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ECONOMIC UPDATE
Steady As She Goes
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A look at St. Louis’ employment performance as compared to the U.S.
By Bryan Bezold
RCGA Director of Research and Chief Economist
Now that the St. Louis region is once again adding jobs, we have a clearer picture of the region’s performance during the 2001 recession and subsequent recovery. In some ways, there’s a positive story to tell, because our region saw much smaller employment declines than a number of other metropolitan areas.
Economists officially characterize recessions based on the deliberations of a small group of economists affiliated with the National Bureau of Economic Research (NBER), which is a non-profit, non-partisan group of economists. The NBER’s business cycle dating committee determined that the most recent U.S. recession began in March of 2001, and ended in November 2001. In both St. Louis and the U.S., however, it took over two years for employment to begin growing again.
The performance of the St. Louis economy was in some ways similar to that of the
U.S. economy during this period. After the
recession began in February of 2001, employment in the U.S. declined until it was
2.1 percent below its pre-recession peak.
In St. Louis, employment bottomed out at a level 2.2 percent below that of February
2001. That’s a tough pill to swallow, but
several metropolitan areas, such as Boston, Chicago, and San Francisco, saw even
larger employment losses.
The timing of those low points illustrates the differences between the U.S. and
St. Louis. U.S. employment bottomed out in May of 2003, and then started growing
slowly. St. Louis, on the other hand, saw its lowest employment level (on a seasonally adjusted basis) in February of 2004. Employment in St. Louis declined at a slower rate, but did so for a longer period of time than the U.S. The net result was a similar magnitude of job losses during the recession, but at a slower pace, in St. Louis.
That slower pace is also evident when we look at the recovery of the St. Louis and
U.S. economies. Employment in the U.S. increased in June of 2003, and has continued to do so, albeit at a slower pace than previous economic recoveries. St. Louis started adding jobs on a month-to-month basis about nine months later, in March of 2004. Since the increases were smaller, employment on a year-over-year basis did not trend positive consistently until August of 2004.
The U.S. reached its February 2001 level of employment in January of 2005, so right now U.S. employment exceeds its pre-recession peak. Employment in St. Louis (at the time Commerce went to press) is still 0.7 percent, or approximately 9,800 jobs, below its
seasonally adjusted February 2001 level.
As of June, St. Louis was about 16 months into its employment recovery, while the U.S. had been growing for about 25 months. During the first 16 months of the U.S.’s employment recovery, growth averaged
0.1 percent per month. Since then, national monthly employment gains have accelerated to 0.14 percent per month. In St. Louis, the first 16 months of our recovery have resulted in monthly job gains that amounted to
0.09 percent–pretty close to the initial pace of employment growth in the U.S.
That prompts a question–is St. Louis on the same performance track as the U.S., but simply nine or 10 months behind, or is our region on a slower path than the U.S.? As much as we’d like to think it’s the former, absent a break in trends, historical evidence suggests the latter. During the 1990s, while the U.S. economy grew rapidly, St. Louis also grew, but at a slower rate. In fact, the last time St. Louis added jobs at a faster rate than the U.S. was in 1983-84.
That growth disparity is a key driver of the RCGA’s economic development programs, and a reminder that even though we’re now experiencing consistent employment gains, a focused economic development program is essential to ensuring that in the future St. Louis experiences the same sustained economic growth that the rest of the nation does.
Employment Change (January 2001 - January 2004)
Employment Change (February 2001 - June 2005)
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