Creighton report: Bank CEO sentiments worsening

Bank CEO economic sentiments continued to drop in August amid ongoing high inflation and other economic challenges, according to Creighton University’s monthly Rural Mainstreet Index. 

The RMI, which fell two points to 44, has not decreased for five straight months. The index has fallen below the growth-neutral score of 50 for three straight months. 

Farm prices eased in August. The region’s farmland price index dropped six points to 60, the 23rd straight month the reading has been above growth-neutral. Farmer purchases fell for the month after nearly two straight years of growth, and farm equipment sales fell 11 points to below growth-neutral.

“Supply chain disruptions from transportation bottlenecks and labor shortages continue to constrain growth,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton University. “Farmers and bankers are bracing for escalating interest rates and falling farm commodity prices.” 

Loan conditions remained strong in August. The related index increased one point to 73. “Higher costs of farm inputs and softer agriculture commodity prices supported stronger borrowing from farmers,” Goss said.

  More than half of bank CEOs expect spending and taxes included in the Inflation Reduction Act to add to inflation and the federal deficit. Despite worsening economic conditions, bankers still expect loan delinquencies to fall by 1.7 percent over the next 12 months. 

The RMI is a monthly index taken of bank CEOs in rural areas of a 10-state region dependent on ag/energy — Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.