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
December 23, 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:
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 
DistrictGeneral Retailers
￿ October and early November sales increased compared 
with the same time last year for half the contacts.
￿ Sales were below expectations for four out of five contacts.
￿ Sales were expected to increase in this quarter relative to 
the same time last year for two out of three contacts.
Car Dealers
￿ October and early November sales increased compared 
with the same time last year for two out of five contacts. 
￿ Sales were expected to increase or remain constant in this 
quarter relative to the same time last year for three out of 
five contacts.
Manufacturing
￿ Automobile parts, detergent, and frozen food contacts plan 
to expand operations and hire workers.
￿ Tobacco and appliances contacts plan to decrease operations
and employment.
Services
￿ A contact in air transportation support plans to open a 
facility and hire workers.
￿ Hotel, gambling, transportation, and business support 
contacts plan to decrease operations and employment.
Real Estate
￿ Home sales for January through October were 7 percent 
lower than last year’s.
￿ Single-family housing permits for January through October 
were 11 percent higher than last year’s. 
Memphis Zone Report—December 23, 2010
At the close of November, the annual growth of employment, building permits, and housing prices was –1.3 percent, 29.5 percent,
and –1.3 percent in the Memphis MSA and 0.7 percent, 5.8 percent, and –1.2 percent in the nation.  The annual growth of per-
sonal income was 3.3 percent inTennessee and 2.1 percent in the nation. In the past three months, local employment fell by an
average of 0.1 percent per month, while the nation’s remained constant.  The unemployment rate in Memphis (9.8 percent) was
higher than the nation’s (9.5 percent). According to half of the indicators, the Memphis zone has been outperformed by the nation.
This view coincides with somewhat negative anecdotal reports from retailers, car dealers, and construction firms but contrasts with
mildly positive reports by bankers in the area.
￿ Between the second and third quarters, industrial and 
downtown office vacancy rates decreased and increased, 
respectively. Suburban office vacancy rates remained the 
same.
Construction
￿ A contact in the northeast Arkansas region reported that 
commercial construction remains at a “virtual standstill” 
and there are “few forthcoming projects.” 
Banking and Finance
￿ Consumer loan demand increased slightly because of an 
“uptick” in the demand for auto loans.
￿ Demand for business loans was relatively unchanged.
￿ An increase in refinancing activity outweighed a decrease 
in new loan demand in the residential mortgage loan 
category.
￿ Delinquency rates in the region have improved.
￿ Little or no change was reported in deposits.
Agriculture
￿ Weather conditions remained dry in the Memphis zone, with 
lower than average rainfall in this quarter.
￿ Crop harvests progressed ahead of schedule. At least 98 
percent of all cotton and soybean crops were harvested by 
early November, while 43 percent of the tobacco crop was 
also harvested in Tennessee.
￿ Sorghum and rice yields decreased by at least 3 percent, 
while cotton yields increased by at least 7 percent.
￿ Winter wheat planting and crop growth outpaced the 2009 
and 5-year average levels by at least 3 percent.–6.0
–5.0
–4.0
–3.0
–2.0
–1.0
0.0
1.0
2.0
3.0
Total 
Nonfarm
100%
Natural
Resources,
Mining, and
Construction
3%
Manufacturing
7%
Trade,
Transportation,
and Utilities
27%
Information
1%
Financial
Activities
5%
Professional
and 
Business
Services
13%
Education
and 
Health
14%
Leisure 
and
Hospitality
11%
Other 
Services
4%
Government
15%
Percent
Memphis MSA Employment Growth by Sector
Year/Year Percent Change, November 2009–November 2010
–0.8
–0.6
–0.4
–0.2
0.0
0.2
0.4
0.6
2006 2007 2008 2009 2010
United States
Memphis MSA
Percent
Nonfarm Payroll Employment Growth
3-Month Average, SA, January 2006–November 2010
Memphis’s recession-related decline in employment, centered on January 2009, was similar to that of the nation overall. Signs of
recovery are incipient in Memphis, which experienced positive growth only in March 2010. Average monthly employment con-
tracted 0.1 percent in Memphis during the past three months, while it expanded 0.01 percent in the nation.
Employment growth by sector during the past 12 months distinguishes general trends from sector-specific trends in Memphis’s
economic performance. Annual employment fell by 1.3 percent in the Memphis MSA, compared with a 0.7 percent increase for
the United States.  The three largest sectors in Memphis are Trade, Transportation, and Utilities; Government; and Education and
Health, accounting for 27 percent, 15 percent, and 14 percent of Memphis area employment. Growth in these three sectors was 
–1.7 percent, 1.8 percent, and 0.9 percent, respectively. With the exception of the Government and Education and Health indus-
tries, sectoral and aggregate employment changes in Memphis moved primarily in the same negative direction.  The Government
sector had the best performance in Memphis, while manufacturing, which accounts for 7 percent of total employment, had the
worst performance (–4.8 percent).Memphis Zone—MSA Housing Activity
Total building permits,
units year-to-date House price index,
percent change,
October 2010 Percent change 2010:Q3/2009:Q3
Memphis 2,318 29.5 –1.26
Jackson,Tenn. 196 4.3 –3.04
Jonesboro, Ark. 557 64.3 –1.18
United States 510,880 5.8 –1.19
SOURCE: Bureau of the Census, Federal Housing Financing Authority.
The 29.5 percent expansion of building permits in the Memphis MSA lies between the 4.3 percent expansion in the Jackson MSA
and the 64.3 percent increase in the Jonesboro MSA.  This expansion was remarkable compared with a 5.8 percent expansion for
the United States.  The 1.3 percent house price decrease in the Mempis MSA was roughly similar to the 1.2 percent decreases in
the Jonesboro MSA and a little less than half the decrease in the Jackson MSA.  This decrease was comparable with the 1.2 percent
decrease for the United States.
Memphis Zone—MSA Employment and Unemployment
Nonfarm payroll employment percent change, 
November 2009–November 2010
Unemployment rate 
Total Goods producing Service providing October 2010
Memphis –1.34 –4.48 –0.94 9.8
Jackson, Tenn. 0.35 –0.88 0.659 . 9
United States 0.640 . 3 4 0 . 699 . 5
NOTE: Sector-level employment data are not available for Jonesboro Ark.; as a result,  this MSA is not included in the previous chart or in this table.
SOURCE: Bureau of Labor Statistics.
Employment contraction in the Memphis zone is substantial in the Memphis MSA.  This holds for both goods-producing and 
service-producing activities.  The highest unemployment rate in the Memphis zone was registered in the Jackson MSA at 9.9 
percent.  The unemployment rate in both Memphis and Jackson are higher than the 9.5 percent rate for the United States.0
1
2
3
4
5
6
7
2006 2007 2008 2009 2010
–3
–2
–1
Percent
SOURCE: Bureau of Economic Analysis.
Arkansas
Mississippi
Tennessee
United States
Memphis Area Real Personal Income Growth
Percent Change, Year/Year
In mid-2007, several periods before the national recession, personal income growth in Arkansas and Mississippi was above the
nation’s, while Tennessee’s was roughly similar.  The recession’s impact on Arkansas and Mississippi personal income growth has
been slightly milder and the recovery in all three states has been similar to the nation’s. Between the third quarter of 2009 and
the third quarter of 2010, personal income grew 2.3 percent, 2.9 percent, and 3.3 percent in Mississippi, Arkansas, andTennessee,
respectively, compared with 2.1 percent in the nation.
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. Both Arkansas’s and Mississippi’s coincident indices reveal a milder impact of
the recession and a quicker recovery compared with the nation.  The index bottomed at 93.4 for Arkansas and 94.0 for Mississippi,
while it bottomed at 92.6 for the United States. Current values of the index suggest that economic activity in Arkansas is at 94.8
percent and Mississippi at 94.7 percent of its pre-recession levels, while it is at 94.3 percent in the nation. On the other hand, 
Tennessee’s coincident index reveals a stronger impact of the recession and a slower recovery compared with the nation.  The
index bottomed 91.7 percent. Current values of the index suggest that economic activity in Tennessee is at 93.7 percent and still
below the nation’s. In summary, the economic environment of states in the Memphis zone should be slightly better than the 
nation’s.
90
92
94
96
98
100
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

Current economic conditions in the Eighth Federal Reserve District. Memphis

http://research.stlouisfed.org/regecon/burgundybooks/10/12/BB1210Mem.pdf

Current economic conditions in the Eighth Federal Reserve District. Memphis

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