After declining below growth neutral in March, the overall Rural Mainstreet Index for July expanded above the threshold for a fourth straight month, according to the July monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading in July slipped to 55.6 from June’s 56.9. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

July 2023 Survey Results at a Glance:

• July’s overall reading, the Rural Mainstreet Index (RMI), rose above growth neutral for a fourth straight month. 
• Farmland prices expanded for the 34th straight month.
• On average, non-farm investors secured approximately 17.1% of farmland sales in the region, up from 9.1% reported by bankers in April 2022.
• More than nine of ten, or 92.5%, indicated that the Fed should cease raising rates.

“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive but slow economic growth for the second quarter and has now started the third quarter on a healthy note,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farm equipment sales: The farm equipment-sales index for July stood at a tepid 50.0, which was up from 48.3 in June. “Higher borrowing costs have begun to negatively impact purchases of farm equipment,” said Goss.

Farming and ranching land prices: The region’s farmland price index rose to 64.6 from 59.3 in June and 56.3 in May. This was the 34th straight month the index has advanced above 50.0. 

Bankers reported, on average, non-farm investors secured approximately 17.1% of farmland sales in their area over the past six months. This is almost double the 9.1% reported by bankers in April 2022 when the same question was asked. 

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Overall: The region’s overall reading for October once again sank below growth neutral to 44.2 from 46.3 in September. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. This was the fifth consecutive month the overall reading has fallen below growth neutral.

“The Rural Mainstreet economy is now experiencing a downturn in economic activity. Almost one in four bankers, or 23.1%, reported that the economy was already in a recession,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farm equipment sales: For the second time in the past three months, the farm equipment-sales index slumped below growth neutral to 47.8 from September’s 58.0. The index has risen above growth neutral for 21 of the last 23 months.

Farming and ranching: The region’s farmland price index for October declined to 58.0 from September’s 61.1 but moved above growth neutral for 25 straight months.

Banking: The October loan volume index dropped to a still strong 76.8 from 79.5 in September. The checking-deposit index fell to 34.0 from September’s 46.3, while the index for certificates of deposit and other savings instruments rose to 46.2 from 34.6 in September. “Higher farm input costs and drought conditions in portions of the region supported stronger borrowing from farmers,” said Goss.

Confidence: The slowing economy, strong energy prices, higher borrowing costs and elevated agriculture input costs pushed the business confidence index down to 30.8 from 40.7 in September. “This is the lowest reading for the confidence index since May 2020,” said Goss.

The survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index covering 10 regional states, approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy.

Source: Creighton University