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Current Economic Conditions in the

Eighth Federal Reserve District
St. Louis Zone
September 24, 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

ARKANSAS
ARKAN AS
RKAN AS
A

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:
Joel James, 314-444-8963, joel.h.james@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—September 24, 2009
Overall conditions in the St. Louis zone ranged from weak to mixed, but have improved somewhat since our previous report.
General retail news tended to be negative, while car dealers reported mixed news. The manufacturing and service sectors both
continued to weaken. The real estate and construction sector mostly declined. News from the banking and agriculture sectors
was mixed.

Consumer Spending
Retail sales reports for July and the first part of August were
mostly negative among general retailers, while they were mixed
among car dealers. Two-thirds of the general retailers and onethird of the car dealers indicated that sales were down compared
with the same months in 2008. One-third of the general retailers
and half of the car dealers reported increased sales. Among
the general retailers, 40 percent noted that sales levels met
their expectations, but 60 percent reported sales below expectations. Among car dealers, two-thirds noted that new car sales
had increased relative to used car sales, while one-third reported
the opposite. Also, one-third noted an increase in low-end
vehicle sales relative to high-end vehicle sales, while 17 percent
reported the opposite. All of the car dealers and 17 percent of
the general retailers reported that their inventories were too
low, while one-third of the general retailers reported too-high
inventories. Two-thirds of the general retailers and 17 percent
of the car dealers expect sales for September and October to
decrease over their 2008 levels, while 17 percent of the general
retailers and two-thirds of the car dealers expect sales to increase.

Manufacturing and Other Business Activity
Manufacturing activity in the St. Louis zone continued to decline,
with a large number of firms reporting job losses and declines
in output. However, a few manufacturers of household appliances
and steel increased production to replenish inventories. The
service sector continued to decline. Firms in business support,
health, leisure/hospitality, and education announced layoffs.
However, a major organization in transportation services
announced that it would rehire employees, and a large firm
in medical services announced plans to expand.

Real Estate and Construction
In St. Louis, compared with the same periods in 2008, June
and July 2009 year-to-date home sales were down 11 percent
and 8 percent, respectively. Compared with the same periods

in 2008, June and July 2009 year-to-date single-family housing
permits declined 32 percent and 28 percent, respectively.
Compared with the first quarter of 2009, the second quarter
2009 industrial vacancy and suburban office vacancy rates fell,
while the downtown office vacancy rate remained fairly constant.
A contact noted that, outside of projects related to large health,
education, and government institutions, there is little construction
work.

Banking and Finance
Overall lending activity was relatively unchanged from the
previous reporting period. Activity was mixed in the consumer,
commercial, and industrial loan categories. Most contacts
reported a slight decrease in residential mortgage lending activity.
Contacts reported declines in commercial real estate lending,
with several indicating that it is the most troublesome portion
of their loan portfolio. Lending standards were reported to be
restrictive. Contacts reported a slight increase in delinquencies.

Agriculture and Natural Resources
Crop conditions have held steady or improved slightly in both
Illinois and Missouri since mid-July. In late August, more than
13 percent of the cotton in Missouri was rated in poor condition,
but less than 10 percent of the other crops were rated poor. As
of August 1, yields for corn, soybeans, and winter wheat in both
states, as well as rice and cotton in Missouri, were expected to
range from 5 percent lower to 8 percent higher than last year’s
yields. Sorghum yields were expected to be more than 10
percent higher than last year in both states. Total production
of corn and soybeans in both states, as well as rice and cotton
in Missouri, was expected to range from 10 percent lower to
15 percent higher than last year. Total production of sorghum
and winter wheat in both states was expected to be lower by
30 percent or more compared with last year.

Payroll employment growth in the St. Louis
MSA has consistently underperformed the
country as a whole in recent years. There
was a reversal on that count for a period of
time. This has changed in the most recent
estimates. Although the recent three-month
average of employment growth has generally been negative for both St. Louis and
the nation as a whole, the national rate
exceeds St. Louis’ growth rate. Over the
three-month period ending in August 2009,
St. Louis monthly employment growth
averaged –0.28 percent, while U.S.
employment growth averaged –0.21
percent.

Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2001–August 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 August 2008 and August 2009
were negative, with the exceptions of education and health and government. Most recent
estimates show education and health to be
the strongest sector (1 percent growth) followed by government (0.7 percent growth).
The steepest changes were in natural
resources, mining, and construction at –12
percent growth, manufacturing at –10.6
percent growth, and other services at –8.6
percent growth. Trade, transportation, and
utilities; information; financial activities; professional and business services; and leisure
and hospitality all saw job losses of at least
1.9 percent.

St. Louis MSA Employment Growth by Sector
Year/Year Percent Change, August 2008–August 2009
Percent
2.0
0.0
–2.0
–4.0
–6.0
–8.0
–10.0
–12.0
–14.0

Total
Nonfarm

Natural Manufacturing Trade, Information Financial Professional Education
Resources,
Transportation,
Activities
and
and
Mining, and
and Utilities
Business
Health
Construction
Services

Leisure
and
Hospitality

Other
Services

Government

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

–3.86
–1.33
–3.03
–0.82
–4.10

SOURCE: Bureau of Labor Statistics.

Goods producing
–11.16
–12.36
–11.21
–9.74
–12.41

Service providing

Unemployment rate
July 2009

–2.52
–0.12
–1.75
0.59
–2.54

9.9
6.7
7.8
8.5
9.7

St. Louis Zone—MSA Housing Activity
Total building permits,
units year-to-date
Percent change
–27.6
–12.0
35.3
–59.4
–45.2

July 2009
St. Louis
2,769
Columbia, Mo.
396
Jefferson City, Mo.
92
Springfield, Mo.
512
United States
331,308

House price index,
percent change,
2009:Q2/2008:Q2
–1.67
–0.09
0.84
–1.03
–3.99

Total residential building permits in July
were lower than a year earlier in every
MSA in the zone, with the exception of
Jefferson City. St. Louis saw a milder decline
compared with the country as a whole, but
Springfield saw a sharper decline. The house
price index fell in Columbia, St. Louis, and
Springfield, while it rose in Jefferson City.
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

Missouri
United States

155
150
145
140
135
130
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

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 April and July of 2009,
the index fell by 2.39 percent in Illinois
and by 1.57 percent in Missouri, while it
declined by 0.63 percent for the nation as
a whole.

SOURCE: Federal Reserve Bank of Philadelphia.

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, with only the Illinois growth
rate being negative among the three, for
the most recent period.

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

2009

Residential Mortgage Delinquency Rates for Eighth District States
Percent 90+ Days Delinquent or in Foreclosure, 2009:Q2
Prime

Subprime

All mortgages
Missouri
Illinois
Indiana
Kentucky
Tennessee
Mississippi
Arkansas
U.S. Total

Total

FRM

ARM

Total

FRM

ARM

5.0
8.6
8.4
5.7
5.9
7.4
4.5
8.0

3.0
5.5
5.0
3.3
3.3
4.2
2.8
5.4

2.5
4.0
4.2
2.7
2.7
3.6
2.3
3.5

7.3
13.6
12.5
9.1
8.8
14.0
8.6
15.1

18.6
29.9
23.8
20.4
19.7
22.6
17.0
26.5

13.7
19.7
18.3
15.3
14.6
17.9
13.0
17.1

27.2
40.3
34.3
31.6
30.1
34.1
25.8
38.7

NOTE: FRM, fixed-rate mortgages; ARM, adjustable-rate mortgages.
SOURCE: Mortgage Bankers Association, National Delinquency Survey/Haver Analytics.