Federal Reserve Bank of St. Louis

Summary of Economic Activity

Economic activity across the Eighth District has increased slightly since our previous report. Contacts reported that consumer demand slowed beyond seasonal norms and cited consumer price sensitivity and lower levels of disposable income as primary reasons why. While labor markets remain tight overall, an increasing number of firms reported being fully staffed or even overstaffed relative to consumer demand. Price growth has slowed in recent months. Residential real estate activity remained slow relative to seasonal averages. Contacts across a range of industries reported a mixed outlook moving forward, although the outlook has considerably improved since mid-December.

Labor Markets

Employment has remained unchanged since our previous report. The labor market continues to be tight, but reports of adequate supply relative to demand have increased. A retail contact in St. Louis reported some difficulty in finding applicants for open positions, while a banking contact in Memphis had to reduce staff due to overhiring. In Louisville, local business contacts have reported an easing of demand for labor in the manufacturing, retail, and health-care sectors, while noting there are still more openings than workers available.

Contacts reported that growth in hourly compensation in 2023 was about 4.5 percent, which was faster than they anticipated one year ago (3.5 percent); however, they expect growth to moderate to an average of about 3 percent in 2024. An insurance contact in Bowling Green reported wages have risen, which has made it tougher to match qualified candidates to new salaries. A restaurant contact in Little Rock reported that rising costs in wages and labor benefits have slowed growth expectations.


Prices have increased slightly since our previous report. Survey respondents across the District reported that prices increased by an average 2.5 percent during 2023 and expect continued moderation in price increases in 2024. On net, a majority of contacts reported that their ability to increase prices charged to consumers had deteriorated. A manufacturer reported facing increased costs and pushback on price increases. A theater contact similarly reported increasing costs and difficulty in determining if and how to pass those increases on to patrons. A contact in spirits and beverages reported that the firm is still able to pass price changes on to consumers. A car dealer reported that prices were being cut to offset higher interest rates for consumers.

Consumer Spending

District general retail, restaurant, and hospitality contacts reported mixed activity, while automotive contacts reported slower activity. January real sales tax collections increased in Arkansas, Western Tennessee, Missouri, and Kentucky relative to December. Missouri saw particularly strong increases in real sales tax collections. Downtown Louisville retail contacts have seen decreases in sales due to continued sluggish foot traffic. An auto dealer in Louisville stated that they've had to scale down their attempt to push electric vehicles onto the market due to low consumer demand. Restaurant contacts in St. Louis and Louisville reported consumer demand weakening beyond expectations, which they attributed to continued price increases. A Northern Mississippi hospitality contact reported that their year-over-year revenue growth fell from 13 percent in the first half of 2023 to 3 percent in the second half, and January saw continued slower growth.


Manufacturing activity has decreased slightly since our previous report. Firms in Missouri reported a slight increase in inventories and delivery lead times and a moderate decrease in employment. Firms in Arkansas reported moderate decreases in inventories, sales, and employment. A third-party logistics provider across several District states reported full staffing at all seven of its distribution and manufacturing centers for the first time in months. However, other contacts continued to report that finding quality and committed workers remained an ongoing issue. On average, firms reported they expect slight decreases in employment and inventory in the coming quarter.

Nonfinancial Services

Activity in the nonfinancial services sector has been mixed and has varied across regions and industries. Within transportation, a Little Rock contact reported extremely strong demand for travel, and a St. Louis contact spoke of a slightly improved outlook despite supply chain uncertainty and capacity issues. In contrast, a Memphis contact reported excess inventory and excess shipping capacity.

A Louisville tourism contact expressed cautious optimism stemming from a strong 2023, and a Little Rock health-care contact expected continued growth based on high rates of migration into the region. Other services firms reported a seasonal January slowdown that was greater than expectations. Overall, sales and sales expectations were split roughly evenly between slightly higher and lower, and the general outlook was similarly mixed between slightly better and slightly worse.

Real Estate and Construction

Residential real estate sales have slowed since our previous report. Contacts in Arkansas and Tennessee reported that the low end of the market continues to be strong, while contacts in Missouri and Southern Indiana reported higher-end homes selling better. Rental rates for residential real estate have remained unchanged since our previous report. Multiple contacts reported that demand for office space in downtown areas continues to be sluggish. In Louisville, two large tenants announced plans to vacate their downtown offices. A Memphis contact reported that demand for retail space remains strong.

Contacts across real estate and construction reported that recent increases in insurance costs have led to higher prices and affordability challenges. Two construction contacts reported that lending has slowed and new projects are being shelved. Other construction firms reported a lack of skilled labor reducing their ability to obtain new projects. However, a Northwest Arkansas commercial real estate construction firm reported being booked out through 2025.

Banking and Finance

Activity in the financial sector has remained stable since our previous report. A survey of contacts found that, while the demand for loans continues to be lower than a year prior, growth for overall, credit card, and commercial and industrial loans has risen. Mortgage originations remain below seasonal norms due to low housing inventories and high mortgage rates. Competition for deposits persists. Banking contacts reported concerns about loan quality due to economic uncertainty, changes in borrower behavior, and an evolving regulatory landscape. However, contacts have not seen a significant rise in delinquent loans.

Agriculture and Natural Resources

District agriculture conditions have remained stable since our previous report. Total winter wheat acreage planted was down about five percent relative to the total planted the year before. Reports indicate the decline was expected and consistent with national planting patterns. A decline in fertilizer costs was offset by increasing fuel and interest costs.

District contacts were mixed on the impact global commodity markets are having on their operations. While some reported benefitting from tightened export markets due to international shipping disruptions and high demand—particularly for cotton—others reported that declining commodity prices and competition from major exporters such as Brazil had depressed their outlook.

Contacts indicated the ban in early February on specific pesticides commonly used for major District crops and subsequent regulatory changes were sources of uncertainty for future planting and growing decisions. Most District contacts described their outlook as unchanged or worsening.

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Last Update: March 06, 2024