Rural Mainstreet Economy Weakest Since June 2020
March 2024 Survey Results at a Glance:
For a seventh straight month, the overall Rural Mainstreet Index sank below growth neutral to its lowest level since June 2020.
Approximately three-fourths of bank CEOs indicated that their local economy was in a recession, or would enter a recession in the first half of 2024.
Almost one in three bankers indicated that their bank had tightened credit standards on farm loans.
Only 1.1% of bankers reported higher farm delinquency rates over the past six months.
For the 52nd straight month, farmland prices expanded.
The farm equipment sales index slumped below growth neutral for the ninth time in the past ten months to its lowest level since May 2020.
OMAHA, Neb. (March 21, 2024) — For a seventh straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the March survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The region’s overall reading for March fell to 38.0, its lowest level since June 2020, and down from 46.2 in February. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“Higher interest rates, weaker agriculture commodity prices and higher grain storage costs pushed the overall reading to its lowest level since the early months of the pandemic,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
As reported by Jeff Bonnett, CEO of Havana National Bank in Havana, Ill., “Our farm operators, like their peers across the cornbelt, are still storing 2023 crop awaiting at least break-even pricing. Without an upward push in commodity prices, the 2024 crop projections mirror 2023.”
Farming and ranching land prices: The region’s farmland price index fell to a still solid 56.0 from February’s 57.7. The farmland price index has remained above growth neutral for 52 consecutive months. “Creighton’s survey continues to point to solid, but slowing, growth in farmland prices. Approximately 16.0% of bankers reported that farmland prices expanded from February levels,” said Goss.
Jeff Bonnett, CEO of Havana National Bank in Havana, Ill., reported that, “With the extremely low market prices for both corn and beans, our bank's typical Ag operating loan cycle is now three, and in some cases four months behind the norm.”
“Even so, only approximately 1.1% of bankers reported an upturn in farm loan delinquencies over the past six months. This is only one percentage point higher than reported three months ago when the same question was asked,” said Goss.
“As a result of weaker agriculture commodity prices, approximately one in three bankers, or 29.2%, indicated that their bank had tightened credit standards,” reported Goss.
Farm equipment sales: The farm equipment sales index for March plummeted to 30.4, the lowest reading since May 2020, from February’s 49.5. “This is the ninth time in the past ten months that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment,” said Goss.
Banking: The March loan volume index soared to a strong 79.2 from 66.0 in February. The checking deposit index jumped to 62.5 from February’s 48.0. The index for certificates of deposits and other savings instruments advanced to a vigorous 72.9 from 60.0 in February.
Hiring: The new hiring index for March rose to 52.2 from February’s 49.0. “Approximately 87% of bankers reported no change in hiring from February’s hiring activity,” said Goss. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the regional Rural Mainstreet Economy added jobs by 1.7%, compared to 0.7% for urban areas of the same states.
Confidence: Rural bankers remain very pessimistic about economic growth for their area over the next six months. The March confidence index sank to 36.0 from February’s 40.4. “Weak and falling agriculture commodity prices and higher interest rates over the past several months continued to constrain banker confidence,” said Goss.
Home and retail sales: Both home sales and retail sales sank below growth neutral for the last five months. The March home-sales index increased to a very weak 41.7 from 35.4 in February. “Elevated mortgage rates and a limited supply of homes are sinking the home sales index below growth neutral in rural areas,” said Goss.
The retail-sales index for March fell to 39.6 from 44.0 in February. “High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales on the Rural Mainstreet Economy,” 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, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former Chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.
Below are the state reports:
Colorado: Colorado’s RMI for March declined to 68.3 from February’s 70.0. The farmland and ranchland price index for March dropped to 62.9 from February’s 63.3. The state’s new hiring index rose to 61.0 from 56.6 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy added jobs by 6.3%, compared to 0.7% for urban areas of the state.
Illinois: The March RMI for Illinois sank to 30.7 from February’s 45.6. The farmland price index declined to 52.3 from 56.3 in February. The state’s new hiring index dipped to 47.9 from 48.1 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy lost 0.1% of its jobs, compared to a 0.2% loss for urban areas of the state. Jim Eckert, CEO of Anchor State Bank in Anchor, “The winter here has been the mildest I've seen in my 56 years of banking. Almost no snow and occasional rains. Moisture is sufficient to get a crop in the ground, but timely rains will be necessary to get satisfactory yields.”
Iowa: March’s RMI for the state decreased to 34.5 from 38.8 in February. Iowa’s farmland price index for March declined to 51.4 from 54.4 in February. Iowa’s new hiring index for March increased to 46.8 from 45.7 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy experienced a job gain of 1.1% compared to 0.7% for urban areas of the state.
Kansas: The Kansas RMI for March sank to 30.2 from February’s 37.9. The state’s farmland price index fell to 52.1 from 54.1 in February. The new hiring index for Kansas increased to 47.7 from 45.4 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy lost 0.3% of its jobs compared to a gain of 0.8% for urban areas of the state.
Minnesota: The March RMI for Minnesota declined to 42.2 from 42.9 in February. Minnesota’s farmland price index slipped to 55.5 from 55.6 in February. The new hiring index for March increased to 51.9 from 47.2 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy added jobs by 3.1% compared to a gain of 0.5% for urban areas of the state.
Missouri: The state’s March RMI increased to 51.7 from February’s 37.3. The farmland price index climbed to 58.2 from 54.0 in February. The state’s new hiring gauge jumped to 55.2 from 45.2 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy experienced a job gain of 4.6% compared to 1.2% for urban areas of the state.
Nebraska: The Nebraska RMI for March rose to 38.0 from 34.4 in February. The state’s farmland price index for March climbed to 54.3 from 53.1 in February. Nebraska’s March new-hiring index increased to 50.4 from 44.2 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy experienced a job gain of 2.2% compared to 1.4% for urban areas of the state.
North Dakota: North Dakota’s RMI for March plummeted to 38.9 from 63.5 in February. The state’s farmland price index declined to 54.6 from 61.4 in February. The state’s new hiring index slumped to 50.7 from February’s 54.4. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy experienced a job gain of 1.3% compared to 2.0% for urban areas of the state.
South Dakota: The March RMI for South Dakota slumped to 43.0 from 50.9 in February. The state’s farmland price index dropped to 55.7 from 57.8 in February. South Dakota’s March new hiring index increased to 52.2 from 49.9 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy experienced a job gain of 2.0% compared to 2.0% for urban areas of the state.
Wyoming: The March RMI for Wyoming slumped to 38.9 from 58.0 in February. The March farmland and ranchland price index climbed to 64.5 from 59.8 in February. Wyoming’s new hiring index slipped to 50.6 from 52.5 in February. Over the past 12 months, U.S. Bureau of Labor Statistics data indicate that the state Rural Mainstreet Economy experienced a job gain of 1.3% compared to 1.5% for urban areas of the state.
