The rural Midwestern economy remains stunted by inflationary fears and labor shortages even as employment continues to grow, according to Creighton University’s Rural Mainstreet Survey.
The Rural Mainstreet Index fell for the sixth time in the past seven months, two points to 42, lingering below the growth-neutral mark of 50 for the fifth straight month. “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.
Labor shortages continue to restrict growth for regional businesses, but regional non-farm employment still increased by nearly 3 percent over the last 12 months. The home-sales index fell six points to 36. The retail-sales index increased four points to 50.
The region’s farmland price index declined three points to 58 this month, the 25th straight month of it being above growth-neutral. Farm equipment sales fell for the second time in the past three months. The index for farm equipment sales fell 11 points to 47, only the second time in the last 23 months the reading has been below growth-neutral. Bank CEOs expect farm equity this year to be 3.4 percent above 2021 levels.
According to the report, the slowing economy, high energy and agriculture input prices and increased borrowing costs caused the business confidence index to fall 17 points to 30, its lowest reading since the spring of 2020. CEOs on average expect this year’s Christmas and holiday buying to increase by less than 1 percent from last year. Approximately three-fourths of banks expect a recession to begin next year. Nearly 25 percent of bankers said their local economy was currently in a recession.
October’s loan volume index fell three points to a still-strong 76. The checking-deposit index fell 12 points to 34, and the index for certificates of deposit and other savings instruments increased 12 points to 46. “Higher farm input costs and drought conditions in portions of the region supported stronger borrowing from farmers,” Goss said.
The index includes a monthly survey of bank CEOs in rural areas of a 10-state region dependent on energy and/or agriculture, including Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.