America’s ag- and energy-dependent central states are reporting better economic numbers, but overall stats remain below normal, according to the Creighton University Rural Mainstreet Index. September’s 46.9 (up from August’s 44.7) was the seventh straight month with a reading in a recessionary economic zone despite increases from April’s historic lows.
After moving to a growth neutral of 50.0 in August, the farmland price index once again fell below the threshold for September at 45.0. The September farm equipment-sales index slipped to 32.1 from 32.8 in August, marking the 84th straight month the reading has remained below growth neutral 50.0.
Borrowing by farmers expanded for September, and at a faster pace than in August. The borrowing index expanded to 60.9 from August’s 53.9. The checking-deposit index declined to 76.6 from 78.9 in August, while the index for certificates of deposit and other savings instruments slumped to 35.9 from 40.8 in August.
“Recent improvements in agriculture commodity prices, federal stimuli and Federal Reserve record low interest rates have underpinned the Rural Mainstreet Economy,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, Omaha. “Bank CEOs estimated that farm income, including government support, was down only 1.5 percent from this time last year.”
The confidence index, which reflects bank CEO expectations for the economy six months out, improved to 50.0 from August’s 44.6. “COVID-19 related farm support payments and improving gain prices have boosted confidence offsetting pessimism from the impact of the derecho in several of the survey states,” Goss said.
Approximately 38.7 percent of bankers indicated that government support via the CARES Act and the Paycheck Protection Program were crucial to their local economy. Only 3.8 percent reported that these two programs had little or no impact.
On a state-by-state basis, Illinois (43.6), Kansas (50.9), Minnesota (42.2), Nebraska (53.4) and South Dakota (53.9) saw increases, with Illinois and South Dakota having the largest at 0.7 and 0.8 respectively. Colorado (38.1), Iowa (46.5), Missouri (42.3), and Wyoming (47.7) all experienced decreases, with Missouri and Wyoming both experiencing drops of 0.4. North Dakota remained flat at 43.3.
The RMI surveys community bank presidents and CEOs each month in nonurban agriculturally and energy-dependent areas regarding current and projected economic conditions in their communities. Bankers come from about 200 small towns with an average population of 1,300 in 10 states: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.