St. Louis Burgundy Book: Unemployment Down, Optimism Rising

ST. LOUIS—In the latest survey by the Federal Reserve Bank of St. Louis on economic conditions in its St. Louis Zone, two-thirds of the business contacts in November expected local economic conditions to improve in 2015. This was a marked upward shift 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 St. Louis Zone represents a total population of approximately 5.6 million people, including close to 3 million who live in the St. Louis metropolitan statistical area (MSA).

The unemployment rate in the St. Louis Zone, which includes 71 counties in eastern Missouri and 45 counties in southern Illinois, averaged 6.3 percent in the third quarter of 2014, its lowest level since the second quarter of 2008. In the third quarter, unemployment rates were lowest in these three Missouri MSAs: Columbia (4.3 percent), Jefferson City (5.3 percent) and Springfield (5.1 percent).

In the St. Louis MSA, total nonfarm employment increased by 1.5 percent in the third quarter, a noticeable acceleration from the previous quarter. Among the St. Louis Zone MSAs, St. Louis’s employment growth was surpassed only by Springfield’s (2 percent).

Residential housing-market activity slowed in the third quarter of 2014 in most of the St. Louis Zone. For example, single-family building permits were below their levels a year ago in three of the four MSAs.

In the St. Louis MSA, the apartment market continued to improve, as asking rents in the third quarter rose to new highs. Household balance sheets improved across the zone in the second quarter, as mortgage and credit card delinquencies fell significantly and balances continued to contract.

For the first time since mid-2009, households increased their outstanding balances of mortgage and credit card debt. Delinquency rates in the St. Louis Zone remained below the national average in the third quarter.

Net interest margins rose at Missouri and southern Illinois banks in the third quarter, and the ratio of nonperforming loans to total loans fell modestly from the previous quarter at Missouri banks.

Missouri and Illinois farmers harvested bumper crops in 2014. However, with prices falling, a majority of agricultural bankers expect net farm income to decline over the near term.

Read the entire St. Louis Zone report at http://research.stlouisfed.org/regecon/burgundybooks/14/12/BB1214StL.pdf.  

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