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Business
AN EIGHTH DISTRICT PERSPECTIVE
F A L L 1984

Eighth District Marches to National Beat
After hitting bottom in the fourth quarter of 1982, eco­
nomic activity at the national level has bounced back at a
faster rate than during any other post-recession recovery
since the late 1940s. Real GNP has grown at an average
annual rate of 7.2 percent since the recession trough, and
the unemployment rate has declined from about 10.5 per­
cent to about 7.5 percent. Despite the rapid pace of the ex­
pansion, the average annual rate of inflation (as measured
by the implicit price deflator) has been 3.8 percent, well
below the 5.1 percent average rate of the 1981-82 recession.
As the accompanying data and charts indicate, economic
activity in the Eighth District has been in step with the
national recovery. For example, the indexes of general busi­
ness have advanced in each District state and are currently
well above their pre-recession levels. These indexes, which
are intended to be barometers of general economic activity,
began recording upticks slightly ahead of the national ex­
pansion. The index for Arkansas and Tennessee began to
advance in September 1982, while the indexes for Ken­
tucky and Missouri showed initial increases two months
later. The National Bureau of Economic Research puts the
trough in the national business cycle in November.
While these indexes suggest that economic recovery
began at roughly the same time in each of the District
states, some states have grown faster than others. In Ar­
kansas and Missouri, the indexes have risen by 15.2 per­
cent and 13.4 percent, respectively, since the trough. Ken­
tucky and Tennessee show smaller increases of 8.9 to 10.5
percent.

Personal Income



Since the fourth quarter of 1982, both the District and
national quarterly growth rates have trended upward and
currently are well above their historical averages. This
upward trend reflects an acceleration in personal income
growth as the expansion has matured. The fact that the
current growth rates are above their historical averages
suggests that they eventually will decline.

Employment
Chart 2 plots the growth rates in total employment for
the District and nation. Again, the long-run average
growth rates are nearly the same for the District and
nation. The quarterly growth rates, however, show con­
siderable variation around the averages. Beginning in the
fourth quarter of 1982, the quarterly rates began to ad­
vance rapidly from the values recorded during the 1981-82
recession. During the second quarter of this year (the most
recent for which data are available), the national growth
rate in total employment was well above its historical aver­
age. At the District level, growth in total employment
declined from a first quarter 1984 high that had not been
matched in more than 10 years to a rate comparable to its
historical average.

Unemployment

During the first year of the expansion, from fourth quar­
ter 1982 through fourth quarter 1983, personal income in
both the D istrict and nation grew at
nearly equal rates, 7.6 percent nationally
and 7.3 percent in the District.
Chart 1 (next page) plots the average an­
nual rates of growth in personal income for
both the District and nation. In addition,
it shows annualized quarterly growth rates
in personal income at the District and na­
levels. The quarterly rates travel by
Digitizedtional
for FRASER

fits and starts, and, at times, the differences between Dis­
trict and national growth rates appear to be considerable.
Notice, however, that the average growth rates over the
entire period (each about 9.5 percent) are very close; so
close, in fact, that they are statistically indistinguishable.

Generally, unemployment rates, both nationally and in
the District states, began to decline following the trough of
the recession. January 1983 marks the
first month of decline in the national un­
employment rate; Arkansas, Kentucky
and Tennessee also record reductions be­
ginning in this month. The unem ploy­
THE
FEDERAL
ment rate in Missouri, however, did not
RESERVE
begin
to fall until May 1983, four months
RANK of
later. Since that time, Missouri’s unem­
ST. IXH IS
ployment rate has declined sharply, and in
June of this year it stood at 7 percent.

FALL 1984

FEDERAL RESERVE BANK OF ST. LOUIS

This was about equal to the national rate and considerably
below the unemployment rates in other District states.
Though declining, unemployment rates in Arkansas, Ken­
tucky and Tennessee have been high relative to the nation­
al average. As a result, the District’s unemployment rate
has been higher than the nation’s throughout the recovery
and currently exceeds the national average by about one
percentage point.

Digitized for
2 FRASER


Summing Up
The national economy has been experiencing a boom in
economic activity that, in terms of the rate of advance, has
not been matched since the post-recession recovery of
1948-49. The advance in economic activity in the Eighth
District has kept pace with the national recovery. Though
some slowing will no doubt occur, the outlook for the near
future remains encouraging.
—G. J. Santoni

Chart 1
PERSONAL INCOME GROWTH RATES

Chart 2
TOTAL EMPLOYMENT GROWTH RATES
PERCENT

FEDERAL RESERVE BANK OF ST. LOUIS

FALL 1984

EIG HTH DISTRICT BUSINESS DATA
G r o w th R a t e s 1
Y ear-to-D ate 1984

C urrent Period
G en eral B usiness In d exes2

M ay-July
2 .3 %
5.8
6.4
7.4

A rka n sa s
K entucky
M isso u ri
T ennessee

11.3%
9.5
19.4
25.4
-4 .4

U n ite d S tates
A rk a n s a s 3
K e n tu cky3
M isso u ri
Tennessee

1 1 .8 %
4.7
8.7
4.8

1 3 .0 %
6.3
4.2
18.3
8.5

1 1 .0 %
11.2
8.9
9.5
14.0

1 2 .7 %
13.2
15.8
13.9
12.5
12.1

7 .6 %
7.3
11.4
4.5
8.1
6.6

4 .6 %
3.3
3.1
0.1
3.5
1.1
3.8
0.9
2.5
5.9
1.9

3 .3 %
2.6
5.4
4.3
1.3
0.7
0.7
1.3
1.9
3.7
2.2

3 .5 %
4.8
4.6
4.3
5.6
3.8
4.5
2.3
6.2

4 .2 %
5.3
4.0
7.6
4.7
5.1
5.0
4.4
0.9

1st q u arter ’84

Personal In co m e

12.7%
13.2
15.8
13.9
12.5
12.1

U nited S tates
D istrict
A rka n sa s
K e ntucky
M isso u ri
Tennessee

M ay-July

Payroll E m p lo ym en t

4 .4 %
1.4
0.1
-2 .7
1.1
-3 .6
2.2
-1 .4
0.9
5.3

U n ite d States
D istrict
A rka n sa s
L ittle R ock
K e ntucky
E vansville, IN
Lo u isville
M isso u ri
St. Louis
T ennessee
M e m p h is

0.0

Average H ou rly E a rn in g s-M fg .

M ay-July

U nited S tates
A rka n sa s
L ittle R ock
K e ntucky
Lo u isville
M isso u ri
St. Louis
T ennessee
M e m p h is

2 .5 %
2.3
5.2
5.9
2.6
4.7
4.9
4.0
2.3

Employment1_________
Y ear-to-D ate 1984




5 .2 %
6.2
7.2
8.0

A pr-June

R etail S ales

ey In d u s trie s
F abricated M etal P rod u cts
E le ctrica l a nd E le ctro 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 ransportation E q u ip m e n t
Food and K in d re d P roducts
Textile and A p p a re l
P rin tin g and P u b lis h in g
C h e m ic a ls a nd A llie d P roducts
C o n stru ctio n

1983

2 .4 %
8.4
10.6
7.4
2.0

0.0
2.7
3.7
13.7

S am e Period 1983
-3 .6 %
8.9
4.7
10.8
-3 .5
3.7
4.1
-1 .4
-2 .7

____________ Prices1
Y ear-to-D ate 1984
3 .4 %
3.6
3.0
1.4
5.3
2.5
6.5
3,5
3.2

S a m e P eriod 1983
-1 .8 %
4.6
2.9
-0 .4
3.1
1.0
7.3
1.1
5.9

3

EIGHTH DISTRICT BU SIN ESS DATA
Current
Period*12
3
U n e m p lo y m e n t R ate
U n ite d S tates
D istrct
A rka n sa s
L ittle R ock
K e n tu cky
E vansville, IN
L o u isville
M isso u ri
St. Louis
Tennessee
M e m p h is

7 .4 %
8.4
9.2
7.0
9.4
8.8
8.9
7.2
7.9
8.6
7.5

M ay-July

D istrict
A rkansas
K entucky
Eastern M isso u ri
W estern T ennessee

$633.1
128.6
202.2
212.1
90.2

L ittle R ock
Lo u isville
St. Louis
M e m p h is

Average Yearto-Date 1984

Average
1983

M ay-July

C o n stru ctio n C o n tra c ts 4
(m illio n s o f d o lla rs)

H o u sin g P erm its

Previous
3 Months
7 .8 %
8.7
8.6
6.9
9.3
9.1
8.9
8.3
9.2
8.8
8.0

7 .6 %
8.7
9.0
7.1
9.4
9.0
9.0
7.9
8.7
8.8
7.9

$505.2
114.7
154.1
156.5
79.8

$ 537.8
118.1
168.9
170.8
80.0

$ 4 8 3 .4
106.4
172.9
136.8
67.3

397
428
1,002
1,256

427
357
829
1,272

274
295
440
986

9 .6 %
10.8
10.1
8.1
11.6
10.7
10.9
9.9
10.5
11.4
9.5

A pr-Ju ne
457
286
657
1,287

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 compounded 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.



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