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Current Economic Conditions in the

Eighth Federal Reserve District
Memphis Zone
June 25, 2008

Prepared by the

Center for Regional Economics—8th District (CRE8)
Federal Reserve Bank of St. Louis

Eighth
Federal Reserve
District
I
ILLINOIS
ILL NO
ILLINO S
ILLINOIS

IN IANA
IN IAN
INDIANA
ND
NDIAN

Columbia
Jefferson City

St. Louis

MISSOURI
ISS UR
SSOUR
S
SO

Louisville-Jefferson County

Evansville

Elizabethtown

Owensboro

KENTUCKY
KENTUCKY
KEN UCKY
EN UC
N
NTU

Springfield
Bowling Green

Fayetteville-Springdale-Rogers
Jonesboro
Jackson

ARKA AS
ARKAN AS
RKANSAS
AN

TEN SSEE
TEN ESSEE
TENNESSEE
NNE
N

Fort Smith

Memphis

Little Rock-North Little Rock
Hot Springs
Pine Bluff

Texarkana

MISS SIPPI
MISS SSIPPI
SSISS PP

This report (known as the Burgundy Book ) summarizes information on economic conditions in the Memphis zone
of the Eighth Federal Reserve District (see map above), headquartered in St. Louis. Separate reports have also been
prepared for the Little Rock, Louisville, and St. Louis zones and can be downloaded from the CRE8 web site
(research.stlouisfed.org/regecon/).
The first section of this report summarizes information provided by various contacts within the District and is
similar to the type of information found in the Fed’s Beige Book (federalreserve.gov/fomc/beigebook/2008/).
The period covered by this section coincides roughly with the two Beige Book periods immediately preceding this
report. The second section includes government-provided data for the metro areas and states of the Memphis
zone. These data are the most recent available at the time this report was assembled.
For more information, please contact the Memphis office:
Martha L. Perine Beard, 901-579-2400, martha.l.perine@stls.frb.org
Economists:
Michael Pakko, 314-444-8564, pakko@stls.frb.org
Rubén Hernández-Murillo, 314-444-8588, ruben.hernandez@stls.frb.org

Memphis Zone Report—June 25, 2008
Economic activity in the Memphis zone continued to weaken during April and May. Most retailers and car dealers reported lower sales
compared with the previous year. Residential home sales and construction continued to decline, but activity in commercial and
industrial real estate showed no clear sign of weakening. Reports suggest that manufacturing activity continued to expand, while
service sector employment showed mixed signs of recovering from the slowdown earlier in the year. Cool and wet weather conditions
have caused delays in agricultural production.

Consumer Spending

Real Estate and Construction

Retail sales for April and early May were mostly negative among
general retailers and car dealers in the Memphis zone. Twothirds of the general retailers and 83 percent of the car dealers
surveyed indicated that sales were down from a year earlier.
Among general retailers, one-third noted that sales levels met
their expectations, but the other two-thirds reported that sales
were below what they had anticipated.Two-thirds of the general
retailers and one-third of the car dealers reported that their
inventories were too high, while 17 percent of the car dealers
reported too-low inventories. Three-fourths of the general
retailers with too-high inventories plan to use more discounting than usual. The sales outlook for the summer was mostly
pessimistic among general retailers but optimistic among car
dealers.

During the first four months of the year, home sales in Memphis
were down by 18 percent from the same period in 2007. Yearto-date single-family housing permits were down by 53 percent
from the previous year. The industrial vacancy rate in Memphis
rose slightly in the first quarter of 2008. Office vacancy rates
rose in the suburbs but fell downtown. Commercial contractors
in Memphis reported a positive business outlook for the next
twelve months. Other contacts in Memphis reported that development of industrial projects had slowed. A contact in northeast
Arkansas reported that light commercial construction is holding
up well and is quite active in some locations.

Manufacturing and Other Business Activity
Manufacturing in the Memphis zone grew significantly in the
second quarter of 2008. Firms in food manufacturing, motor
vehicle parts, transportation equipment, steel, and furniture
manufacturing industries all reported plans to open new facilities.
Furthermore, manufacturers of fabricated metal, food, office
supplies, and chemicals reported plans to expand existing
facilities and operations. In contrast, contacts in furniture and
plastic manufacturing reported plans to lay off workers and
decrease operations. One firm in transportation equipment
manufacturing announced that it will close a plant in the zone.
Employment in some segments of the service sector started to
show signs of renewed expansion: Contacts in the business
support services reported plans to expand operations and hire
additional workers. A firm in the transportation services sector
announced plans to build a new facility and hire additional
workers.

Banking and Finance
Banking conditions in the Memphis zone were mixed during
the first few months of 2008. Contacts reported varying levels
of demand for consumer loans, ranging from unchanged to a
modest decrease. Reports on the demand for business loans
were also mixed. A number of contacts, mostly in urban areas,
reported a modest increase in commercial and industrial lending.
Contacts in rural regions of the zone reported that a slowing
economy has led to decreased business lending. Most contacts
reported steady residential loan demand.

Agriculture and Natural Resources
Compared with 2007, farmers in Mississippi and Tennessee
intended to plant fewer acres of corn and cotton, but more
acres of soybeans this year. Farmers in both states planted
more winter wheat in the fall. Wet and cool weather conditions
have caused delays in planting and crop growth. At the end of
May, farmers in the Memphis zone were nearly finished with
corn planting but soybean and cotton planting were behind
normal. At the end of May, 91 percent of the winter wheat in
Mississippi and 96 percent of the winter wheat in Tennessee
was rated in fair condition or better—an improvement over
the same time last year. About 92 percent of the pastures in
Mississippi and 91 percent in Tennessee were in fair condition
or better, far better than a year ago.

Recent estimates indicate that Memphis
employment has contracted more sharply
than the national average in the first part
of 2008. Over the three-month period
ending in May 2008, Memphis monthly
employment contracted at a 0.17 percent
rate, while U.S. employment was down at
a monthly pace of only 0.06
percent.

Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2001–May 2008
Percent
0.6
0.4
0.2
0
–0.2
United States
Memphis MSA

–0.4
–0.6
2001

2002

2003

2004

2005

2006

2007

2008

Memphis MSA Employment Growth by Sector
Year/Year Percent Change, May 2007–May 2008
Percent
3.0
2.0
1.0
0.0
–1.0
–2.0
–3.0
–4.0
–5.0

Total
Nonfarm

Natural Manufacturing Trade, Information Financial
Resources,
Transportation,
Activities
Mining, and
and Utilities
Construction

Professional Education
and
and
Business
Health
Services

Leisure
and
Hospitality

Other
Services

Government

Between May 2007 and May 2008,
employment growth in the Memphis MSA
was negative in goods-producing sectors
and mixed in the service-providing sectors.
According to the most recent estimates,
expansion has been ongoing in education
and health, leisure and hospitality, and
other services, which saw employment
increases of 0.6, 1.1, and 2.0 percent,
respectively. Other service sectors, including
information; financial activities; and trade,
transportation and utilities were down over
the past year. The number of jobs in the
manufacturing sector fell by 2.3 percent.
Employment in natural resources, mining,
and construction was down by 4.1 percent.

Memphis Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change,
May 2007–May 2008
Total
Memphis
Jackson, Tenn.
United States

Goods producing

Service providing

Unemployment rate
April 2008

–0.28
1.12
0.30

–2.88
–2.08
–2.49

0.09
2.08
0.84

5.5
5.3
4.8

SOURCE: Bureau of Labor Statistics.

Memphis Zone—MSA Housing Activity
Total building permits,
units year to date
Percent change
–65.1
–51.0
7.3
–34.6

April 2008
Memphis
Jackson, Tenn.
Jonesboro, Ark.
United States

House price index,
percent change,
2008:Q1/2007:Q1
2.14
1.62
0.19
–0.03

1,146
119
133
321,015

SOURCE: Bureau of the Census, Office of Federal Housing Enterprise Oversight.

Memphis Area Coincident Economic Activity Index
Index (1992 = 100)
165

Arkansas

160

Mississippi

155

Tennessee
United States

150
145
140
135
130
2000

2001

2002

2003

2004

2005

2006

2007

Total residential building permits in January
were lower than a year earlier in two of the
three MSAs in the Memphis zone. In
Memphis and Jackson,Tennessee, permits
fell by 65 and 51 percent, respectively, while
permits fell by 35 percent nationally. House
price indices increased in all of the zone cities
during the first quarter of 2008. Prices were
up 2.14 percent in Memphis, 1.62 percent
in Jackson, and 0.19 percent in Jonesboro
from a year earlier. Nationwide, house
prices registered a small decrease over
the same period.
The Philadelphia Fed’s coincident index
combines payroll employment, wages and
salaries, the unemployment rate, and hours
worked into a single index. According to
this index, Mississippi and Arkansas have
underperformed the country as a whole
since 2001, while Tennessee has tended to
keep pace with the nation until recently.
During the first four months of 2008,
growth rates have slowed in the Memphis
zone states. For April, the index grew by
.01, –.06, and .11 percent in Tennessee,
Mississippi, and Arkansas, respectively.

2008

SOURCE: Federal Reserve Bank of Philadelphia.

Memphis Area Real Personal Income Growth
Percent Change, Year-Over-Year
Percent
12
10
8

Arkansas
Mississippi
Tennessee
United States

6
4
2
0
–2
–4
–6
2000

2001

2002

SOURCE: Bureau of Economic Analysis.

2003

2004

2005

2006

2007

2008

Personal income growth in Arkansas has
tended to keep pace with national income
growth since 2004, while Tennessee has
tended to be just below the national pace.
Since Hurricane Katrina in the third quarter
of 2005, Mississippi has experienced
relatively erratic income growth. As of the
first quarter of 2008, all three states were
showing year-over-year growth in excess
of the national average. Arkansas was up
1.9 percent, Mississippi was up 1.7 percent,
and Tennessee was up 1.5 percent. For the
United States as a whole, personal income
growth was 1.4 percent over the same
period.

2007 Population Estimates for Eighth District Metro Areas
2007
Population
Large metro areas
St. Louis, Missouri-Illinois
Little Rock–North Little Rock–Conway, Arkansas
Louisville/Jefferson County, Kentucky-Indiana
Memphis, Tennessee-Arkansas-Mississippi
Small and medium metro areas
Bowling Green, Kentucky
Columbia, Missouri
Elizabethtown, Kentucky
Evansville, Indiana-Kentucky
Fayetteville-Springdale-Rogers, Arkansas-Missouri
Fort Smith, Arkansas-Oklahoma
Hot Springs, Arkansas
Jackson, Tennessee
Jefferson City, Missouri
Jonesboro, Arkansas
Owensboro, Kentucky
Pine Bluff, Arkansas
Springfield, Missouri
Texarkana, Texas-Arkansas
SOURCE: U.S. Census Bureau.

Change
since 2000

Percent
change

International
migration

Internal
(domestic)
migration

2,803,707
666,401
1,233,735
1,280,533

105,020
55,883
71,760
75,329

3.9
9.2
6.2
6.3

27,436
3,644
12,115
13,399

–35,697
25,220
24,698
3,086

116,001
162,314
111,610
349,717
435,714
289,693
96,371
112,660
145,686
116,402
112,104
101,484
420,020
134,215

11,835
16,648
4,063
6,902
88,669
16,523
8,303
5,283
5,634
8,640
2,229
–5,857
51,646
4,466

11.4
11.4
3.8
2.0
25.5
6.0
9.4
4.9
4.0
8.0
2.0
–5.5
14.0
3.4

2,549
3,000
–53
1,493
10,435
3,937
451
1,030
854
913
310
448
1,485
531

5,784
6,769
–1,207
–393
52,725
3,497
9,355
1,180
493
4,747
–1,022
–8,297
39,241
1,970

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