Economic Overview

U.S. Economy
Recent Activity

The Federal Reserve’s Beige Book, released on January 16, 2013, reported that economic activity continued to expand across all 12 Districts through the end of 2012. Nationally, employment payrolls rose by 157,000 jobs in January and employment totals were revised upward by 127,000 for November and December. Over the past three months the economy has generated an average of 200,000 new jobs per month. The national unemployment rate continues to hover just below 8%.

Outlook
Surprisingly, the U.S economy contracted modestly in fourth quarter 2012 GDP as cuts in government spending, weak exports, and shrinking inventories both in reaction to weak international markets, took a toll. The private sector continued to demonstrate strength as household spending and fixed business investments increased and the housing sector demonstrated ongoing improvement. Recent positive employment numbers indicate that GDP growth may be revised upward in subsequent estimates.

In early January the Conference Board reported that CEO Confidence improved in fourth quarter 2012 despite fiscal uncertainty. However, CEO sentiment remains negative by historical standards. Consumer confidence fell in December and January. The Conference Board’s Consumer index, released at the end of January found consumers are generally pessimistic about current conditions, the short-term outlook, and the outlook for the labor market. Perhaps this can be attributed, in part, to the increase in the payroll tax that meant reduced paychecks.

St. Louis Economy
According to the Federal Reserve’s Beige Book, the economy continued to grow at a modest pace through early January 2013. The Eighth District includes the St. Louis, MO-IL MSA as well as portions of Missouri, Illinois, Indiana, Mississippi, Kentucky, and Tennessee, and all of Arkansas.

Labor Force and Employment
The St. Louis MSA’s preliminary seasonally adjusted unemployment rate for December was 7.2 %, down from 7.3% in November. The region added jobs as nonfarm employment increased by 19,300 jobs December 2011 to December2012, posting a 1.5% growth rate over-the-year.

Business Activity
The Beige Book’s picture of the District’s manufacturing sector was negative and the St. Louis MSA showed manufacturing employment losses in the final quarter 2012. This slowdown follows strong growth in 2011 and the first nine months of 2012.

The Beige Book’s picture of the growth in the District’s services sector was positive, and the MSA’s employment in select service industries showed strong gains. The health care and education, financial services, and professional and business services sectors, and the other services sector all added jobs. The construction, information, leisure and hospitality, and government sectors shed jobs over-the-year.

The Conference Board’s January Help Wanted Online (HWOL) report showed a 0.7% drop in all job advertisements and a 1.8% drop of new advertisements from December 2012 to January 2013 in the St. Louis MSA. The report estimated that in November 2012 the region had about 2.51 unemployed persons per job advertisement. In comparison, half of the largest metro areas have supply/demand rates below 2, indicating that there are fewer than two unemployed workers for every online advertised vacancy

The St. Louis Economy: Key Indicators   Value Change from Previous Year Percent Change Non-Farm Employment - December 2012 (Not seasonally adjusted) 1,295,200 19,300 1.5% Unemployment Rate - December 2012 (Not seasonally adjusted) 7.0% -1.6 percentage points n.a. Value of Residential Building Permits(December 2012 ytd, in thousands) $1,075,661 $248,311 30.0% Consumer Price Index (2012) 214.8 n.a 2.4% St. Louis Current $GDP (2010, in millions) $129,734 n.a n.a St. Louis Real GDP (2010, in millions of chained 2005$) $115,633 $1.76 1.5% Illinois Manufacturing Exports (Ytd 3Q 2012, in billions) $48.6 $3.8 8.6% Missouri Manufacturing Exports (Ytd 3Q 2012, in billions) $9.1 -$0.4 -0.5% Notes: Data is for St. Louis, MO-IL MSA unless otherwise indicated. Non-farm employment (Current Employment Statistics), unemployment rate, and consumer price index data from the U.S. Bureau of Labor Statistics; construction data from the U.S. Census Bureau. GDP is from the U.S. Bureau of Economic Analysis. Export data from the U.S. International Trade Administration.