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Third Quarter Burgundy Books: Optimism Improving in Some Areas

Thursday, September 24, 2015
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Optimism among business contacts improved or stayed the same in three of the four zones of the Eighth Federal Reserve District, according to the most recent Burgundy Books. Among the zones:

  • Nearly two-thirds of St. Louis Zone contacts and a little more than half of Little Rock Zone contacts expect local economic conditions to be better in 2015 than 2014.
  • Optimism improved modestly among Memphis Zone contacts, with a little more than one-third expecting 2015 conditions to be better than 2014 conditions.
  • While optimism among Louisville Zone contacts weakened slightly, the vast majority expect conditions to be similar or better in 2015 compared to 2014.


The unemployment rate for the St. Louis Zone remained unchanged in the second quarter at 5.7 percent. However, the unemployment rate increased slightly in all metropolitan statistical areas (MSAs). Contacts reported higher expected labor costs and wages, and about 30 percent expect a slight increase in prices. About 60 percent expect prices to remain about the same at the end of the year compared to the previous year.

The Little Rock Zone’s unemployment rate averaged 5.5 percent in the second quarter. Half of contacts surveyed expect employment and hours worked to remain about the same, and the remaining half expect them to be slightly higher than the same period last year.

Unemployment in the Louisville Zone fell in the second quarter to 4.9 percent, the lowest level since 2001. Average weekly hours worked remained almost unchanged across the Zone, compared with the same period last year. Most contacts expect hours worked and employment to remain about the same as a year ago for the rest of the year.

The unemployment rate in the Memphis Zone fell to 7 percent in the second quarter from 7.4 percent the previous quarter. Hourly earnings growth for private-sector employees declined during the second quarter. However, contacts reported labor costs and wages are slightly higher than they were a year ago, and they expect prices to stay about the same or increase slightly in the upcoming quarter.


In the second quarter in the St. Louis Zone, growth of home sales, house prices and building permits in the St. Louis MSA outpaced the nation and other areas of the Zone. Almost 90 percent of Zone contacts reported an increase in residential construction activity, and more than half expect continued growth next quarter.

Housing activity improved in most areas of the Little Rock Zone, as home prices and building permits rose significantly in several MSAs in the second quarter. Year-to-date home sales increased from one year ago.

House prices rose in the second quarter in most areas of the Louisville Zone. Contacts from the area noted high demand and low inventory levels.

Residential home building activity was mixed in the Memphis Zone in the second quarter. Year-to-date home sales were up significantly in the Memphis MSA from the previous quarter.

Household Finances

Personal income grew in both Missouri and Illinois in the first quarter, climbing 3.6 percent and 2.7 percent, respectively. The national average was 3.5 percent. Auto debt balances have increased steadily since 2011, and auto delinquency rates have remained fairly constant since 2013.

Arkansas’s personal income grew by 4.7 percent in the first quarter, down slightly from the previous quarter but higher than the national rate. Credit card debt has leveled off at around 6.5 percent of total debt in recent years, while student debt has consistently increased since 2003.

Personal income grew 4.6 percent and 4.3 percent in Indiana and Kentucky, respectively, in the first quarter, both surpassing the national rate. Mortgage delinquency rates in the Louisville Zone fell to their lowest level in six years.

Personal income growth accelerated in Mississippi (3.2 percent) and remained flat in Tennessee (3.2 percent) in the first quarter. For the Memphis Zone in the second quarter, mortgage debt was essentially unchanged, credit card debt growth accelerated, and auto debt balances continued to increase.

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