June 23, 1971
The economy in the Southwest is still somewhat weaker than a year ago in the opinion of economic analysts with the Southwest regional office of the U. S. Department of Labor and with the district states' Labor Commissions. However, a slim majority felt that the situation would improve by year end. But these analysts generally did not expect the current rate of inflation to change much by year end. Most expect area prices to increase about the same as nationally, and for these price increases to be mainly in consumer durables and services. In addition, they also anticipate moderate increases in both short and long interest rates over the balance of the year.
Most of the respondents view the present level of employment as
about the same as it was at the end of last year. But a few analysts
reporting on New Mexico and Oklahoma felt that the situation has
worsened in their states. About half indicated that the unemployment
problem in their region was concentrated in relatively few areas.
Counties with defense industries or Indian reservations and counties
in southwestern New Mexico and in southern Texas are feeling the
pinch in particular. For the district as a whole,
defense-related
industries were cited as industries in which unemployment problems
were most severe. However, a number of other industries were also
reported as suffering high unemployment in the different district
states, including transportation equipment, electrical equipment,
general services, and construction.
Moreover, the outlook for employment in the Southwest is not particularly promising. Only about half of the respondents felt that the situation would improve somewhat by year end, with the others anticipating no change or some further increase in unemployment. Also, everyone thought the outlook for summer employment is particularly bleak.
Those that expected some improvement in the unemployment situation felt that it would be selective, likely to occur principally in construction, manufacturing, trade, and state and local governments. Those anticipating no change or a worsening in unemployment emphasized the anticipated growth in the labor force. They pointed out that the labor force had increased substantially since a year ago, reflecting in part returning veterans, entering youth, and migration. Moreover, it is anticipated that virtually every labor category, with the exceptions of unskilled and agricultural labor, will increase between now and year end.
Most did feel, however, that the impact of unemployment had fallen less on minority groups in past months than it had in other periods of economic slowdown. But they thought that the outlook for minority group employment was no better or worse than that for workers as a whole.
District economic indicators available since the last issue of the Red Book continue to evidence a mild upturn. Registrations of new passenger cars in Dallas, Fort Worth, Houston, and San Antonio were 8 percent lower in May than in April, but continued to be 9 percent greater than the same period a year ago. Department store sales were 9 percent higher in the four weeks ended June 12 than for the corresponding period a year before, and 8 percent higher on a cumulative basis this year than for the same period last year. The Texas Railroad Commission, however, reduced Texas oil production allowables from June's allowable of 75.4 to a factor of 68.7 percent for July. New Mexico also cut her production allowable for her southeast fields from 80 barrels to 70 barrels a day per well.
Agricultural conditions in the Eleventh District remain somewhat precarious. Recent rains have failed to totally break the drought in Arizona, New Mexico, and Texas, and arrived too late to aid the small grain crops. Range and cattle conditions in the four western states remain substantially below the ten-year average due to drought stress. The outlook depends largely on the adequacy of water supplies, both irrigation and rainfall. Arizona and New Mexico both face possible water shortages, but at this time irrigated crops throughout the district are progressing well.