s related mainly to the decline
in housing starts in the North Central region
during the nationwide contraction. Nonethe
less, the decline to 5 percent by yearend
1967 (the lowest level in more than a decade)
provided strong support for a vigorous hous
ing recovery in the North Central region.
Despite the sharp contraction in housing
starts in the Northeast in 1966 and sluggish
recovery in 1967, the region's current vacan cy
rate of about 4 percent is somewhat higher
than the 3 to 3Vz percent level that prevailed
in the late 1950's. The vacan cy rate in the
Northeast h as not declined significantly from
the highs registered in 1965, which w as be
fore housing starts in the region b egan to fall.
During the grad u al downward drift of total
housing starts in 1964 and 1965, the av erage
rental vacan cy rate for the nation a s a whole,
although below levels reached in 1961, re
m ained within a narrow ran ge,aro u n d IVi
percent com pared with a range of 6 to 6 V2
percent during the late 1950's. The sharp de
cline in housing starts in 1966 w as associated
with a downward movement in vacan cy
rates. In the fourth quarter of 1967, the rate
(5.5 percent) w as lower than at any time since
the fourth quarter of 1957, reflecting under
building in relation to dem ographic and other
requirements.
FACTORS IN THE HOUSING MARKET
Rental V a ca n cy
Rates. Even though the
rental vacan cy rate in the nation rem ained
at a high level until the beginning of the
housing contraction in 1966, it is unlikely that
the degree of contraction w as cau sed prim ar
ily by an excess stock of rental housing. The
decline in homebuilding activity affected 1-4
fam ily dw ellings almost a s much a s build
ings with five or more dwelling units (see
Chart 2). That is to say , the relative decline
in 1966 in permits issued for larger buildings
(51 percent) w as not considerably different
from the relative decline in permits for 1-4
fam ily houses (41 percent), and thus does not
explain the 1966 housing slump a s a reaction
to continued overbuilding of apartm ents. In
addition, the recovery since late 1966 in large
muliiple-unii building permits h as been su b
stantially sharper than the recovery in per
mits issued for single-family and sm aller
mulliple-unii dwellings.
The continued high rental vacan cy rate in
the United States through early 1966 reflected
a high rate in a r e a s where large multipleunit structures are relatively scarce. The
av erag e vacan cy rate outside metropolitan
areas, where sm aller housing structures pre
dominate, rose from 7 percent in early 1964
to nearly 9 percent in early 1966 and declined
relatively little thereafter (see Chart 3). In
contrast, the av erag e vacan cy rate inside
metropolitan areas, where most large multiple-unit housing structures are found, has
been in stead y decline since mid-1964: The
decline during 1966 in permits for large
11
ECONOMIC REVIEW
multiple-unit housing structures apparently
contributed to a further drop in the vacan cy
rate inside metropolitan centers.
Dem and for Housing. According to recent
projections, there w as a net increase of about
1.1 million households between March 1967
and March 1968.4 To meet this b asic dem and
for housing in 1967, it is possible that a s
few a s 0.7 million housing units were sup
plied (including 1.2 million newly built units,
plus 0.2 million new mobile homes purchased
a s prim ary housing, less a decline of possibly
a s m any a s 0.2 million vacant units, less
about 0.5 million in rem ovals and other losses
from the housing stock). It thus ap p e ars that
the total net supply of new housing in 1967
not only failed to meet total demand, but also
failed to provide som e cushion again st nor
m al inter-regional im balances. If the esti
m ates are at all reasonable, perhaps a s m any
a s 400,000 former single-family dwellings
m ay have been divided for multiple occu
pancy during the year.
Current dem ands for housing m ay hit
rental units the hardest. The increase in the
number of households headed by individuals
who are 35 to 54 years of ag e (years in which
home purchasing tends to be greatest) is
estim ated at less than 190,000 in 1967 and is
expected to amount to no more than 30,000
in 1968. In contrast, households h eaded by
individuals less than 35 years old m ay in
crease by nearly 690,000 in 1968, on top of
an increase of 830,000 in 1967. These younger
h eads of households, by preference or neces
sity, tend to favor rental housing. Recent
sharp gain s in starts of large multiple-unit
4 Estimated by the U.S. Department of Commerce, Bureau
of the Census.
Digitized12
for FRASER
structures probably reflect to a large extent
the sizable in creases in younger households.
Other barom eters of housing dem and
also su ggest continuing pressures on su p
ply. Despite the recovery in housing starts,
sa le s of new one-family homes have more
than kept pace. Consequently, the inventory
of unsold new homes declined almost con
tinuously throughout (and despite) the ad
vance in homebuilding during 1967. In fact,
although slightly above the low reached
last summer, the unsold stock of new homes
at the beginning of 1968 w as below the num
ber outstanding at the beginning of 1967,
reflecting the reduced availability of new
homes and sharp in creases in rents that are
occurring with rising frequency in major
urban centers. From these and other indica
tions, it ap p e ars that the need for housing
rem ains b asically strong.
CO N CLU D IN G COMMENTS
In early 1968, total construction activity
advan ced further, with the bulk of the in
crease accounted for by private construction
activity. Unlike 1967, however, nonresiden
tial construction provided somewhat greater
thrust, although residential construction con
tinued to increase from the advan ced late
1967 levels. Within nonresidential construc
tion, both industrial and commercial types of
activity showed recovery from earlier rates.
While the b asic underlying dem ands for resi
dential housing apparently continue strong,
it is too early to tell at this juncture to what
extent the recent shift in monetary policy
and the fiscal m easures still under considera
tion will affect the course of housing over
the period ahead.
APRIL 1 9 6 8
AN ECONOMIC PROFILE OF WHEELING
The City of W heeling, West Virginia, w as
incorporated in 1826. Because of its iron-cut
nail industry, the City w as known a s the
"N ail City " until the 1880's, when steel re
placed the are a 's iron works. By 1900, the
industrial mix of the W heeling are a included
mining, glassw are, and iron and steel pro
duction. The chem ical industry entered the
W heeling Stan dard Metropolitan Statistical
A rea (SM SA )1 during World W ar II and ex
panded in the 1950's.
In the early post World War II period, the
industrial and employment environment of
the W heeling SM SA changed markedly. Al
though a number of chem ical firms moved
into the W heeling SM SA during the 1950's,
a general lack of employment opportunities
prevailed. The then existing labor surplus
resulted from plant and mine modernizations,
consolidation and merging of production
1 The Wheeling Standard Metropolitan Statistical A rea
is located in the panhandle of West Virginia and includes
Ohio and M arshall Counties, West Virginia, and Belmont
County, Ohio.
facilities of area em ployers, and a loss of
m arkets for some of the products of the metro
politan area. Recently, the severity of the
unemployment problem h as lessened be
cau se of general population out-migration
from the area, a s well a s ad v an ces in em
ployment opportunities.
POPULATION
A s shown in the chart, the population of the
W heeling SM SA attained a peak in the 1940
Census, reaching 208,918 persons. The esti
m ated population of the W heeling SM SA in
1965 w as 182,381.2 The absolute population
decline between 1940 and 1965 thus amounted
to approxim ately 26,500 persons, or a reduc
tion of 13 percent. Similarly, but in a broader
context, although the nation a s a whole ex
perienced population gain s during 1950-1965,
the State of West Virginia lost 190,500 per
sons, with declines expected to continue into
the early 1970's.
2 U. S. Department of Commerce, Bureau of the Census
projection.
13
ECONOMIC REVIEW
natural in creases in population were less
than the net outward movement.
POPULATION GROWTH
U n ite d S tate s, S ta te o f W e s t V ir g in ia ,
a n d W h e e lin g SMSA
EMPLOYMENT DISTRIBUTION
1 8 9 0 — 1965
M illio n s o f pe rs o n s
200
M illio n s o f p e rs o n s
2.2
1.8
1.4
1.0
0.6
DECENIALLY
1890 1900
'10
'2 0
’ 30
’40
’ 50
’60
'7 0
S o u rc e o f d a ta -. U. S. D e p a r tm e n t o f C o m m e rc e ,
B u re a u o f th e C e n s u s
L a st e n try : '6 5
Population losses in the W heeling SM SA
and the State of West Virginia can be attrib
uted to net out-migration from both areas.
Between 1950 and 1960, approxim ately 25,000
more persons m igrated from the three-county
W heeling SM SA than moved into the area. In
addition, it is estim ated that 9,000 people left
the W heeling SM SA in the 1960-1965 period.
Com parable figures for the State of West Vir
ginia indicate a net loss of 446,700 people
during 1950-1960 and a net loss of 162,000 peo
ple during 1960-1966. The out-migration of
persons in both the 1950-1960 period and 19601965 period resulted in absolute population
declines in the respective areas, inasm uch a s
14
In 1967, manufacturing provided the largest
single source of employment in the Wheeling
SM SA (see Table I). Although slightly greater
than in the United States and the State of
West Virginia, the proportion of W heeling's
employment in manufacturing is generally
below the sh ares typical of large Fourth Dis
trict SM SA s, except for Columbus, Ohio, and
Lexington, Kentucky.
The prim ary m etal and fabricated m etal
products industries are the most important
sources of manufacturing employment in the
W heeling SM SA. In 1967, these two indus
tries accounted for more than one-third of all
manufacturing employment in the three-coun
ty area (5,700 jobs). In West Virginia a s a
whole, three industries account for 55 percent
of manufacturing employment in the State —
TABLE I
Percent Distribution of N onagricultural
Em ploym ent
W heeling SMSA, State of W est V irg in ia ,
and United States
1967
W est
W h e e lin g
5 .5 %
M a n u fa c tu rin g ..........................
C o n tra c t constructio n
.
.
V irg in ia
9 .6 %
U n ite d
S tates
0 .9 %
3 0 .7
2 6 .3
2 9 .3
4 .3
5.1
4 .9
.
T ra n s p o rta tio n a n d
p u b lic u t i l i t i e s .....................
7 .2
8 .3
6 .5
W h o le s a le a n d r e ta il tra d e
2 2 .0
1 7 .6
2 0 .7
Finance, insurance, a n d
3 7
2 .9
4 .9
1 5 .5
1 1.9
1 5 .2
11.1
1 8 .3
1 7 .6
10 0 .0 %
1 0 0 .0 %
r e a l e s t a t e ..........................
G o v e rn m e n t...............................
T o ta l n o n a g ric u ltu ra l
e m p lo y m e n t..........................
10 0 .0 %
Source: U. S. D e p a rtm e n t o f L a b o r
APRIL 1 9 6 8
chem icals, prim ary m eials, and sione, clay,
and glass, respectively.
Trade and services — the principal nonm anufacturing employment categories in the
W heeling SM SA — accounted for nearly 38
percent of the are a's nonfarm employment in
1967. The proportion em ployed in trade and
services in the W heeling SM SA is higher
than in other large Fourth District SM S As.
Government employment, however, in the
W heeling SM SA in 1967 w as relatively less
than in either the State of West Virginia or
the United States. On a per capita basis, the
Wheeling SM SA h as one of the lowest pro
portions of government employment am ong
Fourth District metropolitan a r e a s.3
EMPLOYMENT TRENDS
The 1950's. The movement of people aw ay
from the W heeling SM SA reflects both in
sufficient employment opportunities and net
employment lo sses in the area that resulted
in an excessive labor surplus in the 1950's.
From 1950 to 1960, total nonfarm employment
declined 8 percent in the Wheeling SM SA
and 9 percent in the Stale of West Virginia.
In the United States, however, total nonfarm
employment increased 22 percent during the
sam e period. Although there were new em
ployers in the a re a and some existing firms
3 In 1966, governmenl employment per 1,000 population
varied among selected Fourth District SMSAs a s follows:
Akron
Canton
Cincinnati
Cleveland
Columbus
43
30
44
48
79
Dayton
Toledo
66
41
YoungstownWarren
Wheeling
33
34
Sources: U. S. Department of Commerce and Division of
Research and Statistics, Ohio Bureau of Employ
ment Services
expanded employment, there w as a net loss
of approxim ately 5,300 jobs in the W heeling
SM SA between 1950 and 1960. The State of
West Virginia registered a net loss of more
than 51,000 jobs in the 10-year period.
The industrial categories responsible for
the employment declines between 1950 and
1960 are shown in Table II. Approxim ately
42 percent of total employment losses in the
W heeling SM SA and 81 percent in the State
of West Virginia during the 1950-1960 period
were accounted for by mining, particularly
bituminous coal. Shrinking employment in
bituminous coal mining h as been a national
a s well a s a regional phenomenon. A s indi
cated in Table III, between 1950 and I960, the
State of West Virginia suffered a 59-percent
loss in employment in its coal industry, com
pared with a 61-percent decline in the United
States. The employment decline can largely
be attributed to technological innovations in
the coal mining industry that increase labor
productivity and thereby reguire fewer work
ers to maintain production levels. For exam
ple, while employment in bituminous coal
mining in ihe W heeling SM SA declined 63
percent between 1950 and 1960, labor produc
tivity (average tons per man per day) in
creased by 164 percent. Productivity in creases
in coal mining operations in ihe Wheeling
SM SA greatly outstripped gain s of 100 per
cent and 96 percent in ihe United States and
State of West Virginia, respectively. In ab so
lute terms, labor productivity in the W heeling
SM SA moved ah ead of the levels in the State
and ihe nation during 1950-1960. A s shown
by the employment declines in Table III,
these rates of productivity change indicate
a greater relative impact on the economy of
15
ECONOMIC REVIEW
TABLE II
C hanges in N onagricultural Em ploym ent
W heeling SMSA, State of West V irg in ia, and United States
1950-1960
T o ta l E m ploym ent, 1 9 6 0 *
(thous. o f persons)
W est
P e rcen t C h a n g e 1 9 5 0 - 1 9 6 0
W h e e lin g
V irg in ia
U n ite d
S tates
W est
W h e e lin g
V irg in ia
U n ite d
S tates
T o ta l n o n a g ric u ltu ra l e m p lo y m e n t...............................
•
6 0 .9
5 1 4 .4
6 0 ,2 8 9 .4
—
—
9%
+
M a n u f a c t u r i n g ...................................................................
. . .
1 8 .6
1 2 5 .7
1 7 ,5 1 3 .1
—
10
+
6
+
19
D u ra b le g o o d s ..............................................................
. . .
1 3 .8
7 2 .2
9 ,8 2 8 .7
—
15
+
2
+
27
S tone, c la y , a n d g l a s s .........................................
. . .
1.8
19.1
6 0 0 .4
—
49f
— 13
+
28
P rim a ry m e t a l s .........................................................
. . .
6 .3
2 3 .9
1 ,2 2 4 .9
—
23
+ 17
+
3
F a b ric a te d m e ta ls ....................................................
. . .
2.8
6 .7
1 ,2 9 1 .7
+
23
+ 17
+
53
+
+ 24
+
25
+
+
10
•
•
8%
N o n e le c tric a l m a c h i n e r y ....................................
. . .
1.3
4 .0
1 ,5 6 8 .0
O th e r d u r a b le s .........................................................
. . .
1.6
1 8 .5
5 ,1 4 3 .7
N o n d u ra b le g o o d s .........................................................
. . .
4 .8
5 3 .5
7 ,6 8 4 .4
+
7
Food a n d k in d re d p r o d u c t s ...............................
. . .
1.7
8 .9
1 ,8 2 2 .5
+
27
C h em icals a n d a llie d p r o d u c t s ..........................
. . .
1.0
2 5 .6
8 6 4 .5
O th e r n o n d u ra b le s ....................................................
. . .
2.1
1 9 .0
4 ,9 9 7 .4
99
-0 -
5
22%
+ 14
+
11
+
9
+
23
+ 206
+ 23
+
36
—
28
—
2
+
4
— 56
—
30
—
+
M i n i n g ...................................................................................
. . .
3 .4
59.1
6 5 4 .0
—
56
C o n tra c t c o n s tru c tio n .........................................................
. . .
3 .5
2 9 .3
3 ,8 1 5 .9
+
9
T ra n s p o rta tio n a n d p u b lic u t ilit ie s ...............................
. . .
4 .6
4 7 .3
4 ,4 5 8 .1
—
19
W h o le s a le a n d re ta il t r a d e .........................................
. . .
1 2 .9
97.1
1 1 ,7 9 2 .6
—
4
Finance, insurance, a n d re a l e s t a t e ..........................
. . .
1.9
1 2 .5
2 ,6 9 4 .6
+
15
+ 25
S e rv ic e s ...................................................................................
. . .
10 .2
7 7 .8
11,01 2 .6
+
10
+ 10
+
29
G o v e r n m e n t ........................................................................
. . .
3 .9
4 8 .2
5 ,7 4 0 .3
+
15
+ 23
+
41
O th e r, n o t s p e c i f i e d .........................................................
. . .
1.9
1 7 .4
2 ,6 0 8 .2
+
99
+74
+ 209
9
— 12
-0 -
10
-0 -
+
12
+
40
* Based on e m p lo y m e n t b y p la c e o f residence (m onth o f A p ril),
f 1 9 5 0 fig u re e s tim a te d .
Source: U. S. D e p a rtm e n t o f C om m erce, Bureau o f the Census
TABLE III
Production, Employment, and Productivity in Bituminous Coal Mining
W heeling SMSA, State of West V irg in ia, and United States
1950-1965
P ro d u ctio n (net tons, thousands)
A v e ra g e N u m b e r o f M e n W o rk in g D a ily
W est
U n ite d
W est
U n ite d
W h e e lin g
V irg in ia
S tates
W h e e lin g
V irg in ia
States
A v e ra g e Tons Per M a n Per D a y
W h e e lin g
W est
V irg in ia
U n ite d
S tates
1950 .
.
8 ,0 0 2 .4
1 2 2 ,6 1 0 .6
4 3 7 ,8 6 8 .0
7 ,7 0 1
1 2 4 ,7 5 0
4 3 3 ,6 9 8
5 .8 6
6 .1 7
1955 .
.
8 ,8 4 8 .9
1 3 9 ,1 6 7 .9
4 6 4 ,6 3 3 .4
3 ,2 4 8
6 6 ,2 3 1
2 2 5 ,0 9 3
1 1 .5 6
9 .3 8
9 .8 4
1960 .
.
9 ,6 0 9 .0
11 8 ,9 4 4 .3
4 1 5 ,5 1 2 .3
2,8 2 1
5 1 ,0 6 2
1 6 9 ,4 0 0
1 5 .4 9
1 2 .0 7
1 2 .8 3
1965 .
.
n.a.
1 4 9 ,1 9 1 .2
5 1 2 ,0 8 8 .3
n.a.
4 1 ,0 0 8
1 3 3 ,7 3 2
1 8.71 p
1 5 .9 0
1 7 .5 2
n.a. N o t a v a ila b le ,
p
P re lim in a ry .
Sources: U. S. D e p a rtm e n t o f th e In te rio r a n d W e s t V irg in ia D e p a rtm e n t o f M ines
16
6 .4 3
APRIL 1 9 6 8
Ihe W heeling SM SA lhan in either the Uniled
States or the Slate of W esl Virginia.
Significant chan ges also occurred in bitu
minous coal m arkets during ihe 1950's. The
W heeling SM SA w as especially affected by
the loss of the railroad fuel and retail markets,
accom panied by declines in ihe m anufactur
ing market. Offsetting these declining m ar
kets, ihe expanding electric power industry
helped to maintain production levels in
Wheeling. The State of West Virginia a s a
whole suffered from the loss of ihe railroad
fuel and retail m arkets and d ecreases in the
steel-coke and m anufacturing markets, a s
well a s the collapse in ihe export market in
the latter half of the 1950's. These lo sses re
sulted in an absolute drop in tonnage pro
duced, both for West Virginia and the United
States in the 1955-1960 period. Since 1960,
bituminous coal production h as been expan d
ing becau se of increased sa le s to the export
and electric utilities m arkets and reduced
costs of transporting coal, especially by rail.
A s shown in Table II, primary m etals and
the stone, clay, and g la ss industry also con
tributed to the employment decline in the
W heeling SM SA during 1950-1960. Secondary
effects were fell from decreases in trade em
ployment and employment in the transporta
tion and public utilities category. These em
ployment groups, when combined with min
ing, accounted for 92 percent of total em ploy
ment lo sses in ihe W heeling SM SA during
Because of these employment losses, the
unemployment ranks grew in the W heeling
SM SA and ihe State of West Virginia; by
1958, the W heeling SM SA w as considered an
are a with substantial and persistent unem
ployment. Between 1950 and 1960, the un
employment rate in ihe W heeling SM SA
climbed from 5.0 to 14.0 percent, in m arked
contrast to ihe change from 4.8 to 5.6 percent
in the United States a s a whole (see Table IV).
The 1960's. A ggravated by ihe 1960-1961
recession in the United States, ihe unemploy
ment rate in ihe W heeling SM SA rose to 15.0
percent in 1961, or more than twice the un
employment rate in the United States. Unem
ployment in ihe State of West Virginia also
rose, a s the av erage state unemployment rale
worsened to 12.8 percent in 1961. Despite ihe
recovery in business activity beginning in
TABLE IV
Rate of Unem ploym ent Among a ll C iv ilia n
W orkers 14 Y e a rs of A g e and O ver
W heeling SMSA, State of W est V irg in ia ,
and United States
1950-1967
19 5 0 *. .
1960 . .
W h e e lin g
W est
V ir g in ia
U n ite d
S tates
.
.
5 .0 %
1 4 .0
4 .8 %
1 1.3
4 .8 %
5 .6
19 6 1
.
.
.
1 5 .0
1 2 .8
6 .7
1962
.
.
.
1 2 .0
1 0 .8
5 .6
.
10.1
9 .5
5 .7
.
.
7 .3
8 .0
5 .2
.
6 .7
7 .8
4 .6
1963
. .
1964
.
1965
. .
1966
.
1967
. .
.
.
5 .4
6 .8
3 .9
.
5 .6 p
6 .4
3 .8 f
1950-1960. In the State of West Virginia, ihe
m ajor sources of employment declines during
1950-1960 were mining, transportation and
f B ased on c iv ilia n w o rk e rs 1 6 y e a rs o f a g e a n d o v e r.
public utilities, lumber and furniture, construc
tion, and ihe stone, clay, and g la ss industries.
Sources: U. S. D e p a rtm e n t o f C o m m erce, B ureau o f the Census;
U. S. D e p a rtm e n t o f L a b o r; W e s t V irg in ia D e p a rtm e n t o f
E m p lo y m e n t S e c u rity
p P re lim in a ry .
* B ureau o f th e Census e s tim a te , b y p la c e o f residence
(m onth o f A p ril) ,
17
ECON O M IC REVIEW
1961, unemployment in the W heeling SM S A
rem ained at a relatively high rale due in part
to the closing of an are a steel facility and
railroad terminal and to continued em ploy
ment lo sses in mining and the stone, clay,
and g la ss industries.
Nevertheless, the unemployment rate in
the W heeling SM SA h as shown noticeable
improvement since 1961. By 1967, the av erage
unemployment rate fell to 5.6 percent, up
only slightly from the recent low reached in
1966 (5.4 percent). The unemployment rate
in the State of West Virginia dropped to an
av erag e of 6.4 percent in 1967.
The improvements in unemployment rates
in the W heeling SM SA and the State of West
Virginia cam e from three sources: the busi
ness expansion in the United Slates that b e
gan in 1961; continued out-migration from the
respective areas, which resulted in a reduc
tion of a re a labor forces; and recent gain s
in a re a employment opportunities. Table V
show s the chan ges in employment during
the 1960's.
Total nonfarm w age and salary em ploy
ment increased 11 percent in the W heeling
SM SA during 1961-1967. This increase, how
ever, is much sm aller than the 22-percent
adv an ce in the United States during the sam e
ad v an ces in both the W heeling SM SA and
the State of W est Virginia during 1961-1967.
Continued softness of employment in some
manufacturing industries, along with laborm anagem ent disputes, especially in mining
and construction, have been the m ajor
sources of w eakness in the W heeling SM SA
during the 1960's.
Although between 1961 and 1967 em ploy
ment in the W heeling SM SA advan ced at
only half the rate a s that in the United States,
the gain in W heeling represents a significant
reversal of the postw ar decline.
period. Government employment, particu
larly state and local government, and services
represented the principal sources of em ploy
ment gain s in the W heeling SM SA. Between
1961 and 1967, an additional 1,500 people
Employment ad v an ces in the nondurable
were em ployed in each sector, and em ploy
ment in m anufacturing increased by 1,000
jobs. These three sectors — government, ser
vices, and m anufacturing — accounted for
more than three-fourths of the employment
18
TRENDS IN M AN UFACTURING ACTIVITY
Em ploym ent. Durable goods employment in
W heeling rem ained very sluggish during the
first half of the 1960's, and by 1966, had not
yet regained 1960 employment levels (see
Table VI). In the United States a s a whole,
however, this industry group w as 19 percent
higher in 1966 than in 1960. Among the dur
able goods industries in the Wheeling SM SA ,
employment in the stone, clay, and g la ss
industries continued to decline a n d ,in 1967,
w as 37 percent less than in 1960. Primary and
fabricated m etals, two other sources of w eak
n ess in the economy of the W heeling SM SA,
have not yet reailained 1960 employment
levels.
goods industries in the W heeling SM SA have
helped to offset the sluggish n ess in the dur
able goods industries. Between 1960 and 1966,
nondurable goods employment increased 11
percent in the W heeling SM SA com pared
with an increase of 8 percent in the United
States. The chem ical industry accounted for
two-thirds of the increase in nondurable
goods employment in the W heeling SM SA.
APRIL 1 9 6 8
TABLE
V
T r e n d s in N o n a g r i c u l t u r a l E m p l o y m e n t *
E ig h t M a j o r E m p l o y m e n t C a t e g o r i e s
W h e e l i n g S M S A , S t a t e o f W e s t V i r g i n i a , a n d U n i t e d S ta te s
1 9 6 0 - 1 9 6 7 a n d P e rc e n t C h a n g e 1 9 6 1 - 1 9 6 7
1960
1961 1962
1963
1964
Percent
Change
19 61-1967
1965
1966
1967
53.4
476.6
54.1
492.3
54.0
498.5
+11%
+11
Total nonagricultural employment
Wheeling (th o u s .)....................................................
W est Virginia (th o u s .)...........................................
5*0.5
460.0
48.8 49.4
50.0
52.1
448.1 447.5 449.9 460.9
United States (mil.)....................................................
54.2
54.0
55.6
56.7
58.3
60.8
64.0
66.1
+22
Wheeling (th ous.)....................................................
West Virginia (th o u s .)...........................................
16.4
124.6
15.6
120.1
15.7
122.6
15.7
124.2
16.1
126.2
16.3
129.2
16.7
132.3
16.6
131.2
+ 6
+ 9
United States (mil.)....................................................
17.0
16.3
16.9
17.0
17.3
18.1
19.2
19.3
+18
Wheeling (thous.)....................................................
West Virginia (th o u s .)...........................................
3.0
56.3
2.6
49.9
2.5
.4 9 .2
2.5
47.7
2.6
48.3
2.4
47.9
2.6
47.2
3.0
47.6
+15
— 5
United States (mil.)...................................................
0.7
0.7
0.7
0.6
0.6
0.6
0.6
0.6
— 14
Wheeling (th ous.)....................................................
West Virginia (th o u s .)...........................................
11.4
84.5
11.1
81.4
11.1
79.3
11.1
79.5
11.3
81.5
11.7
85.0
11.9
87.3
11.9
88.0
+ 7
+ 8
United States (mil.)....................................................
11.4
11.3
11.6
11.8
12.2
12.7
13.2
13.7
+21
Wheeling (th ous.)....................................................
West Virginia (th o u s .)...........................................
2.3
18.4
2.5
18.8
2.7
17.8
2.9
18.4
3.2
20.5
3.3
21.9
3.0
24.8
2.3
25.5
— 8
+36
United States (mil.)....................................................
2.9
2.8
2.9
3.0
3.1
3.2
3.3
3.3
+18
Wheeling (th ous.)....................................................
West Virginia (th o u s .)...........................................
4.3
44.4
3.8
41.6
3.7
41.3
3.7
40.8
3.7
40.8
3.8
40.7
3.8
40.8
3.9
41.3
+ 3
— 1
United States (mil.)....................................................
4.0
3.9
3.9
3.9
4.0
4.0
4.2
4.3
+10
Wheeling (th ous.)....................................................
West Virginia (th o u s .)...........................................
2.0
13.3
1.9
13.3
2.0
13.4
1.9
13.5
1.9
13.7
2.0
14.1
2.0
14.2
2.0
14.5
+ 5
+ 9
United States (mil.)....................................................
2.7
2.7
2.8
2.9
3.0
3.0
3.1
3.2
+18
Wheeling (thous.)....................................................
West Virginia (th o u s .)...........................................
6.6
51.1
6.9
51.5
7.3
52.6
7.3
53.7
7.6
54.7
8.0
56.1
8.2
58.0
8.4
59.3
+22
+15
United States (mil.)....................................................
7.4
7.7
8.0
8.3
8.7
9.1
9.5
10.1
+31
Wheeling (th ous.)....................................................
West Virginia (th o u s .)...........................................
4.6
67.5
4.5
71.5
4.6
71.4
5.0
72.1
5.9
75.3
6.1
81.7
6.2
87.8
6.0
91.0
+33
+27
United States (mil.)....................................................
8.4
8.6
8.9
9.2
9.6
10.1
10.9
11.6
+35
Manufacturing
Mining
Wholesale and retail trade
Contract construction
Transportation and public utilities
Finance, insurance, and real estate
Services
Government
* Based on employment by place o f occupation. Dueto recording differences, data in Table II are not strictly comparable to
data in Table V.
Source: U. S. Department o f Labor
19
EC ON O M IC REVIEW
T A B L E VI
Sel ect ed I ndi cators of I ndust ri al Acti vi ty
W h e e l i n g S MS A , State of Wes t V i r g i n i a , a n d Uni ted States
1960-1966
D u ra b le G oo d s Em ploym ent
(thous. o f persons)
N o n d u ra b le G oo d s Em ploym ent
(thous. o f persons)
V a lu e A d d e d b y M a n u fa ctu re
(mil. $)
W h e e lin g
W est
V irg in ia
United
States
W h e e lin g
W est
V irg in ia
United
States
W h e e lin g
W est
V irg in ia
United
S tates
C a p ita l E xpenditures (new)
(mil. $)
W h e e lin g
W est
V irg in ia
United
States
1 0 ,0 9 7 .8
I9 6 0
.
10.8
7 4 .4
9 ,4 5 9 .0
5 .7
5 0 .2
7 ,3 3 6 .0
140 .8
1,371.1
1 6 3 ,9 9 8 .5
7 .4
1 1 6 .7
1961
.
10.1
6 9 .9
9 ,0 7 0 .0
5 .5
5 0 .3
7 ,2 5 6 .0
13 6 .4
1 ,3 7 7 .9
1 6 4 ,2 8 1 .1
12.5
1 13.8
9 ,7 7 9 .8
1962 .
10.1
7 1 .9
9 ,4 8 0 .0
5 .7
5 0 .7
7 ,3 7 3 .0
1 5 7 .6
1 ,6 2 5 .5
17 9 ,0 7 1 .1
12.3
1 6 7 .6
1 0 ,4 3 6 .2
1963 .
9 .7
73.1
9 ,6 1 6 .0
6 .0
51.1
7 ,3 8 0 .0
190.1
1 ,8 3 4 .0
1 9 1 ,0 3 4 .9
25.1
1 7 3 .0
1 1 ,2 2 8 .0
1964 .
1 0.0
7 5 .9
9 ,8 1 6 .0
6.1
5 0 .3
7 ,4 5 8 .0
1 9 8 .5
1 ,8 7 5 .6
2 0 6 ,1 9 3 .6
2 8 .6
1 7 8 .2
1 3 ,2 8 7 .2
1965 .
10.1
7 8 .9
1 0 ,4 0 6 .0
6.2
5 0 .3
7 ,6 5 6 .0
1 9 1 .0
2,0 3 3.1
2 2 5 ,3 6 5 .6
3 0 .3
2 0 4 .5
1 6 ,5 3 4 .2
1966 .
10.4
8 0 .7
1 1 ,2 5 6 .0
6.3
5 1 .6
7 ,9 3 0 .0
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a. N o t a v a ila b le .
Sources: U. S. D e p a rtm e n t o f Commerce a nd U. S. D e p a rtm e n t o f L ab or
The m ajor sources of growth in m anufac
turing employment in the State of West Vir
ginia were an 8-percent gain in durable goods
employment between 1960 and 1966 and a
3-percent increase in nondurable goods
employment over the sam e period. M ajor
in creases in employment in the electrical
m achinery and transportation equipment
industries were in large part responsible for
the overall gain s in the State.
V a lu e A dded and C ap ita l Spending. Value
add ed by m anufacture in the Wheeling
SM SA advan ced by 36 percent between 1960
and 1965, nearly matching the 37-percent in
crease in the United States, but well below
the 48-percent rise in the State of West
Virginia. The gain in value add ed in the
W heeling SM SA occurred, however, during a
period in which the level of manufacturing
20
employment rem ained virtually unchanged,
reflecting increased labor productivity in
manufacturing in the area stemming from
fairly sizable capital investments.
Large-scale new capital expenditures in
the W heeling SM SA su ggest a m arked im
provement over the late 1950's and early
1960's. The upsurge in expenditures in the
1963-1965 period in the W heeling SM SA
largely represents new facilities and pro
cedures in the prim ary m etal and fabricated
m etal products industries. New capital ex
penditures in the State of West Virginia also
reflect improved industrial conditions, with
the increase in the State outpacing in relative
terms the gain in the United States. The
chem ical and prim ary m etal industries have
contributed importantly to the gain s in capital
spending in the State of W est Virginia.
APRIL 1 9 6 8
W ages in M anufacturing. During 1967, a v
erage hourly earnings of production workers
in the W heeling SM SA were $2.94, an in
crease of 21 percent over 1960 (see Table VII).
Although the gain in ihe W heeling SM SA
roughly m atched the percent increase for ihe
State of W est Virginia, the gain in W heeling
w as below that for the United Slates (25 per
cent).
In 1967, av erage hourly earnings varied
considerably between industries in the
W heeling SM SA, ranging from $3.66 in the
highly autom ated chem ical industry to $2.43
in the food and kindred products industry.
Although employment growth in the W heel
ing SM SA h as lagge d considerably behind
growth in the United States, w age levels in
ihe W heeling SM SA have rem ained above
the national level. This is the c a se largely
b ecau se the av erage w age level in W heeling
is heavily weighted by high-wage industries,
notably the prim ary metal and fabricated
TABLE VII
A v e ra g e Hourly Earnings of Production
W orkers in M anufacturing
W heeling SMSA, State of W est V irg in ia ,
and United States
1960-1967 Annual Average
W h e e lin g
West
Virginia
United
States
I9 6 0
.
.
.
$ 2 .4 4
$2.41
$2.26
1961
.
.
.
2.51
2.48
2.32
1962
.
.
.
2 .6 0
2.55
2.39
1963
.
.
.
2 .6 8
2.61
2.46
1964
.
.
.
2 .7 3
2.67
2.53
2.61
1965
.
.
.
2 .7 8
2.74
.
.
.
2 .8 5
2.82
2.72
1967 . • . .
2 .9 4
2.91
2.83
1966
.
Source: U. S. Department o f Labor
m etal products industries, a s well a s the
chem ical industry.
BAN KIN G ACTIVITY
Selected indicators of banking activity are
additional evidence of the relative sluggish
n ess of ihe W heeling economy in recent
years. For exam ple, bank debits in W heeling
increased only 23 percent over the past seven
years, trailing the progress m ade in other
metropolitan a re a s of the Fourth District (see
Table VIII). Sim ilarly, total loans at insured
commercial banks in W heeling la g g e d be
hind in creases in other metropolitan centers
between 1960 and 1966, although com m ercial
and industrial loans show ed an av e rag e per
formance in com parison with other centers.
During 1960-1967, sav in gs deposits of individ
u als in W heeling show ed the type of pattern
that would be expected in view of the other
economic developm ents in the area.
CO N CLU DIN G COMM ENTS
The economy of the W heeling SM SA
clearly experienced the effects of postw ar
technological ch an ges in m anufacturing and
mining methods, a s well a s chan ges in prod
uct markets. Population out-migrations help
ed, in part, to alleviate som e of the problem s
of employment and unemployment. Hope
fully, more perm anent solutions will be
provided by a continuation of the recent trend
in capital expenditures, which is indicative
of a more favorable economic clim ate in the
Wheeling SM SA. Furthermore, ihe recently
completed interstate highw ay through ihe
W heeling are a m akes the a re a more a c c e s
sible to other metropolitan centers. Expansion
21
ECON OM IC REVIEW
TABLE VIII
Bank Debits, S avin gs Deposits of I n d iv id u a l and Loans O utstanding
W heeling an d O ther Selected A re a s in the Fourth District
1966-1967
S avings D e posits
B ank D e b its
o f In d iv id u a ls
(a n n u a l to ta ls )
(a n n u a l a v e r a g e )
(m il. $)
1967
P ercent
C hange
1 9 6 0 -1 9 6 7
(m il. $)
1967
C o m m e rc ia l
T o ta l
(m il. $)
1966
a n d In d u s tria l
P ercent
Change
1 9 6 0 -1 9 6 6
P ercent
(m il. $)
1966
C hange
1 9 6 0 -1 9 6 6
.
.
.
1 ,2 9 5
+
23%
45
+
88%
126
+
42%
.
.
.
1 2 ,9 2 2
+
86
332
+
96
514
+
78
144
+ 129
C le v e la n d . . . .
.
.
.
7 7 ,0 7 6
+
66
1 ,9 6 7
+
64
3 ,4 7 3
+
76
1 ,1 7 5
+ 102
C o lum bus
.
.
.
3 0 ,8 8 2
+ 130
398
+ 253
844
+ 129
237
+
87
.
.
.
1 1 ,6 5 2
+
85
179
+ 147
511
+
66
141
+
23
+
436*
+
71
121*
+
58
168
+
91
55
W h e e lin g
. . . .
A k r o n .....................
. . . .
$
$
P e rcen t
C hange
1 9 6 0 -1 9 6 7
Loans O u ts ta n d in g (y.ea ren d)
-------------------------------------------------------------------------------
T o l e d o .....................
.
.
.
1 2 ,2 6 8
+
42
307
L e x in g to n
.
.
.
3 ,6 2 8
+
89
81
. . . .
98
+ 151
$
$
24
+
84%
+ 132
* Does n o t in clu d e M o n ro e C o u n ty , M ic h ig a n .
N O TE : Bank d e b its a n d saving s d e p o s its d a ta a r e f o r re p o rtin g b an ks (m e m b e r a n d non m e m b e r) in s e le c te d centers, w hich a r e re p o r te d
m o n th ly to th e F e d e ra l Reserve Bank o f C le v e la n d . S a vings d e p o s its a t re p o rtin g b an ks (m e m b e r a n d n o n m e m b e r) re p re s e n t
c h ie fly saving s d e p o s its o f in d iv id u a ls a n d e le e m o s y n a ry o rg a n iz a tio n s , C hristm as saving s a n d s im ila r t h r if t accounts, a n d tim e
c e rtific a te s o f d e p o s it o f in d iv id u a ls . Loan d a ta a r e fro m c a ll re p o rts o f a ll insured c o m m e rc ia l b a n k s in th e SM SAs.
S ource: F e d e ra l R eserve Bank o f C le v e la n d
in government and service employment, new
chem ical firms, stronger coal markets, and
new facilities in the primary metal and fab-
22
ricated m etal products industries seem to
have come together to forge a reversal of
W heeling's postw ar decline.
APRIL 1 9 6 8
RECENTLY PUBLISHED ECONOMIC COMMENTARIES OF
THE FEDERAL RESERVE BANK OF CLEVELAND
"Aspects of Two D evaluations"
Decem ber 9, 1967
"Coin Demands and Coin Supplies in the 1960's"
February 17, 1968
"U . S. Balance of Payments: The Problem and the Program "
February 24 and March 2, 1968
"Holdings of M unicipal Securities (Fourth District)"
March 9, 1968
"Seigniorage: W hat and How Much"
March 16, 1968
"Distribution of Bank Deposits in M ajor SMSAs of the Fourth District"
M arch 23, 1968
"U . S. M erchandise Trade in 1967"
M arch 30, 1968
"Som e Dimensions of the W age-Price Problem"
A p ril 6, 1968
Econom ic C om m enta ry is a v a ila b le to the pu blic w ith o u t charge. A d d i
tio n a l copies o f an y issue may be o b ta in e d from the Research D epartm ent,
Federal Reserve Bank o f C leveland, P. O. Box 6387, C leveland , O h io 44101.
23
Fourth
Federal
Reserve
District
@FedFRASER