September Survey Results at a Glance:
- After falling below growth neutral for August the Rural Mainstreet Index jumped slightly above the 50.0 reading for September.
- More than four in 10 bank CEOs report that their local economy is in a recession.
- As a result of continuing weakness in the farm sector, more than half of bankers reported increasing collateral for farm loans, and one in four rejected a higher percent of farm loan applications.
- Bankers expect farm equipment sales in their area to decline by another 7.4% over the next 12 months.
OMAHA, Neb. (Sept. 19, 2019) – The Creighton University Rural Mainstreet Index (RMI) for September 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.
Overall: The overall index rose to 50.1 from 46.5 in August. This marks the third time in the past five months that the overall index has risen above growth neutral.
The trade war with China and the lack of passage of the USMCA (NAFTA’s replacement) are driving confidence and growth lower for most areas of the region.
“Despite a $16 billion federal government support package this year and somewhat stronger grain prices, more than four in 10 bankers are reporting that their local economy is in a recession,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
As reported by Dale L. Leighty, chairman and CEO at First National Bank of Las Animas, Colorado, “Grain prices are (still) a big negative for our customers.”
Overall: The overall index rose to 50.1 from 46.5 in August. This marks the third time in the past five months that the overall index has risen above growth neutral.
The trade war with China and the lack of passage of the USMCA (NAFTA’s replacement) are driving confidence and growth lower for most areas of the region.
“Despite a $16 billion federal government support package this year and somewhat stronger grain prices, more than four in 10 bankers are reporting that their local economy is in a recession,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
As reported by Dale L. Leighty, chairman and CEO at First National Bank of Las Animas, Colorado, “Grain prices are (still) a big negative for our customers.”
Farming and Ranching: The farmland and ranchland-price index for September slumped to a weak 43.1 from August’s 46.3. This is the 70th straight month the index has remained below growth neutral 50.0.
The September farm equipment-sales index improved to 35.9 from August’s 30.3. This marks the 73rd month that reading has remained below growth neutral 50.0. “This month bank CEOs were asked to project farm equipment sales in their area. On average bankers expected farm equipment sales to decline by another 7.4% in the next 12 months,” said Goss.
Banking: Borrowing by farmers for September remained strong. The borrowing index expanded to a very strong 72.2 from August’s 66.3. The checking-deposit index declined to 54.2 from August’s 52.5, while the index for certificates of deposit and other savings instruments dipped to 51.4 from 52.5 in August.
As a result of continuing weakness in the farm sector, more than half of bankers reported increasing collateral for farm loans, and one in four rejected a higher percent of farm loan applications.
Hiring: The employment gauge jumped to a strong 62.5 from August’s solid 55.0. Despite tariffs and flooding over the past several months, Rural Mainstreet businesses continue to hire at a solid pace.
Over the past 12 months, the Rural Mainstreet economy added jobs at a 0.7% pace, or half the pace of urban area growth of 1.4% for the same period. Rural areas of two Rural Mainstreet states, Missouri and Nebraska, lost jobs over the past 12 months.
Confidence: While the confidence index, which reflects bank CEO expectations for the economy six months out, climbed slightly to 42.9 from August’s 40.0, it continues to indicate a very negative economic outlook among bankers.
Home and Retail Sales: The home-sales index decreased to a still solid 57.1 from August’s 57.7. The retail sales index for September expanded to 52.8 from August’s 45.0. “Bankers in the region reported a rebound in retail sales from August levels,” said Goss.
The September farm equipment-sales index improved to 35.9 from August’s 30.3. This marks the 73rd month that reading has remained below growth neutral 50.0. “This month bank CEOs were asked to project farm equipment sales in their area. On average bankers expected farm equipment sales to decline by another 7.4% in the next 12 months,” said Goss.
Banking: Borrowing by farmers for September remained strong. The borrowing index expanded to a very strong 72.2 from August’s 66.3. The checking-deposit index declined to 54.2 from August’s 52.5, while the index for certificates of deposit and other savings instruments dipped to 51.4 from 52.5 in August.
As a result of continuing weakness in the farm sector, more than half of bankers reported increasing collateral for farm loans, and one in four rejected a higher percent of farm loan applications.
Hiring: The employment gauge jumped to a strong 62.5 from August’s solid 55.0. Despite tariffs and flooding over the past several months, Rural Mainstreet businesses continue to hire at a solid pace.
Over the past 12 months, the Rural Mainstreet economy added jobs at a 0.7% pace, or half the pace of urban area growth of 1.4% for the same period. Rural areas of two Rural Mainstreet states, Missouri and Nebraska, lost jobs over the past 12 months.
Confidence: While the confidence index, which reflects bank CEO expectations for the economy six months out, climbed slightly to 42.9 from August’s 40.0, it continues to indicate a very negative economic outlook among bankers.
Home and Retail Sales: The home-sales index decreased to a still solid 57.1 from August’s 57.7. The retail sales index for September expanded to 52.8 from August’s 45.0. “Bankers in the region reported a rebound in retail sales from August levels,” 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.
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.
Below are the state reports:
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.
Below are the state reports:
| Colorado: Colorado’s Rural Mainstreet Index (RMI) for September advanced to 54.4 from August’s 50;0. The farmland and ranchland-price index sank to 44.1 from August’s 47.1. Colorado’s hiring index for September advanced to 70.6 from August’s 61.8. Over the past 12 months rural areas in Colorado have experienced job growth of 3.5% compared to a somewhat weaker, but still healthy, 1.9% for urban areas of the state. Illinois: The September RMI for Illinois rose to 49.5 from 44.2 in August. The farmland-price index slumped to 42.8 from August’s 45.2. The state’s new-hiring index increased to 57.5 from last month’s 56.2. Over the past 12 months rural areas in Illinois have experienced job gains of 0.5% compared to a much stronger 1.3% for urban areas of the state. Jeff Bonnett, president of Havana National Bank in Havana said, “Word of a down-turn to our local economy in the near future stems from the fact that our local coal fired power plant, that was built in the 1940s, will be shut down on Nov.1, 2019. This means 75 lost jobs and another five to 10 for a related company that help with the coal handling. We will survive, but this will be a tough pill to swallow in the near term.” Iowa: The September RMI for Iowa increased to 48.7 from August’s 46.2. Iowa’s farmland-price index improved to 47.4 from August’s 46.1. Iowa’s new-hiring index for September expanded to 55.5 from 51.8 in August. Over the past 12 months rural areas in Iowa have experienced job additions with a gain of 0.4% compared to a much stronger increase of 1.4% for urban areas of the state. Kansas: The Kansas RMI for September improved to 49.7 from 45.8 in August. The state’s farmland-price index sank to 42.9 from August’s 45.9. The new-hiring index for Kansas soared to 58.1 from 49.9 in August. Over the past 12 months rural areas in Kansas have experienced job growth of 0.6% compared to a stronger 1.6% for urban areas of the state. Minnesota: The September RMI for Minnesota advanced to 51.2 from August’s 47.1. Minnesota’s farmland-price index improved to 48.3 from 46.3 in August. The new-hiring index for September declined to 53.2 from August’s 54.0. Over the past 12 months rural areas in Minnesota have experienced job growth of 1.5% compared to a significantly weaker 0.3% for urban areas of the state. | Missouri: The September RMI for Missouri expanded to 45.4 from 41.1 in August. The farmland-price index for the state sank to 41.7 from August’s 44.7. Missouri’s new-hiring index for September increased to 46.7 from August’s 38.0. Over the past 12 months rural areas in Missouri have experienced mounting job losses with job reductions of minus 2.6% compared to a much stronger 1.6% for urban areas of the state. Nebraska: The Nebraska RMI for September rose to 47.6 from August’s 44.4. The state’s farmland-price index slipped to 42.3 from last month’s 43.5. Nebraska’s new-hiring index slumped to 45.2 from August’s 46.8. Over the past 12 months rural areas in Nebraska have lost jobs at a rate of minus 1.4% compared to a stronger 1.6% for urban areas of the state. Jim Stanosheck, CEO of State Bank in Odell, said, “It doesn't look like Trump's tariffs are going to save the ag economy.” North Dakota: The North Dakota RMI for September expanded to 50.6 from August’s 47.4. The state’s farmland-price index increased to 46.4 from 45.7 in August. The state’s new-hiring index rose to 60.5 from 54.9 in August. Over the past 12 months rural areas in North Dakota have experienced job growth of 0.4% compared to a stronger 0.9% for urban areas of the state. South Dakota: The September RMI for South Dakota moved above growth neutral for the month, expanding to 52.9 from August’s 48.7. The state’s farmland-price index dipped 42.9 from August’s 43.1. South Dakota’s new-hiring index soared to 66.5 from 58.2 in August. Over the past 12 months rural areas in South Dakota have experienced job growth of 3.1% compared to 2.6% for urban areas of the state. Wyoming: The September RMI for Wyoming advanced to 52.4 from August’s 48.5. The September farmland and ranchland-price index sank to 43.6 from August’s 46.7. Wyoming’s new-hiring index expanded to 65.3 from 57.7 in August. Over the past 12 months rural areas in Wyoming have experienced job growth of 2.5% compared to a weaker 1.3% for urban areas of the state. |
Tables 1 and 2 summarize the survey findings. (Click each table to view larger.)
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