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Optimism Wanes among District Business Contacts

Monday, March 28, 2016
burgundy books

According to the latest Burgundy Books, optimism about 2016 economic conditions waned among Eighth District business contacts since the previous report.

  • In the Little Rock Zone, a little less than half of contacts expect economic conditions to be worse in 2016 than in 2015. In the previous report, only 14 percent of contacts expected worse conditions.
  • The Louisville Zone showed a modest dip in optimism about economic conditions compared with the previous Burgundy Books, though more contacts still expected conditions to be better rather than worse.
  • Memphis Zone business contacts were less optimistic compared with three months earlier. Less than 20 percent of contacts expect economic conditions to improve this year compared with last year.
  • As with the Louisville Zone, proportionally fewer St. Louis Zone contacts expect economic conditions to improve in 2016 over 2015 compared with three months earlier, but more contacts expect improving conditions over worsening conditions.


The unemployment rate in the Little Rock Zone fell to 4.7 percent in the fourth quarter of 2015, its lowest level since 2001. Labor demand slightly increased, but about two-thirds of Zone contacts still expect wages to be about the same as a year ago.

The Louisville Zone’s unemployment rate remained at 4.7 percent in the fourth quarter. Each of the Zone’s metropolitan statistical areas (MSAs) was below the national unemployment rate of 5.1 percent.

Unemployment in the Memphis Zone was unchanged from the previous quarter at 6.7 percent. In Memphis, there are about two unemployed workers for each advertised job opening, well below the recession high of seven persons per vacancy.

In the fourth quarter, the St. Louis Zone experienced its lowest unemployment rate since 2007 at 5.0 percent. Demand for labor in St. Louis continued to increase in 2015, as the ratio of unemployed persons to advertised vacancies declined steadily throughout the year.


Residential construction activity was mixed across the Little Rock Zone in the fourth quarter of 2015. Building permits increased faster than the national pace in half of the Zone’s major MSAs, but decreased in the other half.

In the Louisville Zone, year-to-date home sales increased faster in Louisville than nationally. Home prices in three of the Zone’s four major MSAs increased from a year ago, though growth is still below the national rate of 5.5 percent.

Residential real estate activity continued to grow at a modest pace in the Memphis Zone, and business contacts in the Zone expect improvements to continue. Compared with the same period a year ago, year-to-date home sales in Memphis increased for the third straight quarter.

Home sales in St. Louis outpaced the national rate for the fourth consecutive quarter. Also, home prices are steadily appreciating, although more slowly than the national rate.

Household Finances

In the fourth quarter, household debt in the Little Rock Zone surpassed the peak reached during the financial crisis. Credit card debt grew 3 percent year-over-year, its fastest pace since 2008. Mortgage debt growth was flat.

Over the past two quarters, Louisville Zone total debt per capita has seen its fastest growth since the end of the recession. It has grown faster than the national rate but at a relatively modest rate compared with the prerecession period.

Over the past several quarters, household debt balances in the Memphis Zone have experienced their fastest growth since the end of the Great Recession. Delinquency rates within the Zone remained largely unchanged in the fourth quarter relative to the previous quarter at 2.0 percent for mortgages, 7.4 percent for credit cards and 4.2 percent for auto loans.

Auto debt growth in the St. Louis Zone dropped below the nation’s in the fourth quarter but is still relatively high by historical standards. Growth of credit card debt balances increased slightly, and mortgage debt growth was slightly positive for the second straight quarter.

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