Southeast Missouri begins to improve

By Bruce Domazlicky

Center for Economic and Business Research

Southeast Missouri State University

As the national economy begins to climb out of the recession, Southeast Missouri is also showing signs of a recovery. Revised employment figures form the Department of Labor and Industrial Relations indicate that employment dropped by over 10,000 workers from the second to the fourth quarter of 2001. This 2.8 percent drop in employment greatly exceeded the decline at the national level. Unemployment also increased to 5.9 percent in the fourth quarter, virtually identical to the national rate for the same time period.

Looking ahead to 2002, employment should increase in the region to around 370,500 workers, virtually the same level it was at in the third quarter of 2001. Right now, employment seems likely to stay in a rather narrow range for much of the year with little change from quarter to quarter. This is partly in reflection of the modest recovery that is predicted for the national economy. Similarly, the unemployment rate is also likely to hover in the 5.8 percent to 6.0 percent range for the first part of 2002. However, the fact that unemployment is already showing decline nationally may mean that unemployment in the region may drop faster than is now being forecast.

Personal income, a measure of income actually received by individuals, should continue to rise in the 3 percent to 3.5 percent range for the near future. With low inflation, an increase of 3 percent in personal income is quite acceptable. The higher personal income is a reflection of higher employment and a rebounding economy.

Retail sales have been rather flat in the region for the better part of a year. With modest increases in personal income and little population growth, it seems unlikely that retail sales will grow very quickly in the coming months. A good forecast is that retail sales in the region will be in the neighborhood of $6.9 to $7 million.

This would represent a slight increase over 2001. However, retail sales, especially at the county level, are always difficult to predict, so it is possible that sales will heat up as the weather does, but this is not certain.

While the region has weathered the recession fairly well, with only modest increases in the unemployment rate, some counties have been hit harder than others. Wayne County, for example, has experienced double-digit unemployment rates and is likely to continue to do so into 2002. The Bootheel counties of Mississippi, New Madrid, and Pemiscot are also likely to see their unemployment rates remain above 8 percent.

On the plus side, counties such as Cape Girardeau and Perry still have unemployment rates below 4 percent. To a lesser extent, Scott, Ste. Genevieve and Butler counties have also fared well in the recession and should continue to experience unemployment rates that are below the national rate. We should note that the employment and unemployment rates listed in this Review reflect the recent revisions done by the Department of Labor and Industrial Relations in Jefferson City. These revisions appear to be closer to the truth than earlier estimates for the region, which were probably too optimistic. Of course, even these revisions are subject to yet later revisions, but for now, they paint a picture of a region that struggled a bit in 2001, but seems poised to resume faster growth in 2002. Barring any unforeseen events, the region should have a decent year in 2002.