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Business
AN EIGHTH DISTRICT PERSPECTIVE
WINTER 1984-85

Economy Warming Down After Marathon
Expansion
After two years of expanding at a very rapid rate,
economic activity at the national level is showing signs of
cooling down. Growth in real GNP slowed to a 1.9 per­
cent annual pace in third quarter 1984, down from an
average annual rate of 7.1 percent ovei the previous six
quarters.
As is typical of cooling-off periods, not all of the in­
dicators of economic activity are pointing in the same direc­
tion. For example, personal income and payroll employ­
ment at the national level grew fairly rapidly in October,
at annual percentage rates of 7.1 and 5.7 percent, respec­
tively. On the other hand, during the same month, retail
sales fell at an annual rate of 1.7 percent while the index
of industrial production and the unemployment rate were
roughly unchanged.
The accompanying data and chart indicate that economic
activity in the Eighth District is slowing as well. Growth
rates in the general business indexes have slowed con­
siderably in recent months across all District states. While
it is difficult to date exact turning points, three-month
average growth rates in the range of 8-17 percent occurred
with considerable frequency between fourth quarter 1982
and May 1984. Since that time, there has been a substan­
tial decline in these growth rates. In no state was the growth
rate as high as 8 percent in the five months since May.

personal income (8.5 percent) has been equal to the national
growth rate during the first six quarters of the expansion.
The growth rates for the District states, which range from
7.5 percent in Kentucky to 9.3 percent in Tennessee, have
exceeded the national average in three cases while the
growth rate for Kentucky fell below the national average
over the same period. In some cases, the differences ap­
pear to be large; however, these are statistically insigni­
ficant. Consequently, by this indicator, it does not appear
that the District has lagged behind the nation during the
economic recovery or that the recovery has favored par­
ticular states as some have claimed. Rather, the conclusion
appears to be that the economic recovery in the District has
kept pace with the national recovery and has been roughly
uniform across District states.

Unemployment

Unemployment rates for both the District and the nation
began falling sharply at the end of 1982. Recently, however,
the decline has tapered off.
Currently, the District’s unemployment rate is higher than
the national average and has been higher for the past four
years. This reverses the relationship between the District’s
and nation’s unemployment rates that had existed during
the decade of the 1970s.
Personal Income
While unemployment rates in Arkansas, Kentucky and
Tennessee have recently hovered in the 9 to 10 percent
range, the unemployment rate in Missouri has declined to
Personal income in each of the District states has advanced
about 6.4 percent. Missouri’s unemployment rate had been
rapidly since the trough of the recession. Chart 1 (next page)
higher than the national average from January 1983 through
plots annualized quarterly growth rates in personal income
April 1984. Since April, the rate has declined sharply to
for the District and nation, along with the average annual
its current level. Though not as low, the
growth rates over the period 1970-1984
unemployment rate in St. Louis has be­
(horizontal lines). For the District as a
haved in a similar fashion and is presently
whole, the pace of the advance in personal
about equal to the national average. The cur­
income was particularly rapid in fourth
THE
rent unemployment rate in Litde Rock (about
quarter 1983 and first quarter 1984.
FEDERAL
RESERVE
6.8 percent) is also low relative to the na­
However, during second quarter 1984, both
RANK of
tional
average. However, unlike the
growth rates declined to about their long-run
ST. IjOITS
unemployment rate in St. Louis, which had
averages.
generally exceeded the national average until
The average annual growth rate in District




FEDERAL RESERVE BANK OF ST. LOUIS

WINTER 1984-85

C h art 1
PERSONAL INCOME GROWTH RATES
PERCENT

QUARTERLY DATA

recently, Little Rock’s unemployment rate has been con­
sistently below the national average since September 1981.

payroll employment is close to the national average, the
accompanying tabular data indicates that the growth rates
for individual states and cities has been far from uniform.

Payroll Employment

In Summary

After getting off to a fairly slow start in the initial phase
of the expansion, the average growth rate in District payroll
employment had been about equal to growth at the national
level from January 1983 through February 1984. District
payroll employment either fell or grew slowly in March,
April and May, while employment at the national level con­
tinued to grow at a fairly brisk pace. Since May, growth
in District payroll employment has bounced back. While
recent data indicate that the average growth rate in District

Economic activity at both the District and national level
appears to be cooling down following a brisk recovery that
began in fourth quarter 1982. Currently, most indicators
of economic activity are advancing at rates that conform
more closely to their long-run trends rather than at the rapid
rates that marked the earlier phase of the expansion. Con­
sequently, despite the slowing, the outlook for the near
future remains encouraging.
—G.J. Santoni

Business—An Eighth District Perspective is a quarterly summary of business conditions in the area served by the
Federal Reserve Bank of St. Louis. Single subscriptions are available free of charge by writing: Research and Public
Information Department, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, Missouri 63166. Views ex­
pressed are not necessarily official positions of the Federal Reserve System.

2



FEDERAL RESERVE BANK OF ST. LOUIS

WINTER 1984-85

EIG H TH D IS T R IC T B U S IN E S S D A T A
G ro w th R a te s 1
Current Period
General Business Indexes2

Year-to-D ate 1984

1983

2.1%
4.5
3.8
6.5

12.0%
4.7
8.6
4.8

7.3%
1.1
4.9
8.4
6.5

11.0%
11.2
9.0
9.5
13.8

5.3%
5.8
5.3
5.5
5.5
6.5

7.5%
6.9
8.2
4.2
7.6
7.4

4.1%
2.8
3.2
0.6
2.9
1.1
2.8
1.5
2.9
4.0
2.1

3.4%
2.6
5.4
4.3
1.3
0.7
0.7
1.3
1.9
3.7
2.2

3.1%
4.5
3.8
3.0
2.2
5.5
7.3
3.6
3.9

4.2%
5.3
4.0
7.6
4.7
5.1
5.0
4.4
0.9

Aug-Oct

Arkansas
Kentucky
Missouri
Tennessee

1.6%
0.9
-0 .8
3.7

Retail Sales

July-Sept

United States
Arkansas3
Kentucky3
Missouri
Tennessee

-3 .8 %
-8 .8
1.2
-1 7 .2
-6 .3

Personal Incom e

2nd quarter ’84

United States
District
Arkansas
Kentucky
Missouri
Tennessee

8.8%
7.9
0.5
10.8
6.4
11.2

Payroll Em ploym ent

Aug-Oct

United States
District
Arkansas
Little Rock
Kentucky
Evansville, IN
Louisville
Missouri
St. Louis
Tennessee
Memphis

3.2%
1.6
3.5
1.5
1.4
1.2
0.4
2.4
3.4
0.1
2.9

Average Hourly Earnings-Mfg.

Aug-Oct

2.2%
4.0
1.8
0.1
- 5 .4
8.9
10.9
6.9
-1 .9

United States
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Memphis

E m p lo ym en t1
Year-to-D ate 1984

P ric e s 1

Same Period 1983

Y ear-to-D ate 1984

Sam e Period 1983

Key Industries
Fabricated Metal Products
Electrical and Electronic Equipm ent
Nonelectrical M achinery
Transportation Equipm ent
Food and Kindred Products
Textile and Apparel
Printing and Publishing
C hem icals and Allied Products
Construction




2 .8 %

2 .6 %

3.0%

7.2

9.0

3.2

6.8

2.7
0.5

9.0
6.0
3.0
-0 .8
1.1
2.1
12.2

17.4
-2 .4
6.4

2.7
-1 .6
4.3

2 .8
1.6
5.8
1.9
2.5

- 0 .6 %
4.6

2.5
-0 .3
3.4

1.7
6.3
2.2
5.1

3

EIG H TH D IS T R IC T B U S IN E S S D A T A
C urrent
P erio d *12
3
Unemployment Rate

Aug-Oct

United States
District
A rkansas
Little Rock
Kentucky
Evansville, IN
Louisville
Missouri
St. Louis
Tenn essee
M em phis

7 .4 %
8.5
9.1
6.7
9.6
8.2
8.8
6.6
7.6
9.4
7.3

P revious
3 M onths

A verag e Y earto -D ate 1984

A verag e
1983

7 .4 %
8.4
9.2
7.0
9.4
8.9
8.9
7.2
7.9
8.6
7.5

7 .6 %
8.6
9.0
7.0
9.5
8.8
9.0
7.5
8.4
9.0
7.7

9 .6 %
10.8
10.1
8.1
11.6
10.7
10.9
9.9
10.5
11.4
9.5

$633.1
128.6
202.2
212.1
90.2

$ 5 4 5 .9
121.8
179.9
164.2
80.0

$ 4 8 3 .4
106.4
172.9
136.8
67.3

Construction Contracts4
(millions of dollars)
District
Arkansas
Kentucky
Eastern Missouri
W estern T enn essee

Aug-Oct
$564.8
130.5
205.4
148.7
80.2

NOTE: With the exception of construction contracts and employment and prices in key industries, all data are seasonally adjusted.
1Data are presented as three-month averages to minimize distortions due to the large variability of monthly data. The current period
growth rate is a comparison of the average of the current three months to the average of the previous three months. The year-to-date
grpwth rate is from the average of the three months ended in December 1983. All growth rates are compounded annual rates of change.
2Sources: Arkansas and Missouri from Southwestern Bell, Kentucky and Tennessee from South Central Bell.
3Sources: Arkansas from Southwestern Bell and Kentucky from Kentucky Revenue Department; Missouri and Tennessee are seasonally
adjusted by this Bank
4Source: F.W. Dodge, Construction Potentials, McGraw-Hill Information Systems Company, proprietary data provided by special permission.




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