A monthly update on economic conditions in rural areas across ten Midwestern states reflects continuing economic conditions but a slowing in economic growth. The Creighton University Rural Mainstreet Index RMI) climbed above growth neutral in July for a sixth straight month, according to the monthly survey of bank CEOs in rural areas dependent on agriculture and/or energy. This is the first time since the July 2014 survey that the overall index has risen above growth neutral for six straight months.
Overall: The overall index slid to 53.8 from 56.1 in June. The index ranges between 0 and 100 with 50.0 representing growth neutral.
"Surveys over the past several months indicate the rural Mainstreet economy is solid but with less positive economic growth. However, the negative impacts of recent trade skirmishes have begun to surface with the weakening of already anemic grain prices," says Creighton University's Dr. Ernie Goss, who conducts the survey.
Pete Haddeland, CEO of the First National Bank in Mahnomen, Minnesota, said, "Grain prices are at, in some cases, 10-year lows. Not good."
According to Fritz Kuhlmeier, CEO of Citizens State Bank in Lena, Illinois, "The trade issues/tariffs have been devastating on our local dairy industry when tacked on top of already below cost or break-even milk prices."
The RMI's farmland and ranchland-price index for June rose to a weak 44.7 from June's 42.7. This is the 56th straight month the index has fallen below growth neutral 50.0.
The July farm equipment-sales index increased to 38.8 from June's 36.3. This marks the 59th consecutive month the reading has moved below growth neutral 50.0.
Banking: Borrowing by farmers expanded for July as the loan-volume index rose slightly to 76.9 from 76.3 in June. The checking-deposit index slumped to 37.8 from June's 41.7, while the index for certificates of deposit and other savings instruments slid to 43.9 from 47.6 in June.
This month bankers were asked, "How many times should the Federal Reserve raise interest rates for the rest of 2018?"
"Almost one-third, or 30% of bank CEOs recommended keeping rates at their current level, 45% suggested one additional interest rate increase, 20% supported two additional rate hikes and 5% recommended three more rate increases for 2018," states Goss.