Bank CEO sentiments in the central states reached their lowest level since the start of the pandemic in September due to weak agricultural commodity prices, falling equipment sales and high input costs, according to Creighton University’s September Rural Mainstreet Index.
The RMI fell below growth-neutral for the 13th straight month, to 37.5 from 40.9 in August. The index ranges between 0 and 100. Any reading above 50 indicates growth.
Rural bankers remained downbeat about economic growth prospects for their area over the next six months. The confidence index fell to 22.9, its lowest mark since last November, and down from 27.3 in August.
Farmland prices fell for the fourth time in the past five months, to 43.8 from 45.5 in August. Bank CEOs on average expect farmland prices to drop 5.3 percent in the next year, with nearly 25 percent expecting price declines of between 10-20 percent. Farm equipment sales fell for the 14th straight month.
On average, bankers anticipate nearly 40 percent of farmers in the region will lose money this year, according to the report. Regional exports of agricultural goods and livestock are down nearly 1 percent this year from the same period in 2023.
The index for farm equipment sales index increased to 19.0 from 16.7 from August. “Higher borrowing costs, tighter credit conditions and negative farm income are having a negative impact on the purchases of farm equipment,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton University’s Heider College of Business.
Other report findings included:
- September’s loan volume index fell to 68.8 from 75.0 in August. The checking deposit index increased to 41.3 from 34.1. The index for certificates of deposits and other savings instruments increased to 56.5 from 52.3.
- The home sales index fell to 43.8. Retail sales fell to 30.4, its lowest mark since June 2020. “High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales,” Goss added.
