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
Memphis Zone
July 2, 2010
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 Memphis 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 St. Louis 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/2010/).
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 Memphis zone.
These data are the most recent available at the time this report was assembled.
For more information, please contact the Memphis office:
Martha L. Perine Beard,  901-579-2400,  martha.l.perine@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 April and early May were mixed among
general retailers but mostly positive among car dealers surveyed.
Around 50 percent of the general retailers and 60 percent of the
car dealers indicated that sales were up compared with the same
months in 2009.The remaining general retailers reported 
decreased sales, and the remaining car dealers reported sales
similar to last year.The sales outlook for the summer was mixed
among the general retailers and mostly optimistic among the car
dealers. About 50 percent of the general retailers and more than
80 percent of the car dealers expect sales to increase over 2009
levels.The remaining general retailers expect sales to decrease,
and the remaining car dealers expect sales to be similar to last
year.
Manufacturing and Other Business Activity
Manufacturing in the Memphis zone has continued to strengthen
since our previous report, with more reports of new jobs and
plant openings than job layoffs and plant closings. Firms in fabri-
cated metal product manufacturing, office supplies manufactur-
ing, hand and edge tool manufacturing, and plastics product
manufacturing announced plans to hire new workers and expand
existing operations. Additionally, a major firm in the semicon-
ductor and related device manufacturing industry announced
plans to open a new plant as well as hire a significant number
of workers. In contrast, firms in appliance manufacturing, steel
manufacturing, and elevator manufacturing all announced plans
to lay off workers and decrease operations due to reduced 
demand. A firm in the food and beverage manufacturing industry
announced plans to close a plant and lay off workers as they
relocate operations outside of the District.The service sector has
continued to decline since our previous report, with significantly
more job layoffs than new hires. Uncertainty over health care
costs and financial regulations is cited frequently as an explana-
tion for firms’ reluctance and inability to expand hiring. Schools
announced a significant number of job cuts and reduced services
due to budget shortfalls. 
Real Estate and Construction
Compared with the same periods in 2009, both March and April
2010 year-to-date home sales in Memphis were down by 2 per-
cent. Compared with the same periods in 2009, March 2010
year-to-date single-family housing permits increased by 60 per-
cent, and April 2010 year-to-date single-family housing permits
increased by 65 percent. Compared with the fourth quarter of
2009, the first-quarter 2010 industrial vacancy rate decreased.
During the same period, the suburban and downtown office
vacancy rates increased. A contact in Memphis indicated that
industrial real estate may be showing signs of improvement.
Banking and Finance
Banking conditions in the Memphis zone remained relatively
unchanged during the past three months. Lending activity for
consumer loans decreased. One contact noted that demand for
loans in this category remains low because consumers in the
region think credit is still tight and view the process of obtaining
a loan as long and frustrating. A few contacts noted a recent
spike in demand for business loans, but most reported that
business loan demand is weak. One contact noted that banks
are eager to lend to qualified borrowers, but are seeing very few
established businesses borrowing, making it difficult to find new
loans. Commercial real estate lending remains weak, although
several contacts were encouraged by a number of new inquiries
in this lending category. Reports indicate a slight increase in
deposits.
Agriculture and Natural Resources
Frequent rains throughout the zone toward the end of the report-
ing period caused some fieldwork delays. At the end of May,
farmers in Mississippi were ahead of or on par with their 5-year
average pace for corn, soybean, cotton, and rice planting but
slightly behind normal for sorghum planting. Farmers in
Tennessee were behind their normal pace for corn, soybean, and
cotton planting. Emergence of soybeans in both states and rice
in Mississippi was behind normal, but emergence of other crops
was ahead of normal. At the end of May, at least 90 percent
of the winter wheat in both states and pastures inTennessee
were rated in fair condition or better, whereas 86 percent of
the pastures in Mississippi obtained that rating.The ratings
were better than the same time last year for Mississippi’s winter
wheat and similar to last year for the other states.
Memphis Zone Report—July 2, 2010
Reports on economic activity in the Memphis zone were somewhat positive, with modest strength in consumer spending and manu-
facturing and signs of strength in the residential and commercial real estate sectors. A majority of general retailers and car dealers
indicated that sales were higher than for the same period last year. The banking sector reported little to no change in lending activity. –7.0
–6.0
–5.0
–4.0
–3.0
–2.0
–1.0
0.0
1.0
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
Memphis Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change, 
May 2009–May 2010
Unemployment rate 
Total Goods producing Service providing May 2010
Memphis –2.57 –4.26 –2.35 10.5
Jackson, Tenn. –0.52 –3.45 0.22 10.4
United States –0.59 –4.45 0.05 9.6
SOURCE: Bureau of Labor Statistics.
Memphis MSA Employment Growth by Sector
Year/Year Percent Change, May 2009–May 2010
–0.80
–0.60
–0.40
–0.20
0.00
0.20
0.40
0.60
2006 2007 2008 2009 2010
United States
Memphis MSA
Percent
Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2006–May 2010
Since the beginning of the recession, payroll
employment growth in the Memphis MSA has
tended to be lower than that of the United
States as a whole. On a three-month moving
average basis, Memphis employment growth
remained negative throughout 2010, except
for hitting zero in March. Over the three-month
period ending in May 2010, Memphis employ-
ment contracted at a 0.1 percent monthly
rate, while U.S. employment expanded at a
monthly rate of 0.26 percent. 
Between May 2009 and May 2010, total non-
farm employment in the Memphis MSA fell by
2.6 percent.  This rate of job loss was much
steeper than for the country as a whole, which
saw a 0.45 percent decline in employment over
the period. Net job losses were experienced in
nearly every sector of the Memphis economy,
with the largest declines occurring in natural
resources, mining, and construction (6 percent);
manufacturing (3.4 percent); professional and
business services (4.5 percent); and leisure
and hospitality (5.5 percent). Employment in
the government sector grew by 0.8 percent, a
figure inflated by temporary census workers.Memphis Zone—MSA Housing Activity
Total building permits,
units year-to-date House price index,
percent change,
May 2010 Percent change 2010:Q1/2009:Q1
Memphis 1,242 69.9 –6.47
Jackson,Tenn. 99 47.8 –5.78
Jonesboro, Ark. 404 164.1 –1.64
United States 255,650 18.3 –6.78
SOURCE: Bureau of the Census, Federal Housing Financing Authority.
The Philadelphia Fed’s coincident index com-
bines payroll employment, wages and salaries,
the unemployment rate, and hours worked
into a single index.  According to this index, 
Tennessee was hit harder than the country as
a whole by the recession.The index bottomed
out at 6.4 percent below its January 2008 level
for the United States and by 7.4 percent for
Tennessee. The index for Arkansas and 
Mississippi, on the other hand, fell less than
for the rest of the country.  Recently, however,
Tennessee has outperformed the rest of the
country and the other two states: Between
December 2009 and May 2010, the index rose
by 2.1 percent for Tennessee, 0.7 percent for
both Arkansas and Mississippi, and 1.5 percent
for the United States.
As illustrated by the figure, since the middle
of 2008, real personal income growth in
Arkansas, Mississippi, andTennessee has
tended to be negative.The most recent data
indicate that while personal income for the
country as a whole was effectively unchanged
between the first quarters of 2009 and 2010,
it rose by 0.8 percent in Mississippi and 0.3
percent in Tennessee, while falling by 1.3 
percent in Arkansas.
92
93
94
95
96
97
98
99
100
101
102
2008 2009 2010
Index (Jan. 2008 = 100)
SOURCE: Federal Reserve Bank of Philadelphia.
Arkansas
Mississippi
Tennessee
United States
Memphis Area Coincident Economic Activity Index
–3
–2
–1
0
1
2
3
4
5
6
7
2006 2007 2008 2009 2010
Percent
SOURCE: Bureau of Economic Analysis.
Arkansas
Mississippi
Tennessee
United States
Memphis Area Real Personal Income Growth
Percent Change, Year/Year
Total residential building permits in May 2010
were higher than a year earlier in all three
MSAs in the Memphis zone. Permits rose by
69.9 percent in Memphis, 47.8 percent in
Jackson, and 164.1 percent in Jonesboro.  The
FHFA house price index fell over the period in
all three MSAs: by about 6.5 percent Memphis,
5.8 percent in Jackson, and 1.6 percent in
Jonesboro.  Nationwide, this index fell by about
6.8 percent over the period. 2009 Population Estimates for Eighth District Metro Areas
Net Net 
2009 Change Percent Natural international domestic
Population since 2000 change increase* migration migration
Large Metro Areas
St. Louis, Mo.-Ill. 2,698,664 130,326 4.8 105,672 31,067 –43,750
Little Rock-N. Little Rock-Conway, Ark. 610,514 74,974 12.3 36,083 5,166 34,660
Louisville/Jefferson County, Ky.-Ind. 1,162,414 96,163 8.3 48,692 17,024 34,381
Memphis, Tenn.-Ark.-Miss. 1,205,196 99,730 8.3 85,501 20,490 –8,583
Small and Medium Metro Areas
Bowling Green, Ky. 104,168 16,427 15.8 5,431 3,216 8,347
Columbia, Mo. 145,666 20,568 14.1 9,911 3,801 7,771
Elizabethtown, Ky. 107,550 5,883 5.5 7,708 339 –1,437
Evansville, Ind.-Ky. 342,816 9,095 2.7 9,769 2,051 –657
Fayetteville-Springfield-Rogers, Ark.-Mo. 347,036 117,587 33.9 33,966 13,474 60,883
Fort Smith, Ark.-Okla. 273,177 19,886 7.3 12,336 4,893 4,450
Hot Springs, Ark. 88,068 10,411 11.8 -1,527 692 11,637
Jackson, Tenn. 107,379 6,250 5.8 4,743 1,448 694
Jefferson City, Mo. 140,051 7,387 5.3 6,258 1,169 844
Jonesboro, Ark. 107,762 12,377 11.5 4,796 1,213 6,942
Owensboro, Ky. 109,876 3,760 3.4 4,533 603 –667
Pine Bluff, Ark. 107,348 –6,654 –6.2 2,964 680 –9,785
Springfield, Mo. 368,375 62,525 17.0 16,971 1,903 45,592
Texarkana, Tex.-Ark. 129,754 7,732 6.0 4,219 639 3,610
All U.S. Metro Areas 232,822,999 29,199,634 12.5 14,793,402 8,449,584 34,754
NOTE: *Births minus deaths.
SOURCE: U.S. Census Bureau.

Current economic conditions in the Eighth Federal Reserve District. Memphis zone

http://research.stlouisfed.org/regecon/burgundybooks/10/06/BB0610Mem.pdf

Current economic conditions in the Eighth Federal Reserve District. Memphis zone

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