Texas Business Review, Volume 42, Issue 10, October 1968 Page: 281

                                
THE BUSINESS

SITUATION

IN TEXAS

John R. Stockton

The data for August business in Texas show some weak
spots in the economy, but taken as a whole the level of
activity is still remarkably strong. The index of business
activity compiled by the Bureau of Business Research from
debits to individual accounts in the largest cities of the
state declined 8 percent from the July value, which was
an all-time high for the series. The level of August busi-
ness was exceeded also by April and May activity of this
year, but the average for the first eight months of 1968
was 14 percent above that for the same period last year.
Eighteen out of twenty cities for which individual indexes
of business activity are constructed declined from July,
after adjustment for seasonal variation. Since the total
volume of checks charged to individual demand accounts is
a rather broad-based record of business in a community,
the unanimity with which these city barometers declined
is rather convincing evidence that August business activity
was not as well sustained as July activity.
The level of Texas business activity during the summer
of 1968 has failed to conform to the course predicted for
it at the time the tax surcharge was passed. It was widely
believed that the increase in taxes would dampen the rate
at which the Texas economy, as well as that of the nation
as a whole, was expanding. The unexpected record of Texas
business through the summer month of August in this re-
spect has paralleled the changes in business activity for the
United States as a whole.
In spite of the decline in the volume of business as
measured by checks drawn against bank accounts, other
measures of specific segments of the economy deviate from
this general measure. One of the major forces that has
been propelling the economy to higher and higher levels
has been the demand for housing and for various types of
business construction. The total value of new construction

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authorized in August increased 1 percent over the value
authorized in July. The index of total construction author-
ized in August was the highest for the year, and 12 percent
above the average monthly level for the year 1967.
The strong performance of construction was achieved
through the decided upsurge of nonresidential building
authorized in August. This month represented an increase
of 30 percent over the previous month after adjustment for
seasonal variation. Since nonresidential buildings are fre-
quently very large, it is possible for the total value of
buildings authorized to fluctuate widely from month to
month, depending upon whether the permit was issued in
one month or another. It is significant that the total value
of nonresidential permits during the first eight months of
1968 was 16 percent below the level of the same period
last year.
The large volume of nonresidential permits issued in
August offset a decline of 19 percent in the seasonally ad-
justed permits for residential construction. However, resi-
dential building over the year has done better than non-
residential, with an increase for eight months of 28 per-
cent over the first eight months of 1967, compared to a
decline of 16 percent in nonresidential. In spite of this
somewhat erratic behavior of the various kinds of build-
ing, the industry has contributed a very substantial sup-
port to the present level of business activity. This strong
increase in building permits issued promises substantial
activity in coming months as work on the buildings pro-
gresses, even though this effect was not immediately felt
in the more general measures of business activity such as
bank debits.
The figures on housing for the country as a whole show
essentially the same trend as that indicated in Texas.
Housing starts declined slightly in August after a sharp

TEXAS BUSINESS ACTIVITY
Index Adjusted for Seasonal Variation- 1957-1959=:100
1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
NOTE: Shaded areas indicate periods of decline of total business activity in the United States.
SOURCE: Based on hank debits reported by the Federal Reserve Bank of Dallas and adjusted for
seasonal variation and change s in the price level by the Bureau of Busines s Resear ch.

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