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Current Economic Conditions in the Eighth Federal Reserve District St. Louis Zone September 30, 2011 Prepared by the Research Division of the Federal Reserve Bank of St. Louis Eighth Federal Reserve District ILL IL ILLINOIS IILLIN LINO NO OIS S IINDIANA IN N NDIIA ND IA AN N NA Columbia Jefferson City St. Louis MISS ISSOURI SSOUR S UR SO Louisville-Jefferson County Evansville Owensboro Elizabethtown KENTU KE KEN EN NTU N NTU UCKY UC C CKY KY Springfield Bowling Green Fayetteville-Springdale-Rogers Jonesboro Jackson ARKAN A R RK KA ANSAS AN AS AS TENNESSEE T TEN EN N ES NNE SS SE EE E Fort Smith Memphis Little Rock-North Little Rock Hot Springs Pine Bluff Texarkana MISS M IS SS SIS SSIPPI S PP SIP PI 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 research.stlouisfed.org/regecon/. The report includes government-provided data for Missouri and the metro areas of the St. Louis zone. These data are the most recent available at the time this report was assembled. NOTE: Metropolitan statistical areas (MSAs) are larger geographic areas than cities, as defined by the Census Bureau. Unless noted otherwise, when we refer to a location—such as St. Louis—we refer to the St. Louis MSA and not to the city of St. Louis. For more information, please contact the St. Louis office: Joel James, 314-444-8963, joel.h.james@stls.frb.org Economist: Alejandro Badel, 314-444-8712, alejandro.badel@stls.frb.org St. Louis Zone Report—September 30, 2011 At the close of July, the annual growth of employment, building permits, and housing prices was 1.2 percent, –20.8 percent, and –3.4 percent in the St. Louis MSA and 0.9 percent, –4.9 percent and –4.5 percent in the nation. At the same time, the annual growth of personal income was 2.5 percent in Missouri and 3.1 percent in the nation. Also, in the past three months, local employment increased at a rate of 0.1 percent per month—approximately the same rate registered for nationwide employment. Finally, the unemployment rate in St. Louis (8.5 percent) was lower than the nation’s (9.1 percent). Therefore, St. Louis performed at least like the nation according to four of the six indicators considered. Nonfarm Payroll Employment Growth 3-Month Average, SA, January 2006–July 2011 Percent 0.4 0.2 0.0 St. Louis’s recession-related decline in employment, which was centered near the first quarter of 2009, was slightly milder than the nation’s decline. Since then, the recovery in St. Louis has been similar to that of the nation. During the past three months, employment in both St. Louis and the nation expanded at an average rate of 0.1 percent per month. –0.2 –0.4 United States St. Louis MSA –0.6 –0.8 2006 2007 2008 2009 2010 2011 St. Louis MSA Employment Growth by Sector Year/Year Percent Change, July 2010–July 2011 Percent 8.0 6.0 4.0 2.0 0.0 –2.0 –4.0 –6.0 Total Nonfarm 100% Trade, Education and Professional and Business Services Transportation, Health 14% and Utilities 17% 19% Government 11% Leisure and Hospitality 11% Manufacturing Financial Activities 9% 6% Natural Resources, Mining, and Construction 5% Other Services 5% Information 2% Employment growth by sector during the past 12 months distinguishes general trends from sector-specific trends in St. Louis’s economic performance. Employment increased by 1.2 percent in this MSA with respect to one year ago, while the increase was only 0.9 percent for the United States. The three largest sectors in St. Louis are Trade, Transportation, and Utilities; Education and Health; and Professional and Business Services, accounting for 19 percent, 17 percent, and 14 percent of St. Louis’s employment, respectively. Growth in these three sectors was 3.4 percent, 1.7 percent, and –0.9 percent, respectively. Employment growth varied across sectors, with 5 of 10 sectors increasing employment and the rest having negative or constant employment growth. The Other Services sector, accounting for 5 percent of total employment, had the best performance (6.8 percent), while the Information sector, which accounts for 2 percent of total employment, had the worst performance in St. Louis (–4.3 percent). St. Louis Zone Coincident Economic Activity Index Index (Jan. 2008 = 100) 102 100 98 96 94 92 90 88 Illinois Missouri United States 86 2008 2009 2010 2011 SOURCE: Federal Reserve Bank of Philadelphia The Philadelphia Fed’s coincident index combines information on payroll employment, wages, unemployment, and hours of work to give a single measure of economic performance. The coincident indexes for both Illinois and Missouri reveal a stronger impact of the recession and a slower recovery in these states compared with the nation. The index bottomed out at 89.4 for Illinois and at 87.6 for Missouri, while it bottomed out at 91.9 for the United States. Current values of the index suggest that economic activity in Illinois is at 92.5 percent of its pre-recession level, while it is at 89.8 percent in Missouri and 95.5 percent in the nation. Throughout 2010 and the first half of 2011 the recovery was incipient for Missouri. Importantly, the graph shows that during the last half of 2011 the index has started to increase appreciably for Missouri. St. Louis Zone—MSA Employment and Unemployment Nonfarm payroll employment percent change, July 2010–July 2011 St. Louis Columbia, Mo. Jefferson City, Mo. Springfield, Mo. United States Total Goods producing Service providing Unemployment rate July 2011 1.22 –2.66 0.26 1.37 0.92 3.06 2.82 3.19 2.50 1.66 0.94 –3.13 –0.15 1.24 1.68 8.5 6.0 6.6 7.5 9.1 SOURCE: Bureau of Labor Statistics. Total employment expansion in the St. Louis zone has been positive for all MSAs except for Columbia, which experienced a substantial decline in employment driven by the decline in service-providing sectors. Jefferson City, on the other hand, experienced the highest employment growth in goods-producing activities (3.19 percent) but a negative growth in serviceproviding activities (–0.15 percent). The highest unemployment rate in the St. Louis zone was registered in St. Louis, at 8.5 percent. All MSAs in the zone registered lower unemployment rates than the 9.1 percent registered for the United States. St. Louis Zone Real Personal Income Growth Percent Change, Year/Year Percent 7 6 5 4 3 2 1 0 –1 –2 –3 –4 –5 –6 2006 Illinois Missouri United States 2007 2008 2009 2010 2011 For several quarters before the national recession, which started in the last quarter of 2007, personal income growth in Illinois was roughly similar to the nation’s, while Missouri’s was slightly lower. The recession’s impact on Missouri’s and Illinois’s personal income has been stronger and the recovery since 2010 has been generally weaker for both states compared with the nation’s. Between the first quarter of 2010 and the first quarter of 2011, personal income grew 2.5 and 3.5 percent in Missouri and Illinois, respectively, while it grew 3.1 percent in the nation. SOURCE: Bureau of Economic Analysis St. Louis—MSA Housing Activity Total building permits, units year-to-date July 2011 St. Louis Columbia, Mo. Jefferson City, Mo. Springfield, Mo. United States 2,652 552 99 637 346,452 Percent change –20.8 68.3 –13.9 –0.2 –4.9 House price index, percent change, 2011:Q2/2010:Q2 –3.4 –2.3 –2.3 –4.6 –4.5 SOURCE: Bureau of the Census, Federal Housing Financing Authority. Relative to the same period last year, housing activity in the St. Louis zone is generally weaker. Compared with the same month one year ago, St. Louis, Jefferson City, and Springfield experienced declines in the year-to-date number of total building permits of 20.8 percent, 13.9 percent, and 0.2 percent, respectively. Meanwhile, Columbia experienced a 68.3 percent increase in year-to-date total building permits. With the exception of Springfield, the contractions in housing permits for zone MSAs have been deeper than the 4.9 percent contraction registered for the United States. During this same period, housing prices declined in all four of the St. Louis zone’s MSAs. To illustrate, housing prices decreased 3.4 percent, 2.3 percent, 2.3 percent, and 4.6 percent in St. Louis, Columbia, Jefferson City, and Springfield, respectively. With the exception of Springfield, housing prices in the St. Louis zone’s MSAs fared better than those in the nation, which experienced a 4.5 percent decline.
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