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Business
AN EIGHTH DISTRICT PERSPECTIVE
SUMMER 1985

Employment Growth During the
1975-77 and 1982-85 Recoveries: A Comparison
The strength o f the current recovery is a frequently
debated topic. Some analysts have argued that this
recovery is stronger than average, while others have
m aintained that it is typical o f recoveries in the postw ar
era. The difference o f opinion hinges on which economic
indicators are chosen as the basis for argum ent.
This issue com pares the perform ance o f one indicator
o f econom ic activity—em ploym ent—in the current
recovery, to its perform ance in the 1975-77 recovery.
Em ploym ent data are used because they are closely
associated with trends in output. M oreover, employment
is an indicator o f econom ic activity that is available by
state, which perm its a com parison o f the two recoveries
on a regional, as well as a national, level.

The Recoveries: A General Overview

District Manufacturing Employment in
the Two Recoveries
F or the first 22 m onths o f both recoveries, District
m anufacturing em ploym ent behaved similarly (chart 3).
M anufacturing em ploym ent grew at approxim ately a 7
percent rate for the first 15 m onths o f both recoveries,
then slowed to roughly 2 and 1 percent rates for the next
seven m onths in the 1975-77 recovery and the current
one, respectively.1
The m arked divergence in the perform ance of District
m anufacturing em ploym ent began at the 22-month m ark
in the two recoveries; for the subsequent seven-month
period, manufacturing employment resumed a more rapid
6.1 percent rate o f grow th in the earlier recovery, but
has declined at a 1.6 percent rate in the current recovery.

The current recovery is similar to the 1975-77 recovery
U.S. Manufacturing Employment
in that each was preceded by a contraction of the same dura­
tion, 16 months from the previous peaks to the respective
U.S. manufacturing employment grew faster in the first
troughs of March 1975 and November 1982. To the extent
two years of the current recovery than it did in the 1975-77
that the length and vigor of a particular expansion is deter­
recovery (chart 4). After growing at identical 2.2 percent
mined by the length and depth of the contraction that pre­
rates for the first six months of both recovery periods,
ceded it, this would suggest that the two expansions might
manufacturing employment during the next seven months
be similar. A number of important differences exist,
recorded a 7.6 percent rate of growth in the current
however, not the least of which are the relatively higher
recovery, but only a 5.7 percent growth rate in the previous
value of the dollar and lower inflation rate that have per­
one. In the following 10 months of the current recovery,
sisted during the current recovery.
U.S. manufacturing employment grew at a 3.8 percent rate,
A comparison of the growth in Eighth District and U.S.
twice the 1.9 percent rate of growth registered in the same
nonm anufacturing employment over the current and
stage of the 1975-77 recovery. Since October
previous recoveries shows a similar perfor­
o f last year, how ever, m anufacturing
mance (charts 1 and 2). Nonmanufacturing
employment has slowed in the United States,
employment in the current recovery has
as in the District, registering no growth in
grown at much the same rate as in the
the
current recovery while it had continued
THE
previous one in both the District and the na­
FEDERAL
to rise at a 5.2 percent rate over the same
RESERVE
tion. Manufacturing employment, however,
period in the 1975-77 recovery.
RANK of
has followed different paths across the two
ST. I jOLIIS
recoveries. This different behavior is
explored further in this issue.
All growth rates are compounded annual rates o f change.



FEDERAL RESERVE BANK OF ST. LOUIS

Why the Recent Slowdown in
Manufacturing Employment Growth?
Many analysts have argued that the appreciation o f the
dollar has had a strong detrim ental effect on m anufac­
turing industries because they are m ore sensitive than
service industries to exchange rate effects on traded
goods. Despite the fact that the real value o f the dollar
rose at a 10 percent rate from N ovem ber 1982 through
February 1985 (the first 27 months) o f the current
recovery, the data show that m anufacturing employment
in both the D istrict and the nation perform ed as well or
better over the first 22 m onths o f this recovery, than it
did over the corresponding phase o f the previous
recovery.2 This is particularly interesting since over the
same stage o f the earlier recovery, the dollar rose at
only a 1.6 percent rate in real term s. M oreover, the
sharp appreciation o f the dollar actually began in 1980.
2 Compounded annual rate o f change in the real trade-weighted exchange rate.

SUMMER 1985

Only in the last seven months has m anufacturing employ­
m ent in this recovery fallen behind its perform ance o f
the 1975-77 recovery.
It is possible that the recent slow down in the pace o f
the economic expansion has resulted in a disproportionate
slowing in the grow th o f m anufacturing em ploym ent in
both the D istrict and the nation. From second quarter
1984 through first quarter 1985, real G N P grew at only
a 2.2 percent rate, following a 7.1 percent rate o f growth
in the previous six quarters of the expansion. The earlier
recovery exhibits a sim ilar period o f little grow th in
m anufacturing em ploym ent in the second and third
quarters of 1976, in both the District and the nation. From
first quarter 1976 to third quarter 1976, real G N P ex­
panded at a 2.5 percent rate, well below the 6.7 percent
rate registered over the previous four quarters of that
recovery.
—Catherine Axtell Bieber

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.

2




FEDERAL RESERVE BANK OF ST. LOUIS

SUMMER 1985

EIGHTH DISTRICT BUSINESS DATA
Growth Rates1
Current Period
General Business Indexes2

Y ear-to-D ate 1985

1984

Feb-Apr
- 0 .6 %
4.0
2.0
1.9

Arkansas
Kentucky
Missouri
T en nessee

Retail Sales

0.7%
4.7
2.3
2.6

3.1%
5.0
3.5
6.7

6.3%
-5 .6
9.0
11.2
-9 .4

7.6%
2.4
0.1
9.0
10.9

3.3%
2.9
0.1
-4 .9
8.5
0.3
1.2
1.0
2.3
2.6

4.1%
3.8
4.6
3.7
4.0
2.8
3.3
3.7
3.9
4.8

4.9%
5.2
11.3
3.0
1.5
-0 .2
2.0
1.3
9.3

3.7%
2.6
-1 .7
3.5
3.6
5.5
6.1
6.2
5.7

Jan-Mar
6.3%
-5 .6
9.0
11.2
-9 .4

United States
A rkansas3
Kentucky3
Missouri
T en nessee

Feb-Apr

Payroll Em ploym ent

3.1%
1.6
-1 .4
-6 .0
6.2
0.4
0.5
0.8
1.1
1.9

United States
District

Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
M em phis

F e b -A p r

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

4.8%
6.6
15.5
5.2
2.4
0.2
1.2
1.3
10.8

United States
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Mem phis

4th q u a rte r ’84

P e rs o n a l In c o m e

United States
D istrict
Arkansas
Kentucky
Missouri
Tennessee

9.2%
9.9
8.7
11.1
9.8
9.5

6.3%
5.7
3.9
4.6
6.2
6.8

Employment1
(current period Feb-Apr)
Y e a r-to -D a te 1985

Y e a r-to -D a te 1 9 84

S am e P eriod 19 84

1 9 83

7.5%
6.8
7.9
4.5
7.5
7.1

Prices1
(current period Feb-Apr)
Y e a r-to -D a te 1 9 8 5

S a m e P e rio d 19 84

K ey In d u s trie s
F a b rica te d M etal P ro d u cts
E le ctrica l and 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 ra n s p o rta tio n E q u ip m e n t
Food and K in d re d P ro d u cts
T e x tile a nd A p p a re l
P rin tin g a nd P u b lish 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




1.9 %
-6 .3
-3 .2
-4 .2
-7 .6
-5 .1
1.9
-2 .0
-2 6 .8

3 2 .9 %
10.4
16.4
13.9
-5 .3
7.0
6.3
-3 1 .3
-1 3 .0

0 .7 %
2.2
2.7
3.4
-1 .1
0.4
8.6
1.7
0.9

3 .0 %
4.6
3.2
2.4
9.4
3.4
9.5
3.1
5.6

3

EIGHTH DISTRICT BUSINESS DATA
Current
Period*12
3
U n e m p lo y m e n t R ate
U n ite d S ta te s
D is tric t
A rka n sa s
L ittle R ock
K e n tu c k y
L o u is v ille
M isso u ri
St. Lo u is
T e n n e sse e
M e m p h is

C o n s tru c tio n C o n tra c ts 4
(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
M isso u ri
T e n n e sse e

Previous
3 Months

Average Yearto-Date 1985

Average
1984

7 .2 %
8.1
8.7
6.7
9.1
8.3
7.0
7.6
8.4
6.7

7 .3 %
7.7
8.1
6.1
8.0
7.8
7.0
7.7
8.1
6.3

7 .5 %
8.4
8.9
7.1
9.5
8.6
7.2
8.1
8.5
7.2

$ 675.9
84.1
111.5
210.8
269.5

$ 771.4
9 1 .7
153.8
215.5
310.4

$ 830.4
115.7
167.5
251 .4
295 .7

F eb-A pr
7.3%
7.7
8.1
6.0
7.9
7.6
7.0
7.7
8.0
6.2

F eb-A pr
$823.2
95.0
164.0
237.5
326.7

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; Missouri and Tennessee are seasonally
adjusted by this Bank.
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