Rural bankers note strong local economies

For the seventh straight month, the Creighton University Rural Mainstreet Index (RMI) remained above growth neutral. That is according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.         
Overall: The overall index for June fell to a still strong 70.0 from May’s record high of 78.8.  The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

Approximately, 46.7% of bank CEOs report their local economy expanded between May and June.  

“Strong grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the rural mainstreet economy. Even so, current rural economic activity remains below pre-pandemic levels,” says Creighton University’s Ernie Goss, who conducts the survey.

However, several bankers raised future concerns, he notes. Steve Simon, CEO of South Story Bank and Trust in Huxley, Iowa, reports, “Continued dry conditions will start to have an effect on markets and crops soon”

Farming and ranching: For a ninth straight month, the farmland price index advanced significantly above growth neutral. The June reading slipped to a very strong 75.9 from May’s 78.1. This is first time since 2013 that Creighton’s survey has recorded nine straight months of farmland prices above growth neutral.

The June farm equipment-sales index rose to 71.6 from 67.9, its highest level since 2012, and up from May’s 67.9. After 86 straight months of readings below growth neutral, farm equipment sales bounced into growth territory for the last seven months. This is the best growth in this index since 2012.    

More than three-fourths of the bankers think the Federal Reserve should begin raising interest rates before the end of 2021.

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, decreased to 71.7 from May’s 78.8. “Federal stimulus checks, strong grain prices, and advancing exports have supported a healthy confidence number,” Goss observes.

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.