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AN EIGHTH DISTRICT PERSPECTIVE
Federal Reserve Bank of St. Louis

Summer 1983

District Economy Mirrors Improved
National Economy
General Business Conditions
On both a national and regional level, current in­
dicators of economic activity show a much brighter
picture than in 1982. At the national level, the growth
of inflation-adjusted GNP accelerated to a rate of 2.6
percent in the first quarter of 1983, and early indica­
tions are that it may exceed a 6 percent rate in the se­
cond quarter. This contrasts sharply to the decline in
real GNP during 1982.
The significant upturn in the indexes of general
business for Eighth District states are consistent with




these changes at the national level. The growth rates of
these indexes were negative throughout 1982 in each
of the four District states for which the index is
available. Year-to-date 1983 growth rates, however,
are all positive and range from 1.7 percent for
Tennessee to 4.2 percent for Kentucky.
Employment
Nationwide, total payroll employment fell 2.4 per­
cent in 1982, while declining 3.0 percent in the District.
In contrast, during the first part of 1983, payroll
employment has been rising in both the United States
and the District at roughly comparable rates. Despite
this reversal in employment growth, unemployment in
the District remains high by historical standards. Pro­
ductivity gains have kept the increase in employment
below the increase in production, and some firms are
still reducing their work forces. An encouraging sign,
however, is the substantial reduction in unemployment
that occurred in May, the month for which the most re­
cent data are available.
Prices and Wages
At the national level, the rate of change in the Pro­
ducer Price Index (PPI) was down significantly during
the first part of 1983 (—1.7 percent, January-May).
This is reflected in substantial recent reductions in the
rate of price changes recorded in most key industries in
the District (see page 3). Construction was the only in­
dustry in which prices have risen more rapidly in 1983
than in 1982.
Wage increases have been tempered by reductions in
overtime and other premium pay rates and by lower
rates of actual and expected inflation. Increases
averaged about 5 percent at an annual rate in the first
half of 1983, compared with 7 percent in 1982 and 9
percent in 1981.

SUMMER 1983

FEDERAL RESERVE BANK OF ST. LOUIS

Retail Sales
Major department stores reported sales in the
March-May period that were nearly 10 percent higher
than in the same period a year ago. Automobile sales
improved at a number of dealers, and furniture, ap­
pliances, rugs and “Father’s Day’’ merchandise showed
considerable strength. Sales of summer apparel did
less well, perhaps because of wet and cool May
weather.

Agriculture
Though crop planting in the District was delayed by
adverse weather, it has had only a scattered detrimen­
tal effect. Despite these losses and reduced planting
due to the payment-in-kind (PIK) program, total pro­
duction is expected to be relatively large. This is a con­
sequence of expected record or near-record per acre yields.

Manufacturing and Construction
Orders and shipments of manufactured goods have
been increasing at most District firms since February.
The gains were largest for consumer goods and for pro­
ducts sold to residential construction contractors. Firms
producing business equipment and metals experienced
little change in sales, but inventories at most firms sire
either at or below desired levels.
The level of both new and used home sales has been
strong since February. May and June sales, however, did
not maintain the pace set earlier in the year. The wet
weather in May and increases in mortgage rates in early
June appear to have contributed to the slowdown. Con­
struction activity, which has expanded in response to the
demand for homes, has been boosted further by an in­
crease in orders for office buildings.

District Business Executives Express Optimism
A June Centerre Bank Economic Poll found that the
business executives of mid-sized firms have become
more optimistic about the future course of the
economy. The survey covered 312 companies with an­
nual sales of $25 million to $300 million. Many of the
firms polled are located within the Eighth District.
The vast majority of the executives (82 percent)
forecast improvements in their own businesses within

the next six months, while only 2 percent expect
declines.
Two-thirds of the executives anticipate expanding
the capacity of their operations within the next year,
and 58 percent expect to modernize existing facilities.
They indicate that the most pressing problems facing
the economy are government spending and deficits, ex­
cessive government regulation and high interest rates.

A Favorable Long-Run Outlook
Automobile assembly will expand in the District in
the near future. General Motors is building a major
new plant, while Ford and Chrysler are expanding their
existing facilities. Because of this expansion, a number
of auto supply firms have moved into the District and
more are expected.
Although it is still an infant at present, the high-tech
industry is likely to make a substantial contribution to
the District’s economy in the longer run. Monsanto
Co., Mallinckrodt, Inc., Ralston Purina Co., and
Anheuser-Busch are conducting research into genetics
and other biologically oriented activities. Also, the
Missouri Botanical Garden is involved in biotechnical
research. In addition, the engineering departments of
Washington University and the St. Louis, Columbia

and Rolla campuses of the University of Missouri are
involved in high-tech research. The McDonnellDouglas corporation is building a major microelec­
tronics center. The St. Louis Regional Commerce and
Growth Association is currently coordinating efforts
to build an “innovation center” in St. Louis and a
“research park” in St. Louis County. The state of
Missouri, the major hospitals in the St. Louis area, and
other universities are cooperating in this enterprise.
Because of the diversified nature of industry in our
District, future aggregate economic activity in the re­
gion will likely match the national trend. The current
national outlook is for continued expansion in output
and employment throughout 1983. Consequently, Dis­
trict prospects remain bright for the rest of the year.
—Norman N. Bowsher
and G.J. Santoni

Business—An Eighth District Perspective is a quarterly summary of business conditions in
the area served by the Federal Reserve Bank of St. Louis. Single subscriptions are available
free of charge by writing: Research and Public Information Department, Federal Reserve
Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166.




FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1983

EIGHTH DISTRICT BUSINESS DATA

Current Period

Growth Rates1
Year-to-Date 1983

1982

General Business Indexes2
Arkansas
Kentucky
Missouri
Tennessee

Mar-May
2.6%
2.6
3.5
0.5

2.1%
4.2
3.6
1.7

-2 .4 %
- 1 .5
-1 .2
-2 .8

Retail Sales
United States
District
Arkansas3
Missouri
Tennessee

Jan-Mar
1.3%
6.0
3.7
5.2
8.3

1.3%
6.0
3.7
5.2
8.3

5.2%
11.0
9.1
14.3
8.3

Personal Income
United States
District
Arkansas
Kentucky
Missouri
Tennessee

4th quarter ’82
5.4%
5.2
7.9
9.1
2.3
4.7

5.3%
4.7
3.3
4.7
4.7
5.3

5.3%
4.7
3.3
4.7
4.7
5.3

0.9%
0.7
3.1
2.7
2.1
-5 .9
1.9
-0 .3
-0 .5

-2 .4 %
-3 .0
-2 .4
-1 .3
-3 .1
-4 .1
-4 .6
-2 .2
-2 .8
-4 .1
-3 .5

Payroll Employment
United States
D istrict
Arkansas
Little Rock
Kentucky
Evansville
Louisville
Missouri
St. Louis
Tennessee
Memphis

Mar-May
1.6%
-0 .8
2.0
2.0
-0 .7
14.5
2.1
-1 .5
-1 .0
-1 .2
-3 .8

Average Hourly Earnings-Mfg.
United States
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Memphis

Mar-May
2.1 %
5.8
9.0
8.1
8.0
6.7
5.2
5.9
-2 .2
Employment1
Year-to-Date 1983 Same Period 1982

Key Industries
Fabricated Metal Products
Electrical and Electronic Equipment
Nonelectrical Machinery
Transportation Equipment
Food and Kindred Products
Textile and Apparel
Printing and Publishing
Chemicals and Allied Products
Construction




- 8.0%
7.1
8.0
3.5
-3 .7
2.0
2.2
-1 .4
-1 7 .2

-15.4%
-1 6 .0
-1 4 .2
-0 .5
-4 .2
-1 2 .2
-2 .4
-2 .4
-1 9 .4

0.0
-1 .5
4.0%
5.6
9.7
7.1
7.0
4.0
4.5
5.1
3.8

5.3%
6.5
6.6
5.2
3.1
6.5
6.5
6.3
4.0

Prices1
Year-to-Date 1983
-1 .3 %
4.0
2.6
-0 .4
4.9
0.0
8.2
0.7
6.5

Same Period 1982
1.6%
5.4
6.0
0.3
6.4
1.9
13.7
2.1
2.9

3

EIGHTH DISTRICT BUSINESS DATA

Current
Period1

Previous
3 Months

Average Yearto-Date 1983

Average 1982

Unemployment Rate
United States
District
Arkansas
Little Rock
Kentucky
Evansville
Louisville (Feb-Apr)
Missouri
St. Louis
Tennessee
Memphis

Mar-May
10.2%
10.6
9.2
7.3
10.4
10.9
10.7
10.2
10.8
12.0
9.9

Construction Contracts4
(millions of dollars)
District
Arkansas
Kentucky
Eastern Missouri
Western Tennessee

Mar-May
$498.7
107.1
188.1
124.7
78.8

$287.8
67.6
103.0
77.7
39.4

$422.7
93.4
155.4
109.9
64.0

$398.9
77.3
132.8
144.0
44.8

Housing Permits
Little Rock
Louisville
St. Louis
Memphis

Mar-May
408
195
906
451

112
329
871
385

297
260
898
418

144
158
531
221

10.5%
11.1
9.8
7.8
11.0
10.6
12.8
9.8
10.8
12.3
10.0

10.3%
10.6
9.3
7.4
10.4
10.7
10.9
10.0
10.7
12.0
9.9

9.7%
10.4
9.7
7.6
10.7
9.8
11.7
9.3
9.9
11.6
9.5

NOTE: With the exception of construction contracts and employment and prices in key industries, all data are seasonally adjusted.
1 Data are presented as three-month averages to minimize distortions due to the large variability of monthly data. The current
period growth rate is a comparison of the average of the current three months to the average of the previous three months.
The year-to-date growth rate is from the average of the three months ended in December of 1982. All growth rates are
compounded annual rates of change.
2 Sources: Arkansas and Missouri from Southwestern Bell, Kentucky and Tennessee from South Central Bell.
3 Source: Southwestern Bell.
4 Source: F.W. Dodge, Construction Potentials.

Federal Reserve Bank of St. Louis
P.O. Box 442
St. Louis, Missouri 63166





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102