St. Louis, MO – The Federal Reserve Bank of St. Louis published its findings in the "Burgundy Book" on Wednesday.
Fed economist Howard Wall said the downturn originally started in housing, and has since spread to nearly all business sectors in eastern Missouri and southern Illinois. He said it is affecting everything from construction to manufacturing and banking.
"We have almost no good anecdotal information in terms of 'good news,'" Wall said. "Other than the agricultural sector, it's pretty much weakness across the board."
Eighty-six percent of retailers the Fed surveyed said sales are down compared with this time last year. All car dealers surveyed also reported a decrease.
Wall said credit is not as much of a problem in the Midwest as other parts of the country, but fears of the future are restricting actual lending.
In many cases he said that means regional banks have sufficient capital to finance loans, but the criteria for lending have become stricter.
"The lenders say they have money available to lend, but that tighter standards are really restricting the amount that's being lent," Wall said. "And the tighter standards are really from two things that are difficult to separate."
Wall said those two factors are tighter credit standards and an increase in regulation and oversight.
Wall said real estate values in the St. Louis region are also down, but for the moment do not appear to be dropping further. He said that may indicate prices have bottomed out.