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AN EIGHTH DISTRICT PERSPECTIVE
Federal Reserve Bank of St. Louis

Winter 1983-84

District Economy Continues To Expand
Current indicators of economic activity point to a
continued expansion at both the national and regional
levels. A t the national level, industrial production rose
at a 11 Vi percent rate over the first 10 months of this
year, while retail sales expanded at a 10 percent rate.
Payroll employment rose at a rate of 5 percent in
November and the unemployment rate fell sharply to
8.4 percent.
Economic activity in the District is following suit.
After declining throughout 1982, regional indexes of
general business activity have risen during 1983 and,
with the exception of Kentucky, the rate of increase
has accelerated in the most recent period. After
growing at a relatively modest pace of about 4 percent
during 1982, District personal income grew at a rate of




IVi percent during the second quarter of 1983.
Personal income growth in Arkansas and Missouri
were particularly strong at rates of 10 percent and 8 V2
percent, respectively.

Employment
District payroll employment has been growing at an
annual rate of 2 Vs percent during the most recent three
months for which data are available. However, due to
an expansion in the labor force, the District unemploy­
ment rate was roughly unchanged.
Employment in Missouri has been boosted by the
increase in demand for domestically produced
automobiles. The forecast for passenger car production
in tUe current year is 6.85 million units, 35 percent
higher than in 1982. Missouri auto plants currently
employ about 23,000 persons, about 50 percent more
than in October 1982, and the outlook is bright for
continued employment growth at these plants.

Retail Sales
September and October retail sales rose nationally at
an annual rate of 15 V4 percent after a brief downturn in
August. September sales at major District department
stores mirrored this situation, averaging about 11
percent above September sales last year, with most
merchants expecting an excellent Christmas season.
Automobile sales have been robust as well. Six large
District dealerships reported year-over-year gains
averaging 21 percent.

Manufacturing and Construction
Production at most of the industrial firms in the
District has risen since late summer, though the rate of
increase has slowed somewhat. This rate of increase
since the beginning of the year has been more rapid
than can be maintained indefinitely, so some slowing
was to be expected.
Residential home sales in the District in September
and early October were below the peaks reached in the

WINTER 1983-84

FEDERAL RESERVE BANK OF ST. LOUIS

spring but were still ahead of year-ago levels. Con­
struction of homes, however, continued to be brisk due
to a backlog of orders. The cumulative total for St.
Louis construction (residential and nonresidential)
over the first nine months of 1983 was about 35 per­
cent ahead of the total for the same period last year.

Agriculture

substantial reductions in the output of corn, soybeans,
tobacco and cotton. Corn production nationally is ex­
pected to be about 49 percent below last year’s, while
soybean production is expected to decline by 32 per­
cent. Burley tobacco production in Kentucky (which
normally amounts to about two-thirds of the nation’s
crop) is at its lowest level since 1943. The combination
of the reduced harvest plus low prices for burley could
reduce cash receipts to half the 1982 level.

This year’s drought was the worst in 50 years.
Coupled with the PIK program, the drought caused

—G.J. Santoni

A Longer-Run View Of The District

1970

71

72

73

74

75

76

77

76

79

80

81

82

1983

Shaded areas represent periods of business recessions.

There is a considerable amount of fluctuation u*
short-run regional economic data. As a result, these
fluctuations can be misleading indicators of under­
lying trends. The chart above illustrates this point. It
shows quarterly growth rates in District (solid line)
and national (broken line) personal income. The shaded
areas represent periods of recession, while the horizon­
tal lines are the average growth rates over the entire
period.
At some points, the differences between the quarter­
ly growth rates and the average growth rate over the
whole period are very large. In addition, the differences
at any point between District and national quarterly
growth rates can be considerable. For example, per­
sonal income in the District grew at a rate of 6 percent
during the first quarter of 1983, while growing at a
slower rate of only 4 percent at the national level. The
difference between these quarterly rates is much larger
than the difference in the average growth rates over
the whole period. These differ by only one-tenth of a

percentage point. Since, on average, there is little difierence between District and national growth rates,
any large difference between quarterly growth rates
will tend to be offset later on. This appears to be the
case in the second quarter of this year. The national
growth rate in personal income rose to 9 percent, while
personal income grew at a pace of only IV2 percent in
the District.
Equally important, the second quarter 1983 growth
rate of District personal income is below its longer-run
average growth rate, as is typically the case during the
initial phase of an economic expansion. As the expan­
sion matures, these growth rates generally rise above
their long-run averages. If the boom in economic activi­
ty currently under way continues, we can expect the
growth rate in District personal income to rise above
its second quarter 1983 level.
—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. Views expressed are not necessari­
ly official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.

2



FEDERAL RESERVE BANK OF ST. LOUIS

WINTER 1983-84

EIGHTH DISTRICT BUSINESS DATA

Current Period
General Business Indexes2

Growth Rates1
Year-to-Date 1983

1982

Aug-Oct

A rkansas
K e n tu cky
M isso u ri
T ennessee

11.2%
0.9
10.7
5.2

Retail Sales

9.6%
3.3
7.6
4.0

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

10.1%
11.6
5.2
10.5
17.1

5.3%
8.7
9.1
12.7
4.1

6.5%
6.7
8.8
4.8
7.7
6.2

4.7%
3.9
3.2
3.0
3.7
5.1

2.3%
1.4
2.7
1.4
1.1
2.6
1.8
0.8
0.7
1.9
-0 .4

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

3.5%
5.4
5.3
4.8
4.3
5.4
4.7
4.5
1.9

5.3%
6.5
6.6
5.2
3.1
6.5
6.5
6.3
4.0

July-Sept

U nited S tate s
D is tric t
A rk a n s a s 3
M is s o u ri
Tennessee

4.7%
18.0
7.4
20.2
22.3

Personal Income

2nd quarter ’83

U nited S tate s
D is tric t
A rkansas
K e ntucky
M isso u ri
Tennessee

9.1%
7.5
9.9
4.1
8.5
7.9

Payroll Employment

Aug-Oct

U nited S tate s
D is tric t
A rkansas
L ittle R ock
K e n tu cky
E vansville(IN )
L o u is v ille
M isso u ri
St. L o u is
T ennessee
M em ph is

3.3%
2.5
3.5
0.7
0.2
15.3
0.7
2.2
2.4
3.9
1.8

Average Hourly Earnings-Mfg.

Aug-Oct

U nited S tate s
A rka nsa s
L ittle R ock
K e n tu cky
L o u is v ille
M is s o u ri
St. L ou is
T ennessee
M em ph is

2.3%
1.2
-5 .2
1.6
-0 .6
6.1
5.0
4.5
8.2

Employment1
Year-to-Date 1983 Same Period 1982

Prices1
Year-to-Date 1983 Same Period 1982

Key Industries
F a b rica te d M etal P ro d u cts
E le c tric a l and E le c tro n ic E q u ip m e n t
N o n e le c tric a l M a ch in e ry
T ra n s p o rta tio n E q u ip m e n t
Food and K in dred P ro d u c ts
T e x tile and A pparel
P rin tin g and P u b lis h in g
C h e m ica ls and A llie d P ro d u c ts
C o n s tru c tio n




1.1%
9.5
9.6
13.1
-0 .3
7.9
1.1
0.5
5.7

-8 .8 %
- 1 0 .9
- 1 8 .0
-3 .3
1.0
-7 .0
-2 .7
-5 .7
- 3 .1

-0 .6 %
4.4
2.4
-0 .2
3.6
1.5
6.0
2.2
5.0

1.0%
3.1
4.4
2.2
3.8
0.3
8.9
-0 .6
1.5

3

EIGHTH DISTRICT BUSINESS DATA
Current
Period*12
3
Unemployment Rate
U nite d S ta te s
D is tric t
A rka nsa s
L ittle R ock
K e n tu c k y
E va nsville (IN) (July-S ept.)
L o u is v ille
(July-S ept.)
M is s o u ri
St. L o u is
T ennessee
M e m p h is

Previous
3 Months

Average Yearto-Date 1983

Average 1982

Aug-Oct
9.2%
10.3
10.3
8.3
11.3
10.1
9.9
9.1
9.9
10.7
9.0

9.9%
10.2
9.3
7.2
11.2
10.0
10.3
9.4
10.3
10.8
9.0

9.9%
10.4
9.6
7.6
11.1
10.4
10.4
9.6
10.3
11.3
9.4

9.7%
10.4
9.7
7.6
10.7
9.8
11.7
9.3
9.9
11.8
9.6

Construction Contracts4
(m illio n s o f d o lla rs )
D is tric t
A rka n sa s
K e n tu c k y
E astern M is s o u ri
W e ste rn T en ne sse e

Housing Permits
L ittle R ock
L o u is v ille
S t. L ou is
M e m p h is

Aug-Oct
$578.5
132.1
189.8
176.2
80.4

$548.1
114.2
194.7
154.3
84.9

$497.5
107.9
173.8
144.6
71.2

$352.3
78.2
125.0
105.5
43.6

389
239
829
466

285
331
873
478

144
158
531
221

July-Sept
305
427
845
601

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, McGraw-Hill Information Systems Company, proprietary data provided by
special permission.




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