By DANIEL SUDDEATH, Evening News
Daniel.Suddeath@newsandtribune.com
Judging by the latest Beige Book numbers released Wednesday, it could be 2010 before the economy begins to rebound, according to some officials.
The Beige Book explores business conditions in the 12 districts of the Federal Reserve, with Southern Indiana falling into the St. Louis zone - which is the eighth district.
Significant pickup in economic conditions is not expected until late 2009 or early 2010, according to the report. January and February consumer spending was down, with 72 percent of respondents in the St. Louis district saying their retail sales will be lower in 2009 than last year.
Manufacturing, service and construction sectors continued to show decline over the first two months of the year. Compared to January and February 2008, home sales are down in Louisville by 34 percent.
It's a steep decline compared to St. Louis, where home sales dropped 14 percent, and Little Rock, Ark., where they decreased by 23 percent. Building permits declined by 42 percent in Louisville, which was actually lower than St. Louis and Memphis, where they waned by 43 percent and 59 percent respectively.
Nearly 12 percent of homeowners with any mortgage were at least one month late or in foreclosure at the end of last year, according to the Mortgage Bankers Association. That's a record amount - equaling 5.4 million Americans.
Suburban office and industrial vacancy rates did decrease in Louisville during the fourth quarter of 2008, but downtown office vacancy increased.
As expected, there was a moderate decrease in lending.
"Overall, the Beige Book paints a pretty dark view of the current state of the overall economy," said Uric Dufrene, Sanders chair of the Indiana University Southeast Business Department.
"In my opinion, the news out of this report is that contacts believe the economy will not turn around until late 2009 or early 2010. This means that we will likely see job losses mount through all of 2009."
Unemployment claims reached 639,000 last week, according to the U.S. Labor Department. That number is actually down from 670,000 unemployed from the previous week.
"There can be no doubt that employers continue to shed labor at a frightening pace, with no end in sight," Ian Shepherdson, chief U.S. economist at High Frequency Economics, stated in a client note Wednesday.
On the bright side, the decline in industrial and commercial office vacancies for the area is surprising, but great news, according to Dufrene.
"I would have expected the opposite," he said.
Much of the economic problems are linked by the same issue.
"The consumer is in hibernation," Dufrene said. "The report indicates that retailers throughout the district continue to face challenges."