September 22, 2009

CAPE GIRARDEAU -- The second quarter saw employment rise a bit and the unemployment rate fall below double digits in southeast Missouri. However, when compared to the second quarter in 2008, the numbers are discouraging.

Employment is down by about 19,000 jobs (or 4.7 percent) and unemployment is 3.5 percentage points higher than in the same period a year ago. At 9.5 percent, the region’s unemployment rate is tracking the national rate very closely. Unfortunately, some counties are struggling with very high unemployment rates.

Double-digit rates can be found in the following counties: Crawford, Dunklin, Franklin, Gasconade, Pemiscot, Reynolds, Stoddard, and Washington. But some counties (Butler, Cape Girardeau, Iron, Perry) have rates that are 2-3 percentage points below the national unemployment rate.

Overall, unemployment will fall slowly in southeast Missouri as the economy recovers and is likely to remain several percentage points above its pre-recession levels well into 2010.

Personal income growth, which is so dependent on earnings from employment, has slowed to about 3 percent (average annual rate). This is roughly half of its pre-recession rate of growth. It is likely that personal income growth will remain in the 4 percent range for the remainder of the year.

Falling personal income means a lower level of retail sales, and that is precisely what has happened. Retail sales in the second quarter were about 4 percent less than in the same period a year ago. While there was a slight increase over the first quarter of the year, it is difficult to be very optimistic about retail sales for the rest of the year. Given uncertainty and lower incomes, consumers are being very cautious with their spending habits. Nationally, retail sales in August, the prime month for back-to-school spending, were down almost 3 percent from the same month a year ago, a strong indication of the tighter grip consumers have on their pocketbooks.

A few counties in southeast Missouri were able to eke out a modest increase in retail sales over the second quarter in 2008: Butler, Crawford, Dent, New Madrid, and Wayne, but they were definitely the exception to the rule.

Bruce Domazlicky is the director of the Center of Economic and Business Research at the Donald Harrison College of Business at Southeast Missouri State University. His complete fall report can be viewed at: http://www6.semo.edu/cebr/