Bankers in the country’s heartland continue to see negative impacts from tariffs despite positive growth in the area.
The Creighton University Rural Mainstreet Index for July was above growth neutral for the month. The overall index fell to 50.2 from 53.2 in June, the seventh time in the past eight months that the index has remained above growth neutral.
“Higher agriculture commodity prices and rebuilding from recent floods supported the Rural Mainstreet Index for the month. Furthermore, almost nine of 10 bankers reported tariffs and trade skirmishes have had, or will have, a negative impact on their local economy. This is up from eight of 10 recorded last September,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Borrowing by farmers for July remained very strong. The borrowing index slipped to 71.9 from June’s 72.6. The checking-deposit index rose to 51.5 from June’s 50.0, while the index for certificates of deposit and other savings instruments slumped to 47.1 from 51.6 in June.
Bankers reported that approximately one in ten 2018 farm operating loans were not repaid and were rolled into 2019 loans.
However, James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa, said, “I think you will find that most banks don’t roll over 2018 unpaid operating notes into the 2019 LOC notes. If there is still grain to cover operating debt, we extend the loan until it is marketed.”
The confidence index, which reflects bank CEO expectations for the economy six months out, slipped to 51.5 from June’s 53.3, indicating a positive, but somewhat weak economic outlook among bankers.
The Rural Mainstreet Index covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.