An indicator of economic health in Midwestern rural areas remains solidly in the negative. For the seventh time this year, the Rural Mainstreet Index (RMI) remains below growth neutral, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The region’s overall reading for September is 38.5 down from 48.1 in August. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“Weak agriculture commodity prices for grain producers continue to dampen economic activity in the 10-state region. Almost three of four bank CEOs and chief loan officers indicate falling agriculture commodity prices represent the greatest threat to banking operations over the next 12 months,” says Dr. Ernie Goss, Creighton University, who conducts the survey.
Approximately three of four bank CEOs report tariff increases have had a negative impact on farm operations.
Farming and ranch land prices: For the 16th time in the past 17 months, farmland prices are below growth neutral. The region’s farmland price index dropped to 45.8 from 46.2 in August. “Elevated interest rates, higher input costs and below breakeven grain prices put downward pressure on farmland prices,” states Goss.
According to the USDA data, the 10-state region produced 36.9% of U.S. 2024 agriculture output, he notes.
Farm equipment sales: The farm equipment sales index improved slightly to a very weak 15.2 from August’s 14.6. “This is the 25th straight month the index has fallen below growth neutral. High input costs, tighter credit conditions, low farm commodity prices and market volatility from tariffs are having negative impacts on the purchases of farm equipment,” notes Goss.
Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The September confidence index increased to a still very weak 32.7 from 27.8 in August. “Weak grain prices and negative farm cash flows, combined with tariff retaliation concerns, pushed banker confidence lower,” says Goss.
The RMI is a unique index covering 10 regional states from Colorado and Wyoming to Illinois, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy, Creighton University states.