Federal Reserve Bank of St. Louis, Research Division

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Research Papers in Economics

Current Economic Conditions in the
Eighth Federal Reserve District
Louisville Zone
September 30, 2011
Prepared by the
Research Division of the
Federal Reserve Bank of St. LouisThis report (known as the Burgundy Book) summarizes information on economic conditions in the Louisville zone of the
Eighth Federal Reserve District (see map above), headquartered in St. Louis. Separate reports have also been prepared for the
Little Rock, Memphis, and St. Louis zones and can be downloaded from research.stlouisfed.org/regecon/.
The report includes government-provided data for Kentucky and the metro areas of the Louisville 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 Louisville—we refer to the Louisville MSA and not to the
city of Louisville. 
For more information, please contact the Louisville office:
Maria G. Hampton, 502-568-9205, maria.g.hampton@stls.frb.org
Economist:
Alejandro Badel, 314-444-8712, alejandro.badel@stls.frb.org
Texarkana
Pine Bluff
Hot Springs
Fort Smith
Fayetteville-Springdale-Rogers
Little Rock-North Little Rock
Memphis
Jackson
Jonesboro
Springfield
Columbia
Jefferson City
St. Louis
Evansville
Owensboro
Bowling Green
Elizabethtown
Louisville-Jefferson County
TENNESSEE ES EE SS N E NNE E SS SE T TEN TEN
SSIPPI PP PP SIP S PI SIP SIS MISS IS SS M M SIS
A ANSAS AS AS ARKAN S AN A RK KA A A AR
Y UCKY CKY CKY UC NTU ENTU NT N KEN N K KENTU K ENTU EN K NTU UC Y KEN KE K
M MISSOURI M MISS S M SOUR SO S UR
ILLINOIS IL ILL ILL OIS NO S OIS ILLIN LINO I INDIANA NDI IA AN ND NA AN IA IN I IN
Eighth 
Federal Reserve 
DistrictLouisville Zone Report—September 30, 2011
At the close of July, the annual growth of employment, building permits, and housing prices was 1.8 percent, –7.2 percent,
and –1.3 percent in Louisville 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 3.1 percent in both Kentucky and the nation. Also, in the past three months, local employ-
ment remained roughly unchanged, while nationwide employment increased by an average rate of 0.1 percent per month.
Finally, the unemployment rate in Louisville (9.7 percent ) was higher than the nation’s (9.1 percent).Therefore, according
to three of the six indicators considered, Louisville has underperformed the nation.
–0.9
–0.7
–0.5
–0.3
–0.1
0.1
0.3
0.5
0.7
2006 2007 2008 2009 2010 2011
United States
Louisville MSA
Percent
Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2006–July 2011
Louisville’s recession-related decline in em-
ployment, which was centered at the start
of 2009, was similar to the nation’s decline.
The recovery in Louisville has been similar
to that of the nation; however, the recovery
seemed to have stalled in Louisville during
the third and fourth quarters of 2010, and
employment expansion restarted only in
January of 2011. During the past three
months, Louisville’s employment remained
roughly unchanged on an average monthly
basis while national employment expanded
at an average rate of 0.1 percent per month.
–6.0
–4.0
–2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Total Nonfarm
100%
Government
13%
Trade,
Transportation,
and Utilities
21%
Education and
Health
14%
Professional and
Business Services
13%
Leisure and
Hospitality
12%
Manufacturing
11%
Financial Activities
7%
Natural
Resources,
Mining, and
Construction
5%
Other Services
4%
Information
2%
Percent
Louisville MSA Employment Growth by Sector
Year/Year Percent Change, July 2010–July 2011Employment growth by sector during the past 12 months distinguishes general trends from sector-specific trends in
Louisville’s economic performance. Employment increased by 1.8 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 Louisville are Trade, Transportation,
and Utilities; Education and Health; and Professional and Business Services, accounting for 21 percent, 14 percent, and
13 percent of Louisville’s employment, respectively. Growth in these three sectors was 0.5 percent, 1.8 percent, and 10.3
percent, respectively. Employment growth varied across sectors, with 3 of 10 sectors reducing employment and the rest
increasing employment or remaining unchanged. The Professional and Business Services sector had the best performance
in Louisville, while the Other Services sector, which accounts for 4 percent of employment, had the worst performance in
Louisville (–3.8 percent).
88
90
92
94
96
98
100
102
2008 2009 2010 2011
SOURCE: Federal Reserve Bank of Philadelphia
Index (Jan. 2008 = 100)
Indiana
Kentucky
United States
Louisville Zone 
Coincident Economic Activity Index
The Philadelphia Fed’s coincident index com-
bines information on payroll employment, wages,
unemployment, and hours of work to give a sin-
gle measure of economic performance. The rele-
vant index values suggest that the recession’s
impact was stronger for Kentucky and milder for
Indiana than for the nation. In fact, the index
values during the recession show that, at the low-
est point, Kentucky’s, Indiana’s, and the nation’s
levels of economic activity were at 90.9, 88.4,
and 91.9 percent of their pre-recession levels.
Since then, the recovery has followed a similar
pace for these three geographic areas; hence, the
gaps across the three areas that were created by
the differential impact of the recession have per-
sisted up through the latest period of observation.
The current values of the index are 94.8 for 
Kentucky, 93.2 for Indiana, and 95.5 for the
United States.
Louisville Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change, 
July 2010–July 2011
Unemployment rate 
Total Goods producing Service providing July 2011
Louisville 1.78 2.93 1.58 9.7
Bowling Green, Ky. 0.17 3.85 –0.63 8.1
Evansville, Ind. 0.58 0.76 0.53 7.5
United States 0.92 1.66 1.68 9.1
NOTE: Sector-level employment data are not available for Elizabethtown, Ky., or Owensboro, Ky; as a result, these MSAs are not included in the previous chart or
in this table.
SOURCE: Bureau of Labor Statistics.
Employment expansion in the Louisville zone has been substantial in Louisville and Evansville for both goods-producing
and service-providing activities. However, the highest unemployment rate in the Louisville zone was registered in
Louisville at 9.7 percent. This unemployment rate is more than half a percentage point higher than the 9.1 percent rate
registered for the United States.–4
–3
–2
–1
0
1
2
3
4
5
6
7
2006 2007 2008 2009 2010 2011
SOURCE: Bureau of Economic Analysis
Percent
Indiana
Kentucky
United States
Louisville Zone Real Personal Income Growth
Percent Change, Year/Year
In Kentucky and Indiana, personal income
growth was below the nation’s for several
quarters before the most recent recession,
which started in the last quarter of 2007.
The recession’s impact on Kentucky’s per-
sonal income was milder than the nation’s.
Indiana’s rate of recovery has also been
roughly similar to the nation’s. Between the
first quarter of 2010 and the first quarter of
2011, personal income grew by 3.1 percent
in Kentucky and Indiana, while it also grew
by 3.1 percent in the nation.
Housing activity in the Louisville zone shows both a slowdown in building permits and weak house prices. The number
of building permits issued since the beginning of the year through July was lower than the number issued during the
same months of 2010 for all MSAs in the Louisville zone. The declines, which ranged from 7.2 percent to 43.6 percent
were more pronounced in each of the MSAs than in the nation, where they declined by 4.9 percent. By contrast, house
prices show a milder decline in the zone relative to the nation. The 1.3 percent house price decrease on a year-over-year
basis in Louisville was the greatest decline registered within the zone. This decline is mild compared with the 4.5 percent
decrease for the United States. The only increase in house prices in the zone was registered in Owensboro at 0.8 percent.
Louisville Zone—MSA Housing Activity
Total building permits, units year-to-date
House price index, percent change,
July 2011 Percent change 2011:Q2/2010:Q2
Louisville 1,298 –7.2 –1.3
Bowling Green, Ky. 261 –27.1 –0.7
Elizabethtown, Ky. 154 –43.8 –0.6
Evansville, Ind. 264 –22.4 –0.3
Owensboro, Ky. 135 –38.6 0.8
United States 346,452 –4.9 –4.5
SOURCE: Bureau of the Census, Federal Housing Financing Authority.

Current economic conditions in the Eighth Federal Reserve District. Louisville Zone

http://research.stlouisfed.org/regecon/burgundybooks/11/09/BB0911Lou.pdf

Current economic conditions in the Eighth Federal Reserve District. Louisville Zone

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