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Business Review - Social SecurityBenefits Continue to Rise, But So Do Revenue Needs District AgricultureExpansion in Beef Cattle Leads Advance in 1971 December 1971 ---.~ This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Social Security- Benefits Continue to Rise, But So Do Revenue Needs Social Security is now firmly implanted as an institutional feature of the American fiscal and political structure. With more than 26 lllillion people drawing benefits under the program, it provides one of the primary means of supPort for a group almost 30 percent as large as the civilian labor force. . Last June, these recipientsretired workers and their wives, Widows and widowers, and disabled workers and dependent ~hildren-received a 10-percent Increase in benefits, retroactive to ~anuary 1. The increase, the fourth SInce 1965, added about $3.6 billion to the annual flow of transfer Payments under Social Security. Revenue to finance the increase ~as raised through another boost In payroll taxes. The tax rate has been raised six times since 1961, and the amount of maximum earnings subject to Social Security taxes has been raised twice. liow the system works The Social Security system is a C~lllbination of old-age, survivors', dIsability, and health insuranceoften referred to as OASDHI. ProViding only old-age retirement benefits when it was established . In 1935, the system has since been greatly expanded in both the types of Workers covered and the bene~ts provided. Benefits were added or dependents and survivors in 1939, disabled workers in 1956, and dependents of disabled workers in 1958. Health insurance for ?ld people (Medicare) was added In 1965. Originally conceived as an insurance program, with individual Contributions treated as premiums that would be invested to build up nUsiness Review / December 1971 equity for eventual payment of benefits, Social Security has long since developed into a program of taxation and expenditure for the redistribution of income from the working population to the retired and disabled and their dependent survivors. Where a sizable surplus was accumulated ·in the early years of the program and invested in Government securities, the program now operates on a pay-asyou-go basis-with current benefits paid from current revenues. Although a large trust fund is still maintained as a backup to the program and this fund continues to grow, it would no longer be enough to pay benefits at current rates for more than about a year. A worker becomes eligible for protection merely by taking employment covered by Social Security. Nine out of ten jobs are covered. In most cases, coverage is compulsory, with workers paying taxes out of their wages (or selfemployment income) up to an annual maximum set by law (currently, a wage of $7,800) and employers matching the contributions of their employees. Although there are maximum and minimum payment levels, monthly cash benefits to workers and their dependents (or sur- vivors) are based generally on a ~orker's earnings over the years of ~lS covered employment. For prac- tICally all workers claiming retirement benefits, covered earnings are averaged for the years from 1950 through the year before the worker reaches retirement age, which is ordinarily 65 for men and 62 for women. The worker's five years of lowest earnings are dropped before his average monthly earnings are computed. A man receives the maximum benefit for his average earnings when he retires at age 65. If he retires earlier, his benefit is reduced five-ninths of a percent for every month he receives retirement benefits before age 65. If he retires at 62 (the earliest age for claiming retirement benefits), payments amount to only 80 percent of his maximum potential benefits. Wives usually receive benefits amounting to 50 percent of the benefits their husbands receive. Beginning at age 62, widows receive 82.5 percent. The program is supported by a tax on earnings (mostly wages and salaries), but not on total income. Fringe benefits and such nonwage sources of personal income as dividends, rents, and interest are not taxed. As a result, the $504 billion in wages earned in covered FINANCIAL STATUS OF SOCIAL SECURITY PROGRAMS1 (Million doll ars) Item Total receipts· .. . . .. .. .. Total expenditures' ...... Accumulated trust funds .. 1950 1955 $2,367 784 12,893 $5,525 4,427 21,141 FIscal years 1960 $11,394 11 ,606 22,996 1965 1970 $17,681 17,456 22,187 $41,740 35,228 40,397 1. Includes old-age and survIvors' Insurance for all years, dIsabilIty Insurance sInce 1956, and health Insurance sInce 1965 2. Includes payroll taxes, Interest earned from trust fund assets, and transfers from general revenue 3. Includes cash benefits, rehabilitatIon servIces, payments for servIces, and admInIstrative expenses SOURCE: SocIal Security Admlnlstral/on 1 employment in 1969 (the latest year for which data are available) made up slightly less than 68 percent of personal income that year. Also, not all earnings in covered employment are taxed-only those up to the maximum wage and salary base. Earnings subject to the Social Security tax amounted to only 80 percent of total earnings in covered employment in 1969. The benefit side Increases in retirement and disability benefits in recent years have been substantial-for every level of earnings. Through amendments to the Social Security Act, the whole scale of benefits was raised in 1965, 1967 (effective in 1968), 1969 (effective in 1970), and 1971. As a result, workers earning average monthly incomes between $100 and $400 are eligible for" about 53 percent more benefits than ten years ago. The minimum benefit a worker can receive (based currently on average earnings of less than $76 a month) has increased 76 percent. The maximum has increased 172 percent. The increase in the maximum benefit reflects more than acrossthe-board boosts in payments. Amendments in 1965 and 1967 also increased the amount of earnings subject to the Social Security tax, allowing the increase to be included in the determination of average covered earnings. Up through 1965, the maximum single benefit, $127 a month, went to workers with covered earnings averaging $400 a month. But the amendment that Amendments raise Social Security payments and increase amount of earnings covered MONTHLY BENEFITS $280--------------------------------------------~---- 230------------------------------------ 180 ------------------------ 130 ------------- 80=~~ 30~I-----rI----~I----~I------I~----TI----~I------r1 o $100 $200 $300 $400 $500 AVERAGE MONTHLY COVERED EARNINGS SOURCE: Social Security Administration 2 $600 $700 year raised maximum taxable earnings to $550 a month, boosting maximum benefits for that average level of earnings to $168. The amendment in 1967 raised maximum taxable earnings to $650 and maximum benefits to $218. Although still based on average covered earnings of $650 a month, the maximum benefit is now $275.80. And next year, when maximum taxable earnings are scheduled to rise to $750 a month, maximum benefits will move up to $295.40. Increases in maximum benefits tied to higher levels of earnings do not, of course, affect the benefits of workers already retired. Their benefits are based on earnings during their working years. MainlY, the increases affect younger work- SOCIAL SECURITY TAXES ers. By the time they retire, they have qualified for benefits based on Maximum annual l ax Tax ral e higher average levels of earnings. Employer Employer· employee Tax Selfand With the increases of recent Selfbase Period Each Combined employe d employee employed years-both from the upward ad$4,800 3.0% 1961 .. . . ... 6.0% 4.5% $144.00 Justment in benefits and from new $216.00 4,800 3.125 1962 . . . . 6.25 4.7 150.00 225.60 recipients qualifying for higher 4,800 3.625 1963-65 . .. . 7.25 5.4 174.00 259.20 benefits on the basis of higher 6,600 4.2 8.4 1966 . . . . . . . 6.15 277.20 405.90 6,600 4.4 8.8 1967 .... . . . 6.4 earnings-average monthly pay290.40 422.40 7,800 4.4 8.8 1968 . . . . . . . 6.4 343.20 ments to retired workers (the 499.20 7,800 4.8 9.6 1969-70 .... 6.9 374.40 538.20 largest group of Social Security 7,800 5.2 10.4 7.5 1971 405.60 585.00 recipients) have been pushed up9,000 5.2 10.4 7.5 1972' .. . . . . 468.00 675.00 1 ward. Where benefits to retired 1. Schedul ed to go Into effecl on January 1 ~orkers averaged $75.65 a month SOURCES : Social Security Admini stration Federal Reserve Bank of Dallas In 1961, they averaged $118.10 in 1970. And the increase in benefits increase has been from 6.0 percent in 1971 brought average payments sistent inflation. Even with periodic increases in Social Security to lOA percent. The rate for selfto about $131. The total increase employed workers increased from since 1961-a rise of mqre than $55 benefits, recipients are totally dependent on legislation to adjust 4.5 percent to 7.5 percent. The a month-represents a compound the benefit scale to changes in price latest increases were in January annual rate of growth of nearly 6 1971, when the employer-employee levels. percent. rate went up from 4.8 percent and These increases brought a The revenue side the self-employed rate went up worker that retired (or was disfrom 6.9 percent. To keep the program on a pay-asabled) in the early 1960's with The tax rate applied only to the you-go basis, revenues flowing into average covered·earnings of $300 first $4,800 of annual earnings in the system have had to be in~ month an increase of 53 percent creased as benefits were raised. The 1961, but the tax base was raised In current-dollar benefits-an adto $6,600 in 1966 and $7,800 in vance from $105 a month ten years additional revenue has come pri1968. Existing legislation calls for marily from changes in the tax ago to $160.90 today. But in real the base to rise to $9,000 in Janbase and tax rate. The amount of purchasing power, this worker's uary 1972, although with current maximum earnings on which the Increase amounted to only 13 Government attitudes, this inSocial Security tax is paid was percent ($15.35 at mid-1971) . In crease may be postponed. raised 62 percent between 1965 fact, measured in 1967 dollars, With the increases already in and 1971, while the tax rate was " rea I" b enefits through 1969 actueffect, the maximum liability of raised about 70 percent. ally declined $1.43. For this covered workers has climbed Revenues have also increased Worker, all the increase in real steadily. Employers and employees with expansion in the number of bUYing power was achieved in the workers covered by Social Security, were each subject to a maximum of pa~t two years. Advancing prices $144 ~ year in Social Security but since most major working ~UICkly wiped out the gains made taxes III 1961,. By 1967, this liagroups are already covered, the In 1965 and 1968. And further bility had more than doubled increase from this source has been pr~ce increases could wipe out the reaching $290.40. In 1971 th~ fairly modest. In recent years, in gaInS made in 1970 and 1971. . ' maX Imum climbed to $405.60-an fact, the number of workers covThis, of course, points up the increase of 181 percent since 1961 ered has increased only about in problems of retired people in genAnd if the base is raised in J an- . line with growth in the labor force. eral. Living on fixed incomesuary, the maximum tax liability Six increases since 1961 have Whether from pensions, annuities, brought the tax rate from 3 percent will reach $468 next year. or earnings from capital-they face Where self-employed workers of basic earnings to 5.2 percent. drastic reductions in real income covered by Social Security were As this rate must be paid by both and value of accumulated wealth liable for a maximum annual tax employer and employee, the total when forced to contend with per- -- 1. The gap between average benefi ts received by men a nd women has narrowed. Where benefits ~o men were 87 percent higher t han those to women in 1961, t hey w ere 29 percent higher in 1970. The shift, however, has r esulted not from cha nges In t he p rogl'8m but from women remuining in t he labor force longer and Qua lifying for higher-payinll' jobs. Busmess Review / . December 1971 3 Buying power of Social Security benefits eventually outpaces growth in real wages 1961=100 130------------------------------------------------------- 125-----------------------------------------------/ t! 120----------------------------------------------- ~ 115---------------------------------------------110------------------___- - - - - - - - - - / 105 -----------:::..",~------- -""w:::--------- , -----------------100-- - - - -________~~-----------------------------RETIREMENT BENEFITS 95~----rl--~I--~~--r---~I----~I--~I--~I----TI--~1 '61 Year 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 '62 '63 '64 '65 Average monthly retirement benefits Current Constant dollars dollars1 $75.65 76.19 76.88 77.87 83.92 84.35 85.37 98.86 100.40 118.10 131.00e $84.43 84.09 83.84 83.82 88.80 86.78 85.37 94.88 91.44 101.55 107.90e '66 '67 '68 '69 '70 Average weekly earnings of private nonagricultural workers Manufacturing workers All workers Current Current Constant Constant dollars dollars1 dollars dollars1 $82.60 85.91 88.46 91 .33 95.06 98.82 101.84 107.73 114.61 119.46 ' 127.57 $92.19 94.82 96.47 98.31 100.59 101.67 101.84 103.39 104.38 102.71 2105.00 $92.34 96.56 99.63 102.97 107.53 112.34 114.90 122.51 129.51 133.73 ' 143.51 $103.06 106.58 108.65 11 0. 84 113.79 115.58 114.90 117.57 117.95 114.99 2118.12 1. Adju sted to 1967 consumer prices 2. June figure e-Estlmated NOTE : Retirement beneflls based on Social Security payments to single workers retiring at age 65. Earn ings of workers based on wages of nonsupervlsory production workers. SOURCES : Bureau of Labor Statistics Social Security Administration Federal Reserve Bank of Dallas 4 '71 of $216 in 1961, they were liable for a maximum of $585 in 1971. And their tax is scheduled to reach $675 in 1972. While much of the tax increase has been needed to finance general increases in benefits, other factors have also been at work. Benefits have been extended to some workers that had not contributed significantly to the program. In the midsixties, for example, a special monthly retirement benefit was provided for people at least 72 years old and not otherwise qualified for Social Security benefits. Also, with the creation of health insurance in the form of Medicare, a whole new area of coverage was added, requiring still more revenue so that coverage could be extended to retired people immediately. The matter of adequacy Despite the increases in Social Security benefits since the midsixties, there may still be some doubt about the adequacy of benefits to meet current living costs. The level of income considered adequate for people that do not work and must rely, even partly, on Social Security benefits has never been determined. And without such a standard, it is hard to say how close these benefits come to meeting the needs of the retired and disabled workers. But since Social Security benefits are broadly viewed as a means of partially compensating for the wages a worker loses when he retires or becomes disabled, the success of the program can be partially checked by comparing trends in benefits with trends in earnings of workers. In real purchasing power, average Social Security benefits have increased more than earnings of private nonagricultural workers since the early 1960's. Compared with an increase of 27 percent in monthly Social Security benefits through mid-1971, real average weekly earnings of production workers had increased about 14 percent. There were marked differences in the timing of these advances, however. Most of the increase in real average earnings was made between 1961 and 1966, when consumer prices were not rising rapidly and most of the currentdollar wage increases represented real income gains. By contrast, real average Social Security retirement benefits rose only slightly during that time, lagging well behind gains in the purchasing power of average wages. Business Review I December 1971 But increases in Social Security benefits after 1967 pushed up the real value of Social Security payments at a time when real wages were growing slowly. Real wages, in fact, declined during the recession of 1970-a year of sharp boosts in Social Security benefits. And benefits were boosted again this year, even though real wages were advancing only slowly. New developments possible Although most of the original features of Social Security are still recognizable, changes have been extensive in recent years-so much so, in fact, that proposals for further change in one form or another have become regular items on the congressional calendar. Congress is currently considering a range of further modifications in the program-several of which could be enacted in the next few years. One proposal increases the minimum benefit for qualified workers from $70.40 a month to $100. An estimated third of all Social Security recipients now receive less than $100 a month. Another proposal increases the amount recipients can eru:n from part-time jobs without losmg benefits. Earnings up to $1,680 a year are now allowed. Another cuts the reduction in benefits men must take when retiring before age 65. And still another ties benefits to increases in the consumer price index. This last change, proposed as a means of maintaining the real income of recipients, would be similar to the cost-of-living escalation clauses in some collective bargaining contracts. A corresponding change has also been proposed f0r the maximum salary base on which Social Security taxes are collected. With tax increases also tied to increases in consumer prices, new revenues could be generated to pay for the cost-of-living increases in benefits. But even if none of these changes is enacted soon, developments of the past decade clearly indicate an uptrend in both benefits and taxes -a trend very apt to continue in the years ahead. -Leonard G. Bower 5 District Agriculture- Expansion in Beef Cattle Leads Advance in 1971 Agricultural production in states of the Eleventh Federal Reserve District continued to advance in 1971-despite the drouth. Although lack of moisture in the first half of the year slowed crop production, total agricultural output from these five southwestern statesLouisiana, Texas, Oklahoma, New Mexico, and Arizona-rose with the increase in livestock production. Although milk and pork production made sizable contributions to the advance, most of the gain was in cattle, especially fed cattle. Feeding margins-the spread between the selling price for finished animals and the buying price for feeder calves-improved sharply this year, giving new impetus to the cattle feeding industry in the Southwest. After the high costs of feeders and capital slowed growth of the industry last year, cattle feeding has expanded rapidly in the District's four main cattle feeding states. By midyear, Texas had replaced Iowa as the nation's number one cattle feeding state. And with nearly 2.5 million head on feed in Texas, Oklahoma, New Mexico, and Arizona, these four states accounted for nearly a fourth of the cattle on feed in the 23 major feeding states. Drouth conditions in the first half of the year led to sharp setbacks in the production of winter Wheat, oats, barley, and rye crops. But with improvements in moisture conditions after midyear helping boost production of cotton, rice, and several minor crops, estimates are for total crop production in the five states to be about 5 percent below that in 1970. 6 Cattle on feed in Southwest boosted by growth in Texas MILLION HEAD 3 ------------ 2------------ 1 ----------------------- o I 1970 1971 SOURCE: U.s. Department of Agriculture With the rise in total agricultural production, gross farm income in these states probably advanced in 1971. But with the rise in production costs, net farm income probably changed very little. A strong demand for grain and cotton combined with a reduction in stocks to raise the index of prices farmers in the Southwest received for their crops. And with the continued growth in demand for beef, prices received for beef cattle held up very well, even in the face of expanding produc- tion. The same was true for milk prices. Because of large supplies, however, prices of most other livestock and livestock products, including poultry, dropped below levels of a year before. Crop production off With the cotton crop in these states expected to total 4.6 million bales, prospects are for the District's most important crop to be only 2 percent larger than last year. If realized, this will be the largest cotton crop since 1968, when the harvest reached 5.2 million bales. The increase is due mainly to a gain in average lint . yield. Acreage for harvest is about the same as last year, but the harvest has been improved by the shifting of some cotton acreage to the District's more productive areas. In Texas, below-average yields in some dryland areas will probably be more than offset by above-average yields in irrigated areas in the western part of the state. Although the grain sorghum acreage for harvest is 5 percent greater than last year, drouth in the early part of this year has cut yields in some areas, leaving the expected crop at 383 million bushels-only slightly less than in 1970 and well below the record of 409 million bushels set in 1967. Compared with 1970, the winter wheat crop dropped about a third. With a reduction in harvested acreage and a,drop in yield, this year's crop of 115 million bushels was only slightly more than half as large as the 1969 crop. Much of the loss in Texas was due to extremely dry weather during the planting and growing seasons. Drouth in first half of year reduces winter wheat and small-grain harvests, cutting Southwest ' s total crop production PERCENT CHANGE , 1971 FROM 1970 PEANUTS SORGHUM GRAIN WINTER WHEAT OATS RICE I -80 I -60 -40 I -20 I o I 20 I 40 I 60 I 80 1971 indicated November1 SOURCE: U.S. Department of A9,riculture Rice acreage in Louisiana and Texas is about the same as last year, but prospects are for a ~oderately larger crop. Most of the ll1crease comes from the sharp gain in average yield in Texasprobably about 5,000 pounds per acre, compared with 4,450 pounds last year. In Louisiana, the average yield was expected to ease downward from 3,900 pounds per acre last year to 3,850 this year. Prospects for most minor crops are mixed. The outlook is for production of corn, peanuts, pecans, and soybeans to show gains over last year. Production of hay is expected to be near last year's crop. And smaller'crops are Seen for oats, barley, rye, flaxseed, and potatoes. Citrus crops in Texas and Arizona are ex~ected to total 21.6 million boxes this season, or about 3 percent fewer than in 1970. The outlook in Arizona is for the orange crop to be down sharply and Business Review I December 1971 In response to the growth in urban population, milk production in these states increased 4 percent this year. . But while growth in beef production was greater than in 1970 the increase was due mainly to the Livestock production up greater utilization of existing Expanded cattle production in the feedlots. The increase in number five states will help boost livestock of feedlots-a trend that has production 7 percent above its level characterized livestock developments in the Southwest for several in 1970-a significant gain, since livestock accounts for more than 60 years-apparently slowed. In Texas ' for example, 98 percent of the percent of the agriculture of the cattle on feed were in 195 lots with Southwest. Cattle in these states average capacities of nearly 11,500 numbered more than 22 million head. On average, these lots were head at the beginning of the year, operating at only 70 percent of compared with 21.6 million a year before. And by the end of 1971, the capacity, indicating substantial increases in beef production could number is expected to increase be handled without increases in another half million. Most of this advance has been in feedlot capacities. Many cattle operations were beef herds, which have been exhindered, of course, by the drouth panded to meet the increased which encouraged early placement demand for feeder calves in the of calves into feedlots and exten.District. But there has also been sive culling of herds. The situation a slight increase in dairy herds. grapefruit production to be off moderately. Prospects are for the orange crop in Texas to be about the same as last year. The harvest of Texas grapefruit is likely to be off some. 7 Hog production advances rapidly in 1971, but most of the total gain in livestock still due to region's cattle industry PERCENT CHANGE, 1971 FROM 1970 ..J-6oIWi6lllW" MOHAIR CATTLE AND CALVES ~~~~~~~--- TURKEYS -.~~,.. ALL LIVESTOCK AND I&iII~WiI LIVESTOCK PRODUCTS I -30 I -20 I -10 I I o 10 20 I 30 1971 partly estimated SOURCES: U.S . Department of Agriculture Federal Reserve Bank of Dallas was reversed in the second half of the year, however, as improvements in moisture conditions brought better pastures and brightened the outlook for winter grazing and feed supplies. Based on liveweight, the beef slaughter in District states was 9 percent greater in the first nine months of this year than in the same period last year. This increase combined with a 21-percent gain in the slaughter of sheep and lambs and a similar increase in the slaughter of hogs to give these states an increase of 11 percent in total red-meat production. There were major declines in the production of wool and mohair. As the drouth continued into the summer and more wool growers gave up production in the face of lower prices, the marketing of sheep and lambs continued at high levels. And although the large lamb crop last year caused a slight -S increase in the number of sheep shorn, wool production was off 4 percent this year. Part of the decline was due to the lighter average weight of fleece and part was due to the slightly smaller lamb crop resulting from the heavy marketing of sheep. The effect of lower prices and prolonged drouth on mohair production was even more pronounced. Both the number of goats and the production of mohair were off 20 percent from last year. After a nearly 20-percent increase last year, turkey production was up only 5 percent this year. And elsewhere in poultry and eggs, production was off. E gg production was up in New Mexico and Oklahoma, but the increase in these states was not enough to offset declines in the other three states. In reaction to extremely low prices in the second half of 1970 and high feed costs in late 1970 and the first half of 1971, broiler production through October was down 5 percent from a year before. Little change in income Gross farm income in the five states was probably higher than the $7.1 billion reported for 1970. But net income probably changed very little from the $2.3 billion realized last year. Reflecting strong crop and beef prices, cash receipts in the first nine months of this year were 6 percent higher than in the same period last year. Beginning in September, however, many crop prices came under supply pressures that very probably slowed the rise in average cash receipts for the year. Government crop payments in the five states are expected to amount to considerably less than last year's $763 million. This decline was partly offset by other commodity payments, however, Crop prices received by Texas farmers and with the drouth in the first average sharply higher this year ... part of the year and much flood damage in the second bringing 1967=100 payments under emergency programs, total Government payments are very likely to be close to the PRICES FOR LIVESTOCK AND LIVESTOCK PRODUCTS $811 million paid last year. Through mid-October, the index 130 - - -, - - - - - - - - - - - - - - - - - , . , , - - -_ _ of prices received by Texas farmers and ranchers was 5 percent more than the average for 1970. Prices were mixed, however. In the first 120----------' :---- 1- - - ten months of the year, prices of all major crops were substantially higher than in the same period a 110 - - - - - - - - - - year before. With average price increases ranging from 5 percent for corn to 17 percent for cotton, the index of crop prices climbed 100------~ 15 percent over the average for 1970. But while prices of cotton, rice, and soybeans remained high, the nation's bumper grain crop 90~I----------1-9-7-0--------.-------1-9-71-------1 has brought sharp declines since midyear in prices of corn, sorghum, SOURCE: U.S. Department ot Agriculture and wheat. By mid-October, the prices Texas farmers and ranchers received for their livestock were off about 1 percent from the average for 1970. Beef prices were up slightly, as were milk prices. . . . raising prices received for all products faster than national average of prices paid But prices for sheep, wool, hogs, eggs, and chickens were off 1967=100 sharply. With some of these 130 declines amounting to as much as 38 percent, the livestock index would have slipped much further had beef and milk not accounted for such a large proportion of livestock production. Even with the slippage in prices of some crops and most livestock, 120-----------------~~~--,-------however, the index of prices received by farmers in all five states is expected to be higher than in 1970. This is because prices for PRICES RECEIVED FOR cotton, rice, soybeans, beef, and TEXAS FARM PRODUCTS milk have all averaged higher than a year before, and these commodities account for two-thirds of the 1971 1970 agriculture of these states. Nationwide, the index of prices SOURCE: U.s. Department ot Agriculture paid by farmers and ranchers rose about in line with inflation until 14o------------------------------------------______ Business Review I December 1971 9 May, when the index began holding steady, reflecting offsetting increases and decreases in prices paid. Later in the year, cheaper feed prices and the wage-price freeze tended to slow the rise in prices of farm inputs. For the year as a whole, prices paid by farmers and ranchers in the Southwest will probably increase less than the prices they receive. But some farm enterprises still face an extreme cost-price squeeze. Other developments In line with the increase in beef production, conversion of marginal cropland to pasture continued, as did the improvement of pastures and the substitution of beef cattle for other livestock operations. The trend toward fewer and larger farms also continued, with the rate of decline in the number of farms in states of the District probably about the same as the 2 percent reported for last year. Although credit eased, this inducement to consolidation was offset by uncertainties resulting from the low prices of farm products last year and the severity of the drouth through the first half of this year. With the cost of farm inputs rising and farmers and ranchers in the Southwest continuing to mechanize their operations, the use of farm credit in District states has increased close to 10 percent this year, compared with 8 percent last year. All major types of farm lending institutions showed steady increases in their loan portfolios throughout the first half of the year, and this advance very probably continued as the availability of loans improved somewhat. Insurance companies became more active as the year progressed, increasing their new loans considerably over the year before. Production credit associations and land banks also expanded their loan volumes, as did commercial banks. 10 The value of farm real estate continued to rise, but the average increase for the District-3 percent for the year ended March I-was much slower than the average for the previous ten years. Arizona, with a 4-percent decline, was the only District state to show a loss in average land values, although areas of the High Plains of Texas, where there has been concern over the depletion of underground water, also showed a decline in average land prices. Agricultural exports from the five states rose 27 percent in fiscal 1971, reaching an estimated $980 million. Increased shipments and higher world prices boosted the export value of several of the region's major crops. Exports of cotton rose 42 percent, wheat 27 percent, and feed grains 11 percent. But as world demand for rice continued to fall and overseas prices slipped still further, exports of this crop declined 13 percent. The outlook for 1972 Further expansion in District agriculture is expected in the year ahead. Prospects for the biggest gains are still in livestock, but with improvements in moisture conditions, crop production can also be expected to increase. With ample feedlot capacity already available and lower grain prices, cattle feeding will probably continue its growth of the past several years, providing cattle producers, in turn, a good market for feeder calves. Cotton growers, encouraged by higher cotton prices this year, are bound to increase their plantings, providing the main boost to an expansion in crop production. With continued favorable weather, the District's wheat crop should be close to normal next year. But because of a cutback in acreage allotments, rice production could be lower. Little change is expected in the grain sorghum crop. Although several Government crop programs have been changed to reduce production, the upland cotton program will be about the same as this year-a national base acreage allotment of 11.5 million acres, a national average loan rate of 19.5 cents a pound, a preliminary set-aside payment rate of 15 cents a pound, and a set-aside requirement of 20 percent of a farm's base acreage allotment. As a result, a cotton grower signing up for the 1972 program and complying with the set-aside and conserving base requirements for his farm can plant the acreage he wants, depending on his own estimate of such market considerations as supply, demand, prices, and prospects for alternative crops. Because of the large grain crop in the nation this year, the new feed grain program has been designed to boost the set-aside of feed grain acreage to more than twice the 18 million acres withheld from production in 1971. The program raises the set-aside 5 percent (to 25 percent of the base) , increases set-aside payments, and includes barley as a substitute crop. Along with other adjustments, the new program offers incentives for farmers to set aside acreage beyond the required 25 percent and gives them more flexibility in choosing how many acres they will plant and to what crops. The national average loan rates for grain sorghum and barley will be slightly higher than in 1971, but rates for corn, oats, and rye will be the same as this year. The rice acreage allotment has been lowered 10 percent as a result of several factors cutting into the market-increasing world production, sagging export demand for U.S. rice, lower prices, and slow growth in domestic demand. The loan rate for rice, however, remains the same as in 1971. An above-average harvest for the nation's wheat crop has brought on an increase in the set-aside acreage for wheat. Setaside requirements next year will be 83 percent of the domestic allotment-an increase of 8 percent over the rate for 1971. The national average loan rate remains the same, however-$1.25 a bushel. Compared with the record value of farm shipments this year, prospects for agricultural exports from District states next year seem dim. Because stocks of cotton and soybeans have declined not only here but also abroad, exports of these commodities will probably remain strong. But shipments of wheat, feed grains, and rice are apt to be smaller, and with the increase in world supplies of these commodities probably de- pressing prices, the value of shipments could also be less. Consolidation of agriculture into fewer and larger commercial operations will doubtlessly continue next year, spurred in part by the cost-price squeeze on some farms and ranches. Caught in this squeeze, many growers will try to increase their productivity by making use of the latest technological advances-an effort that tends to encourage larger operations. The rate at which this long-term trend continues will, of course, also depend on other factors, such as changes in land values and the availability of farm credit. -Carl G. Anderson, Jr. Dale L. Stansbury New par bank - The Astro Bank, Houston, Texas, an insured nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, October 26, 1971. The officers are: Waddell Moursund, President, and Rodney Preuit, Jr., Vice President and Cashier. Business Review / December 1971 11 Research Department Federal Reserve Bank of Dallas Station K, Dallas, Texas 75222 Federal Reserve Bank of Dallas December 1971 Statistical Supplement to the Business Review The oil allowable in Texas was increased from 62.5 percent of maximum efficient production in November to 63 percent in December. Allowables in other producing states of the Eleventh District were left at November levels. The increase in Texas caught many oil observers by surprise. Nominations by major purchasers of Texas crude oil are ordinarily a good indicator of trends in allowables, and nominations for December had dipped slightly, leading many to expect a continued decline in allowables from the record highs set earlier this year. In raising the allowable, however, the Texas Railroad Commission pointed to a reduction in crude inventories in November. But with imports greater than a few months ago, the commission held the increase to only a marginal advance. Tanker rates have eased and authorizations to import crude have become more available since international oil companies and producing countries reached agreements on crude prices overseas. The seasonally adjusted Texas industrial production index slipped slightly in October after recovering in September from a midyear slowdown. Falling 1.4 percent from the September level, the index, at 179.4 percent of the 1957-59 base, showed virtually no change from a year before. Both manufacturing and mining contributed to the fall. Utilities remained unchanged. While total manufacturing fell slightly, production of durable goods was up 0.4 percent from a month before. Major gains in these industries were reported for lumber and wood products, up 9.4 percent; stone, clay, and glass products, up 4.4 percent; and fabricated metal products, up 4.2 percent. The only significant decline in durable goods was in electrical machinery production, off 3.6 percent from a month earlier. Production of transportation equipment continued to fall behind the level for a year. before. A decline of 1.9 percent in the production of nondurable goods resulted primarily from a drop in the output of chemical and allied products. Although higher than a year before, production in this industry group was 4.5 percent less than in September. This was the largest month-to-month change for industries producing nondurable goods. Increases from September were reported, however, in the production of textile mill products, up 3.3 percent; apparel and allied products, up 2.4 percent; and paper and allied products, up 2.0 percent. The drop in mining was due primarily to a cutback in the output of crude petroleum. Crude production fell 3.6 percent to a level 10.9 percent lower than a year earlier. Production of metal, stone, and earth minerals was also off, lagging behind the level of a year before. Total nonagricultural wage and salary employment in the five southwestern states continued to rise in October, advancing 0.4 percent over a month before and 1.2 percent over a year before. Employment expanded in both manufacturing and nonmanufacturing, with both categories showing gains of almost 2 percent over October 1970. With nonmanufacturing industries offering 0.4 percent more jobs in October than in September, however, these industries were still the major source of new employment in southwestern states this year. Although, overall, nonmanufacturing industries increased their employment rolls in October there was considerable variation f;om . industry to industry. Government continued to provide the primary source of jobs in the region in. . ' creasmg Its employment 1.8 percent over the previous month. Only two other nonmanufacturing industries showed increases in employmenirconstruction, up 0.5 percent, and trade, up 0.3 percent. The largest decline in employment was in the transportation and public utilities industries. Employment in this grouping fell 1.7 percent to a level 1. 7 percent lower than in October 1970. Employment in mining also fell, dropping 0.9 percent to a level 1.9 percent lower than a year earlier. Service and finance showed little change from September, but employment in both was significantly higher than a year earlier. Registrations of new passenger automobiles in Dallas, Fort Worth, Houston, and San Antonio were 22 percent higher in October than in September. Registrations were 40 percent greater than in October 1970, and cumulative registrations for the first ten months of 1971 were 14 percent greater than for the same period a year earlier. Department store sales in the Eleventh District were 8 percent greater in the four weeks ended November 27 than in the corresponding period a year before. Cumulative sales through that date were 7 percent more than a year before. (Continued on back page) CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS Eleventh Federal Reserve District (Thousand doll ars) Nay. 24, 1971 Oct. 27, 1971 Nay. 25, 1970 894,195 7,056,356 486,353 7,033,190 714,950 6,320,092 3,229,393 ASSETS 3,225,233 3,003,940 Fe deral fund s sold and securities purchased und er agreements to rese ll •• •. ...• . ... . ..... Oth er loan s and discounts, gross . ...... . ...•.... Total deposits •••••••••••• ••• ••••• • ••••••• •• • 11,103,687 ---- Comm erci al and industrial loan s • • .. .... . ..... Agricultural loans, ex clud ing certiflcates of interest •••..••••• ........•.. Loans to brokers and d eal ers for pu rcha sing or carry ing: U.S. Government se curiti es • • • . • . . • .... •••. . Oth er secu rities .•• . . .•..••••••••••••••••• Other loan s for purcha sing or carr ying : U.S. Governm ent securities • • • ••.••••.•.. . . . Oth er sec uriti es . .. • .. .. .. ... .. .. ..... ..•. Loan s to nonbank flnancial Institutions: Sal es flnanc e, p ersonal finance, factors, and oth er business credit companies • •••••. ecc 145,713 128,374 104,910 512 51,652 512 56,083 6,184 444,688 971 440,303 11 5,274 495,167 898,303 21,688 27,496 804,552 126,438 502,803 873,424 18,676 34,75 1 799,032 243,840 384,423 646,656 4,7 19 9,136 736,482 0 839,602 3,188,037 0 816,992 3,198,583 0 699,268 2,804,791 1,021,627 78,618 0 1,001,335 77,591 0 ---- Total U.S. Governm ent securities . . . . . . . .. .. . . . Trea sury bills • • • ••••• •• •••••• ••• •. •• •••• Treasury certiflcates of indebtedness •• . . •.•• Trea sury notes and U .S. Governm ent bonds maturingl Within 1 year • •• •• ••• • • . •••••••• ••• ••. 1 year to 5 y ea rs ••••• •• ••.• • ••. •.• . ••. After 5 years ••••••••• • •. ••• . ••••• • • • • Obligations of state s and political subdivisions: Tax warrants and shortaterm notes and bills... All other ••••. •• • • • •• • •• • ••••••••••••••• Other bond s, corporate stocks, and securities: Certiflcates representing participations in Fed eral ag ency loans •• ••.•.•.••.. . ••. . All other (Including corporate stocks) • •• • ••• • • Cash items in process of collection . •••• •••••••••• Reserves with Fe deral Reserve Bank • . .. . . ••. . • . • Currency and coin • . • •.•• . .• ••• ••••••••• • • • . • Balances with ban ks in the United States . . •. •• ••• Balanc es with bonks In foreign countries •• . . • .• •• • Other a ssets (includ ing investments in subsidiaries not consolidated) ••• • • ••••• • • •• •• • •••• • •••• ---967,903 107,665 0 150,058 631,064 161,887 153,989 642,574 127,18 1 189,804 573,294 97,140 66,896 1,923,805 117,393 1,923,565 Certifi e d and officers' ch ecks, etc .•• .. . .. . . . . Total tim e and sovings deposits ...• .. •..•.• ... 17,976 157,733 1,284,170 1,099,912 86,775 380,655 10,726 19,537 136,753 1,432,270 1,11 1,524 99,036 425,722 12,365 83,950 101,571 1,152,191 957,386 85,111 470,36 1 9,323 486,492 483,441 States and political subdivisions ••••.•• .. • . . U.S. Goyernm ent (including postal sayings) •• • • Bonks in the United States •••••••• • • ••••• • • Fore ign: Governments, offlcial institutions, central banks, and International institutions •• . .. . Commercial banks . .• •••.••• • ••••• •• ••• Federa l funds purchased and securities sold under agre ements to re purchase • • . .•.•••• •. . . Other liabilities for borrowed money . •• • •• . • .•. • Other liabilities • • •••• • ••••• • ••• • • •• • • ••••• .• • Rese rve s on loans ••• ••• •• •• • ••• •• • • . ••••• .. •• Res erves on securities •• . .•.• .. • •• ... •••••••••. Total capital accounts . •• • •. • ••••••••• •• •• •••• 1,077,273 2,695,59 1 1,042,674 11,564 50,670 1,069,793 2,64 1,117 1,011,033 13,559 57,180 935,726 2,500,841 847,000 39,023 56,945 22,300 1,100 17,285 1,100 1,714,800 42,05 1 384,299 135,224 22,109 1,085,148 1,355,209r 108,244r 360,515 120,883 35,003 1,083,106 1,054,760 95,159 359,941 128,846 16,989 1,026,065 ---- - - - - ---14,282,484 12,973.738 ---14,282,484 r-Revlsed CONDITION STATISTICS OF ALL MEMBER BANKS Eleventh Federal Reserve District (MIllion dollars) Item 459,533 12,973.738 Oct. 27, 1971 Sept. 29, 1971 Oct. 28, 1970 13,497 2,337 4,437 1,717 298 1,271 14,050 2,293 4,368 1,522 288 1,206 12 1,371 978 12,191 2,116 3,612 1,357 273 1,323 10 1,243 934 ASSETS TOTAL ASSETSe •••..•• • • •••• ••••••••• 14 1,668 995 26,234 2M88 2J.Q59 1,732 9,977 9,895 1,696 9,704 9,826 1,676 8,994 8,408 Borrowings . ••••.. . . . . .......•••••••••• Other liabilities e ••••.• . .• .••..••.••••..• Total capital accounts e • • . ••••••• . •••• • •• 21,604 1,557 1,168 1,905 21 ,226 1,788 1,177 1,897 19,078 1,046 1,102 1,833 TOTAL L IABILITIES AND CAPITAL ACCOUNTSe • •• ••••••• • ••• •• • •• ••• 26,234 2M88 23.DS9 LIABILITIES AND CAPITAL ACCOUNTS Eleventh Federal Reserve District Demand d e posits of banks •• • . . • •• ... ••• . Other de mand deposits •••.. • ••• ••••••••• Time deposits • . ....•.••••..• .... •••. . •• (Averages of dally figures. Thousand dollars) Total deposits• •••• •••••• •• ••••••• • ••• 4 wee ks end ed 5 wee ks ended 4 w eeks end ed Nay. 3,1971 Oct. 6,1971 Noy.4, 1970 832,331 772,824 59,507 822,485 9,846 5,018 4,828 848,695 791,066 57,629 847,075 1,620 15,275 -13,655 765,711 710,627 55,084 773,047 -7,336 1,275 -8,611 898,337 696,857 201,480 875,215 23,122 3,978 19,144 886,034 688,101 197,933 868,771 17,263 703 16,560 794,847 605,499 189,348 772,1 11 22,736 2,315 20,421 1,730,668 1,469,681 260,987 1,697,700 32,968 8,996 23,972 1,734,729 1,479,167 255,562 1,715,846 18,883 15,978 2,905 1,560,558 1,316,126 244,432 1,545,158 15,400 3,590 11,810 COUNTRY 8ANKS .•••..• • •••••.• With Federal Reserye 8ank •• .• 2,677 24,317 87,140 4,397,920 4,007,364 346,930 101,329 1,324,301 ---- RESERVE POSITIONS OF MEMBER BANKS Currency and coin . •. ...•..•. Required reserves ••••• •..••.. .. Excess re serves . • . .. . ... . .... •. Borrowing s • ••.••••••••••••••• Free reserves . . ........ . ... . .• 3,359 31,200 96,245 4,816,082 TOTAL LIABILITIES, RESERVES, AND CAPITAL ACCOUNTS •• • • •• • • • •• ••••• •• • 14,487,318 Balances with bonks in the United States •••• Total reserves held •••• ......•.. 6,403,442 4,562,579 250,216 136,214 1,323,629 Ind ividuals, partnerships, and corporationsl Balances with banks in foreign countrles e • • •• Cash Items in process of coll ection • ••• . •• . .. Oth er ossets e • • •• ••. . . .. .• • . .•• .. • ••• •• Currency and coin • ••.... .. • • Re quired reserves • ••• . .. . . . ••.. Exce ss reserves • • • ..... . •. . •••• Borrowing s •• • ••• • ••••••••• •. . Free rese rves . . ••• ••••• •.• .• . • 10,291,978 19,800 1,100 banks, and international institutions •.•... Comm ercial banks ••• . . . .•• . .••••. .. .•. Loans and discounts, gross•. •..•••••• • •••• U.S. Governm ent obligations. .•• . .• . • . • . •• Othe r securities ..••. ...••••••••••.. .. ••. Reserves with Fed eral Rese rve Bank • • . .... . Cash in vault • . •... .. •. . . ••• • •.•• . • ••• . • With Federal Rese rye Bonk •• • • ---5,894,058 42,069 1,609,298 TOTAL ASSETS . .... ... ....... ... ..... .. . 14,487,318 Total reserves held ••• ••• ••••••• 11,219,524 2,800 31,764 72,BBI 4,898,672 U.S. Governm ent . •..• . •• • . •• • ••••• • •••.• Ban ks in the United States• • .. . • • •••••• • .. . Foreign: Savings de posits .... . •.. . . • ..••.•• ... •. Other time de posits . ..•. . •. . . ...• •.. . .. Other loons ••• ••• • • • •• • • • ••••• ..• • •••••••• RESERVE CITY BANKS Nay. 25, 1970 4,362,001 391,882 81,722 1,261,965 Total de mand deposits . . . ... . ... • ..•. •...... Individuals, partnerships, and corporations . . .. States and political subdivisions •... . . . . . .. . 507 44,937 6,242 420,762 Other ••• ••••.•••• • •••. •• • .• •• ••••.•••. Ite m -6,205,015 --- Oct. 27, 1971 Governm ents, offlciol institutions, central Real estate loans . .. •. . •.• .•• •. ..••. • . • .. . • Loon s to dom estic commercial banks. •.••• • •..• Loans to foreign banks . •• • •• . •. . . • . . . . . • ... . Consum er instalment loans .. ••.• ..• ••••• .••• • Loans to foreign governments, offlcial institutions, central banks, and international institutions ...... •.•.•• ••• •••••. •• . •• . ••• Total investments . • . . ..•...• . ••.••••••.•••• . . Nay. 24, 1971 LIABILITIES e-Estlmated CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS (Thousand dollars) Item Nay. 24, 1971 Oct. 27, 1971 Nay. 25, 1970 538,687 78,395 0 3,128,476 3,206,871 1,716,543 2,081,632 628,238 50 0 2,650,378 2,650,428 1,498,680 1,881,012 ALL MEMBER 8ANKS Total rese rves held . .•. ... . ..... With Fe deral Reserye 80nk ••• • Currency ond coin • .......... Required rese rves ••••. .....•... Exce ss reserves ••. .•.. .•.. ..... Borrowing s • •.••.... ...... . . . . Free reserves • •. . .•. . . . .. •• ... Total gold certlflcate reserves •. . . .... . .. . •• • Discounts for me mb er bank s. ... •.. ...•.. . .. Oth er discounts and advances ••• . ..•. . • ...•• U.S. Governm ent securities •••.• •.•...•...•.. Total earning assets • .. . .. . . ........ . . ••• • • Member bank reser ve deposits ••. .... . ... •.• Federal Re se rve notes in actua l circulation • •••. 501,083 3,700 o 3,184,146 3,187,846 1,726,269 2,087,609 BANK DEBITS, END-OF-MONTH DEPOSITS, AND DEPOSIT TURNOVER SMSA's in Eleventh Federal Reserve District (Dollar amounts In thousands, seasonally adjusted) DE81TS TO DEMAND DEPOSIT ACCOUNTS' DEMAND DEPOSITS' Percent change Standard metropolitan stati stical aroa ARIZONA, Tucson ••.••••• ••••• •• • . • •.. ..• ••••• •• • ••• LOUISIANA, Monroe ••.• •...••.• • •• ••• .• . . •• . •• .• • •• • Shreve port . . . •..... • . .. .. .•. .. .•... . ... . NEW MEXICO, Rosw.II' •• •••. •••• ••••. • .• ••• ••·•• • ·• • TEXAS, Abil. ne • ...••• ••• ••• •..•• • •.• ••• .•• • .. •• ..•. Amarillo .. . ..•..•. ... • .....•....•• ·· •· · •··· . Austin ......................... Annual rote of turnover Oelob.r 1971 from Oclober 1971 (Annual·rale basis) II ••• •• • •• •• • Beaumont· Port Arthur-Orang e . • ... . .• . ... •• .. . . . Brown svill e-Harlin gen-San Benito ••••• .•..•••.•.. • Corpus Christi .... . ....... .. .. ... .. . ... . ... ... Cors icana 2 • • • ••••• • •••• ••••••••••• • •• •• ••••• Dallas ••••• •..••.. ••• .••• •• •• •• ..• • •• •• • •·• • EI Paso ... . ............... ...... · .. · ........ Fori Worlh •••• •• ••• •• ••••• .•• • • •• •· •• • •• ·• •• Galveston-Texa s City . .• ... . .. . .. ... . .. . . ...... Houston •••••••••• •••••••...•••.•• . •• .• •••••• Laredo .. . .•.••.. .•.... •.. ..••.. ...•• .. .. .•. Lubbock . .. .. ... .. ...... .. .... .. .... ........ McAllen·Pharr·Edinburg .. ... . .. .... .. . .. ... .. .. ' Midland .... . .. ... . . ... ...... ·• ••• • ••·•• • •• . Od essa •. ... .••. .•... .•. •.. . ···· • ···• •• · •· . . San Ang. lo ....... . .... .... ..... • •• •• •• ••• •• · San Anton io ... •.. •• •. ••• .. .. ... • .. ••• .. . .... Sh erman· Denison .. • ... • . ..• •.• • ..••.•..•...•. Texarkana (Texa s.Arkansas) .... .. •• ••.. • .••.. .. Tyl.r . ...... . . . ...... .. . .... ... .. • • • ••·•••• • Waco ........ •. .. ••. ••..•••....• • •... • •. •. . Wichita Falls.... ... .. .. .. .. .. .. . . . ...... ... .. TOlal-28 cent.rs ......... . . .......... • • •• ••· •• • •• .. S.plember 1971 Oelober 1970 1971 from 1970 Oclob.r 31, 1971 Oclober 1971 $7,547,208 3,238,812 11,551 ,200 974,652 2,279,964 6,622,920 11,121,780 6,276,252 2,098,968 6,525,924 427,944 131,203,632 8,251,860 23,455,632 2,784,732 114,031,548 912,852 4,622,100 1,800,420 2,144,628 1,693,968 1,3 59,204 19,607,280 1,105,920 1,465,980 2,485,332 3,396,804 2,693,808 4% -4 -12 -7 -1 -6 -1 -5 12 3 -3 -10 -13 -15 -17 -8 -14 -19 -1 -5 -4 -5 -9 -6 -9 0 -3 2 4% 24 35 7 6 11 23 4 6 -1 2 5 10 4 -3 13 0 1 12 6 2 15 4 11 6 4 17 9 17% 21 24 8 9 9 22 8 14 22 10 11 16 20 6 13 11 12 14 7 4 19 17 7 7 7 11 13 $300,498 100,114 277,188 44,035 109,291 171,022 378,336 256,648 89,605 264,007 31,723 2,408,854 269,433 716,941 114,044 2,858,991 43,780 177,835 114,467 146,075 92,846 68,044 720,800 70,235 80,752 103,229 131,997 125,229 25.7 32.2 42.4 22.9 20.9 39.2 30.5 24.3 23.7 24.7 13.3 55.1 31.1 32.9 24.0 41.1 21.4 25.7 16.0 14.9 17.9 19.1 27.2 15.7 18.9 23.5 25.6 21.7 27.5 33.2 47.7 25.2 20.9 40.6 32.7 25.4 22.1 23.9 13.3 60.2 34.7 39.0 28.8 45.1 25.0 30.8 16.7 16.0 18.1 19.1 29.0 16.6 21.5 23.3 26.0 21.2 31.1 30.4 35.5 23.8 20.8 37.9 30.0 25.6 25.4 24.0 14.0 57.7 31.2 35.5 25.1 40.8 22.8 26.3 16.2 15.3 18.9 17.8 29.6 15.4 19.4 24.8 25.1 21.3 -9% 9% 37.7 41.2 38.6 10 months, $381,681,324 13% $10,266,0 19 Seplemb.r 1971 Oclob.r 1970 1. Deposits of Individuals, partnerships, and corporations and of states and political subdivisions 2. County basis INDUSTRIAL PRODUCTION (Seasonally adjusted Indexes) October BUILDING PERMITS Percent change Oct. 1971 from NUM8ER Tucson • .... . .. 10 monthl, 10 mos. 1971 Ocl. 1970 S. pl. 1971 1971 from 1970 Ocl. 1971 10 mos. 1971 Oclob. r 1971 437 6,035 $8,365 $77,122 95 584 999 5,406 881 7,106 15,943 78,986 -32 -75 -8 220 26 196 50 146 436 169 120 500 1,493 30 437 376 66 2,433 42 162 116 82 98 47 1,286 32 26 264 74 534 1,410 5,102 1,570 1,120 7,536 17,809 347 4,933 4,181 679 35,939 523 1,978 734 848 798 647 15,878 562 399 3,000 802 771 4,540 19,437 1,579 463 3,903 15,897 207 6,585 4,888 1,666 44,093 596 2,504 4,028 1,011 140 345 11,338 95 169 1,721 425 10,749 29,353 156,241 16,790 8,895 55,248 257,785 2,598 99,036 102,772 10,344 530,686 6,819 58,797 12,404 7,272 5,536 9,480 104,505 4,757 6,958 21,269 17,713 -60 -28 -45 -50 -75 -55 -57 165 -57 -69 1,191 33 28 -13 1,139 94 -89 - 32 -4 -77 -25 -28 -85 106 348 57 303 -32 -1 -53 101 28 -21 46 1 49 86 -16 2,077 90 -34 -34 23 -94 -3 5 -45 44 8 45 107 62 140 -12 -17 19 38 67 39 12 30 221 - 15 ARIZONA 29% 101% 56% LOUISIANA Monro e -West Monroe •... . Shreveporl • ••• TEXAS Abilene •••. • •• Amarillo •••••• Austin • ..•••. . Beaumont •• ••• Brownsville . • • . Corpus Christi •• Dalla s •••••••• D enison . •• .. • • EI Pa so .... ... Fori Worlh • .• • Galveston . .. .. Hou ston • • ••• . . Lar.do •• ••• •• Lubbock • ••••• Midland ••••• • Od ess a . •. ... . Port Arlhur •• •• San Ang elo •••• San Anton io ••• Sherman • ..... Tex arkana . . .• Waco . ...... . Wichita Falls • •• TOla l-26 cltlos ••• 9,601 1971 August 1971 OClober 1970 179.4 199.2 198.4 199.8 131.9 284.7 181.8 201.3 197.7 203.7 135.5 284.7 176.9r 194.8r 195.4 194.5r 132.0r 284.7r 179.3 194.3 200.6r 190.1r 142.5r 265.1r 106.3 104.9 99.1 113.4 97.8 139.7 106.1 104.0 97.5 113.5 106.3 140.5 105.3 103.6 96.6 113.5 106.0 136.9 103.7 101.4 95.7 109.7 112.4 134.0 TEXAS (1957- 59 = 100) VALUATION (Dollar amounls in Ihousands) Area Septemb er 1971p Area and type of ind.x 119,769 ------$ 142,753 $1,708,058 -35% 19% -22 0 22 -62 19 -30 63 28% Total industrial production •• • ••• Manufacturing • •.• •• .....••.• •• Durabl....... . ........ . .... . Nonaurable •••••• •••• ••••••.• Mining ......... .. ............. Utllltl.s .... .... ....... ... ..... UNITED STATES (1967 = 100) TOlal induslrlal production •••••• Manufacturing ••••....• •••.•... Durable •••••• • • •••• •••• ••• •• Nondurable ... ... ...... . . . ... Mining ...... . .. . ..... ......... Ulilitles .. ......... . ......... .. p-Prellmlnary r- Revlsed SOURCES : Board of Governors of the Federal Reserve System Federal Rese rve Bank of Dallas GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS Eleventh Federal Reserve District (Averages of dally figures. Million dollars) GROSS DEMAND DEPOSITS Reserve TIME DEPOSITS Counlry Re serve Date Tolal city banks banks TOlal cily banks Country bank. 1969, Oclob.r • • • 1970, Oclober • •• 1971 , May • •• •.• June . .... . July ....... August ..... S.pl.mb.r. October ••• 10,306 10,684 11,348 11,354 11,507 11,468 11,571 11,562 4,726 4,860 5,216 5,224 5,314 5,246 5,3 11 5,246 5,580 5,824 6,132 6,130 6,193 6,222 6,260 6,316 7,223 8,317 9,516 9,573 9,588 9,615 9,735 9,977 2,646 3,305 3,688 3,691 3,696 3,714 3,769 3,819 4,577 5,012 5,828 5,882 5,892 5,901 5,966 6,158 VALUE OF CONSTRUCTION CONTRACTS NO~AGRICULTURAL (Million dollars) Five Southwestern States' EMPLOYMENT January-October Area and type FIVE SOUTHWESTERN STATES' . •••.... • . .••• . • Resid ential building •••• ••• Nonresid e ntial building .•.. Nonbuild ing construction • . .• UNITED STATES • . . ......•.• Residential building ••..• •• Nonresidential building • •• . Nonbulld lng construction •••• October 1971 September 1971 August 1971 1971 786 376 314 96 6,568 3,171 2,065 1,332 814 419 179 216 6,814 3,196 2,246 1,372 790 390 226 173 7,712 3,255 2,120 2,337 7,648 3,771 2,371 1,506 67,122 28,938 21 ,619 16,565 6,588 2,551 2,161 1,876 57.811 20,804 21 ,038 15,968 Percent change 1970r Type of employment 1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas r- Re vlsed NOTE.-Delalls may not add to totals because of rounding. SOURCE: F. W. Dodge Division, McGraw-Hili Information Syste ms Company Oct. 1971 from Number of persons October 1971p September 1971 October 1970r Sept. 1971 Oct. 1970 6,379,800 1,123,700 5,256,100 226,400 387,600 6,356,500 1,121,200 5,235,300 228,500 385,500 6,306,900 1,145,800 5,161,100 230,700 385,700 0.4% 1.2% .2 -1.9 1.8 .4 -.9 -1.9 .5 .5 444,100 1,504,000 332,700 1,029,800 1,331,500 451,600 1,499,200 333,200 1,029,900 1,307,400 451,600 1,473,000 321,900 1,012,700 1,285,500 -1.7 -1.7 2.1 .3 3.4 -.2 .0 1.7 1.8% 3.6% Total nonagricultural wag e and salary worke rs • • Manufacturing .• . ..... . .. Nonmanufacturing •••• •• •• Mining .......... . . . .. . Construction .. • . •• •...• Transportation and public utilities • . • •••.• Trade .•........ •• ••. • Finance . . ............. Service ...... . . . . . • . • • Governm ent . • •• . .• .... 1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas p-Prellmlnary r-Revlsed. SOURCE: Slate employment agencies CROP PRODUCTION (Thousand bushels) TEXAS Crop Cotton 2 • •• • • • •• • Corn ••.... . .. • • Winter wheat .. .. Oats •...• ••••• • 8arley ......... . Rye .• .• • •••..•• Rice 3 ••• •• • • • • • • Sorghum grain~ •• Flaxseed • ••..•. • Hay< .••• • ••.•.• Peanuts 5 • ••••••• Irish patataes e . •. ~:c~~sr.~t~~~~s.e: : Soybeans ••..••• FIVE SOUTHWESTERN STATES' DAILY AVERAGE PRODUCTION OF CRUDE OIL 1971, 1971, estimated Nov. 1 1970 1969 Nov. 1 3,132 33,120 31,416 5,994 1,320 378 23,350 318,292 70 3,776 417,150 3,779 788 25,000 4,185 3,214 32,391 54,408 29,032 4,224 566 20,782 329,616 1,125 4,037 429,930 4,593 1,040 38,000 4,424 2,859 25,124 68,856 25,460 3,290 684 21,646 309,800 1,300 3,45 1 389,070 4,437 780 23,000 7,598 4,649 44,316 115,014 11,466 22,784 1,158 43,486 382,746 70 9,817 661,310 7,026 3,988 87,000 45,894 estimated 1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas 2. Thousand bales 3. Thousand bags containing 100 pounds each 4. Thousand Ions 5. Thousand ~ounds 6. Thousand undredwelght SOURCE: U.S. Department 01 Agriculture Credit at weekly reporting commercial banks in the Eleventh District rose considerably less than usual in the four weeks ended November 24. With deposits off sharply, the rise in bank credit was accommodated mainly through an increase in net purchases of Federal funds. Loan demand was weak primarily because of slack demands from businesses, financial institutions other than banks, and security brokers and dealers. Demand for business loans was down for the second consecutive month, following a considerable 1970 4,561 43,554 169,437 38,304 33,954 1,502 41,179 386,05 1 1,125 9,811 640,196 8,075 5,205 69,700 45,413 1969 4,409 34,266 196,824 33,058 29,096 1,664 42,11 5 368,740 1,300 9,1 19 610,549 8,084 5,200 73,900 41,618 (Thou s and barrels) Percent change from Area FOUR SOUTHWESTERN STATES ... . . ...... . . .. .. Louisiana . .. . . ..•••.• . • .• New Mexico •.... .... . ... Oklahoma .... .... . . . ... . Texa s ..... .•• • • •. . •... • Gulf Coast ............ W est Texas •• .. ..•. • . • East Texas (proper) •.... Panhandle ... .. ..... .. . Rest of state • ......... . UNITED STATES . ...... . .... October 1971 September 1971 6,678.4 2,571.6 6,816.3 2,575.9 320.3 602.0 3,318.1 670.0 1,599.0 215.0 71.0 763.1 9,482.1 316.0 592.9 3,197.9 639.9 1,550.5 205.9 68.6 733.0 9,331.5 October 1970r 7,265.3 2,687.4 342 .8 611.0 3,624.1 749.4 1,710.7 233.3 76.5 854.2 10,017.3 September 1971 -2.0% -.2 -1.4 -1.5 -3 .6 -4.5 -3.0 -4.2 -3.4 -4.0 -1.6% October 1970 -8.1% -4.3 -7.8 -3.0 -11.8 -14.6 -9.4 -11.8 -10.3 -14.2 -6.9% r-Revlsed SOURCES: American Pelroleum Institute U.S . Bureau of Mines Federal Reserve Bank of Dallas increase in these loans during the preceding two months. Real estate loans continued stronger than usual, and consumer loans were up slightly more than usual. These banks reduced their investment portfolios somewhat in response to the deposit outflow. Holdings of Government issues rose contraseasonally, however, probably as a result of bank participation in the November refunding, prerefunding, and new cash offerings, which, combined, totaled about $8.6 billion. Holdings of municipal issues declined sharply. Although time and savings de- posits rose more than seasonally, there was a marked reduction in inflows of demand deposits as individuals and businesses made sizable net withdrawals, causing Ii significant contraction in total deposits. The increase in time and savings deposits was due largely to a rise in consumer-type deposits. The rise in large negotiable CD's outstanding was about in line with the average gain registered in comparable periods of previous years. In view of the decline in total deposits, reporting banks significantly increased their borrowings in the Eurodollar market.