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
December 17, 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:
Joel James, 314-444-8963, joel.h.james@stls.frb.org
Economist:
Howard Wall, 314-444-8533, wall@stls.frb.org

St. Louis Zone Report—December 17, 2009
Economic activity in the St. Louis zone continues to be weak, with few signs of improvement over recent periods. General retailers
and auto dealers continue to report that sales are lower than in the previous year. The manufacturing and service sectors both
continued to shed jobs. Housing markets have continued to stabilize, although commercial real estate markets have weakened.
The banking sector remains stable.

Consumer Spending

Real Estate and Construction

Retail sales reports for October and early November were mostly
negative among general retailers and mixed among car dealers
surveyed in the St. Louis zone. About 83 percent of the general
retailers and one-third of the car dealers indicated that sales
were down compared with the same months of 2008. The
remaining 17 percent of the general retailers and half of the
car dealers reported increased sales. Among the general retailers,
60 percent noted that sales levels met their expectations, but
40 percent reported sales below expectations. Among car dealers,
half noted that new car sales had increased relative to used
car sales, while 17 percent reported the opposite. Two-thirds
of the car dealers reported more rejections of finance applications. The sales outlook for the rest of 2009 was mostly
pessimistic among the general retailers but mixed among the
car dealers. Two-thirds of the general retailers and half of the
car dealers expect sales to decrease over 2008 levels, while
one-third of each group expect sales to increase.

In St. Louis, compared with the same period in 2008, September
2009 year-to-date home sales and single-family housing permits
were down by 6 percent and 20 percent, respectively. The
third-quarter 2009 industrial vacancy rate increased from the
previous quarter, as did suburban and downtown office vacancy
rates. A contact noted that the pace of commercial foreclosures
has been increasing. Other contacts noted that a number of
high-profile commercial properties have recently been foreclosed
upon and that industrial construction had fallen sharply compared with the same time last year.

Manufacturing and Other Business Activity
Manufacturing activity has continued to decline in the St. Louis
zone since our previous report, with job losses reported across
a wide range of industries. Firms in the transportation, manufacturing, and chemical product manufacturing industries
announced plans to close plants and cut jobs. Firms in heating,
ventilation, and air conditioning manufacturing and auto parts
manufacturing announced plans to cut jobs in line with decreased
production. Finally, a major pharmaceutical company announced
plans to lay off a significant number of employees following a
merger with another firm. The service sector also continued to
decline, with a larger number of job losses on net. Firms in the
financial services and business support services announced plans
to open new facilities and hire additional workers. In contrast,
a larger number of firms in the business support services
announced plans to reduce staff and cut costs.

Banking and Finance
Overall lending activity was relatively unchanged from previous
reporting periods. Reports indicated a slight increase in consumer
lending activity, although commercial and industrial lending
activity was unchanged from previous reports. One contact
noted a spike in loan applications from small businesses, but
lending standards are still tight and are restricting the number
of new loans. Residential mortgage lending increased slightly
with an increase in both new loans and refinancing activity.
Reports continue to indicate declining activity in commercial real
estate lending. All contacts reported an increase in deposits.

Agriculture and Natural Resources
Wet conditions throughout the St. Louis zone caused some
delays in harvesting and winter wheat planting. As of midNovember, Illinois farmers had harvested about half of their
corn, about 90 percent of their soybeans, and about threefourths of their sorghum (all three behind normal). Missouri
farmers had harvested between 65 percent and 85 percent of
their corn, soybeans, sorghum, and cotton (all behind normal)
and nearly all of their rice.

Employment for the St. Louis MSA and
the country as a whole has continued to
decline, albeit at lower rates than earlier in
the year. Estimates indicate that, recently,
St. Louis employment has been contracting less sharply than for the country as a
whole. Specifically, over the three-month
period ending in October 2009, St. Louis
employment contracted at a 0.11 percent
monthly rate, while U.S. employment contracted at a monthly rate of 0.17 percent.

Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2001–October 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

Between October 2008 and October 2009,
total nonfarm employment in the St. Louis
MSA fell by 3.2 percent. This rate of job
loss was lower than for the country as a
whole, which saw a 3.9 percent decline
over the period. Net job losses in St. Louis
were experienced in all sectors except
education and health, which saw a modest
increase of 1.3 percent. The largest percentage declines were in natural resources,
mining, and construction (11.3 percent);
manufacturing (9.7 percent); and other
services (–7.3 percent).

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

Total
Nonfarm

Natural Manufacturing Trade, Information Financial Professional Education
Transportation,
Activities
and
and
Resources,
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,
October 2008–October 2009
Total
St. Louis
Columbia, Mo.
Jefferson City, Mo.
Springfield, Mo.
United States

–3.23
–1.26
–2.98
–0.85
–3.87

SOURCE: Bureau of Labor Statistics.

Goods producing
–10.27
–10.47
–9.62
–7.81
–12.03

Service providing

Unemployment rate
October 2009

–1.96
–0.35
–2.00
0.17
–2.37

10.3
6.2
7.6
8.2
10.2

St. Louis Zone—MSA Housing Activity
Total building permits,
units year-to-date
Percent change
–20.4
–6.2
37.4
–53.8
–40.5

September 2009
St. Louis
4,152
Columbia, Mo.
545
Jefferson City, Mo.
136
Springfield, Mo.
778
United States
483,013

House price index,
percent change,
2009:Q3/2008:Q3
–2.43
–1.58
0.69
–1.61
–4.08

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

Total residential building permits in
September 2009 were lower than a year
earlier in three of the four MSAs in the
St. Louis zone. Permits declined by 53.8
percent in Springfield, by 20 percent in
St. Louis, and by 6.2 percent in Columbia.
Jefferson City, on the other hand, saw an
increase of 37.4 percent in building permits
and a small increase in its house price index.
The house price index fell in the other three
MSAs: 2.4 percent St. Louis and about 1.6
percent in Springfield and Columbia.
Nationwide, house prices fell by 4.1 percent
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 of economic
performance. According to this index,
Missouri and Illinois have both underperformed the country as a whole since the
start of the recession in December 2007.
The index declined by 3.3 percent for the
United States and by 11.4 percent and 6.5
percent for Illinois and Missouri, respectively.
Since June of this year, the index has leveled
off for Missouri and the United States but
has continued to decline for Illinois.

SOURCE: Federal Reserve Bank of Philadelphia.

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

Illinois

6

Missouri

5

United States

4
3
2
1
0
–1
–2
–3
–4
2000

2001

2002

2003

SOURCE: Bureau of Economic Analysis.

2004

2005

2006

2007

2008

2009

As illustrated by the figure, since the recession began in the fourth quarter of 2007,
personal income growth in Missouri has
tended to be higher than in Illinois, where
it tended to be somewhat lower than the
country as a whole. Recent performance has
followed a similar pattern. For the second
quarter of 2009, personal income in
Missouri was 1.3 percent lower than it had
been a year earlier, while for Illinois it was
2.7 percent lower. For the nation as a
whole, personal income declined by 2.4
percent over the period.

Year-Over-Year Percent Change in State Tax Revenue
2008:Q3
Personal
income
Arkansas
Illinois
Indiana
Kentucky
Mississippi
Missouri
Tennessee
United States

6.2
3.8
–1.9
6.6
–1.8
0.2
—
1.9

Corporate
income
–12.4
–3.4
–10.5
–48.4
–14.6
–3.0
–25.2
–14.9

2009:Q3

Sales

Total

Personal
income

3.6
1.9
19.7
3.2
2.5
–3.6
–2.0
4.8

3.4
1.4
9.1
0.9
1.4
–1.1
–4.2
3.0

–6.9
–11.7
–20.3
–7.1
–12.2
–8.1
—
–11.3

Corporate
income
–21.4
–28.4
–42.4
–40.5
–19.1
–8.5
8.2
–17.5

Sales

Total

–11.1
–13.1
–10.9
–7.5
–12.4
–6.0
–9.5
–8.8

–7.8
–12.6
–14.2
–5.5
–11.8
–6.9
–5.4
–11.1

NOTE: 2009:Q3 data are preliminary data from early-reporting states collected by the Rockefeller Institute of Government.
SOURCE: The Nelson A. Rockefeller Institute of Government/U.S. Bureau of the Census.