Strong ag, banking conditions continue across Midwest

Strong agriculture and banking conditions are fueling a good Midwest economy, according to Creighton University’s December Rural Mainstreet Index. 

The survey includes small-town bank CEOs in rural areas of a 10-state region dependent on energy/and or agriculture: Colorado, Kansas, Minnesota, Nebraska, North Dakota, South Dakota, Wyoming, Illinois, Iowa and Missouri. The Index is on a 100-point scale: Any number above 50 indicates positive growth expectations. 

The overall index remained above growth-neutral for the 13th straight month (falling one point from November to 66.7).  Numerous farm indicators remain strong as well: The region’s farmland price index improved to a record 90 from the previous record high of 85.5 in October — the 15th straight month of the index being above growth-neutral. This month’s farm equipment-sales index soared to 74.1 from 62.1 in November, the highest in more than a decade, and farm equipment sales were at its highest point in more than 10 years. Todd Douglas, CEO of First National Bank in Pierre, S.D., said Paycheck Protection Program dollars and strong commodity prices mean ag borrowers are in good shape entering 2022, even in drought-plagued areas with reduced yields.

The banking economy remains strong: December’s loan volume index jumped to 61.7 from 53.2 last month. The checking-deposit index declined to 68.3 from November’s 71, while the index for certificates of deposit, and other savings instruments, fell to only 26.7 from 32.3 in November. Jim Brown, CEO of Eldora, Iowa-based Hardin County Savings Bank, said his organization is “seeing very strong working capital and net worth gains even from marginal customers.” 

 Economic prosperity is bringing a boom in home and retail sales: The related index increased from 65 to 72.4 in December. “Healthy farm prices and federal stimulus spending are having very positive impacts on Rural Mainstreet retail sales and home sales,” Goss said.

“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy,” said Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton’s Heider College of Business. “USDA data show that 2021 year-to-date agriculture exports are more than 20.7 percent above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy.”

Despite those gains, the area has still lost 2.5 percent of its nonfarm, pre-Covid-19 employment level, according to the U.S. Bureau of Labor Statistics. Bankers are concerned about inflation, according to the report. Jeff Bennett, CEO of Illinois-based Havana State Bank, said inflation is “affecting folks in our service areas.”