Bank CEOs expressed more optimism over economic conditions this month but are still wary of the future as recessionary fears continue, according to Creighton University’s Rural Mainstreet Index.
The RMI increased two points from the previous month to 46 in September, according to the report, which tracks the sentiments of bank CEOs in rural areas of a 10-state region in the Midwest and Rocky Mountain region dependent on agriculture and/or energy. The business confidence index increased two points to 40 in September.
Farm prices remained high in the Midwest: The region’s farmland price index for September increased one point to 61, marking the 24th straight month the index has moved above growth-neutral. The farm equipment sales index increased 13 points to 58 this month. September’s loan volume index increased six points to 79. Four of 10 bankers reported that high and increasing farm input costs will be their greatest economic challenge to their bank and area over the next 12 months. More than one-of-five bank CEOs said drought impacts were their top economic challenge as dry conditions blanket Colorado, Kansas, South Dakota, Wyoming and Nebraska. Increasing farm
The new hiring index fell three points to 49 as labor shortages continued constraining growth for regional businesses. However, regional non-farm employment has still increased 3 percent over the past 12 months. According to the report, rising energy costs and higher interest rates dropped home sales to its lowest level since the end of 2016.
“The Rural Mainstreet economy is now experiencing a downturn in economic activity,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton University’s Heider College of Business. “Supply chain disruptions and inflationary pressures from higher farm input costs continue to constrain growth. Farmers and bankers are bracing for escalating interest rates, higher farm input costs, and drought.”