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Business
AN EIGHTH DISTRICT PERSPECTIVE
SUMMER 1984

Economic Expansion Continues
in Early 1984
Economic activity in the Eighth District generally
matched the robust pace of the national economy in early
1984. At the national level, real GNP, industrial produc­
tion and retail sales continued to expand at rapid rates.
The unemployment rate fell to 7.5 percent in May and
average hours worked in manufacturing increased.
Despite the strong rise in economic activity, the pace of
inflation increased only moderately as consumer prices
rose at a 4.3 percent rate from January through April of
this year compared with a 3.8 percent rate for 1983.
In our District, the strength of the recovery varied
from state to state. The indexes of general business,
which combine measures of manufacturing output, non­
manufacturing output, retail sales, value of construction
and farm income, rose in each of the states. The year-todate increase in business activity ranges from 8.8 percent
in Arkansas to 5.2 percent in Missouri. The relatively
rapid pace set by Arkansas is described in more detail on
the next page.

Retail Sales

Year-to-date new car sales probably increased 15 percent
to 20 percent over the same period a year ago. Dealers
claim that sales would have been larger if sufficient
popular models had been available. Sales of used cars and
trucks also have been vigorous.

Manufacturing
Industrial activity continued to expand during the first
four months of 1984. Orders were up, backlogs were in­
creasing, and some firms implemented capital spending
plans. Most capital spending continued to be directed
toward eliminating “ bottlenecks” or otherwise improv­
ing productivity, but some capital is now being spent on
capacity expansion. A t some firms, inventories have been
enlarged to handle the growing volume of new orders.

Construction
The amount of home, office, factory and other construc­
tion in the District was sizable in the first part of 1984
despite adverse weather that at times hampered activity.
With the exception of Kentucky, the dollar amount of
new construction contracts in the February-to-April
period was greater this year than in the same period last
year in each District state.

Department store sales in the District continued to be
above year-ago levels in each of the first four months of
the year, and indications are that May sales continued
the same pattern. Leading stores indicate that the yearEmployment
to-date gain was in the 12 percent to 15 percent range.
The gains were broadly based, with clothing and appli­
ances moving particularly well. Retailers indicate that,
Reflecting the increases in sales and production,
while inventories are higher than at this
District employment rose in the first part
time a year ago, they are, in most cases,
of 1984, with the largest gains in the
not burdensome since they will accom­
manufacturing, construction and service
modate greater sales volume.
industries. The unemployment rate, while
still fairly high, has declined sharply in re­
THE
FEDERAL
Automobile sales have been strong.
cent months. Respondents indicate that the
RESERVE
Several dealers reported all-time record
average hours worked increased slightly.
RANK of
monthly sales in March, which were
The number of temporary summer jobs is
ST.LOITS
broken again in April. Reports indicate
somewhat more plentiful in 1984 than in
that sales in May continued to be lively.
1983.



FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1984

Outlook
Employers generally are optimistic about the nearterm business outlook. An April survey of 257 District
businessmen indicated that 73 percent expected the
volume of activity to rise in the next three months, 18
percent anticipated little net change and only 9 percent
expected a contraction. The strong rebound in real
growth that has occurred during this recovery and the
moderate rate of inflation.compared with recent past ex­
perience have been important contributing factors to this
optimistic view.

Spotlight on Arkansas
Arkansas, with its heavy concentration of durable
manufacturing, lumbering and other cyclically sensitive
sectors, experienced a strong 9 percent annual rate of in­
crease in business activity in early 1984. This followed a
rapid 11.7 percent increase during 1983, a sharp increase
relative to other District states. The Arkansas economy,
however, contracted sharply relative to the U.S. economy
during the recession of 1981-82 (see chart).

These more pronounced swings in Arkansas’ economy
are not unusual. For example, the variation in the growth
rate of personal income has been about twice as high in
Arkansas as in the United States over the last 15 years.
This also has been true of the variation in Arkansas’
growth rate of total employment as well as such other in­
dicators of economic activity as the growth in mortgage
loans and housing permits.

Despite this greater short-run variation, the average
growth rate of the Arkansas economy does not differ ap­
preciably from that of the United States over longer-run
periods. From the first quarter of 1970 through the first
quarter o f 1984, the average grow th rate of
Arkansas’ personal income was about 10.5 percent, while
the national average was about 9.5 percent. This same
pattern holds for the other indicators of economic activi­
ty mentioned above. While Arkansas’ economy tends to
be more volatile than the U.S. economy, it does follow the
national trend over the long run.
—Norman N. Bowsher

Relative Business Activity: Arkansas Vs. United States

1981

1982

1983

1984

Late st da t a plotted: U .S .-1st q u a r t e r ; A r k a n s a s - A p r i l

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
necessarily official positions of the Federal Reserve System.______________________________



FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1984

EIGHTH DISTRICT BUSINESS DATA
Growth Rates1
Current Period
G en eral B u siness In d e x e s 2

Year-to-Date 1984

1983

Feb-Apr

A rka nsa s
K e n tu cky
M is s o u ri
T ennessee

8.6%
4.1
4.8
7.5

R etail S ales

8.8%
6.3
5.2
8.2

11.7%
4.7
8.5
4.8

14.1%
3.3
-9 .1
11.9
19.9

11.0%
11.2
8.9
9.5
14.0

7.6%
7.3
11.4
4.5
8.1
6.6

4.7%
4.0
3.3
3.3
3.8
5.3

4.9%
4.4
5.3
2.1
5.3
4.7
5.1
1.7
3.6
6.3
3.2

3.3%
2.7
5.4
4.4
1.3
0.7
0.7
1.6

3.9%
6.9
3.3
3.1
8.5
2.7
3.6
1.2
8.7

4.3%
5.3
4.0
7.6
4.7
5.1
5.0
4.4
0.9

Jan-M ar

U nite d S tate s
A rk a n s a s 3
K e n tu c k y 3
M is s o u ri
T ennessee

14.1%
3.3
- 9 .1
11.9
19.9
4th quarter ’83

P erso nal In c o m e

U nite d S tate s
D is tric t
A rka nsa s
K e n tu cky
M is s o u ri
T ennessee

10.8%
10.9
19.5
7.5
10.9
9.5
Feb-Apr

Payroll E m p lo ym en t

4.9%
4.1
4.7
1.4
4.4
4.6
4.9
2.1
3.4
6.0
2.5

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 is s o u ri
St. L ouis
T ennessee
M em ph is

1.9

3.7
2.2

Feb-Apr

A verag e H o u rly E a rn in g s -M fg .

U nite d S tate s
A rkansas
L ittle Rock
K e n tu cky
L o u is v ille
M is s o u ri
St. L ouis
T ennessee
M em ph is

2.7%
6.1
-0 .6
0.6
4.1
2.9
3.0
3.1
12.6

Employment1
Y ear-to -D a te 1984

S am e Period 1983

Prices1
Y e a r-to -D a te 1984

S a m e P eriod 1983

Key In d u stries

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 ach in e ry
T ra n s p o rta tio n E q u ip m e n t
Food and K indred 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 ic a ls and A llie d P ro d u cts
C o n s tru c tio n




0.3%
11.2
12.1
12.5
- 3 .1
1.5
4.8
0.8
- 2 0 .0

- 9 .5 %
6.9
1.6
7.7
-8 .5
-3 .5
2.5
-7 .4
- 3 3 .8

3.0%
4.2
3.4
2.2
10.0
3.1
8.6
3.3
5.3

-2 .2 %
5.0
3.0
-0 .5
5.5
-0 .6
9.0
0.7
7.6

3

EIGHTH DISTRICT BUSINESS DATA
Current
Period*12
3
Unemployment Rate

Feb-Apr

U nite d S tate s
D is tric t
A rka nsa s
L ittle R ock
K e n tu cky
E vansville, IN
L o u is v ille
M is s o u ri
St. L o u is
T en ne sse e
M e m p h is

7.8%
8.7
8.6
6.8
9.3
9.1
8.8
8.3
9.2
8.7
8.0

Previous
3 Months

8.2%
9.2
8.8
7.1
9.8
9.0
9.0
8.8
9.6
9.5
8.5

Average Yearto-Date 1984

7.9%
8.9
8.8
7.1
9.5
9.3
9.0
8.5
9.4
9.0
8.2

Average
1983

9.6%
10.8
10.1
8.1
11.6
10.7
10.9
9.9
10.5
11.4
9.5

Construction Contracts4
(m illio n s o f d o lla rs )
D is tric t
A rka nsa 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

Feb-Apr
$505.2
114.7
154.1
156.5
79.8

Housing Permits5

Feb-Apr

D is tric t
A rka nsa s
K e n tu cky
M is s o u ri
T ennessee

6,726
920
1,190
1,972
2,645

$384.0
91.6
145.1
99.8
47.5

$466.2
110.2
143.9
139.9
72.3

$483.4
106.4
172.9
136.8
67.3

5,721
837
700
1,517
2,667

6,725
886
1,083
1,909
2,847

5,475
803
896
1,478
2,297

NOTE: With the exception of construction contracts and employment and prices in key industries, all data are seasonally adjusted.

1Data 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 1983. All growth rates are com­
pounded annual rates of change.
2Sources: Arkansas and Missouri from Southwestern Bell, Kentucky and Tennessee from South Central Bell.
3Sources: Arkansas from Southwestern Bell and Kentucky from Kentucky Revenue Department.
4Source: F.W. Dodge, Construction Potentials, McGraw-Hill Information Systems Company, proprietary data provided by
special permission.
5Changing to state data during the transition to new area definitions.



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