The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVU TWELFTH FEDERAL RESERVE DISTRICT Fe d e r a l D e c e m b er 195 4 reserve Ba n k of S a n Fr a n c is c o BUSINESS ACTIVITY MODERATELY LOWER IN 1954 contrast with the general tone of weakness that ex isted in the business situation at the start of 1954, the economy of the Twelfth District ended the year on an upward trend. In addition, the general feeling among the great majority in the business community was one of moderate optimism. While there has been much discus sion concerning the recession in business activity, the over-all decline has been relatively minor. In the Twelfth District total nonagricultural employment in 1954 was only 1.5 percent below the record level of 1953. This drop in employment was only half the national decline of 3 percent from 1953 to 1954. Some of the reasons for this difference in experience are discussed in another article in this Review . n I At the start of 1954 reductions in Federal outlays for defense goods and military construction, a cutback in con sumer purchases of durable goods, and a major inventory liquidation by business firms were the dominant forces in the business contraction, both in this District and the country as a whole. Weakness in the markets for lumber and nonferrous metals were additional depressive factors in the District. In the summer a number of major strikes in various District industries were a further disruptive element in the general business picture. However, in the late months of the year conditions improved. Settlement of the more important labor disputes, a revival of con sumer buying of durable goods, an increased level of business orders, and a rise in military contracts combined to produce a stronger tone in the District economy. The trend in general business conditions, however, tends to mask the fairly sharp divergent movements in some of the major industrial sectors of the District econ omy during 1954. A brief discussion of these differences will add to our understanding of the over-all business trend during the year. Divergent trends prominent am ong major industry lines Despite the relative stability in the over-all level of business activity, employment changes in the principal industry groups of the District varied considerably on a year-to-year basis. While the decline in average monthly total nonagricultural employment was only 1.5 percent between the two years, individual industry changes ranged from nearly plus 2 percent to about minus 8 percent. The largest percentage declines in average monthly employ ment occurred in contract construction, manufacturing, transportation, and mining. The drop in construction employment reflects the decline in the building of military installations and some slowness in new private construc tion activity in the first half of the year. A sharp upsurge in the value of District building permits issued in the latter half of the year may well presage some recovery in private construction employment in the coming months. The decline in District manufacturing employment dur ing 1954 was concentrated to a large extent in the durable goods lines, although most nondurable goods industries were also affected to some extent. The total number of man-hours worked in 1954 was 9 percent below 1953 at District firms producing durable goods compared with a decline of 3 percent for the nondurable group. I# furniture and lumber the reductions in man-hours were ^14 and 15 percent, respectively, reflecting in part the strike in lum ber and a sharp cutback in furniture inventories. The cut of approximately 9 percent in man-hours in the metals and machinery industries wras largely the result of the decline in the volume of defense work, reduced demands from business and farmers for productive equipment, and strike losses in nonferrous metal processing plants. Contrary to the pattern of developments among durable industries generally, the number of man-hours worked and the level of production in the District transportation equipment industry expanded from 1953 to 1954. This was largely a consequence of a shift in defense policies which curtailed aircraft construction outside the District and at the same time resulted in some expansion in the output of types of aircraft produced on the West Coast. Some decline did appear in aircraft production in the late months of the year, but this was expected to be a tem porary dip that would disappear in the early months of 1955. District automobile assembly plants employed fewer workers than in 1953, although the early introduction of Also in This Issue Nonagricultural Employment in a Year of R e c e s s io n ...................155 Annual Index, January-December 1954 154 FEDERAL RESERVE B A N K OF SA N FRANCISCO new models was responsible for a sharp pickup in the closing months of 1954. Nondurable goods industries in the District, while somewhat less active in 1954 than in 1953, have been sig nificantly more stable than the durable group. The only substantial decrease in terms of man-hours of employment was in textiles and apparel in which total man-hours de clined somewhat more than 6 percent. Smaller packs of canned fruits and vegetables, owing in part to reduced crops of some items and a heavy carryover from 1953 of unsold inventory, resulted in a 3 percent reduction in man-hours in the food products industry. In contrast, employment in the paper and in the printing and publish ing industries reached new high levels during 1954. Other industry lines show high degree of stability Employment changes in the major nonmariufacturing industries, except construction, were small and generally offsetting. A reduction of 3 percent in average monthly employment in transportation reflects largely lowered rail carloadings owing to strike interruptions, a smaller physi cal volume of agricultural shipments, and a decline in manufacturing activity. Smaller average employment at District mines arose from market weakness in lead and zinc and strike interruptions at the copper mines and smelters in Utah and Arizona. Growth in the finance, real estate, and service industries, although small (less than 2 percent), reflects largely the natural growth of popula tion in the District and continued in-migration from other areas of the country. Declines in Federal Government employment were completely offset by further growth in state and local government personnel. The rise in state and local government employment has been largely con centrated in educational institutions, reflecting the con tinued large increase in school population. Unemployment rises as employment declines and the labor force grows Unemployment was substantially higher in 1954 than in 1953, as the number of jobs fell and the labor force continued to expand. Unemployment represented ap proximately 5 percent of the labor force during 1954, a rise of nearly a third from the 1953 ratio of 3.8 percent. It is significant that the ratio has declined steadily from 6.8 percent in February 1954 to a level just slightly above 3 percent in October and November. In December the ratio rose but by a significantly smaller amount than dur ing the same period in the several preceding years. The decline in the relative severity of unemployment is indica tive of the growing strength of the economy as the year drew to a close. Also, it is interesting to note that the District ratio of unemployment to labor force continued below the national average from May through November, thus providing another indicator that the District has fared better during the recession than the country as a whole. D e ce m b e r 1954 Sales decline at District department stores Sales at Twelfth District department stores in 1954 fell 1 percent behind the comparable period of 1953. Most of this decline may be attributed to a sales weakness in the first half of the year. Recovery in the second half of the year, although slight, raised the level of sales modestly above the second half of 1953. It should be recalled, how ever, that the second half of 1953 was itself a period of sales decline which followed the downturn in business activity late in the second quarter of the year. District farm incomes slip further Continuing the decline of the previous two years the income position of District farmers weakened somewhat further during 1954. A number of forces contributed to this result. The output of farm crops was smaller and crop prices were generally lower in 1954 than in 1953. Acreage allotments and marketing quotas on wheat and cotton reduced income from these two major sources of District farm cash receipts. Although much acreage diverted from cotton or wheat was used for other crops, cash receipts from such alternative production only partly offset re duced receipts from cotton and wheat. In addition, more than the usual proportions of the 1953 cotton and wheat crops was placed under price support loans in late 1953, thereby reducing the proportion that would typically be sold to yield income in the first half of 1954. District cash income from livestock declined much less than from crops, largely because of an increase in the physical vol ume of livestock marketings and relatively more stability in livestock than in crop prices. Dem and for bank credit remains relatively low Reflecting the reduced level of over-all economic activ ity and a substantial liquidation of business inventories, the demand for bank loans remained relatively light throughout 1954. On December 31, loans and discounts outstanding at all member banks in the Twelfth District totaled $9,541 million, a rise of $203 million from the comparable date a year earlier. This increase in loans is about one half as large as that which occurred in 1953. Most of this difference in behavior in total loans between the two years is concentrated in consumer and business loans. Consumer loans outstanding at Twelfth District member banks decreased continuously during 1954 except for a minor rise in the last two months of the year, where as the substantial increase in the first half of 1953 was only partly offset by a minor decrease in the second half of that year. Business loans decreased in both the first and second halves of 1953. In 1954 the increase in the second half largely offset the substantial drop in the first six months, so that the decrease for the year as a whole was somewhat less in 1954 than in 1953. Real estate loans increased in both years, but the increase in 1954 was slightly less than in 1953. Some part of these differences in loan behavior represents a shift in borrowers from banks to other types of lending institutions, especially consumer finance companies and large insurance and sav ings institutions. D e ce m b e r 1954 155 M O N T H L Y RE V IEW NONAGRICULTURAL EMPLOYMENT IN A YEAR OF RECESSION interesting and important differences between the economic impact of recession on the national and Twelfth District economies developed during the decline in business activity which started in June 1953. Although differences between the District and the nation were ap parent in agriculture, the contrasts of most importance were concentrated in the nonagricultural part of the econ omy. This is true because, in terms of employment, the nonagricultural sectors far outweigh agriculture in both the District and the nation and because agriculture re sponds to unique factors in addition to those which influ ence the remainder of the economy, both here and in the country as a whole. Differences in the behavior of individual industries, the other key factor in explaining the better performance of nonagricultural employment in the District than in the nation, were evident in a sharper employment drop in many individual industries nationally than in the District irrespective of the relative importance of the industries in the two areas. Most manufacturing lines were harder hit nationally than in this District. Mining employment, too, fell more sharply outside this District because of the different demands for particular materials. However, dif ferences in behavior of major industry groups did not always favor the District. For example, construction em ployment rose nationally, but declined in this District. One of the more interesting aspects of the decline, and the one under discussion here, was the more moderate reduction in nonagricultural employment in the Twelfth District than in the nation during the year starting in June 1953. Between that date and June 1954,1 total nonagricultural employment fell by 3.5 percent or 1.8 mil lion jobs in the United States in contrast to a decline of only 1.9 percent or 107,000 jobs in the Twelfth District. The June 1953-June 1954 comparison provides a rough measure of the effect of the recession upon nonagricul tural employment in the two economies, even though some activities reached their peak either a little before or a little after June 1953 and others had not yet reached their trough by June 1954. Differences in industrial structure and the impact of changes in economic activity S om e The underlying forces primarily responsible for the drop in activity between June 1953 and June 1954 were reductions in Federal spending, inventory liquidation, and a reduced demand for durable goods. The difference in behavior of nonagricultural employment produced by the impact of these forces upon the District and the nation can be largely explained by two factors: ( 1 ) differences in the industrial structure of the nonagricultural economy of the two areas and ( 2 ) differences in the behavior of individual industries. As for structure, those groups of industries most ad versely affected by the decline in business activity tended to be more important in the national economy than in the District economy. The manufacturing sector in general falls into this category. In particular, the metals industry component of the manufacturing sector (which includes the smelting, refining, processing, and fabricating of met als) was one of the hardest hit individual industries in either the nation or the District. This industry accounts directly for less than 3 percent of the District’s nonagri cultural jobs, however, in contrast with 5 percent for the nation. Thus, an identical percentage decline in employ ment in the metals manufacturing industry for the United States and for the District would affect the total job picture more severely in the nation than in the District. JThe June 1953 to June 1954 period was selected for several reasons: to provide a consistent basis for comparison of smaller sectors with movements in total non agricultural employment; to remove the influence of different seasonal forces in those industries where no seasonally adjusted data are available; and to permit the use of data which were little affected by major labor-management disputes. It has already been indicated that part of the difference in behavior between the District and the nation results from a difference in the industrial structure of the two areas. The major difference in the importance of indus trial groups is found in manufacturing which accounts for a substantially larger fraction of total nonagricultural em ployment in the nation than in the District. Consequently, most other major industry groups account for a larger share of employment in the District than in the nation, but Government employment, as is evident in the chart, is the only sector in which the District proportion is significantly larger than the national ratio. The effect of structural differences on the District and national economies in the year under review is illustrated in Table 1. The table shows for each major industry group, in both the United States and the Twelfth District, the percentage change in employment from June 1953 to IN D U S T R IA L S T R U C T U R E B A S E D O N N O N A G R IG U L T U R A L E M P L O Y M E N T 1— T W E L F T H D I S T R I C T A N D U N I T E D S T A T E S , 1953 (P e r c e n t distribution) 156 D e c e m b e r 1954 FEDERAL RESERVE B A N K OF SA N FRANCISCO June 1954 (columns 1 and 5) and the average monthly nonagricultural employment in 1953 (columns 2 and 6). It is evident from looking at the figures that identical per cent changes in employment in two different industry groups, in either the District or the nation, will not neces sarily have the same effect upon total employment, since some industry sectors employ many more workers than do others. To adjust for this type of difference in both the District and the nation, the percent changes for each industry group were weighted by the relative importance of each industry in total nonagricultural employment shown in columns 3 and 7. This weighted percent change (columns 4 and 8) thus provides a measure of each indus try’s contribution to the total change in nonagricultural employment in each geographical area. Use of these weighted percent changes permits a more refined analysis of the factors that accounted for the dif ference in the impact of the recession upon the Twelfth District and the nation. Examination of the national and District figures shows, for example, that if nothing other than the respective declines in manufacturing had oc curred the drop in total nonagricultural employment would have been 3.1 percent nationally (column 4) but only 0.9 percent in the District (column 8). The statistics also show that the impact of the recession on various other sectors was quite different in the District than in the nation. Differences in the experience of individual indus tries account for some of this variation, but differences in industrial structure, that is, the relative importance of the various industry groups, also played an important role. The role of differences in industrial structure in pro ducing the variance of behavior between the District and the nation can be demonstrated by multiplying the United States percent change in employment for any given group (column 9) by the ratio of that group to total employment in the District (column 10). The result, shown in column 11 , is the percent change in total nonagricultural employ ment which would have prevailed in the District had the group percent change been the same in the District as in the United States. The difference between the figures in column 11 and those in column 4 thus arises from dif ferences in the relative importance of major industry groups, or structural differences, between the District and United States economies. In other words, the last three columns in Table 1 illustrate that, had the national em ployment percent changes been applicable to the District, the decline in total nonagricultural employment would still have been smaller in the District than in the nation. Manufacturing made the principal difference because of its significantly smaller importance in the District econ omy. For other sectors, the relative impact would have been the same. In terms of employment, the difference in response of the two economies to developments in the year ending last June might suggest that an examination of their structural characteristics would lead to some general ideas about economic stability in the District relative to the country as a whole. Manufacturing usually is less stable during the business cycle than a number of other broad industry classifications. Construction also tends to be volatile, al though construction employment has been considerably more stable since 1948 than in some other periods of our economic history. During the 1948-49 recession and in the decline beginning in June 1953, employment in build ing has been much steadier than manufacturing employ ment for the nation as a whole. In contrast to manufac turing, employment in the finance, service, and govern ment sectors tends to be fairly stable during most business cycles. Given the differences in industrial structure be tween the District and the nation, there may be a tend ency to assume that the District has a more stable economy. This assumption is unsafe, however, because the major industry groups, particularly manufacturing, include a wide variety of individual lines. Differences in specializa- T able 1 R elative I m pact of R ecession on N onagricultural E m p l o y m e n t T w e l f t h D istrict a n d U nited S tates - T w e lft h D is t r ic t - -U n it e d S tatesP ercent change in e m p lo y m ent June 1954 from June 1953 (1) — 3.5 — 8.8 — 12.1 + 0.7 Transportation, communication, and utilities . . . Trade ...................... Finance ................. S e r v ic e .................... Government . . . . — — + + + 5.4 0.6 3.3 0.4 0.6 W eighted percent change in A v era ge m onthly e m p lo y m ent /-----em ploym ent in 1953— \ June 1954 R atio o f from N u m b er each group June 19531 (in thousands) to total <4> (2) (3) 49,660 1.000 — 3.5 17,259 .348 — 3.1 — 0.2 844 .017 * 2,644 .053 4,224 10,533 2,025 5,486 6,645 .085 .212 .041 .110 .134 — 0.5 — 0.1 4-0 .1 • + 0 .1 P ercent change in A v era ge m onthly e m p lo y -— em ploym ent in 1953— ^ m ent June 1954 R atio o f from N um ber each group June 1953 (in thousands) to total (7) (5) (6) — 1.9 5725 1.000 1491 .260 — 3.5 — 3.4 77 .013 — 5.7 374 .065 — 3.8 — 1.5 + 1.3 + 0 .8 # 526 1313 237 712 995 .092 .230 .041 .124 .175 W eigh ted percen t change in e m p lo y m ent June 1954 from June 19531 (8) — 1.9 — 0.9 * — 0.4 — 0.3 — 0.3 + 0.1 + 0 .1 H yp o th e tica l situation T w elfth D istrict---------------W eigh ted p ercen t change in T w elfth e m p lo y D istrict m ent e m p lo y June 1954 m ent from ratios June 19532 (1 0 ) (9) (1 1 ) 1.000 — 2 .9 t — 8.8 .260 — 2.3 — 12.1 .013 — 0.2 * + 0.7 .065 U . S. percent change in e m p lo y m ent June 1954 from June 1953 — — + + + 5.4 0.6 3.3 0.4 0.6 .092 .230 .041 .124 .175 — 0.5 — 0.1 + 0.1 * + 0.1 *Less than one half of 1 percent. tTotal of component groups in the column. 1 The weighted employment change provides a measure of each industry’s contribution to the total employment change. It is derived by multiplying the percentage change in employment for each group by its ratio to total nonagricultural employment. The components may not add to total due to rounding. 2 The figures in this column were obtained by multiplying the percent changes in United States employment by the Twelfth District employment ratios. Source of basic data: The United States Department of Labor, Bureau of Labor Statistics and cooperating state agencies. D e ce m b e r 1954 M O N T H L Y REVIEW tion within major industry groups make a region more sensitive to some forces than to others. During the period under review, depressive forces affected types of produc tion in which the national economy is more specialized than the District economy. During other periods, how ever, economic forces have created instability in indi vidual industries that are relatively more important with in the District economy. Thus, the decline in aircraft pro duction and shipbuilding after World War II had a much more serious effect on this District than on the nation. From time to time national fluctuations in residential building have reduced activity in the lumber industry— which is important in this District— resulting in a more severe impact here than in the nation. While government employment is usually rather stable, Federal employment, which is very important in this District, can be quite un stable, particularly during periods of defense expansion or contraction. Even though manufacturing is less important here than nationally, there could be circumstances when the decline in the District would be greater because changes in demand for factory output would affect its industries more severely than those elsewhere. An examination of the industrial composition of the broad industry groups exhibited in Table 1, then, is vital for an understanding of the lesser decline in employment in the District than in the nation during this most recent recession. It is also vital in evaluating the question of relative stability at other times. Since manufacturing is the most important group of industries, it will be analyzed first. Depressing forces had a greater effect on individual national manufacturing industries than on those in the District Reduced Federal spending between June 1953 and June 1954 resulted in lower activity in a number of manufac turing lines which are located principally in areas outside this District. Contracts for ordnance, some types of ma chinery and vehicles, aircraft parts, some types of aircraft not manufactured in this District, and instruments were either reduced or canceled. The impact from these cuts affected the steel industry as well as the particular lines mentioned. The drop in consumer spending on goods after mid-1953 forced cuts in the production of consumer dur ables such as automobiles and home appliances. The ap parel and textile group also experienced a sharp drop in demand, and the textile industry was even more severely affected than apparel manufacturing. Inventory liquida tion by business firms hurt most manufacturing lines, but the durable lines were the hardest hit. In almost every case, the industries affected play a smaller role in the in dustrial structure of the District than in that of the nation. The degree of difference in the effect of these forces on the District and the nation is well illustrated in Table 2. Five national manufacturing lines— machinery, metals, transportation equipment, textiles and apparel,1 and ord 1 Several states in the Twelfth District report a combined employment figure for the textile and apparel industries thus making it necessary to combine these two industries for the District as a whole. Consequently, these two national indus tries have also been treated as one group. 157 nance— accounted for more than 80 percent of the decline in the nation’s manufacturing employment. Each of these individual industries, except transportation equipment, is more important nationally than in this District. The trans portation equipment industry, however, is a composite of the automobile, aircraft, and shipbuilding lines. The auto mobile industry accounted for all but a small portion of the decline in employment in the transportation equip ment industry. Nationally, the automobile industry em ploys 47 percent of transportation equipment workers, but in this District the automobile industry accounts for about 10 percent of the jobs in transportation equipment. The bulk of the transportation equipment workers in this Dis trict— 83 percent— are engaged in aircraft production. Stated in other terms, the decrease in the number of workers in the machinery, metals, transportation equip ment, textiles and apparel, and ordnance industries had the effect of reducing the nation’s total nonagricultural employment by 2.5 percent in the year ending June 1954, with all other sectors contributing the remaining 1 per cent decline. In the District, however, these five industries accounted for a drop of only one half of 1 percent in total nonagricultural employment. To some extent the declines in jobs in these industries were relatively less in this Dis trict, but their smaller importance here also contributed to the less severe impact on the District. Nationally these industries account for 20 percent of nonagricultural em ployment, compared with a little over 12 percent in the District. Most individual manufacturing industries fared better in the District than in the nation in terms of employment. Employment in the transportation equipment industry, as has already been indicated, held up much better in the District than in the country as a whole. National employ ment in this group of industries declined as a result of conditions in the automobile industry, while the aircraft industry is responsible for the increase in District employ ment in this industry group. The cutback in aircraft con tracts was relatively small and did not affect most District producers for some time. District aircraft employment expanded in the second half of 1953 and early 1954. Although it started to decline slightly in April 1954, Dis trict aircraft employment was still above its year ago level in June 1954. The ordnance, instrument, and machinery industries in the District also appear to have suffered less from defense contract cuts than their national counter parts. In the nondurable sector, employment in the textiles and apparel group declined less in the Far West than in the rest of the nation. This difference in behavior is ac counted for by the fact that the textile segment of this group, which suffered a severe decline nationally, is not large in the District and by the tendency of apparel manu facturing here to grow relative to the nation. The more favorable District behavior in other manu facturing lines reflects a variety of forces. Many industries did not experience so sharp a drop in the District as in the nation because of the less severe effect of the over-all changes in business activity on the District economy. A 158 D e c e m b e r 1954 FEDERAL RESERVE B A N K OF S A N FRANCISCO continued higher rate of population growth in the District than in the nation, owing in large part to in-migration, also contributed some sustaining forces. Variation in items produced within the same industry category also was a factor. For example, national steel production was more depressed by the drop in demand for automobiles than District steel production which provides a relatively minor amount of the steel products used in the District automobile industry. Also, the national machinery indus try has a higher proportion of its facilities devoted to the output of such goods as machine tools, household durable goods, and agricultural machinery than the District ma chinery industry. These types of machinery production have been particularly hard hit by the economic decline. In addition, inventory reduction was concentrated more in items not so important in the West as in the nation. A few District manufacturing industries such as furni ture, food, chemicals, and lumber did not do so well as their national counterparts. Because of the greater im portance of the lumber industry here than in the nation and the slightly sharper decline in District lumber em ployment, the lumber industry had a greater depressing effect on total nonagricultural employment in the District than in the country as a whole. Outside of manufacturing, individual industries in other groups behave differently in the District than in the nation The lesser importance of the industry groups in this District which were affected by recessionary forces ex plains in part the milder decline in total nonagricultural employment in this District. In addition, most industry groups did not experience so sharp a decline in employ ment in the District as in the nation. A good example is the mining sector in which employment declined 12.1 per cent in the country as a whole but only 3.4 percent in the District. This difference results primarily from the much greater importance of coal mining on the national scene. A large part of coal production finds its way into indus trial uses. The drop in steel production and the cutback of production in other coal-using industries as well as the long-run downward trend in the use of coal resulted in a very sharp drop in employment. Metal mining and oil field drilling, which account for most of the mining employ ment in the Twelfth District, declined much less than coal production. In the public utilities field the District also had a smaller decline than the country as a whole. In this case a sharper decline in transportation employment in the nation than in the District accounts for most of the difference. The greater cut in transportation employment nationally re flected the more severe decline in manufacturing and min ing in the nation than in this District. Manufacturing and mining generate a large part of freight traffic in certain districts of the country, and transportation employment tends to respond to fluctuations in industrial output and mining. The trends in industrial sector employment were not always in favor of the District, however. Construction employment declined in the District in contrast to a small rise nationally.1 Greater cuts in Federal construction awards here than nationally and less favorable results in JOn the basis of current published figures, the decline in District construction employment from June 1953 to June 1954 was 5.7 percent. However, preliminary revised state data suggest that the year-to-year decline in District construction employment may have been of smaller magnitude. T a b l e 2 R elative I m pact of R ecession on M a n u f a c t u r in g E m p l o y m e n t T w e l f t h D istrict a n d U nited S tates --------------------------United States------------------------------------------% Average monthly Weighted Percent percent change ,t------------employment in 1953----------- ^ change in Ratio of each in employment * group to total employment June 1954 nonagriJune 1954 from Number cultural from June 19531 (in thousands) employment June 1953 M a n u fa ctu rin g ................. Durable g o o d s ............ Ordnance ................. L u m b e r ...................... Furniture ................. Stone, clay, and glass ........................ .. . M a c h in e ry ................. . . Transportation eq u ip m e n t............ . . M iscella n eou s.......... . . Nondurable goods . . . Food ........................... Textile and apparel . . Paper ........................ . . Printing ................... . . . Percent change in employment June 1954 from June 1953 17,259 10,129 243 775 374 .348 .204 .005 .016 .008 — — — — — — 7.4 — 12.0 — 11.6 543 2,474 2,932 .011 .050 .059 — 0.1 — 0.6 — 0.7 — — — — 12.5 1,955 333 500 7,131 1,555 2,419 530 793 806 260 278 386 104 .039 .007 .010 — 0.5 — 0.1 — 0.1 .144 .031 .049 .011 .016 .016 .005 .006 .008 .002 — 0.7 — 0.1 — '0.5 * # + + — — — — + + — + — — — . . — 11.4 . . — 32.9 . . — 5.1 — '11.5 — 8.8 — 1.6 — 9.9 — 1.2 + 1.8 — 3.7 Rubber ...................... , , — 10.2 L e a t h e r ...................... M iscella n eou s.......... . . — 1.1 3.1 23 0.2 0.1 0.1 / ------------------------------ — 0.1 * — 0.1 — 0.1 * — 3.5 — 4.3 — 10.0 — 6.2 — •12.1 ■Twelfth District— Average monthly / ---------- employment in 1953---------- N Ratio of each group to total nonagriNumber cultural (in thousands) employment Weighted percent change in employment June 1954 from June 1953» 1491 987 13 213 32 .260 .172 .002 .037 .006 — 0.2 — 0.1 5.9 8.5 6.6 41 162 158 .007 .028 .028 — 0.2 — 0.2 1.4 3.6 2.6 2.0 2.9 6.3 0.7 2.3 4.1 1.4 1.2 4.6 1.0 306 14 48 504 200 72 40 70 37 37 17 6 26 .053 .002 .008 .088 .035 .013 .007 .012 .006 .006 .003 .001 .004 — 0.9 — 0.7 * • + 0.1 * * — 0.2 — 0.1 — 0.1 * * * * * * *Less than one half of 1 percent. 1 The weighted employment change provides a measure of each industry’s contribution to the total employment change. It is derived by multiplying the percentage change in employment for each group by its ratio to total nonagricultural employment. The components may not add to total due to rounding. Source of basic data: The United States Department of Labor, Bureau of Labor Statistics and cooperating state agencies. D e ce m b e r 1954 M O N T H L Y REVIEW residential construction in the District contributed sub stantially to the difference in behavior. The District also did not fare so well as the nation in trade, finance, and government employment. The reduction in Federal Gov ernment civilian personnel has been sharper in the Dis trict than in the country as a whole. The sharper decline in District Federal Government employment since the end of the Korean fighting reflects the reduction of activity at military establishments, which are heavily concentrated in this area, and the cutback in many Federal civilian agen cies, which are relatively more important as employers here than in the nation. Stability: District compared with the nation During the year under review, the structure of the Dis trict’s economy in relation to the forces making for decline contributed to the greater stability here than in the nation. In the discussion of structure it was pointed out that the major industry groups experiencing the sharpest cuts in demand were much more important nationally than in this area. Furthermore, most District industrial sectors had relatively smaller job losses than comparable national groups because of such factors as the internal composition of particular industries, much smaller cuts in defense orders in this area, the smaller importance here than na tionally of items in which inventory reduction was great est, and the effect of continued rapid population growth. Among the various factors, the most important one appears to be the nature of the decline in demand. The changes in the demand for goods either affected indus tries that are relatively more important in other areas or hurt such industries less in this District than in the rest of the country. Nevertheless, it is possible that a set of circumstances could develop which would cause a more intense reaction of nonagricultural employment here than elsewhere. The post-World War II change in demand is one good ex ample, and the greater growth of employment here than in the country as a whole after June 1950 is another illus tration. In the latter case, increases in the demand for the products of the aircraft and lumber industries, which are more important here than nationally, and the stimulation of Federal activity and of some of the newer District industries resulted in a more rapid rise in employment in this area than in the country as a whole. If the demand for military aircraft were to drop substantially, as oc curred immediately after World War II, the impact would be much more severe in the District than in the nation. In general, any development affecting the demand for lumber is likely to have a greater effect upon employment in the District. Similarly, a decline in the demand for canned and frozen food products would also hurt the Dis trict more than the nation. Outside the manufacturing sphere, there are a number of fields of activity in which the District is more sensitive to depressive forces at times than the nation. Employment 159 in construction is relatively more important here than in the nation. For some years the District has had a much higher proportion of national construction activity than might be expected on the basis of population or income because of the very rapid population growth in the Far West since 1940. This population growth has created a backlog of demand for housing, public structures, factor ies, and commercial structures. Conceivably this backlog may be reduced at some time to a level which will bring the demand for structures relative to population and in come here more in line with the ratios for the nation. Fur thermore, Federal construction, which has been very im portant in this region, tends to be exceedingly unstable at times. If and when these changes occur, the construc tion industry may fare less well in the District than in the country as a whole. Some of these forces may have oper ated in the period under review, since District construc tion employment declined between June 1953 and June 1954 in contrast to a small rise nationally. Government employment is another sphere that may behave less fav orably in the District, as illustrated during this recession. This District has had a rather large proportion of Fed eral employment because of the great number of military installations and regional civilian agencies located in the Far West. Since the end of the Korean conflict the cut in Federal employment has had a more severe impact on the District than on the nation, although an offset has ap peared in the continued rapid growth of state and local government employment. Other factors need to be given some consideration. Among them, the duration and intensity of changes in economic activity may have an important bearing on how nonagricultural employment in this District or in any other area might behave relative to the nation. It is not uncommon to find geographic areas within the nation whose change in activity is milder or more severe than that nationally. Differences in structure, rates of growth, specialization within individual industries, and occasion ally special circumstances moderate or intensify the re action of a particular section to forces affecting the nation. The larger and more lasting the national change, how ever, the more will the experience of any region resemble that of the nation. Generally speaking, the industrial structure in the Twelfth District provides a stable base under some condi tions, but contains characteristics which could lead to in stability under other circumstances. It would not be safe to conclude, therefore, that employment in the District can always be expected to be more stable than in the nation. NOTICE: A pamphlet entitled “ Distribution of Bank Deposits by Counties and Standard Metropolitan Areas— June 30, 1954,” pub lished by the Board of Governors of the Federal Reserve System, is available without charge upon request to this bank. 160 FEDERAL RESERVE B A N K OF S A N FRAN CISCO D e c e m b e r 1954 B U S IN E S S IN D E X E S — T W E L F T H D IS T R IC T 1 (1947-49 average=100) In d u s t r ia l p ro d u c tio n (p h y sic a l vo lu m e )* ■ oar and m o n th Lum ber 1929 1931 1933 1935 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 80 42 34 45 61 48 60 65 77 77 74 74 61 80 94 102 104 116 115 111 119 87 57 52 62 71 75 67 67 69 74 85 93 97 94 100 101 99 98 106 107 109 78 55 50 56 65 64 63 63 68 71 83 93 98 91 98 100 103 103 112 116 123 114 115 114 109 110 109 122 122 119 120 124 103 80 89 113r 127 109 109 108 107 107 107 106 104 105 104 Pe trole u m * C r u d e R e fin e d C e m e n t W heat flour* T o ta l C ar non agri T o t a l D e p 't m f ’g c u ltu ra l lo a d in g s store sale s E le c t r ic e m p lo y e m p lo y ( n u m power ber)* (value)* m ent m e n t4 Lead* Copper* 54 36 27 33 56 45 56 61 81 96 79 63 65 81 96 104 100 112 128 124 130 165 100 72 86 114 92 93 108 109 114 100 90 78 70 94 105 101 109 89 86 74 105 49 17 37 88 58 80 94 107 123 125 112 90 71 106 101 93 115 115 112 111 90 86 75 87 84 81 91 87 87 88 98 101 112 108 113 98 88 86 95 96 96 29 29 26 30 38 36 40 43 49 60 76 82 78 78 90 101 108 119 136 144 161 125 121 125 137 128 120 69 69 67 112 112 104 99 98 96 121 120 118 119 123 119 118 115 121 116 114 117 116 134 143 140 143 137 138 143 60 79 76 71 67 69 63 72 69r 69V 107 102 99 98 103 105 91 75 97 110p 99 97 98 96 96 96 92 101 108r 105 R e ta il fo o d prices >» i W a te rb o rn e fo re ig n tra d e 1» • E x p o r t s Im p o r t s 30 25 18 24 80 28 31 33 40 49 59 65 72 91 99 104 98 105 109 114 116 64 50 42 48 50 48 47 47 52 63 69 68 70 80 96 103 100 100 113 115 113 190 138 110 135 170 164 163 132 124 80 72 109 119 87 95 101 101 96 95 99 102 99 103 111 118 122 '*4 7 60 51 55 63 83 121 164 158 122 97 100 102 97 105 122 132 139 102 68 52 66 81 72 77 82 95 102 99 105 100 101 106 100 94 97 100 101 100 *89 129 86 85 91 186 171 140 *57 81 98 121 137 157 200 308 163 157 158 122 121 121 141 137 138 95 97 102 111 112 109 114 113 113 133 139 141 316 287 250 163 160 171 168 174 183 179 174 174 176 121 121 120 120 120 120 119 119 120 120 138 137 136 136 136 137 131 130 136 138 93 90 94 99 97 96 88 90 97 101 109 107 111 111 114 114 115 115 110 116 114 114 113 113 114 114 113 113 113 113 108 156 156 157 158 141 144r 96 210 271 233 232 271 237 331 282 261 .... ...» .... .... . ... .... .... 'ÌÓÓ .... 1953 Ootober November December 1954 January February March April May June July August September October B A N K IN G A N D C R E D IT S T A T IS T IC S — T W E L F T H D IS T R IC T (amounts in millions of dollars) C o n d itio n Ite m s o f a ll m e m b e r b a n k s 7 T 09" and m o n th U .S. Loans G o v ’t and d is c o u n t s s e c u r it ie s 1929 1931 1933 1935 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 495 547 720 1,275 1,270 1,323 1,450 1,482 1,738 3,630 6,235 8,263 10,450 8,426 7,247 6,366 7,016 6,415 6,463 6,619 6,639 1,234 984 951 1,389 1,740 1,781 1,983 2,390 2,893 4,356 5,998 6,950 8,203 8,821 8,922 8,655 8,536 9,254 9,937 10,520 10,515 1,790 1,727 1,609 2,064 2,187 2,221 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 6,087 6,255 6,302 6,777 7,502 7,997 9,248 9,220 6,693 6,639 10,255 10,515 7,815 7,997 9,198 9,176 9,106 9,045 9,001 9,049 8,989 8,977 9,054 9,048 9,343 6,844 6,667 6,500 6,903 6,991 6,981 7,190 7,574 7,610 8,014 8,089 10,540 10,138 9,922 10,190 10,045 10,087 10,310 10,257 10,463 10,749 10,937 7,995 8,071 8,175 8,234 8,306 8,428 8,444 8,501 8,555 8,651 8,596 1954 January February March April May June July August September October November T otal tim e d e p osits 2,239 1,898 1,486 1,537 1,871 1,869 1,967 2,130 2,451 2,170 2,106 2,254 2,663 4,068 5,358 6,032 5,925 7,093 7,866 8,839 9,220 1953 November December Dem and d e p osits a d justed* Bank rate s on short-term b u sin e ss lo a n s* M e m b e r b a n k reserves a n d related It e m s 10 Reserve bank c re d it11 _ + C o in a n d C o m m e rc ia l T r e a su ry c u rre n cy in o p e ra tio n s12 o p e ra tio n s12 c ir c u la t io n 11 ’ 3.20 * 3.35 3.66 3.95 4.14 34 21 2 2 + 1 — 3 2 + 2 + 4 + 107 + + 214 98 + 76 9 + — 302 17 + 13 + 39 + — 21 7 + 14 0 154 110 163 90 - 240 192 148 596 -1,9 80 -3,751 -3,534 -3,743 -1,607 - 510 + 472 - 930 -1,141 -1,582 -1,912 -3,073 + 23 + 154 + 150 4- 219 + 157 + 276 + 245 + 420 +1,000 4-2,826 4*4,486 4-4,483 4-4,682 +1,329 + 698 - 482 + 378 +1,198 +1,983 +2,265 +3,158 — 137 50 + - - + 4.19 4.12 .......... 4.14 4.08 1 + 98 + — 125 5 + 9 + + — + + 21 29 18 16 9 1 + - 149 432 308 245 213 324 148 254 307 28 170 138 244 + + + + + + + + + + + + + + + + + + + + + — — — — + + + Reserves B a n k d e b its 1ndex 31 cities** » (1947-49» 100)* 6 48 18 14 3 20 31 96 227 643 708 789 545 326 206 209 65 14 189 132 39 175 147 185 287 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 2,202 2,420 1,924 2,026 2,269 2,514 2,551 42 28 18 25 32 29 30 32 39 48 60 66 72 86 95 103 102 115 132 140 150 330 438 + 23 26 2,476 2,551 149 158 125 80 315 381 136 277 170 12 196 142 342 — 86 2 29 7 36 15 3 7 8 23 27 2,468 2,398 2,413 2,477 2,432 2,413 2,308 2,317 2,368 2,364 2,440 146 153 158 150 143 157 145 154 152 150 158 — — + + + + + + + 1 Adjusted for seasonal variation, except where indicated. Except for department store statistics, all indexes are based upon data from outside sources, as follows: lumber, various lumber trade associations; petroleum, cement, copper, and lead, U.S. Bureau of Mines; wheat flour, U.S. Bureau of the Census; electrio power, Federal Power Commission; nonagricultural and manufacturing employment, U.S. Bureau of Labor Statistics and cooperating state agencies; retail food prices, U.S. Bureau of Labor Statistics; carloadings, various railroads and railroad associations; and foreign trade, U.S. Bureau of the Census. * Daily average. * Not adjusted for seasonal variation. 4 Excludes fish, fruit, and vegetable canning. 1 Los Angeles, San Francisco, and Seattle indexes combined. • Commercial cargo only, in physical volume, for Los Angeles, San Francisco, San Diego, Oregon, and Washington customs districts; starting with July 1950, “special category” exports are excluded because of security reasons. TAnnual figures are as of end of year, monthly figures as of last Wednesday in month or, where applicable, as of call report date. • Demand deposits, excluding interbank and U.S. Gov’t deposits, less cash items in process of collection. Monthly data partly estimated. • Average rates on loans made in five major cities during the first 15 days of the month. 10 End of year and end of month figures. 11Changes from end of previous month or year. 12 Minus sign indicates flow of funds out of the District in the case of commercial operations, and excess of receipts over disbursements in the case of Treasury operations. 11Debits to total deposits except interbank prior to 1942. Debits to demand deposits except Federal Government and interbank deposits from 1942. p— Preliminary. r— Revised.
@FedFRASER