Federal Reserve District, 8th ; Regional economics

prepared by the Center for Regional Economics-8th District (CRE8)

English

Research Papers in Economics

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. LouisThis 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
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 
DistrictConsumer Spending
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 applica-
tions.  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.
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, manu-
facturing, 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.
Real Estate and Construction
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 com-
pared with the same time last year.
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 mid-
November, Illinois farmers had harvested about half of their
corn, about 90 percent of their soybeans, and about three-
fourths 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.
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.–12.0
–10.0
–8.0
–6.0
–4.0
–2.0
0.0
2.0
Percent
Total 
Nonfarm
Natural
Resources,
Mining, and
Construction
ManufacturingT rade,
Transportation,
and Utilities
Information Financial
Activities
Professional
and 
Business
Services
Education
and 
Health
Leisure 
and
Hospitality
Other 
Services
Government
St. Louis Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change, 
October 2008–October 2009
Unemployment rate 
Total Goods producing Service providing October 2009
St. Louis –3.23 –10.27 –1.96 10.3
Columbia, Mo. –1.26 –10.47 –0.35 6.2
Jefferson City, Mo. –2.98 –9.62 –2.00 7.6
Springfield, Mo. –0.85 –7.81 0.17 8.2
United States –3.87 –12.03 –2.37 10.2
SOURCE: Bureau of Labor Statistics.
St. Louis MSA Employment Growth by Sector
Year/Year Percent Change, October 2008–October 2009
–0.6
–0.5
–0.4
–0.3
–0.2
–0.1
0
0.1
0.2
0.3
0.4
2001 2002 2003 2004 2005 2006 2007 2008 2009
Percent
United States
St. Louis MSA
Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2001–October 2009
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 contract-
ing 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 con-
tracted at a monthly rate of 0.17 percent. 
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 percent-
age declines were in natural resources,
mining, and construction (11.3 percent);
manufacturing (9.7 percent); and other
services (–7.3 percent).St. Louis Zone—MSA Housing Activity
Total building permits,
units year-to-date House price index,
percent change,
September 2009 Percent change 2009:Q3/2008:Q3
St. Louis 4,152 –20.4 –2.43
Columbia, Mo. 545 –6.2 –1.58
Jefferson City, Mo. 136 37.4 0.69
Springfield, Mo. 778 –53.8 –1.61
United States 483,013 –40.5 –4.08
SOURCE: Bureau of the Census, Federal Housing Financing Authority.
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 underper-
formed 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.
As illustrated by the figure, since the reces-
sion 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.
130
135
140
145
150
155
160
165
2000 2001 2002 2003 2004 2005 2006 2007 2008
Index (1992 = 100)
Illinois
Missouri
United States
SOURCE: Federal Reserve Bank of Philadelphia.
2009
St. Louis Area Coincident Economic Activity Index
–2
–1
0
1
2
3
4
5
6
7
2000 2001 2002 2003 2004 2005 2006 2007 2008
Illinois
Missouri
United States
Percent
SOURCE: Bureau of Economic Analysis.
2009
–4
–3
St. Louis Area Real Personal Income Growth
Percent Change, Year/Year
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. Year-Over-Year Percent Change in State Tax Revenue
2008:Q3 2009:Q3
Personal Corporate Personal Corporate
income income Sales Total income income Sales Total
Arkansas 6.2 –12.4 3.6 3.4 –6.9 –21.4 –11.1 –7.8
Illinois 3.8 –3.4 1.9 1.4 –11.7 –28.4 –13.1 –12.6
Indiana –1.9 –10.5 19.7 9.1 –20.3 –42.4 –10.9 –14.2
Kentucky 6.6 –48.4 3.2 0.9 –7.1 –40.5 –7.5 –5.5
Mississippi –1.8 –14.6 2.5 1.4 –12.2 –19.1 –12.4 –11.8
Missouri 0.2 –3.0 –3.6 –1.1 –8.1 –8.5 –6.0 –6.9
Tennessee — –25.2 –2.0 –4.2 — 8.2 –9.5 –5.4
United States 1.9 –14.9 4.8 3.0 –11.3 –17.5 –8.8 –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.

Current economic conditions in the Eighth Federal Reserve District. St. Louis zone

http://research.stlouisfed.org/regecon/burgundybooks/09/12/ZBB1209StL.pdf

Current economic conditions in the Eighth Federal Reserve District. St. Louis zone

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