RMI continues upward trend

Ernie Goss

Signaling improved economic health in America’s heartland, the Rural Mainstreet Index improved to 53.8 from last month’s 52.0. This is the fourth time in the past five months the RMI has been above growth-neutral 50.0; it is also the highest reading since January 2020.

Gains in farmland prices helped support the increase, with the February reading hitting 60.0, up from January’s 56.3 and the highest level since May 2013. Bank CEOs from the survey’s 10-state area estimated 2021 cash land rent for non-irrigated, non-pastureland at $218.  

Equipment sales also improved, with the index increasing to 62.7 from 54.5 in January. The last three months have been comparatively bright for equipment sales after 86 straight months of readings below growth neutral.

Bankers, however, continued to report anemic loan volumes. The February loan volume index increased to a still weak 46.1 from January’s 33.9. The checking-deposit index ticked up to a record high 88.5 from January’s 88.0. The index for certificates of deposit and other savings instruments increased to 46.2 from 46.0 in January.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the rural mainstreet economy,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “Only 8 percent of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels.”

The new hiring index climbed to 51.9 from January’s 46.0. Data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment levels for the rural mainstreet economy are down by 146,000 (nonseasonally adjusted), or 3.3 percent, compared to pre-COVID-19 levels, and down by 236,000, or 5.3 percent, from 12 months earlier.

Missouri topped the region with a record reading of 66.2, up from January’s 63.6. Wyoming (54.9), South Dakota (59.6), Nebraska (58.4), Kansas (55.9), Illinois (52.8) and Iowa (54.0) all saw improvements to their already above-neutral growth. Minnesota and North Dakota also improved, although both of their growth rates remained below neutral at 48.5 and 41.2, respectively. Colorado was the only state which dropped, falling to 35.6 from January’s 41.6.

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.

Goss and Bill McQuillan, former chair of the Independent Community Banks of America, created the monthly economic survey in 2005.