An index which monitors rural banker economic attitudes continues to show growing confidence in the Midwestern rural economy, despite growing pessimism for agriculture. The Creighton University Rural Mainstreet Index (RMI) for December rose above growth neutral after slipping below the 50.0 threshold in January, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
The overall index climbed to 54.2 from November's 49.9, its first sub-growth neutral reading since January 2018. The index ranges between 0 and 100 with 50.0 representing growth neutral.
"Our surveys over the last several months indicate the rural mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector," says Creighton University's Dr. Ernie Goss, who conducts the survey.
Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, said, "Glad to see Congress passed a bipartisan farm bill. (It) allows farmers and their community bankers to budget more accurately in the future."
However, the farmland and ranchland-price index for December slipped to 35.7 from 35.9 in November. This is the 61st straight month the index has fallen below growth neutral 50.0.
The December farm equipment-sales index increased to 37.1 from November's 30.6. This marks the 64th consecutive month that the reading has moved below growth neutral 50.0.
Borrowing by farmers advanced for December, as the borrowing index soared to a 72.2 from November's loan-volume index of 60.6. The checking-deposit index inched forward to 55.6 from November's 54.5, while the index for certificates of deposit and other savings instruments increased to 55.6 from 47.0 in November.
More than half of bankers, or 52.8%, have boosted collateral requirements for farm loans due to low agriculture income. One-fourth of bank CEOs have made no change in farm lending practices due to weak farm income.
The confidence index, which reflects bank CEO expectations for the economy six months out, slumped to 44.3 from November's 47.0, indicating a pessimistic economic outlook among bankers.
"As in the last month several months, tariffs, trade tensions, and weak agriculture commodity prices negatively influenced the economic outlook of bank CEOs," states 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.