Economic Overview

During the first half of 2009, the nation’s economy continued to weaken, and non-farm employment in the St. Louis region declined. However, the region’s employment losses are slower than the nation's as a whole. In St. Louis, employment was 52,100 lower in June 2009 than one year earlier, representing a 3.8% decline. Nationally employment declined by 4.2%. In St. Louis, the largest June losses were in the manufacturing and mining, and logging and construction sectors (12.3% and 12.1%, respectively). In contrast, the education and health services sector continued to expand, adding 3,500 jobs and posting a 1.7% increase. Government employment added 3,000 jobs for a 1.8% increase.

Reflecting a national trend of rising unemployment, the region’s unemployment rate reached 9.9% in June 2009, representing a 3.4 percentage point increase from the June 2008 rate of 6.5%.

According to the Federal Reserve’s Beige Book, released on July 29, 2009, the pace of economic decline in the Fed’s Eighth District, which includes the St. Louis, MO-IL MSA as well as portions of Missouri, Illinois, Kentucky, and Tennessee, and all of Arkansas, moderated from April through mid-June 2009. The Beige Book reports that most of the Federal District Banks continue to experience weak economic conditions. However, the downward slide is showing signs of moderating in some districts and some districts report improved expectations. Even with emerging positive indicators, there are no expectations for a substantial increase in economic activity through the end of the year.

The Federal Reserve’s Burgundy Book, released on June 25, 2009 focuses on the St. Louis region and reports similar trends. The majority of general retailers and auto dealers reported lower sales than one year ago. The summer sales outlook was mixed among general retailers and pessimistic among car dealers.

The manufacturing and service sectors continued to contract through mid-June. The Beige Book reports that the pace of manufacturing and services decline is slowing. Hiring activity is seen in government services and health and social services sectors. Projects funded by the American Recovery and Reinvestment Act of 2009 are hiring temporary and part-time summer employees.

Residential real estate activity continued to decline throughout the district. In St. Louis, May 2009 year-to-date home sales dropped 13%, while single-family housing permit activity declined by 37%.

The commercial real estate market remained flat in the region. Credit conditions are stalling new projects, and commercial construction is expected to be anemic in 2009. Institutional and health care projects account for most of current construction activity.

Updated: July 31, 2009