An index reflecting the economic health of rural America in 10 Midwest states remains negative. That’s according to the monthly Creighton University Rural Mainstreet Index (RMI). The latest reading of the index shows it fell below growth neutral for a sixth consecutive month.
Overall: The region’s overall reading for November once again sank below the growth neutral threshold. The November index did increase slightly to a weak 45.7 from 44.2 in October. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. This was the sixth straight month the overall reading has fallen below growth neutral.
“The rural mainstreet economy is now experiencing a downturn in economic activity. Last month, almost one in four bankers, or 23.1%, reported the economy was already in a recession,” says Creighton University’s Dr. Ernie Goss, who conducts the survey.
Farming and ranching: The region’s farmland price index rose to 68.2 from October’s 58.0. This was the 26th straight month that the index has climbed above 50.0.
Bankers were also asked their expectations for the direction of farmland prices in the next 12 months. Approximately 60.9% expect farmland prices to plateau at current price, while 21.7% expect prices to decline over the period. The remaining 17.4% of bankers expect prices to rise, but at a slower pace.
Farm equipment sales: The farm equipment-sales index jumped to a strong 59.5 from October’s weak 47.8. The index has risen above growth neutral for 22 of the last 24 months.
Bankers were asked this month about their recommendation for the Federal Reserve’s interest rate action for next several months. About 30.4% of bank CEOs recommend the Fed cease raising rates. The largest percentage of bankers, 39.1%, recommend a half-percentage point increase (50 basis points) at its next meetings on December 13-14.
Hiring: The new hiring index for November dipped to 49.1 from October’s 49.2. Labor shortages continue to be a significant issue constraining growth for rural mainstreet businesses. Despite labor shortages, rural mainstreet expanded non-farm employment by 3.6% over the past 12 months. This compares to 3.2% growth for urban areas of the same 10 states for the same period of time.
Confidence: The slowing economy, strong energy prices, higher borrowing costs and elevated agriculture input costs pushed the business confidence index down to 27.3 from 30.8 in October. “This is the lowest reading for the confidence index since May 2020,” notes Goss.
The retail-sales index for November weakened to 45.5 from October’s 50.0. “Bankers were pessimistic regarding the economic outlook for the Christmas and holiday buying season as they expect growth at less than 1.0%, or 0.8%, from the 2021 season,” states 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