View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Current Economic Conditions in the

Eighth Federal Reserve District
St. Louis Zone
March 18, 2009

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
Owensboro

Elizabethtown

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 St. Louis 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 Memphis zones and can be downloaded from the CRE8 website
(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/2009/).
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 St. Louis zone.
These data are the most recent available at the time this report was assembled.
For more information, please contact the St. Louis office:
Randy Sumner, 314-444-8644, randall.c.sumner@stls.frb.org
Economists:
Tom Garrett, 314-444-8601, tom.a.garrett@stls.frb.org
Subhayu Bandyopadhyay, 314-444-7425, subhayu.bandyopadhyay@stls.frb.org

St. Louis Zone Report—March 18, 2009
Economic activity in the St. Louis zone continued to weaken over the past two months. Most general retailers and half of car dealers
reported sales decreases over the same period last year. Overall activity in the manufacturing, services, real estate, and construction
sectors declined. In the banking sector, an increase in residential mortage refinancing helped to offset declines in other lending
activity. Reports from the agriculture and natural resources sectors were strong relative to the rest of the economy.

Consumer Spending

Real Estate and Construction

Retail sales reports for January and early February were mostly
negative among general retailers, while they were more mixed
among car dealers. About 83 percent of the general retailers
and half of the car dealers surveyed indicated that sales were
down compared with year-earlier levels. The remaining general
retailers and 17 percent of car dealers reported increased sales.
Twenty percent of general retailers reported sales to be below
expectations, while the same proportion reported sales above
expectations. Among car dealers, 33 percent reported increases
in sales of high-end vehicles, and about 30 percent reported
more rejections of finance applications. General retailers and
car dealers tended to be pessimistic about the near future, as
more than 80 percent of each expect their sales over the next
two months to be lower than their 2008 levels.

Compared with year-earlier levels, January 2009 year-to-date
home sales were down by 14 percent. The residential housing
market shows signs of stabilizing, as this decline is similar to
that experienced in previous months. January 2009 year-todate single-family housing permits were 53 percent lower than
a year earlier. The commercial real estate market has continued
to weaken, and the fourth-quarter 2008 industrial and office
vacancy rates were higher than earlier in the year. Contacts
were generally pessimistic about the commercial construction
market for 2009.

Manufacturing and Other Business Activity
Manufacturing activity continued to decline between December
2008 and February 2009. A large number of firms announced
job layoffs and reductions in output. Firms in the primary
metal, heavy metal, and steel-product industries, for example,
announced plans to lay off workers; firms in electrical equipment, railroad rolling stock, and automotive parts announced
plans to close plants in the zone. In contrast, a firm in machinery manufacturing announced plans for a new facility and new
jobs and a firm in rubber-product manufacturing announced
plans to expand employment. In the service sector, firms in
business support, education, information, transportation, and
urban transit all announced job losses. A major service firm in
the zone announced a significant number of job losses at its
corporate office.

Banking and Finance
Commercial and industrial lending activity has continued to
decline. According to our contacts, increased economic uncertainty has meant a decrease in the demand for these loans.
Commercial real estate loans also declined, although there was
a slight increase in residential mortgage lending, which contacts
attribute to a spike in refinancing activity. Contacts also reported
that consumer lending levels ranged from unchanged to modestly
lower. A number of contacts noted a recent increase in delinquencies on consumer loans, and lending standards remained
tight for all types of loans.

Agriculture and Natural Resources
Total coal production in Illinois and Missouri for all of 2008
was 3 percent below its 2007 level. Between 2007 and 2008,
the total value of field crops declined in Illinois by 6 percent and
in Missouri by 4 percent, although 2007 was a very good year.
There were some differences across crops, however, as both the
price and the production of corn decreased, while the opposite
occurred for winter wheat. Also, in Missouri, the price and production of rice increased, while the price and production of
cotton decreased.

In recent years, payroll employment growth
in the St. Louis MSA has consistently
underperformed the country as a whole.
According to the most recent estimates, this
trend has reversed. Although the recent
three-month average of employment
growth has generally been negative for
both St. Louis and the nation as a whole,
St. Louis’s growth exceeds the national
rate. Over the three-month period ending
in January 2009, St. Louis’s monthly
employment growth averaged –0.42
percent, while U.S. employment growth
averaged –0.53 percent.

Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2001–January 2009
Percent
0.4
0.3
0.2
0.1
0
–0.1
–0.2
–0.3
–0.4
United States
St. Louis MSA

–0.5
–0.6
2001

2002

2003

2004

2005

2006

2007

2008

2009

St. Louis MSA sectoral employment growth
rates between January 2008 and January
2009 were negative, with the exceptions of
information, education and health, and government. The most recent estimates show
education and health to be the strongest
sector at 3.1 percent, followed by information
at 1.3 percent, and government at 1.1 percent. The steepest changes were in natural
resources, mining, and construction at –8.7
percent, manufacturing at –6.1 percent, and
other services at –6 percent. Trade, transportation, and utilities; financial activities;
professional and business services; and
leisure and hospitality all saw job losses of
at least 1.8 percent.

St. Louis MSA Employment Growth by Sector
Year/Year Percent Change, January 2008–January 2009
Percent
4.0
2.0
0.0
–2.0
–4.0
–6.0
–8.0
–10.0

Total
Nonfarm

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

Professional Education Leisure
and
and
and
Business
Health Hospitality
Services

Other
Services

Government

St. Louis Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change,
January 2008–January 2009
Total
St. Louis
Columbia, Mo.
Jefferson City, Mo.
Springfield, Mo.
United States

–1.98
0.79
–1.39
–1.47
–2.48

SOURCE: Bureau of Labor Statistics.

Goods producing
–7.04
–1.27
–4.00
–10.95
–8.28

Service providing

Unemployment rate
December 2008

–1.07
0.99
–1.01
0.06
–1.39

7.6
4.5
5.7
6.0
7.1

St. Louis Zone—MSA Housing Activity
Total building permits,
units year-to-date
Percent change
–47.2
–14.3
–20.0
–71.3
–52.3

January 2009
St. Louis
Columbia, Mo.
Jefferson City, Mo.
Springfield, Mo.
United States

House price index,
percent change,
2008:Q4/2007:Q4
–1.10
2.11
1.67
–1.09
–4.47

230
36
4
58
36,250

Total residential building permits in January
were lower than a year earlier in every MSA
in the zone. St. Louis saw a decline that was
similar to that of the country as a whole,
but Springfield saw a sharper decline.
The house price index fell in St. Louis and
Springfield, while it rose in the other two
metro areas in the zone. The index fell over
the same period for the nation as a whole.

SOURCE: Bureau of the Census, Federal Housing Financing Authority.

St. Louis Area Coincident Economic Activity Index
Index (1992 = 100)
165
Illinois
160
155

Missouri
United States

150
145
140
135
130
2000

2001

2002

2003

2004

2005

2006

2007

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, labor market conditions began
to soften in early 2007, several months
before similar softening occurred nationwide. The gap between the nation and
St. Louis has grown according to this index.
Between September and December 2008,
the index fell by 1.35 percent in Illinois and
1.19 percent in Missouri, while it fell by
0.81 percent for the national as a whole.

2008

SOURCE: Federal Reserve Bank of Philadelphia.

St. Louis Area Real Personal Income Growth
Percent Change, Year/Year
Percent
7

Illinois

6

Missouri
United States

5
4
3
2
1
0
–1
–2
2000

2001

2002

2003

SOURCE: Bureau of Economic Analysis.

2004

2005

2006

2007

2008

Personal income growth in Missouri and
Illinois had been weaker than in the country
as a whole since 2003, and income growth
in Missouri had been weaker than in Illinois
through most of 2006 and 2007. More
recently, however, Missouri’s income growth
has outpaced that of Illinois and the country
as a whole, although all of these growth
rates have been negative for the most
recent period.

Annual Revisions of the Metro-Area Employment Data
December 2007–December 2008
Original estimate
as of January 2009
Thousands
Large Metro Areas
Little Rock–N. Little Rock, Ark. –5.8
Louisville, Ky.–Ind.
–16.1
Memphis, Tenn.–Ark.–Miss.
–15.7
St. Louis, Mo.-Ill.
–23.0
Small and Medium Metro Areas
Fayetteville-Springdale–2.5
Rogers, Ark.
Fort Smith, Ark.-Okla.
–1.6
Texarkana, Texas-Ark.
1.2
Bowling Green, Ky.
–0.8
Evansville, Ind.-Ky.
–2.5
Jackson, Tenn.
–0.9
Columbia, Mo.
0.0
Jefferson City, Mo.
–1.0
Springfield, Mo.
0.1

Percent
change

Revised estimate
as of March 2009
Thousands

December 2006–December 2007
Original estimate
as of January 2009

Revised estimate
as of March 2009

Percent
change

Thousands

Percent
change

Thousands

Percent
change

–1.7
–2.5
–2.4
–1.7

–4.7
–16.9
–15.7
–19.8

–1.3
–2.7
–2.4
–1.4

5.2
6.9
5.4
2.0

1.5
1.1
0.8
0.1

5.0
4.3
–0.1
6.7

1.5
0.7
0.0
0.5

–1.2

–2.6

–1.2

0.9

0.4

1.2

0.6

–1.3
2.1
–1.3
–1.4
–1.4
0.0
–1.2
0.1

–1.4
0.9
–1.5
–4.6
–1.7
1.1
–0.7
–4.6

–1.1
1.6
–2.4
–2.6
–2.7
1.2
–0.9
–2.3

1.7
0.7
1.8
1.4
0.3
1.0
1.5
5.2

1.4
1.2
2.9
0.8
0.5
1.1
1.9
2.6

2.1
0.9
1.6
–0.2
0.0
–0.1
1.5
4.4

1.7
1.6
2.6
–0.1
0.0
–0.1
1.9
2.2

In early March of each year, the Bureau of Labor Statistics carries out a benchmark revision of state and local payroll employment
data using information from the more-comprehensive Quarterly Census of Employment and Wages (QCEW). The payroll employment
data are revised going back 21 months and the new numbers sometimes show a dramatically different view of local employment
experiences. This year, however, data revisions for Eighth District metro areas are relatively small. The revisions for the 2007 and
2008 calendar years are presented in the table. Note that the data for 2008 are subject to revision again in March 2010.