For the fifth time in the past six months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its highest level since launching the survey in January 2006.
Overall: The overall index for March soared to a record high 71.9 from February’s solid 53.8. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
Approximately, 68.8% of bank CEOs reported that their local economy was expanding, while the remaining 31.2% indicated little or no growth. “Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the rural mainstreet economy. Only 3.1% of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels,” says Dr. Ernie Goss, who conducts the survey.
Farming and ranching: For a sixth straight month, the farmland price index advanced above growth neutral. The March reading climbed to 71.9, its highest level since November 2012, and up from 60.0 in February. This is first time since 2013 that Creighton’s survey has recorded six straight months of farmland prices above growth neutral.
Bankers reported approximately 12.3% of farmland sales were cash sales, which is down from 17.3% recorded in February 2020.
The March farm equipment-sales index rose to 63.5, its highest reading since February 2013, and up from 62.7 in February. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the last four months.
Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, rose to a very healthy 76.7 and up from 64.0. “Looming federal farm support payments, improving grain prices and advancing exports have supported confidence offsetting negatives from pandemic ravaged retail and leisure and hospitality companies in the rural economy,” observes 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 and launched in January 2006.