JM Innovations



National & World Ag News Headlines
Rural Mainstreet Index Drops to Lowest Level in 2 Years
USAgNet - 08/16/2019

The Creighton University Rural Mainstreet Index (RMI) fell below growth neutral for the only the second time this year. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the RMI for August indicated negative growth for the region.

Overall: The overall index slumped to 46.5 from 50.2 in July. This is the lowest reading for the index since October 2017. The index ranges between 0 and 100 with 50.0 representing growth neutral, and an RMI below the growth neutral threshold. 50.0, indicates negative growth for the month.

"The trade war with China and the lack of passage of the USMCA (NAFTA's replacement) are driving growth lower for areas of the region with close ties to agriculture. Despite a $16 billion federal government support package coming soon, a drop in farm income is negatively affecting the Rural Mainstreet Economy," said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Three of four bankers reported the trade war was having a negative impact on their local economy.

As stated by Jeffrey Gerhart, CEO of the Bank of Newman Grove in Newman Grove, Neb,, "Trade wars have been and will continue to be a drain on our ag economy"

"Despite the negative impact of tariffs and the trade war, only 28.2% of bankers support cutting tariffs on imported goods from China," said Goss.

Rod Cornelius, market president for Pinnacle Bank in Grand Island, Neb., reported, "I quickly surveyed 12 local producers, a majority indicated (U.S. should) increase tariff pressure - go big or go home. Although the majority again indicated the tariffs are negatively impacting the local economy."

Farming and ranching: The farmland and ranchland-price index for August improved to a still weak 46.3 from July's 45.6. This is the 69th straight month the index has remained below growth neutral 50.0.

The August farm equipment-sales index dropped to 30.3 from July's 37.9. This marks the 72nd straight month the reading has remained below growth neutral 50.0. "The dismal economic outlook for farm income continues to decimate agriculture equipment sales in the region," reported Goss.

Banking: Borrowing by farmers for August remained strong. The borrowing index slipped to 66.3 from July's 71.9. The checking-deposit index rose to 52.5 from July's 51.5, while the index for certificates of deposit and other savings instruments expanded to 52.5 from 47.1 in July.

Despite worsening economic conditions on the farm, bankers expect only a modest 4% rate of farm loan defaults over the next year.

Hiring: The employment gauge sank to a still solid 55.0 from July's very strong 66.2. Despite tariffs and flooding over the past several months, Rural Mainstreet businesses continue to hire at a solid pace.

Over the past 12 months, the Rural Mainstreet economy added jobs at a 0.3% pace compared to a higher 1.5 % for urban areas of the same 10 states. Rural areas in four Rural Mainstreet states, Illinois, Iowa, Missouri, and Nebraska lost jobs over the past 12 months.

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, plummeted to 40.0 from July's 51.5, indicating a very negative economic outlook among bankers. This is the lowest confidence index recorded since October 2017.

Home and retail sales: The home-sales index decreased to a still solid 57.7 from July's 67.6. The retail sales index for August slumped to 45.0 from July's 47.1. "It appears that the region experienced a significant slump in retail sales from June's solid sales index of 58.1," said Goss.

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.


Other National Headlines
Real Wisconsin Cheese Curds
Digi-Star
Copyright © 2024 - Farms.com. All Rights Reserved.