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business
•
revIew
september 1970
FEDERAL RESERVE ,
BANK 0F DALL.AS
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
contents
Developments in 1970:
The battle against inflation ..................
3
.
8
The rise in unemployment ...... .. ....... . ,
Inventory adjustments ........ .. ... ... ... ... 12
District highlights .......................... 14
Developments in 1970:
The battle against inflation
Inflation has been the nation's number one
economic problem for several years. All major
price indicators show the emergence and growing dimensions of inflation since the midsixties.
The wholesale and consumer price indexes, for
example, mirror changes that contrast sharply
with the comparatively stable prices of the
early 1960's.
From 1960 through 1965, wholesale prices
increased at an average annua l rate of 0.3 perCent and consumer prices increased at an average rate of 1.4 percent. While th is upward drift
was far from perfect price stability, it was gentle
enough to be well within tolerable limits.
The main thrust of discretionary monetary
and fiscal policy during those early years of the
1960's was aimed at stimulating aggregate
spending to bring the economy up to its fullenlployment potential. By mid-decade, consUmer spending and private investment were
expanding rapidly when, largely as a result of
the escalation of the war in Vietnam, Governtnent spending also surged. Aggregate demand
began to outstrip the nation's capacity to prodUce, and the economy became overheated.
While much of the booming demand was
Satisfied by increases in real output, the excess
demand simply pulled prices upward. Since
1966, the wholesale price index has advanced
at an average annual rate of 2.8 percent and the
consumer price index has risen at an average
rate of 4.3 percent.
More important than these high average inCreases, however, has been the accelerating rate
Of increase. The only respite from progressively
Sharper price increases came in 1967, when
under the delayed influence of monetary restraint, rises in both the wholesale and consumer price indexes temporarily moderated.
Strategy of restraint
In the face of progressively faster rates of
price increases, discretionary policy since the
mid sixties has been aimed at curtailing aggregate spending in hopes of slowing the rate of
price increase. Policy actions have included
periods of monetary restraint (1966 and 196970) , the Federal income tax surcharge (196870) , and continuing efforts since 1968 to contain if not cut Federal spending, especially for
defense. Most recently, the President has
formed a National Commission on Productivity
to investigate means of increasing the nation's
output per man-hour and directed the Council
of Economic Advisers to prepare a periodic
"inflation alert." The first alert was issued in
early August.
Price increa es accelerate
PER CENT IN CREASE
8
WHOLESALE PRICE INDEX
4 l-
I I
o
1966
I
I'
1967
1968
1969
1970
8
CONSUMER PR ICE INDEX
4
o
-
I
II
I
Th e 1970 c h a n ges arc b tlscd o n th e J a nu a r y- Jun e averages
co mpar e d with th e J a nu a r y- Jull o 196 9 av er agos .
SOURCE : U. S. D e partm e nt o f L a b or .
business review / september 1970
3
Although evidence indicates that inflation
was not brought under control in the first half
of 1970, there are hopeful signs that inflationary forces may have finally passed their peak.
With the economy slowed and slack developing, the rate of price increase should diminish
in the months ahead.
Meanwhile, the slowdown itself is causing
some concern. The slowdown, which has raised
unemployment from 3.5 percent of the labor
force at the end of 1969 to 5.0 percent in July
1970, cannot be separated from the problem
of inflation, however. Being the result of fiscal
and monetary efforts to combat inflation by
slowing growth in aggregate demand, the rise
in unemployment and the general moderation
in business activity dedve from the inflationary
malaise that permeates the economy.
The restrictive monetary and fiscal actions
taken last year and partly maintained into this
year have been widely recognized as forces that
would eventually slow economic activity. The
Government itself has taken the official position
(in the Economic Report of the President, for
example) that the rate of economic expansion
would have to be slowed. And evidence of this
slowing in the second half of 1969 was generally viewed as good news. While the side
effects of the economic slowdown present neW
problems, there is no doubt that the slowdown
has been considered an essential part of the
struggle against inflation.
Prices in Dallas and Houston
Dallas and Houston are the only areas in
the Eleventh District for which consumer
prices are reported separately from the total
for the nation. Until last year, consumer
prices in these two cities increased at about
the same rate as in metropolitan areas across
the country. But last year, consumer prices
in Dallas and Houston increased an average
of 6.5 percent-I.1 percentage points faster
than the average for all U.S. cities.
cities in the first quarter of this year, as they
did in the nation as a whole, advancing at
annual rates of 9.6 percent in Houston and
8.5 percent in Dallas. There was a marked
slowing in the second quarter, howeverto 2.1 percent in Houston and 1.0 percent
in Dallas. These slower rates of increaseboth less than the national average - seem
to offer both cities hope for near-stability in
food prices in the second half of 1970.
In the latest three-month periods for which
detailed data are available, the rates of increase in both cities slowed to less than the
national average. In Dallas, the annual rate
of increase from March through May was
4.8 percent. In Houston, from May through
July, it was 2.4 percent.
To the extent that consumers in these
Texas cities have taken more of their meals
at home, they have been able to resist the
increase in family food bills. Prices for food
at home have not increased as fast as prices
for food away from home. In Houston, prices
for food at home averaged 3.3 percent higher
in June than a year before, compared with
11.5 percent for food away from home. III
Dallas, these prices were up 3.8 percent and
7.9 percent, respectively.
Food prices, which have tended to fluctuate more than the consumer price index as
a whole, rose sharply in these two Texas
4
Much of the agony of 1970 results from the
economy slowing but inflation showing only a
few signs of moderating. On the average, prices
increased slightly faster in the first half of 1970
than in 1969. In the first six months of this year,
the wholesale price index averaged 4.2 percent
higher than in the same period last year. The
consumer price index was up 6.2 percent.
The steady slowing in business activity and the
accompanying rise in unemployment might
have seemed less uncomfortable had there been
clear evidence that inflation was being wrung
out of the economy.
Prices at the wholesale level
Price index for industrial materials
passes peak in first quarter
1957 · 59 = 100
120
110
100
1969
Wholesale prices were almost stable during
the first half of the 1960's, averaging only 2.5
percent higher in 1965 than during the 1957-59
period on which the index is based. In 1966,
however, average wholesale prices jumped 3.3
percent over the average for 1965. With some
relief from demand pressures following a period
of restrictive monetary policy in 1966, the increase in wholesale prices slowed markedly in
1967, edging upwal·d only 0.2 percent. Monetary restraint was eased in 1967, and with
Spending in both the public and private sectors
expanding rapidly, the rate of price increase
accelerated in 1968, setting a sharp uptrend
that continued througb 1969 and into 1970.
The increase in wholesale prices since 1966
has been broadly based, with rises in all segtnents of the economy contributing to the increase in the index. The wholesale index for
farm products and processed food and feed has
SWung some from year to year but, on average,
has increased faster than the index of wholesale
Prices overall. The index for industrial comtnodities has increased slightly less than the
tOtal wholesale price index.
Recent developments in wholesale prices
Provide some encouragement, however. Where
Prices of farm products and processed food and
feed were increasing sharply in the first quarter
1970
SOURCE : U . S . D e partm e nt of Labor .
of this year, they declined in the second. And
although prices of industrial products were still
increasing in the second quarter, they were not
increasing quite as fast as in the first quarter. As
a result, the wholesale price index increased at
an annual rate of 1.7 percent in the second
quarter, compared with 5.9 percent in the first
quarter.
Further encouragement has come with a decline in average prices of raw industrial materials. The wholesale price index of industrial
materials prepared by the Department of Labor
is usually a leading indicator of price behavior.
This index followed an irregular pattern through
much of 1968 but moved sharply upward late
in the year and, except for a temporary dip
during the fourth quarter, continued to rise
throughout 1969. After reaching a cyclical peak
in February of this year, however, the index
declined for five consecutive months, registering an annual rate of decline of 7.2 percent for
the second quarter.
Prices at the consumer level
Consumer prices drifted upward throughout
the first half of the 1960's, but so gradually that
the increase caused little concern on the part
business review/september 1970
5
of the public or its policy-makers. After 1965,
however, these prices rose at an accelerating
rate, averaging 3.8 percent a year between 1966
and 1969. Last year, the consumer price index
averaged 5.4 percent higher than a year earlier.
By June 1970, $1.35 was needed to buy what a
dollar would have bought in ] 957-59.
Consumer prices increased faster in the first
two quarters of this year than in ] 969. On a
monthly basis, however, the annual rate of increase moderated slightly in May, June, and
July, providing some encouragement, even
though it may take several months to detelmine
whether the rate of increase in consumer prices
has actually passed its peak.
After advancing at an annual rate of 9.0 percent in the first quarter, the increase in food
prices slowed to 3.4 percent in the second quarter. Prices of other nondurable goods accelerated in the second quarter, but much of this
increase came in April. The rate of increase
sJowed again in May and June.
Prices of consumer durables did not increase
as fast in the 1960's as prices of services and
nondurable goods. But in the second quarter
this year, prices of durable goods rose sharply,
gaining at an annual rate of 7.0 percent cornpared with 1.4 percent in the first quarter. This
increase could be only temporary, however,
since much of the rise resulted from a rapid
acceleration in used-car prices.
Prices of services have been increasing faster
than consumer commodity prices since 1960.
They were up sharply in the first half this year,
advancing 9.8 percent in the first quarter and
8.8 percent in the second quarter, compared
with 7.0 percent for 1969. Although the moderation in the rate of increase between the first
and second quarters was slight, the percentage
increase every month in the second quarter waS
-The Two Price Indexes
The consumer price index measures
changes in the prices of goods and services
most often bought by urban wage earners
and clerical workers, whether as single people or for their families. Since it is not feasible to obtain price quotations on everything people buy, about 400 key items have
been selected to make up a "market basket"
for use in determining current price levels.
Items are priced periodically in different
cities, mainly through personal visits to a
sampling of retail and service outlets.
The wholesale price index measures
changes in prices of about 2,400 commodities sold in large lots at the first level of commercial transaction. The index, therefore,
refers to prices paid to producers of goods
6
and raw materials and not to the prices paid
wholesalers, distributors, and jobbers.
A recent study suggests that the wholesale price index tends to overstate prices
during periods of economic slowdown. The
possibility of overstatement results from the
index being based on sellers' posted prices,
without incorporation of the special price
concessions that are often made when business activity eases. If there is this form of
upward bias present ill the wholesale price
index, wholesale prices may have moderated
even more than indicated ill this article. (See
George J. Stigler and James K. Kindahl, The
Behavior of Industrial Prices, National Bureau of Economic Research General Series,
No. 90, New York, 1970.)
AVERAGE ANNUAL RATES OF CHANGE
IN PRICE INDEXES
Index
Consumer prices ....
Services
Goods
,
...
Durables
Nondu rab ies .
Food
Dther
......
Wholesa le prices .
Industrial
commodities ....
Farm products,
processed foods
and feeds . .. .
1960-65
1966-69
1970'
Second
quarter
First
quarter
1.4 %
3.8 %
6.1 %
6_3 %
2.2
5.1
9.8
8.8
.9
3.2
3.6
5.2
.2
2.2
1.4
7.0
1.2
3.6
4.7
4.4
1.4
3.7
9.0
3.4
1.0
3.5
1.0
5.4
.3
2.5
5.9
1.7
.2
2.4
4.6
3.4
.6
2.8
10.7
-4.0
1 Quarterly rates were calculated by comparing the average value of the index for one quarter with the average
value of the index for the preceding quarter and putting the
Percentage rate of change on an annual basis. Data for 1970
are not seasonally adjusted.
SOURCES: U_S. Department of Labor.
Federa l Reserve Bank of Dallas .
less than the smallest monthly increase in the
first quarter.
The outlook for stability
In the face of restrained aggregate demand,
fewer price increases may be attempted in the
months ahead, and some of those that are tried
may be rolled back in the marketplace. Because
wholesale prices are usually more responsive to
changes in economic conditions than consumer
prices, the moderation of their increases is enCOuraging, especially since many of these prices
represent the cost of commodity inputs to producers. Moderation of the increase in wholesale
prices could help take some of the upward presSUre off consumer prices.
The slowing trend in wholesale prices is apt
to be irregular, however, and could take some
time before leveling off. In July, for example,
wholesale prices spurted upward again at an
annual rate of 7.2 percent - the sharpest rise
in six months. Then in August, the movement
reversed itself and the index actually declined
- for the first time in two years.
Although the recent downward trend in
wholesale food prices raises hopes that increases in consumer food prices may moderate
further, services seem the key to any substantial
braking in the rate of increase in consumer
prices_ The rapid increase in prices of services
has been pulling up the rate of increase in the
consumer price index overall. If the slight moderation in the rate of increase of service prices
in the second quarter continues throughout the
rest of the year, the trend of the consumer price
index could improve substantially.
Higher labor costs remain one of the major
upward pressures on both wholesale and consumer prices. Many labor groups are demanding large wage increases in hopes not only of
offsetting an expected rise in consumer prices
but also of gaining in real purchasing power.
Much smaller wage demands will probably
come only after a sustained movement toward
price stability. But even if wage rates continue
to rise rapidly, a substantial increase in productivity could result in a marked slowing in the
rise of unit labor costs. In fact, in manufacturing, a sharp rise in productivity in the first half
slowed the rate of increase in unit labor costs.
Because these various adjustments take considerable time to diffuse throughout the economy, an inflationary spiral, once started, can
be broken up only over a lengthy period and
with some lag.
Although monetary and fiscal policy has
eased somewhat in 1970, the battle against inflation is still far from won. The rate of increase
in consumer prices, for exanlple, could be cut
in half and still be moving up much faster than
in the first half of the 1960's. Some economic
restraints, therefore, may be needed even after
the increase in prices has definitely slowed.
Otherwise, there could be a resurgence of inflationary pressures before the rate of price increase is restored to a level that can be tolerated
over the long run.
LEONARD
G. BOWER
business review/september 1970
7
The ,-ise in une-",ploy-",ent
The economic slowdown in the first half of
1970 brought unemployment to the highest
level since 1965. Where the number of unemployed averaged about 2.9 million (3.6 percent of the civilian labor force) in the fourth
quarter last year, the average reached almost 4
million (4.8 percent of the labor force) in the
second quarter this year.
Part of the increase during the first months
of the year can be attributed to an unusually
sharp increase in the labor force. Between the
fourth quarter last year and the first quarter
this year, the labor force expanded by an addiTotal nonfarm payroll employment
falls in second quarter this year
FIRST QUA\lTER
SECOND QUARTER
MINING
CONTRACT CONSTRUCTION
DURABLE GOODS
MANUFACTURING
NONDURABLE GOODS
MANUFACTURING
TRANSPORTATION AND
PUBLIC UTILITIES
WHOLESALE
AND
r I - - - - - ' RETAIL TRADE
SERVICES
GOVERNMENT
-300
·200
-100
o
+100
+200
+300
EMPLQYMENT CHANGE . IN THOUSANDS ( Seasonally adjusted )
SOURCE : U. S. Department of Labor .
8
tional 915,000 workers - or at an annual rate
of almost 3.7 million. On the basis of changes
in the working-age population and long-term
trends in labor participation rates, the labor
force is expected to grow approximately 1.5
million a year.
With the economy slowing and production
declining, employment opportunities also began
to shrink and growth in employment slowed
appreciably. As a result, many new entrants
into the labor force could not find work. The
number of unemployed workers swelled almost
500,000 in the first quarter, with workers entering the labor force accounting for more than
40 percent of the increase.
But even in these early months of the year,
many employers, faced with sluggish demand
for their output and declining profits, began to
trim back their work forces. More than half the
increase in unemployment in the first quarter
was among workers that had lost their last job,
mostly through layoffs.
Impact on labor demand
As the year progressed, layoffs became the
dominant factor contributing to the rising trend
in joblessness. In fact, seasonally adjusted, the
civilian labor force increased only 100,000 in
the second quarter, and less than 1 percent of
the rise in unemployment could be traced to
new entrants into the labor force. Some seCondary workers (women and teen-agel's) that
had entered the labor force during the ear!Y
stages of the slowdown, when jobs were still
abundant, dropped out of the labor force in
the spring, discouraged by the reduction in
available work. Unemployment increased bY
566,000 in the second quarter, with workers
that had lost their last job accounting for more
than four-fifths of the increase.
The first-quarter easing in demand for workers was fairly well concentrated in industries
producing durable goods, especially defenserelated items and consumer durables. While
nonfarm payroll employment increased 299,000
in the first quarter, the number of employees
on payrolls of durable goods manufacturers
decreased 189,000. About half this drop was
in industries producing transportation equipment, mainly aircraft and automobiles.
Nonfarm payroll employment fell almost
260,000 in the second quarter as employment
in durable goods manufacturing continued to
deteriorate and weakness in demand for labor
spread to other sectors of the economy. Payroll
employment fell in all goods-producing industries (mining, construction, and durable and
nondurable goods manufacturing), was at a
Virtual standstill in trade, and grew substantially
slower in finance and services. Government was
the only major sector with faster growth in payroll employment in the second quarter than in
the first, and employment growth in this sector
Would have also fallen had it not been for the
temporary increase in Federal employment reSulting from the addition of enumerators for the
1970 census.
Effects on the Southwest
Job opportunities were reduced nationwide,
although some areas were affected more than
others. Hardest hit were areas with heavy
Concentrations of industries producing defense
items and consumer durables. Areas depending
less on manufacturing were better able to maintain fairly low levels of unemployment. Unemployment rose sharply along the Pacific Coast,
for example, as spending on defense and aerospace programs was reduced. But in some areas
of the Midwest, where much of the employment
is in nonmanufactllring, joblessness remained
at comparatively low levels.
The Southwest has fared slightly better than
the nation as a whole. Last December, the aver-
Joblessness in the Southwest
follows national trend this year,
after initial drop
UNEMPLOYMENT AS PERCENT
Of CIVILIAN LABOR fORCE
{S eas onally adju s t e d )
UNITED STATES
5
4
FIVE SOUTHWESTERN STATES
3
o
M
1969
A
M
1970
S OUR C ES: Sial e e mpl o ym c nt ago n cies.
U. S. De p a rtm c nt o f Lab o r .
Fe el e r.,1 R ese rv e Bal,k o f 0 .1 1Ia 5.
Unemployment
as percent of
civilian labor force
June
State
Arizona
...
Louisiana
New Mexico
Oklahoma
Texas
...... ...
1970
4.6
6.4
6.3
4.4
3.4
December
1969
Increase
2.8
5.2
4.9
3.4
2.8
1.8
1.2
1.4
1.0
.6
age rate of unemployment for the five states of
the Eleventh Federal Reserve District was 3.4
percent, compared with 3.5 percent for the
nation. In January, while the nation's unemployment rate was rising substantially, the average rate for these five southwestern states even
declined a little. Since then, the unemployment
rate for the Southwest has also been on the
rise, but it has remained about 0.6 percentage
point less than the rate for the nation.
There have been wide differences within the
region, however, with only Texas maintaining
an unemployment rate significantly below the
national average. Texas and Arizona started
business review I september 1970
9
the year with unemployment rates of only 2.8
percent. In the first half of the year, the rate
for Texas increased about half as fast as the
rate for the nation as a whole, reaching only 3.4
percent in June. The unemployment rate in
Arizona increased faster than the national average, however, reaching 4.6 percent in Junea rate only 0.1 percentage point less than the
rate for the nation.
The unemployment rates for Oklahoma, Louisiana, and New Mexico advanced at about the
same pace as the average for the nation. Oklahoma began the year with an unemployment
rate slightly below the national average and
held this advantage through the first half of
the year. The jobless rates for Louisiana and
New Mexico, however, were already about 5
percent at the start of the year. By June, unemployment in these two states had reached
more than 6 percent.
While the unemployment rate in the Southwest began moving upward in February, the
weakness in labor demand was not reflected
Employment in the Southwest
increased faster than in the nation
before decline finally set in
January 1969 = 100
t Seasona ll yadjus t ed )
105
FIVE SOUTHWESTERN STATES
RECENT CHANGES IN SOUTHWESTERN
NONFARM PAYROLL EMPLOYMENT
(Seasonally adjusted)
Second quarter 1970
from
first quarter 1970
Area
Ari zona . .
Number
Percent
First quarter 1970
from
last quarter 196~
Number Percent
2.6
400
0.1
13,600
-22,000
-2.1
11,200
1.1
New Mex ico ..
-3,200
-1.1
3,500
1.2
Okl ahoma
-8,200
-1.1
5,400
.7
~
.2
41,600
1.1
-25,600
-.4
75,300
1.2
Louisiana
Texas
Tota l
SOURCES : State employment agencies.
Federal Reserve Bank of Dallas.
in payroll employment until March. In fact,
growth in nonfarm payroll employment in the
five southwestern states showed no signs of
abating all last year, even though growth nationwide had begun to slow about midyear.
For a while, job markets in the Southwest
seemed almost immune to the economic slowdown that was cutting employment in much
of the rest of the country. In March, however,
the trend in the Southwest leveled off and in
the next three months moved downward, following the pattern set for the nation.
The region's recent cutback in nonagricultural employment centered in Louisiana. Of a
second-quarter drop of 25,600 in nonfarm payroll employment in the five states, 22,000 waS
in Louisiana. Oklahoma and New Mexico alsO
showed declines, while employment growth in
Texas an'd Arizona showed substantial leveling·
Outlook for the second half
UNITEO STATES
100
1969
SOURCES : State e mploym e nt age n c ies .
U . S. Department of Labor .
Federa l Reserve Bank of Dalla s .
10
1970
While evidence continues to accumulate indicating that economic recovery may be neal',
demand for labor is likely to remain sluggish for
a time. Typically, when economic activity begins to pick up again after a downturn, emploYers meet additional demand by raising the output of employees already on the payrolls and
lengthening their workweek. Only when these
efforts are no longer enough to provide the
manpower needed to meet the demand for output do employers usuaUy begin adding to their
work forces.
Latest indications are that this pattern of
lag between general economic recovery and
recovery in employment is apt to be followed
in the months ahead. Nonfarm payroll employment fell again in July for the fourth month in
a row, reflecting further weakness in the demand for labor. But the average workweek of
nonfarm payroll employees edged upward in
July for the second consecutive month, indicating that some firming in labor demand may
not be far off. Moreover, the rate of layoffs in
manufacturing has declined significantly since
reaching a peak in April, providing evidence
that this major source of unemployment in the
first half of 1970 has finally begun to subside.
Although these recent developments suggest
that employment may level off in the next few
months and, perhaps, begin moving back upward before the end of 1970, the nation's rate
of unemployment could easily rise still further,
as growth in the civilian labor force outstrips
gains in employment. In JUly, the unemployment rate bounced back to its May level of 5
percent, after declining to 4.7 percent in June.
WILLIAM H. KELLY
The Guardian Bank Northwest, 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, August 10,
1970. The officers are: W. P. Gibbs, Jr. , President; Tom L. Johnson, Jr., Vice
President; Mrs. Ruby Seagraves, Cashier; and James E. Froehlick, Assistant
Cashier.
new
patban'~s
The First State Bank of Keene, Keene, Texas, an insured nonmember bank
located in the territory served by the Head Office of the Federal Reserve Bank
of Dallas, was added to the Par List on its opening date, August 10, 1970. The
officers are: James A. Nees, President, and Karl E. Richhart, Vice President
and Cashier.
The Spring Woods Bank, HOLlston, 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, August 24, 1970.
The officers are: Richard Hairston, President, and Pat Moody, Vice President
and Cashier .
......
business review/september 1970
11
Inventol·Y adjustments
Gross national product and its two major
components - final purchases and inventory
investment - have shown a well-defined relationship in previous economic slowdowns, and
the recent slowing is no exception. In every recession since World War II, the change in inventol), investment has been far greater than
the total change in final purchases by consumers, businesses, and government.
Since business holdings of goods account for
most of any short-term swing in GNP, business
decisions have an enormous influence on the
quarter-to-quarter course of economic activity.
This influence is so great, in fact, that knowledge of movements in business inventories is
essential to the formation of effective monetary
and fiscal policy.
There are several reasons for the volatility
of business investment in inventories. Inventory
investment directly involves expectations about
future sales. Unlike investment in plant and
equipment, which can have a significant lag
between changes in expected sales and changes
in investment levels, inventories can be adjusted
to sales fairly quickly.
terest rates also rise, as they ordinarily do when
overall demand is strong.
Many inventories, especially of durables, are
held by companies in industries highly sensitive
to changes in the general economy - a fact
that adds further to the volatility of inventories.
Producers of business, transportation, and construction equipment, for example, operate
largely in interdependence with other producers. When one producer changes its inventories,
it adjusts its orders to suppliers. Each of the
suppliers, in turn, also changes its inventory
level to keep inventories in line with changes
in sales. Thus, during a period of economic
slowdown, a decision by one manufacturer to
reduce inventory investment would start cutRecent changes in GNP affected
more by inventories than final sales
--
B I LLIONS OF DOLLARS
+25
CHA NGE IN:
o GROSS NA TI ONAL PR ODu cT
121 FIN AL SA L ES
+2 0
O I NV ENTORY INVEST M ENT
+15
Because inventories act as a buffer between
output and final sales, expectations about production also affect the level of business stocks.
It is not unusual for producers of durables, for
example, to stockpile goods in anticipation of
labor negotiations either in their industry or in
major supplier industries.
Expectations about price changes also affect
inventory investment. If prices of goods appear
likely to increase, businessmen will probably
increase their holdings of these goods as a
hedge against expected inflation. Widespread
building of inventories on price speculation can
inc;rease their operating costs, especially if in-
12
+10
.,..
..I·
+5
0
~
~~
l
h
U
-5
- 10
tJ
U
~--~--~----~--~I----~_--1969
SOURCE : U . S . D e partm e nl o f COrl1l11 0 rcc .
1970
backs in the rate of inventory accumulation at
all levels of production.
Most of these conditions have been reflected,
at least in part, in the economic slowdown of
1969-70. Investment in inventories declined
from an annual rate of $11.3 billion in the
third quarter last year to $1.6 billion in the
first quarter this year. Although the decline was
sharp - a drop of $10 billion in six monthsit stopped short of actual liquidation and was,
in fact, the smallest adjustment in any economic
downturn since World War II.
Inventory-to-sales ratios improve,
hut still higher than a year earlier
RATIO
.-----------------~
The slowdown in sales spread into still other
durable goods industries in the first quarter of
this year - particularly business machinery
and equipment industries - leading to slower
accumulation of inventories in those industries. Inventory investment was cut back to
$1.6 billion in the first quarter - a decline of
$5.6 billion from its level in the fourth quarter
~ast year. The spillover of inventory adjustment
luto 1970 resulted mainly from the continued
sluggish growth in sales, but with credit still
scarce and interest rates rising, financial markets also discouraged increases in inventories.
Business accumulation of inventories rose
to an annual rate of $2.9 billion in the second
qUarter this year, reversing the downward
trend in the rate of 'accumulation that had held
fO r the previous two quarters. All the improvement in real GNP in the second quarter can be
2 .2
RETAIL TRADE.
The slower growth of sales in industries producing durable goods - particularly consumer
durables and defense-related items - triggered
a chain of events leading to a fourth-quarter reduction in inventory investment. With sales in
these industries sluggish, inventories rose relative to sales, indicating by early fall that there
Were trouble areas in durable goods at both
Illanufacturing and retail levels. As production
Was trimmed back, inventory investment was
trimmed to $7.2 billion in the fourth quarter.
2.3
2 .1
MANUFACTURING .
DURABLE GOODS
INDUSTRIES
2 .0
1.9
1969
1970
Ju ne 1970 preliminary .
SOURCE : U . S. Depar tm en t o f Commerce .
attributed to increased inventories. Final purchases rose only $10.3 billion - the smallest
quarter-to-quarter gain in over three years.
While the $1.3 billion gain in inventories in
the second quarter represented a turnaround
in the downward adjustment of the previous
two quarters, many observers do not expect a
resurgence in inventory investment in the second half of the year. Sales may not have improved enough for any further buildup in
stocks. Although inventory-to-sales ratios had
improved at midyear, ratios for durable goods
remained high at both manufacturing and retail
levels.
CHARLES M. WILSON
business review/september 1970
13
District highlights
Total nonagricultural wage and salary employment in states of the Eleventh District continued to show weakness in July, even though
employment dropped less than seasonally expected. Gains over a year before were only
moderate. The soft demand for labor was also
seen in rising unemployment rates over the District and in high levels of unemployment claims.
Most of the softness was in manufacturing and
construction, the industries most affected by
the current economic slowdown.
Nonfann payroll employment in the five
southwestern states declined 0.4 percent in July,
to a total of 6,365,200 workers. The change
resulted from declines in manufacturing, construction, and government payrolls. Almost all
other categories of employment increased moderately. The only exception was finance, which
held steady.
Compared with a year before, strength was
generally lacking. An increase in total employment of 1.6 percent over July 1969 reflected a
decline of 3.1 percent in manufacturing and a
rise of 2.7 percent in nonmanufacturing. Within
nonmanufacturing, absolute declines from a
year earlier were registered only in mining and
construction.
higher than in July 1969, cumulative registrations through July trailed registrations for the
same period last year by 6 percent.
Industrial production in Texas was unusuaJly
weak in July. The seasonally adjusted Texas industrial production index declined 1.8 percent
to 174.0 percent of its 1957-59 base. The decline was more widespread than in other recent
months. Of the three major industrial categories, only utilities held steady. Where weakness had previously centered in the manufacturing of durable goods, it spread to mining and
the manufacture of nondurable goods in July.
Mining output was down 1.9 percent fr0111
June but was still 2.1 percent higher than a year
before. With the oil allowable in Texas lower
in recent months, this weakness was expected.
The allowable was raised to a record high in
August, however, and since crude oil accounts
for nearly 30 percent of the Texas index, industrial production was expected to show more
strength in August.
Department store sales in the Eleventh District were 7 percent higher in the four weeks
ended August 22 than in the corresponding
period last year. Cumulative sales through that
date were 3 percent higher than a year earlier.
Manufacturing output declined in Julyfor the fourth time in six months. In the production of durables, the most pronounced droP
was in electrical machinery. Transportation
equipment rose slightly, reflecting recent
strength in automobile production before retooling for new models. The weakness in nondurables, altllOugh moderate, covered most
products. Only leather and leather products
showed any real strength.
Registrations of new passenger automobiles
in Dallas, Fort Worth, Houston, and San Antonio were slightly higher in July than in June.
Changes ranged from an increase of 13 percent
in Houston to a decrease of 14 percent in Dallas. Although total registrations were 12 percent
Compared with a year ago, the state's manufacturing output was off 1.5 percent. A year- to year increase of 4.8 percent in the production of
nondurables was more than offset by a decline
of 9.3 percent in durables. T he largest year- to year decline in durable goods was also in the
14,
manufacture of electrical machinery. Transportation equipment was off 8.6 percent. Except for textile products, all categories of nondurable goods were up from July last year.
Cotton, corn, sorghum, and other unharvested crops in the Coastal Bend area of Texas
Were severely damaged by Hurricane Celiaalthough not as severely as first expected. The
loss has been estimated at $8 million, and damage to agricultural buildings, equipment, and
land is believed to be even higher. Several gins
in the path of the storm were either totally destroyed or so heavily damaged that operations
cannot be undertaken this harvest season.
Despite the hurricane damage and general
lack of rain, most crops in the states of the
Eleventh District are making fair progress.
Based on conditions August 1, cotton production in the five southwestern states was expected
to total slightly more than 5.2 million bales, or
18 percent more than in 1969. The expected
increase results from both larger planted acreage and prospects for higher yields. In Texas,
the forecast was 28 percent more than the 2.9
Illillion bales produced in 1969. The yield in
Texas was expected to average 348 pounds of
lint per acre, compared with 292 pounds in
1969. Even thIS, however, would be less than
the 410-pound average in 1968.
Production of grain sorghum in the southWestern states was expected to total 385 million
bUshels, or 4 percent more than last year. Rice
Production was expected to be down about 2
Percent from a year before.
Most livestock were in fair to good condition
on August 1. The number of cattle on feed in
Texas totaled 1,388,000 head, or 10 percent
lllore than a year before. There were 412,000
head of cattle on feed in Arizona, or 8 percent
fewer than a year before.
Of the 267 feedlots in Texas with capacities
far at least 1,000 head, 184 reported cattle on
feed July 1. This is an occupancy rate of 58
percent, compared with 73 percent a year before and 54 percent two years before.
The nation's six largest cattle feeding states
had 6,430,000 head on feed August 1 - 4 percent more than a year earlier. States showing
increases, in addition to Texas, were Colorado
(31 percent), Nebraska (9 percent), and Iowa
(3 percent). Gains in these four states more
than offset declines in California (15 percent)
and Arizona.
Prices received by Texas farmers and ranchers were fractionally lower on July 15 than a
year earlier. The aU-crops price index was 1
percent higher than in July 1969, but the price
index for livestock and livestock products was
1 percent less.
Cash receipts from farm marketings in states
of the District in the first half of this year were
up 1 percent from the same period last year.
Receipts from sales of livestock and livestock
products were up 8 percent, but receipts from
crop marketings were down 14 percent.
Restrictions on oil production in Libya
and disruption of the Trans-Arabian Pipeline
through Syria have forced oil companies to
move more European petroleum imports
around Africa by tanker. The resulting increase
in demand for tankers has raised shipping rates,
pushing up the price of petroleum imports to
Europe and the United States and threatening
shortages on both sides of the Atlantic.
In response, crude oil production in states
of the Eleventh District has been increased
sharply. Louisiana increased its August rate
from 51 percent of maximum efficient production to 56 percent and then, for September,
raised the rate to a new record of 66 percent.
In Texas, the Railroad Commission, meeting
in emergency session, raised the August allowable from 62.9 percent of maximum efficient
business review / september 1970
15
production to a record 70 percent and made
the increase retroactive to August 1. For September, the commission increased the allowable
to 79.9 percent.
The commission has expressed concern,
however, that conservation problems, such as
unwanted production of associated gas and
hard-to-dispose-of salt water, might develop at
this high production rate. Pipeline capacity
could also become a problem. Problems with
the conservation of gas prevented New Mexico
from increasing its production rates above the
level for August.
Sulfur production in the District is suffering
from low world prices. By-product sulfur from
desulfurization of fuels and increased mining
capacity abroad have driven sulfur prices down,
causing some production in the District to be
shut down.
Total loans and investments at weekly reporting commercial banks in the Eleventh District
declined considerably in July and the first two
statement weeks in August. With demand for
most types of loans remaining sluggish and deposits increasing, these banks added slightly to
their security holdings.
new
member
banl~s
16
Total loans declined $78 million. Business
loans declined $44 million, which was in sharp
contrast to an increase of $63 million a year
earlier. Loans to financial institutions other
than banks declined $29 million as it becaJ1le
somewhat easier for finance companies to obtain funds in the commercial paper market.
Consumer instalment loans were essentially unchanged. Real estate loans rose $17 million.
Bank holdings of securities had increased $2
million since midyear. The banks increased
their holdings of municipals and, with twO
Treasury financings in July, added to their holdings of Treasury bills. Increases in holdings of
these securities more than offset reductions in
intermediate- and long-term U.S. Government
notes and bonds.
Total deposits rose $72 million in July and
early August, despite a $183 million decline in
demand deposits - most of which were held
by individuals, businesses, and the U.S. Government. A sharp increase of $255 million in
time and savings deposits stemmed mainly frolll
sales of large certificates of deposit following
the recent suspension of Regulation Q ceilings
on short-term CD's. With this increase in deposits, the banks further reduced their outstanding borrowings from nondeposit sources.
The Pan American National Bank, Houston, Texas, a newly organized institution located in the territory served by the Houston Branch of the Federal
Reserve Bank of Dallas, opened for business August 17, 1970, as a member of
the Federal Reserve System. The new member bank has capital of $400,000,
surplus of $400,000, and undivided profits of $200,000. The officers are: Frank
M. Pinedo, Chairman of the Board; Dr. Emilio Sarabia, Secretary of the Board;
Arnoldo Garcia, President; and A. W. Reynolds, Vice President and Cashier.
The American National Bank, Corpus Christi, Texas, a newly organized
institution located in the territory served by the San Antonio Branch of the
Federal Reserve Bank of Dallas, opened for business August 24, 1970, as a
member of the Federal Reserve System. The new member bank has capital of
$400,000, surplus of $250,000, and undivided profits of $150,000. The officers
are: George S. Hawn, Chairman of the Board; Ray Hudson, President; Bob L.
Bailey, Vice President; and Alfred B. Jones, Jr., Cashier.
STATISTICAL SI!I P,PI!EMENli
to the
BaSINESS REVIEW
September 1970
FEDERAL RESERVE BANK
OF DALLAS
RESERVE POS ITIONS OF MEMBER BANKS
CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS
Eleventh Federal Reserve District
Eleventh Federa) Reserve District
(In thousands of dollors)
(Averag es of doil y figures. In thou sands of dollors)
Item
Aug. 26,
1970
July 29,
1970
Aug. 27,
1969
Comm ercial and industria I loans •..•••••••••••
Agricultural loan s, ex clud ing CCC
certiAco tes of interest ••• .. ..• . ...... . ....
559,988
6,084,654
2,948,483
577,725
6,039,927
428,425
6,035955
---2,894,717
3,000,179
98,004
100,861
110,228
500
36,101
656
34,700
556
44,876
2,306
408,593
821
390,200
70
376,088
192,2 23
367,462
608,393
5,004
8,269
730 ,957
204,462
361,697
609,434
5,085
8,414
727,291
138,076
378,347
623,723
9,014
8,635
700,213
0
678,359
2,658,942
0
701,589
2,575,607
0
645,950
2,507,948
885,495
51,474
0
966,171
60,992
0
185,977
547,700
94,357
135,054
609,794
89,173
131,394
617,470
156,315
35,884
1,538,692
26, 191
1,488,483
24,256
1,422,645
110,152
72,956
1,061,005
919,234
96,277
491,418
8,540
108,695
66,743
1,058,445
713 ,944
90,210
399,2 10
7,939
22,803
72,073
1,050,302
647,188
88,211
464,371
5,912
loons to brokers and dea lers for
purcha sing or carrying:
U.S. Government securi ties ••........ •• .• ••
Other securities •..... . • ... • .. . • ••.. . ....
Other loan s for purcha sing or carrying:
U.S. Government securities .••....••......•
Other securiti es •....•..•...•. • ...•...•..
loans to nonbank flnancla I institutions:
Soles finance, personal finance, factors,
and other business credit companies .••. •. •
Other ........... ..... ......... .. . .....
Real estate loo ns •• .•...•.... .. •...••.•.. . •
Loans to dome stic commercial banks ..•........
Loon s to foreign bonks •• . ... •......•..•.• . .
Consumer instalment loons ••. • ... •.•• ........
Loon s to for ei gn governments, offlcial
institutions, central bonks, and international
institutions •••• .. .. • ... . .... •. .. • ..•.. •. .
Oth er loons .. •...... •..•...••...•.•••..•.
Total investments •.•..•....... .... ..... ......
Total U.S . Government sec uritie s •.•.... ••••.•.
Tre asury bills •.•••.•... .. .•••.. . ••..••..
Treasury certiflcates of indebtedness •.....••
Treasury notes and U.S. Gov ernmen t
bond s maturing:
Within 1 ye ar .• ••...•...•..••.••.....
1 year to 5 years •••...••..•..••••••..
After 5 years .••••.. • ..• • .•....•.••...
Obligations of state s and political sub division s:
Ta x warrants and short-term notes and bills ••
All other ........................ . .... ..
Other bond s, corporate stocks, and securities:
Ce rtiflcates repre sen ting participations in
Federal agency loon s •••••...•......•..
All oth e r {including cor~orate stocks} ••...•..
Cosh items in process of col ection ••.. ...... . ...
Re se rves with Federal Re serve Bonk ••••.•......•
Currency and coin ... • ..• ..•.... .. .... .. ••••.
Balances with banks in the Unite d States .•....•. •
Balances with bonks in foreign countries ••....•..
Other assets (including inv estments in subsi diaries
not con so lidated) •..•••.•..•...•.•...••.•.•
Total rese rves he ld •.•.........
With Federal Reserve Bonk ••..
Currency and coin ... . •..•. . .
Required reserves. . ...........
Excess reserves •.••.....•.....
Borrowings •. . •. .•...•. •..•••.
Free rese rves •......•..•......
Jul y 1, 1970
Aug. 6, 1969
754,910
701,396
53,5 14
758,488
-3,578
88,192
-91,770
740,727
687,270
53,457
749,434
-8,707
51,775
-60,482
732,494
682,173
50,321
731,907
587
54,175
_53,588
774,984
591,290
183,694
757,488
17,496
10,307
7,189
769,558
585,326
184,232
749,665
19,893
8,658
11,235
773,337
596,174
177,163
748,391
24,946
24,531
415
1,529,894
1,292,686
237,208
1,515,976
13,918
98,499
-84,581
1,510,285
1,272,596
237,689
1,499,099
11,186
60,433
-49,247
1,505,831
1,278,347
227,484
1,480,298
25,533
78,706
_53,173
ALL MEM8ER BANKS
901,258
73,224
0
----
Total re se rves he ld •••..•••..••
With Federa l Reserve Bonk •.••
Currency and coin ••••.••..••
Req uired reserves ••.. ••.. . •. ..
Excess reserves ..••.....•....•
Borrowings • . .••.. •. ..•.•...••
Free reserves • . . ••.....••.• .. .
-
4 weeks en d e d
Aug. 5, 1970
COUNTRY BANKS
Toto I reserve s he ld •.••........
With Federa l Reserve Bonk ••.•
Curr en cy and coin .••...•••..
Required reserves ••.........•.
Excess reserves .••.•....•.....
Borrowings •••.. .. . . ... • ••••..
Free reserves •.....•..•.......
-=
5 weeks ended
5 weeks e nd e d
RESERVE CITY 8ANKS
ASSETS
Fe d era l fund s so ld and securitie s purcha se d
un d er agreements to resell. . ....•......•.•••
Other loans and discounts, gross .••.• •..•• .• ••..
It e m
-
CON DITION OF THE FEDERAL RESERVE BANK OF DA LLAS
471,053
485,379
413,783
TOTAL ASSETS ....... .................. 12,351,111
11,948,386
11,642,095
- - - - ----
lin thou sonds of dolla rs )
==========================================================~
Aug. 27,
Aug. 26,
1970
July 29,
1970
1~
----------------------------------------Total gold certiAcate reserves.... . . . • . • • • • . .
711,470
313,949
316,991
Item
Discounts for member banks. . . • • • . . • • . • • . . .
14,520
125,600
Oth er discounts and advances . • • •• . . . . . . . • .
0
2,240
U.S. Government securities . • • . . • • . . . • . . • • . .
Total earning a ssets.. ... . • . . . . . . . . . • • • . . . •
Member bank reserve deposits.... . . . . . • • • . .
2,468,007
2,482,527
1,447,684
2,51 0,008
2,637,848
1,220,227
Federa l Re serve not es in actua l circulation. . .. •
1,83 1,25 2
1,810,282
53,320
2
2,322,9~7
2,376'~28
1,175, 65
1,652,2
---------------------------------------------------
CO ND ITION STATISTICS OF ALL MEMBER BANKS
LlA81L1TIES
Total d e posits •...•.....•...••..•..•.•.•..••
Total d e mand d e posits ••...•...•..•...•..••
Individuals, partn ers hip s, and corporations ••••
States and political sub d ivi slons ...• . ......•
U.S. Government • ••••..•.•.. . •.. ••. • . . ••
Bonks in th e Un ite d States •••••......••..••
Fore ig n:
Governments, of Ado I institutions, central
banks, and intern at ional inst itution s ••. •.
Commercial banks •.•.••.•• .. •.••.••...
Certifled and offlcers! checks, e tc ..•••.... ..
Total time and saving s d eposits . •. . •.•.• . .. • .
Individuals, partnerships, and corporations:
Savings d e posits •••. . •.••. . .. . •••• ....
Other tim e d e po sits .•....•...•....•.•..
States and political subdivisions . .....•.... .
U.S. Governm e nt (including postal saving s) ..•
Bonks in th e United States ...... ......... ..
Foreign:
Governm e nts, offlcial insti tution s, cent ral
banks, and international institutions .....
Comm erc ial banks ....•.........•..•...
Federal funds purcha se d and sec uriti es sold
under agr eeme nts to repurchase ..••.........
Oth e r liabilities for borrowed mon ey .• •... . •...•
Other liabilities • ...•.•........•... . . •••. .. ..
Rese rves on loon s ...•..•.•...•.. .. • .. .•....•
Reserves on securities .... ..•..... ......• . ..•.
Total capitol accounts ... .. ..... .. ... . •....•..
Eleventh Federal Reserve District
9,610,169
9,199,273
9,186,402
5,814,531
3,956,351
318,777
194,471
1,223,280
5,620,194
3,854,030
279,834
131,935
1,238,267
5,720,724
4,000,539
326,094
127,987
1,148,018
2,984
19,982
98,686
3,795,638
3,390
22,912
89,826
3,579,079
3,866
23,426
90,794
3,465,678
(In millions of dolla rs )
---- ---- ----
920,400
2,027,305
757,899
43,633
28,916
917,637
1,843,975
752,690
29,633
19,659
957,323
1,848,144
623,063
8,735
22,023
~
July 29,
1970
June 24,
1970
loan s and discounts, gross ••••••.. •••••...
U.S. Government obligations • ••....•.•• ...
Other sec uriti es .•. .•.•••• .... •.••.• .. ••
Reserves with Federa l Reserve Bonk ••.•. . ••
Cash in vault . .... .•...•... '" ......•..
Balances with bonks in th e Unit e d States ••••
Balances with bonks in foreign countriese ....
Ca sh items in proc ess of collection ••. ......
Othe r a ssets e •••... .•• ••.. . •• '" ..•....
11 ,903
2,017
3,356
1,220
270
1,183
11
1,215
621
11,853
1,989
3,297
1,209
267
1,171
10
1,271
989
TOTAL ASSETse ......... ..... ...... .
21,796
22,056
Item
ASSETS
LlA81LITIES AND CAPITAL ACCOUNTS
16,385
1,100
14,385
1,100
6,000
390
Dem ond deposits of banks •...•......••..
Other d eman d d e posits ..................
Tim e d e po sits •.... . ... •... . •.• , ..••••.•
1,612
8,703
7,610
1,539
8,689
7,382
1,009,003
155,095
419,718
13 0, 105
14,863
1,012,158
943,077
218,466
440,426
130,626
14,807
1,001,711
798,045
246,719
322,031
117,778
11,560
959,560
Total deposits •..•. ..•........... .. . .
Borrowing s .........•..................
Oth er liabiliti es e •........... •. .• " •.•.•
Total capitol accounts e . .••• .. ..•... ... ..
17,925
1,218
860
1,793
17,6 10
1,325
1,358
1,763
TOTAL LlA81LITIES, RESERV ES, AND
CAPITAL ACCOUNTS • • •...•..•...•.•. . 12,351,111
TOTAL L1A8ILITIES AND CAPITAL
ACCOUNTSe ........ .... . ..... ....
21,796
22,056
11,948,386
----
---11,642,095
e -
Estimated.
July 30,
~
11,3~~
2,1
313 6
1'123
'259
1,15~
-
1 170
'753
~
1 441
8'7 07
7;3 88
17'1'800m
---
1,69 8
~
~
BANK DEBITS, END-Of-MONTH DEPOSITS, AND DEPOSIT TURNOVER
(Dollar amounts in thousands, sea sonally adju sted)
DEBITS TO DEMAND DEPOSIT ACCOUNTS'
DEMAND DEPOSITS'
Percent change
July
1970
7 months,
(Annual-rate
basis )
Standard metropolitan
stati stical area
ARIZONA, Tucson •.•..... •. ... ••.. ..... . ....•. •• .. • •
LOUISIANA, Monroe . • .. • . .. • ...... . • • .. • . . . . • ....•.
Shreveport . .. . .. . .. . .............•......
NEW MEXICO, Roswe ll' • • •.. • .... • ..•.•........... • •
TeXAS, Abilene •••.. . . . • •• .. .. . . •.• . .. . . ..•••• ..... •
Amari llo . . .. . ... . .. . .... . . . ... .. , ..... . .... .
Austin .. .. .. .. ..... .. ... .. . ... ... ... . ...... .
Beaumont- Port Arthur- Orang e . . .. .. .•..........
Brown sville - Harling en-San Benito . ...... . . . . .....
Corpus Chri sti . •• .. ... .. . . .•. .. . . . .. .. . . .. . . ..
Corsicana:! . • .... .. .... .. .. ... ... . ...... . .. ..
Dalla s • .• . . • •• .. • •.. .... . • .• . •...• •• .. .... . .
EI Pa so •..••.......•.• . ... • ••... • •......... •
Fort Worth •. •• ... • ... •••.•. •. • ..•. . .•.. • .. • •
Galveston-Texa s City . . ... . . . . ... . .. . . ... .. •. .
Houston . •. . . ... . . . ....... . . .. .. ...... . ... ..
Laredo . . .. ..... ...... '" .... •.. .. .... . .....
Lubbock • .• • •..•.•..••........ . •. • •... • . • .••
McAllen·Phorr· Ed inburs •.•• ••. •••... .•• ...... • •
Midland .. • •..••... • • . . . . • ...... .• . • .•.. .. •.
Odessa • . . •.. . . . .. .... .. .. . ........ . .... . . . .
San Ang e lo . .•. .. ... . . . • .. .. . . • .. . .... . •.•..
San Antonio . ...... . ...... • ..... .. •..•... . ...
Sherman- Denison . . . .... . . . . . ..• .... . . . . . .. . ..
Texa rkana (Texa s-Arkansa s) .... .. . . . . .. •. .. .. ..
Tyler •••. • . •. • •• .. .• ••. . . . .. . . . .•. . .•.. •• ...
Waco • ... . ....... ... .. . .. .. .. . . ......•. . .. .
Wichita Falls ••• ... • ••. • .• • .•...• • •...•..... .
$
6,835,320
2,879,232
9,000,816
883,476
2,139,192
5,898,300
8,458,140
6,222,096
2,019,036
4,852,404
468,528
130,421,640
7,364,124
21,700,488
2,757,144
106,865,772
967,896
5,171,640
1,738,584
2,051,088
1,515,432
1,202,280
19,134,684
1,159,260
1,426,872
2,220,468
3,161,844
2,372,124
Annual rate
of turnover
Jul y 1970 from
July
1969
June
1970
7
3
-6
-2
0
4
-12
-1
8
- 1
7
5
-1
2
-4
9
1
8
3
11
-2
-4
10
3
-9
-4
-6
13
1970 from
1969
July 31,
1970
Jul y
1970
June
1970
July
1969
17
10
22
$ 234,255
91,923
234,818
38,876
103,346
160,718
324,053
242,934
70,245
205,534
31,955
1,913,887
227,955
638,839
112,484
2,467,388
41,076
172,584
98,370
130,591
91,403
65,717
656,114
63,807
71,457
90,745
118,612
113,704
29.0
33 .0
36.9
23 .5
21.1
36.4
26.5
25.9
27.8
23.5
15.0
63 .4
31.9
33.8
24.1
42.8
24 .3
30.1
17.4
15.6
16.4
17.3
29.5
18.1
20.2
24.0
26.4
21.0
26.5
33 .1
39.1
25.1
21.5
35 .0
29.6
26.8
25.0
23.8
14.3
56.9
31.7
31.2
25 .4
39.5
25.3
29.2
16.8
14.0
16.9
17.8
27.5
17.7
21.8
25.1
28.2
18.5
26.3
30.7
35.1
25.9
19.9
36.1
37.0
26.5
23 .8
24.7
14.8
51.7
31.8
33.3
24.6
38 .4
22.3
31.6
17.1
14.7
19.8
16.3
26.9
17.5
21.8
23.0
24.9
20.5
20
10
1
-8
10
6
-15
-5
21
-6
8
15
4
4
5
12
10
7
13
4
1
10
17
13
-11
1
9
1
5
12
-2
1
14
5
6
11
8
11
12
12
12
1
6
1
9
9
12
11
-8
01
13
-2
----
10
11
$8,813,390
40.1
37.8
36.6
10101_28 centers ... . . ....... . .. .. .. . . .. .... . ... .. . . $360,887,880
------------------------------------------~~~~~-----------------------------------------------
! Dopo sl ts of individuals, partnerships, and corporations and of states and polit ical subdivi sions.
~ County basi s.
GROSS DEMAND AND TIME DEPOSITS Of MEMBER BANKS
Eleventh federal Reserve District
(Averages of daily flgures. In millions of dollars)
BUILDING PERM ITS
=-
GROSS DEMAND DEPOSITS
VALUATION (Dollar amounts in thousand s)
Date
Total
Reserve
city banks
1968:July .••••••
1969, July • • ••...
1970, February .•.
9,742
10,316
10,256
10,284
10,497
10,233
10,265
10,412
4,554
4,783
4,625
4,727
4,819
4,671
4,748
4,782
Percent change
July 1970
from
NUMBER
_____Area
~RIZONA
lOTIJCSOn • •• • ..•.
UISIANA
Ju ly
1970
592
7 months,
July
1970
7 mos.
1970
4,208
$
3,610
7 mos.
Jun e
1970
1970
July
1969
$ 29,415
-25
-65
~bil e n e ••• • • .•
83
615
47
169
e Ustin . . .. . ...
511
e8alJmont .. .. .
138
CrOwn svill e . . . .
66
o°IPus Christi . • 404
Da la s•.•..... 1,830
Elepi son ..•. ...
55
F c so . . .. . . .
506
rt Worth . •..
511
11 alveston .. ...
62
loor~~~n .• • . . . 4,499
36
Lb
· ·· · · · .
Mid~:ck • .... . 416
56
Od nd • • . .•.
74
Por~~~"" . ..
thur • • . .
70
S
S~n Ang elo . . .
65
Sh:r~~toniO ... 1,654
T
n • ....•
72
W'torkana . . . .
24
aco
218
\Vichit~' F~il; : :
71
10'01
--~ cities •. 12,844
Amarilla . .. •. .
U
March .•. . .
April ••....
May .• ....
-31
June . .. ...
July •••• • ..
Monro e. West
Sh Monroe ••• • •
tex;;veport •.••
1970 from
1969
461
3,146
2,533
3,468
280
3,119
2,757 .
1,051
498
2,4'10
13,793
273
3,214
2,814
495
21,633
335
1,648
390
527
565
405
9,151
47.5
209
1,431
493
2,704
884
16,614
640
461
2,282
31,081
299
6,524
4,486
478
33,180
198
6,952
521
588
199
2,396
8,086
2.878
124
1,925
2,141
75,787
$ 135,252
109
30
15
-13
845
6,474 1,022
22,866 _ 17 -85
53
167
72,603
6,433 -55 -49
3,032 - 65 - 41
41
1
17,250
5 - 10
217,614
47
59
2,773
51
53,390 -14
- 7
51,987 - 71
34
62
3,869
260,527 -24 - 28
33
4,395 -51
251
47
33,388
52
-6
2,902
87
6,216 - 27
6,567 - 96 -61
644
149
8,280
20
58,848 _ 21
59 -46
10,103
71
5,277 -88
25,221 - 55 - 38
111
270
8,163
-14
7
-26
-9
-5 1
8
I
21
-9
0
- 71
2
102
75
-16
6
-10
131
19
-34
25
95
-16
- 7
-1
9,919
20,005
$947,517
303
-19
- 10
TIME DEPOSITS
Country
bonk s
Total
5,188
5,533
5,631
5,557
5,678
5,562
5,517
5,630
7,059
7,474
7,145
7,231
7,328
7,394
7,391
7,511
Reserve
city banks
2,921
2,806
2,554
2,581
2,634
2,659
2,651
2,722 .
Country
banks
4,138
4,668
4,591
4,650
4,694
4,735
4,740
4,789
VALUE Of CONSTRUCTION CONTRACTS
(In millions 01 dollars)
Area and type
FIVE SOUTHWESTERN
STATES' ••. . ••... . . .....
Resid ential building . • ... ..
Nonres id ential building . . . .
Nonbuilding con struction . . .
UNITED STATES ••. . •• . ••. ..
Re sid ential building ... ... .
Nonresid ential building . ...
Nonbuilding construction . ..
January-July
Jul y
1970
1970
May
1970
1970
1969r
626
305
210
111
6,178
2,347
2,469
1,361
755
249
205
301
6,553
2,224
1,919
2,410
596
252
190
154
5,417
2,123
1,750
1,545
4,727
1,7 12
1,508
1,507
40,565
13,862
14,946
11,756
4,160
1,675
1,366
1,120
40,236
15,299
15,106
9,831
June
A rizona, loui siana, N ew Me xico, Oklahoma, and Texa s.
r Revised .
NOTE . De tail s may not add to total s be cause of rounding.
1
SOURCE, F. W. Dodge , McGraw· Hill, Inc.
INDUSTRIAL PRODUCTION
(Se asonall y adiusted indexe s, 1957·59
Area and type of index
CROP PRODUCTION
= 100)
(In thousands of bushels)
July
1970p
1970
May
1970
July
1969
174.0
195.1
201.2
191.1
128.7
255.1
177.2
199.2
208.2
193.1
131.3
255 .1
177.6r
198.0r
212.4
188.5r
134.0r
255 .1r
175.2r
198.2r
221.8r
182.4r
126.lr
262.6r
June
1970,
1970,
estimat ed
TEXAS
Totol industrial production . . . ...
Manufacturing •..•...• • .•. •• ...
Durable ..... ... ... ... . .. . ...
Nondurable .. . ...............
Mining .... .. . . ... .. .. .•. . ... .
Utilitie s. .... .. . ... . ..... . .... .
UNITED STATES
Total industrial production ..•.. .
Manufacturing .. . .. .• ...... .. ..
Durable .. . .. ......... . .... . .
Nondurable •• ••. .. • ..•.•.• • ..
Mining ......... . ........ . ....
Utilities • . .. . ..•• • •.• • ••• •• .. ••
169.2
168.3
167.5
169.2
135.0
237.5
168.8
167.9
167.6
168.4
134.9
235.2
174.6
175.6r
178.7r
171.8
133.2r
222.2
169.1
168.4r
167.5
169.4r
134 .7r
234.9r
p Preliminary .
r Revised .
SOURCES : Boord of Governors of th e Fedoral Reserve Syste m.
Federal Reserve Bonk of Dallas .
-=
FIVE SOUTHWESTERN STATES'
TEXAS
-
estimated
Crop
Aug. 1
1969
1968
Aug. 1
1969
1968
Cotton 2 • ••••••••
Corn .....•••...
3,653
23,359
54,408
28,140
4,394
736
21,436
331,674
1,127
3,983
420,000
4,216
975
2,862
25,124
68,856
25,460
3,290
684
21,646
309,600
1,300
3,451
389,070
4,437
780
3,525
26.os2
84,150
19,822
3,348
528
27,164
340,780
742
4,587
426,300
4,382
960
5,219
35,139
167,715
36,332
35,340
1,762
41,677
384,877
1,127
9,409
653,600
7,734
5,650
4,415
34,266
197,619
33,058
29,096
1,664
42,420
368,7 40
1,300
9,136
610,549
8,084
5,200
5,2 44
36,871
218,974
25,450
26,856
1,208
53,3 06
402,72 9
742
10,418
671,476
7,62 4
5,120
Winter wheat • • ••
Oats. • ....... . .
8arley •••••.••.
Rye •• • •••• • . •••
Rice' •....••.•. .
grain ...
S~rghum
Flaxseed •• •• • ••
Hay· • •••. • •.•• .
Peanuts5 ••••• • ••
Irish potatoesG•• •
Swee t potatoes6 .•
1
~
Arizona, loui siana, New M ex ico, Oklahoma, and Texa s.
In thousands of bale s.
----
a In thousands of bag s containing 100 pounds each.
" In thousands of ton s.
fi In thou sands of pounds.
o In thousands of hundredweight.
SOURCE , U.S. Department of Agriculture.
DAILY AVERAGE PRODUCTI O N OF CR UDE OI L
CASH RECE IPTS FROM FARM MARKETINGS
IDoliar amounts in thousands)
(In thousands of barrels)
Percent change from
========================================~~
January-Jun e
Percent
July
1970
Area
July
1969
June
1970
July
1969
June
1970
____________________________________________
~~________
ch__
a~
1970
Area
1969
Arizona •........ . .....•....
FOUR SOUTHWESTERN
STATES ••••.• • ••.• . .•..•
louisiana ... . ...........
New Mexico ... . .... ... . .
Oklahoma ••. • . • . ••• . ...
Texas .......... . . . .... .
Gulf Coast .• . ...... • .•
West Texas ...........
Ea st Texas (proper) • • ..•
Panhandle •.•..•••.•..
Rest of state ......• .. ..
UNITED STATES • • •. • •..•..•
6,591 .5
2,370.5
377.0
617.3
3,226.7
658 .6
1,530.7
~01.2
75.2
761.0
9,361.5
6,745.3
2,463.6
364.8
621.4
3,295.5
673.8
1,558.5
203.3
77.2
782 .7
9,501.4
6,467.3r
2,333.4r
340.7r
606.4r
3,186.8r
647.5
1,504.5r
163.5r
82.0r
789.3r
9,262 .9r
-2.3
-3 .8
3.3
-.7
-2 .1
-2 .3
-1.8
-1.0
-2 .6
-2.8
-1.5
1.9
1.6
10.7
1.8
1.3
1.7
1.7
23 .1
-8.3
-3 .6
1.1
louisiana ...................
New Mexico ........... . ... ··
Oklahoma .... • ...•.. . ... .. .
Texas ... . ... . . . •...... .. ·· .
Total •.•...... • ••.. . .. · •· .
Unit ed Stat es..... . . . .... . .
326,700
196,000
120,300
435,100
1,209,500
340,400
194,100
120,500
403,600
1,208,300
$ 2,287,600
$21,085,600
2,266,900
$20,035,800
$
_4
1
o
8
o
1
5
------~------~~~---------------------SOURCE, U.S. Department of Agriculture .
SOURCES, American Petroleum Institute.
U.S. Bureau of Mines.
Federal Reserve Bank of Dal las.
COTTO N PROD UCT ION
NONAGR ICU LTURAL EMPLOYMENT
Texas Crop Reporting Districts
Five Southwestern States'
(In thousands of ba les -- 500 pound. gross weight )
~
Percent change
Type of employment
Total nonagricultural
wage and sala ry worke rs ..
Manufacturing . .....••...
Nonmanufacturing ... • ... .
Mining .••.....•.. . ...
Construction .. . ........
Transportation and
public utilities ....... .
Trade •.•..•• .. •..••..
Finance .... . ... . . •• . . .
Service . ... . . . .. . ... . .
Government .. . .. .. .. ..
1
July
1970p
1970
July
1969r
1970
July
1969
6,365,200
1,155,800
5,209,400
234,600
414,200
6,391,500
1,162,700
5,228,800
233,700
418,100
6,262,200
1,192,100
5,070,100
237,700
417,700
- 0.4
-.6
-.4
.4
- .9
1.6
- 3.1
2.7
-1.3
- .8
474,200
1,48 1,500
326,500
1,042,200
1,236,200
471 ,000
1,478,600
326,400
1,038,800
1,262,200
458,100
1,427,300
312,600
1,001,300
1,215,400
.7
.2
.0
.3
-2.1
3.5
3.8
4.4
4.1
1.7
June
Arizona, louisiana, New Mexico, Oklahoma, and Te xa s.
Preliminary.
Revised .
p -
r -
SOURCE , State e mployment agencios .
June
1970 t 01
1970,
July 1970 from
Number of persons
as perc en
indicated
August 1
1969
1968
248
1,134
179
213
15
258
15
34
144
49
50
106
93
17
307
211
1,384
312
372
20
409
19
41
189
9 - Coastal Prairi es..••.. .. .. . . ..
10·N - South Texas Plains .• • •.......
10· 5 - Lower Rio Grand e Va ll ey .• ••..
400
1,500
180
325
15
400
25
45
163
50
60
90
100
30
270
State . .•• • ••• .• • • ..............
3,653
2,862
3,525
Area
l -N 1-5 2. N 2-5 3 4 -
Northern
Southern
Red 8ed
Re d Bed
High Plains ••••.. •. ..
High Plains .••.....•.
Plains •. . •....• •. .•.
Pla ins • •.. • .. • .. . ...
Western Cross Timb ers•... . . . .
Black and Grand Prairi es.... ..
5-N - East Texas Timbered Plains. ...
5- S - East Texa s Timbered Plains. ...
6 - Trans·Pecos ............ ... ..
7
- Edwards Plateau • ••......... .
8-N - South ern Texa s Prairi es . . .. .. .
8- S - Southern Texa s Prairies .... . . .
SOURCE, U.S. Deportment of Agriculture .
72
57
93
79
25
242
~
161
132
101
153
10 0
15 5
167
132
11 3
102
120
85
108
176
88
---128
@FedFRASER