Confidence low as rural economy down for 10th straight month

Underwhelming ag commodity prices and farm export numbers paired with a drop in farm equipment sales over the past several months limited banker confidence this month, according to Creighton University’s Rural Mainstreet Index.  

The Rural Mainstreet Index sank to 41.7 from 44.2 in May, its 10th straight month of falling below the growth-neutral score of 50, according to Creighton University’s monthly survey of bank CEOs in rural areas of a 10-state region. The confidence index was 29.2 — comparable to May’s very weak 28.8. 

After rising above the growth-neutral threshold for more than four years, the region’s farmland index fell below growth-neutral for a second consecutive month to 49.9, up from May’s 47.9. Regional exports of agriculture goods and livestock for 2024 year-to-date were down 4.1 percent from the same period in 2023, according to the International Trade Administration. 

The loan volume index stood at a strong 79.2 but decreased from 82 in May and from April’s record high of 85.4. “Farm operating loans are up 20 percent in total volume compared to last year, a sign that cash flow and cash (balances) are down from last year,” said James Brown, president of Hardin County Savings Bank in Eldora, Iowa. 

The index for home sales increased to 62.5 from 46 in May, while the retail sales index fell to 41.3 from May’s 46.1. “High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales for the Rural Mainstreet economy,” said Ernie Goss, chair in regional economics at Creighton’s Heider College of Business. 

Delinquency rates for farm and business loans have remained consistently low over the past six months. Fewer than 9 percent of bankers have increased their farm loan rejection rates, while approximately 13 percent and 4.3 percent, respectively, reported restructuring or reducing their loan-to-value ratios.

Other report findings included:

  • The farm equipment sales index for June dropped to 31.8 this month from 34 in May, its 12th time in the past 13 months of falling below growth-neutral.
  • The checking deposit index sank to 34.8 from May’s 44. The index for certificates of deposits and other savings instruments rose to 63 from 62 in May.
  • The new hiring index decreased to 47.7 from 50 in May, its lowest reading since January 2021.