Louisville Burgundy Book: Economic Momentum, Optimism on the Rise

ST. LOUIS—In a November survey of business contacts in the Louisville Zone of the Federal Reserve Bank of St. Louis, about two-thirds of respondents revealed that they expected economic conditions to improve in 2015. This is a modest improvement in sentiment compared with three months earlier.

The information was published Dec. 19 in the latest quarterly release of the Burgundy Books, a publication of the St. Louis Fed. The reports offer comprehensive economic information for each of the St. Louis Fed’s four zones: St. Louis, Little Rock, Ark., Louisville, Ky., and Memphis, Tenn.

The Louisville Zone includes southern Indiana and western Kentucky, with a population of approximately 3.4 million people, including the nearly 1.3 million who live in the Louisville metropolitan statistical area (MSA).

Paced by brisk gains in manufacturing and transportation employment, total nonfarm payroll employment increased at a solid pace in the Louisville MSA in the third quarter of 2014. For the second straight quarter, employment growth was strongest in the Bowling Green, Ky., MSA.

The Louisville Zone’s unemployment rate averaged 6.1 percent in the third quarter of 2014, nearly three-fourths of a percentage point below the previous quarter. Although the Evansville, Ind., MSA once again had the zone’s lowest unemployment rate (5.2 percent), the largest quarterly declines were seen in the Elizabethtown, Ky., and Owensboro, Ky., MSAs.

Residential real estate conditions were mixed in the Louisville Zone in the third quarter. The Louisville MSA retail market remained strong.

Growth of per capita personal income accelerated in Indiana and Kentucky in the second quarter. Auto loan balances (per capita) edged lower in the Louisville Zone in the third quarter, and delinquency rates remained low.

Bankers revealed that loan demand is expected to edge slightly higher in the fourth quarter, and similar gains are expected in the first quarter of 2015. Asset quality improved at Indiana and Kentucky commercial banks in the third quarter.

Indiana’s soybean crop was nearly 11 percent larger than last year’s crop—though that increase still trailed national growth (about 18 percent). Kentucky’s coal production increased in the third quarter for the first time in three years.

View the entire Louisville Zone report at: http://research.stlouisfed.org/regecon/burgundybooks/14/12/BB1214Lou.pdf.

The next Burgundy Books will be released March 24, 2015.