Rural Mainstreet Economic Index Falls Below Growth Neutral Again

(KFOR NEWS  July 21, 2022)   OMAHA, Neb.  The Creighton University Rural Mainstreet Index (RMI) fell for the fourth straight month, sinking below growth neutral for a second consecutive month according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

July 2022 Survey Results at a Glance:

  • The overall index fell for a fourth straight month, sinking below growth neutral for a second consecutive month.
  • The survey recorded the worst back-to-back economic confidence numbers since April/May 2020.
  • More than half, or 53.9%, of bank CEOs named rising input prices as the greatest economic threat to farmers in the next 12 months.
  • Even with significant 2022 input price increases, bankers expect to record a half percentage point decline in farm loan delinquencies.
  • Bankers expect farmland prices to expand by only 2.1% over the next 12 months.

Overall: The region’s overall reading for July slumped to 46.0 from 49.8 in June. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. This was the fourth consecutive decline in the region’s overall reading.

The Rural Mainstreet economy is now experiencing a downturn in economic activity. Supply chain disruptions from transportation bottlenecks and labor shortages continue to constrain growth. Farmers and bankers are bracing for escalating interest rates — both long-term and short-term,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Bankers were asked this month to identify the greatest risk for farmers over the next 12 months.  Regarding the top risks, 53.9% named rising input prices, 34.6% indicated falling grain/livestock prices, and 11.5% reported drought was the top threat.

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