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THE BUSINESS
SITUATION
IN TEXAS
Francis B. May
Texas business activity has declined for two consecutive months. After reaching an all-time high of 236 percent of its 1957-1959 monthly average value in July, the seasonally adjusted Texas business-activity index declined 8 percent in August and 1 percent in September. This decline in activ- ity suggests that the rate of growth of the state's economy is slackening, a conclusion supported by a two-month de- cline in crude-oil production and a three-month decline in crude runs to stills. This is not to say that a recession is imminent. Two of these indexes are above their September 1967 levels. It is just that the state's economy is a little less vigorous. A condition of lessening vigor is not without precedent during the seven years and eight months of the current cyclical upswing. The credit crunch of 1966 produced a recession in the Texas homebuilding industry and slowed the rate of nonresidential building in 1967. This prevented the total level of business activity from rising as much as it would have risen without the drag from the construction sector. A glance at the table of barometers of Texas business shows that September business activity was at a level of 216.1 percent of its 1957-1959 base value. At this figure the seasonally adjusted index was 11.5 percent above that for September 1967. During the first three quarters the index averaged 13 percent above the January-September 1967 level. Crude-oil production in September, at 108.6 percent of its 1957-1959 base value, was 5 percent below the August index and 7.3 percent below the September 1967 value. A rise in crude-oil stocks and a substantial 34.6-percent rise in crud~e-oil imports in the three-month period ended
250 200 150 50
August 31 contributed to the need for a reduction in Texas output. From July 1967 to July of this year Texas crude- petroleum production ranged from 124.8 percent to 108.8 percent. Compared to the 1958-1966 period these were rela- tively high levels of production. The high levels after June 1967 resulted from disruption in world oil flows by the Arab-Israeli War. The Suez Canal has been closed since that war, blocking the usual route of the smaller oil tank- ers. This resulted in a drop in crude-oil imports into this country until recently. Total imports of crude oil for January-May of this year were 15.1 percent below imports during the like 1968 period. Imports during June, July, and August raised the eight-month total to a level 3.5 per- cent above that of January-August 1967. The world oil industry has adjusted to the closing of the Suez Canal, with imports resuming their prewar pattern of growth. This means that the future rate of increase in Texas oil output will be about 1.5 percent a year instead of the 1966-1967 increase of 7.4 percent. Crude-oil runs to stills fell 2 percent in September, on the basis of seasonally adjusted data. At 128.6 percent of average monthly runs during its 1957-1959 base period the index was 2.3 percent above that of September 1967. The index has been above the level of the corresponding 1967 month during the entire January-September period. Al- though demand for most petroleum products has been at high levels, refinery output of kerosene and distillate has been at high enough levels to result in an increase in product stocks. Kerosene and distillate stocks were up 13.2 percent and 21.5 percent, respectively. The high level of kerosene stocks is not troublesome because demand for jet fuel is at high levels. Distillate stocks are a problem
TEXAS BUSINESS ACTIVITY Index Adjusted for Seasonal Variation-19S7--l9S9=lOO 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 bank debits reported by the Federal Reserve Bank of Dallas and adjusted for seasonal variation and changes in the price level by the Bureau of Busines s Resear ch.
Newsletter of the University of Texas Bureau of Business Research outlining statistics and research related to business in Texas. Index to volume 42 starts on page 369.
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University of Texas. Bureau of Business Research.Texas Business Review, Volume 42, Issue 11, November 1968,
periodical,
November 1968;
Austin, Texas.
(https://texashistory.unt.edu/ark:/67531/metapth1203647/m1/3/?rotate=270:
accessed July 16, 2024),
University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu;
crediting UNT Libraries Government Documents Department.