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By Bryan Bezold,
RCGA Director of Research and Chief Economist
AS THE NATIONAL ECONOMY DOWNSHIFTS, CAN ST. LOUIS KEEP MOVING FORWARD?
Since the third quarter of 2000, U.S. economic growth has slowed
precipitously from its rapid pace of the last three years, and there
is a great deal of speculation about the possibility of a recession
this year. According to preliminary estimates from the U.S. Bureau
of Economic Analysis (BEA), Gross Domestic Product (GDP) growth
slowed to 1.0 percent in the fourth quarter of 2000. According to
these numbers, the U.S. economy is not now in a general recession,
and is unlikely to be in one this year. Some sectors of the economy
are suffering, but unemployment and inflation are both at historically
low levels.
The manufacturing sector of the U.S. economy has suffered more than
any other during the current slowdown. The Federal Reserve’s index
of U.S. industrial production has also declined for the past five
months; since September, the index has declined by almost 2.5 percent.
The National Association of Purchasing Manager’s (NAPM) survey of
manufacturing in Missouri indicated that manufacturing activity
declined in February, continuing a five-month trend. According to
preliminary estimates for St. Louis from the BLS, there were 183,000
people employed in the manufacturing sector in February 2001. This
is a decline of 0.9 percent compared to last February.
St. Louis’ economy has seen a shift in both employment and output
away from the manufacturing sector and towards the service sector.
In 1980, manufacturing accounted for 20 percent of the area’s employment.
By 1998, that share had fallen to less than 13 percent. At the same
time, the service sector’s share of metro area employment increased
from 24 percent to 33 percent.
In order for the U.S. to avoid a general recession consumer spending
must continue, and it has. According to the BEA, personal consumption
expenditures grew slightly in both January and February of 2001.
As long as unemployment remains low and consumer spending continues,
the U.S. should be able to avoid a general recession. Given that
the pattern of the St. Louis area economy is similar to the national
pattern, St. Louis will probably experience slower growth for the
rest of 2001, but not an outright recession.
The St. Louis area has a diverse economy, and that’s helping it
through this current period of slow national growth. St. Louis is
vulnerable to the same stresses that threaten the national economy,
but not disproportionately so. As the area continues to grow, it’s
important to maintain a diverse economic base. That’s the aim of
the RCGA’s efforts to attract and support growth in five key clusters;
information technology, plant and life sciences, warehousing and
distribution, financial services, and advanced manufacturing. If
the region can continue to attract and develop businesses in these
key areas, then it will retain the economic diversity it needs to
avoid being overly exposed to national imbalances in any one particular
sector of the economy.
On The Move
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•Edward
Jones
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| Financial
services giant Edward Jones, which is headquartered
in St. Louis, is constructing a $74 million data center at
its Maryland Heights, Mo., campus. The 90,000-square-foot
data center will support the company’s financial services
operation nationwide, and will cost an estimated $24 million.
When complete in April 2002, the data center will initially
employ 30 workers and $50 million worth of communications
equipment. |
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•Walker
Products
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| The Los
Angeles-based Walker Products located a 15,000-square-foot
packaging and distribution center for aftermarket auto parts
that will employ 50 people in Pacific, Mo. |
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