Economic Overview
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U.S. Economy
Recent Activity
The Federal Reserve’s Beige Book, released on October 19, 2011 reported economic activity continued to improve across the twelve Federal Reserve Districts during the third quarter 2011. However, many districts reported weakening growth and an increasingly uncertain business outlook.
Outlook
The near term outlook for the U.S. economy softened over as the nation entered second quarter 2011. While three national forecast surveys released in November(Federal Reserve Bank of Philadelphia, Wall Street Journal Economic Forecasting Survey, and National Association for Business Economics) revised GDP and employment growth projections downward from previous surveys, they also reported reduced odds of a recession.
The labor market conditions are forecast to continue to improve albeit at a sluggish pace. Even as private employment continues to grow, the unemployment rate will remain elevated. Consensus unemployment forecasts are around 9.0% in 2011 and range from 8.7% to 8.9% in 2012. Rates are not expected to drop below 8% until 2014.
St. Louis Economy
According to the Federal Reserve’s Beige Book,the economic picture was mixed in third quarter 2011 throughout the Fed’s Eighth District. The Eighth District includes the St. Louis, MO-IL MSA as well as portions of Missouri, Illinois, Kentucky, and Tennessee, and all of Arkansas.
Labor Force and Employment
The St. Louis region’s preliminary seasonally adjusted unemployment rate for September is 8.9%, unchanged from one month earlier.
September 2010 to September 2011 over the year non-farm employment grew by 0.8% with the addition of 10,500 jobs. Nationally, employment expanded by 1.1% over the same period.
Business Activity
The Beige Book reported increased manufacturing activity for the Eighth District. September 2011 employment data for the St. Louis MSA shows manufacturing employment increased adding 4,700 jobs over the year. Employment in the services sector is mixed. The health care, education, leisure and hospitality and other services sectors all added jobs over the year. The information, financial services, and professional and business services sectors all experienced over the year employment declines as did the construction and the government sectors.
The Conference Board’s May Help Wanted Online (HWOL) report showed an 18.0% increase in new help wanted advertisements from September 2010 to September 2011 in the St. Louis region. The report estimates in August the region has about 3.37 ads per unemployed person.
Real Estate Markets
Residential
September year-to-date residential housing permit activity decreased by 19.6% in the region, outpacing the national decline of 2.7%. According to local multiple listing service data, existing single family home sales increased by 14.8% from September 2010 to September 2011. Over the same period, the median home price fell by 5.4%.
Commercial
Office vacancies and industrial vacancies have inched up from third quarter 2010 to third quarter 2011. Vacancy levels have restrained rental rates. Construction activity is expected to remain slow The Beige Book reports real estate lending declined by 1.5% in the third quarter of 2011 and commercial and industrial lending fell by 0.5%.
| The St. Louis Economy: Key Indicators |
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Value
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Change from Previous Year
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Percent Change
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Non-Farm Employment
(September 2011) |
1,307,300
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10,500
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0.8%
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Unemployment Rate
(September 2011) |
8.7%
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-0.9 percentage points
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n.a.
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| Value of Residential Building Permits (September 2011 ytd, in thousands) |
$672,879
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-$94,963
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-12.4%
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Consumer Price Index
(1H2011) |
208.586
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6.74
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3.3%
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| Current $GDP (2010, in millions) |
$129,734
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n.a
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n.a
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| Real GDP (2010, in millions of chained 2005$) |
$115,633
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$1,759
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1.5%
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| Illinois Manufacturing Exports (September 2011 ytd, in billions) |
$44.64
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$10.89
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32.3%
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| Missouri Manufacturing Exports (September 2011 ytd, in billions) |
$9.12
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$0.7
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9.4%
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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.
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Updated: November 18, 2011
