Since falling to a record low in April of this year, the Creighton University Rural Mainstreet Index (RMI) has increased for five straight months, but still remains below growth neutral.
According to the September monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, September’s reading represented the seventh straight month with a reading in a recessionary economic zone despite the increases over the past few months.
The overall index for September increased to 46.9 from August’s 44.7, but still well below growth neutral. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
“Recent improvements in agriculture commodity prices, federal stimuli and Federal Reserve record low interest rates have underpinned the Rural Mainstreet Economy. Bank CEOs estimated that farm income, including government support, was down only 1.5% from this time last year,” said Creighton University’s Ernie Goss, who conducts the monthly survey.
Almost one of four bankers, or 23.1%, report that their local economies were back to pre-coronavirus levels.
Farming and ranching: After moving above growth neutral for only the second time in the past 81 months in August, the farmland price index once again fell below the threshold for September. The September reading sank to 45.0 from August’s 50.0.
The September farm equipment-sales index slipped to 32.1 from 32.8 in August. This marks the 84th straight month the reading has remained below growth neutral 50.0.
Banking: Borrowing by farmers expanded for September, and at a faster pace than in August. The borrowing index expanded to 60.9 from August’s 53.9. The checking-deposit index declined to 76.6 from 78.9 in August, while the index for certificates of deposit and other savings instruments slumped to 35.9 from 40.8 in August.
Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, improved to 50.0 from August’s 44.6. “COVID-19 related farm support payments and improving gain prices have boosted confidence offsetting pessimism from the impact of the derecho in several of the survey states,” 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.