June 20 - Growth for the Rural Mainstreet economy strengthened to its highest level since December of last year according to the June survey of bank CEOs in a 10-state area.
Overall: The Rural Mainstreet Index, which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to 60.5 from May’s 58.8.
“This year’s healthy rainfall for much of the area has boosted growth over the past several months compared to the same period last year,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.
Jeffrey Gerhart, chairman of the Bank of Newman Grove in Newman Grove, Neb., reported, “Corn and soybeans are in and growing without the assistance of irrigation in our area. What a difference one year makes.”
Farming: The farmland price index declined for the sixth time in the past seven months. The index decreased to 58.4 from 62.1 in May. “Our farmland price index has been above growth neutral since February 2010. However we are tracking a clear downward trend in farmland price growth. I expect that growth to continue to fall as the U.S. dollar strengthens and agriculture commodity prices weaken,” said Goss.
“This downward trend in agriculture commodity prices has softened the growth in both farmland prices and farm equipment sales,” said Goss. After expanding by almost 9 percent for 2012, farm product prices have been flat for 2013 and while the farm equipment sales index expanded for June to 53.2 from May’s 52.4, sales are softer than earlier in the year.”
Banking: The loan-volume index moved above growth neutral for the month. However, the index dropped to a healthy 66.7 from 72.1 in May. The checking-deposit index declined to 48.5 from May’s 54.5 while the index for certificates of deposit and other savings instruments sank to 33.6 from May’s 42.6.
This month bankers were asked about the Federal Reserve’s $85 billion monthly bond buying program, Quantitative easing. Approximately 55.6 percent of bankers recommend tapering or reducing the Fed’s bond buying program over the next six months beginning immediately.
“Furthermore, almost one of five bankers, or 19.4 percent, think QE3 has been unsuccessful at stimulating economic growth and 43.3 percent of bankers indicated that the program has put excessive air in asset price bubbles such as farmland prices,” said Goss.
Hiring: June’s hiring index expanded to 61.4 from May’s 59.8. “For two and one-half years, the Rural Mainstreet economy has been adding jobs. However, the region’s employment level is still 2.3 percent below its pre-recession level,” said Goss.
Confidence: The confidence index, which reflects expectations for the economy six months out, increased to 60.0 from 54.5 in May. “Consistent and positive growth in the national economy, along with improving crop conditions, are boosting bankers’ economic outlook,” said Goss
The Senate Farm bill cuts about $4.1 billion in food stamps over the next decade. “According to our June survey, 56.6 percent of bank CEOs think the cuts are too small,” reported Goss.
Home and retail sales: For a fifth straight month the homes-sales index took a large, positive jump. The June home-sales index advanced to a record 78.1 from May’s 73.9. The June retail-sales index rose to 53.9 from 52.3 in May. “Just as the national housing market consistently moves higher so does the Rural Mainstreet housing sector,” said Goss.
Each month, community bank presidents and CEOs in nonurban, agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.
This 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. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, president of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.
Colorado: For a ninth straight month, Colorado’s Rural Mainstreet Index remained above 50.0. The June RMI soared to 81.2 from May’s robust 59.2. The farmland and ranchland price index sank to a very strong 80.3 from 80.8. Colorado’s hiring index for June expanded to 75.7 from May’s 72.5.
Illinois: The RMI for Illinois rose above growth neutral for the ninth straight month. The index advanced to 61.6 from May’s 55.9. Farmland prices sank to 49.4 from 52.1 in May. The state’s new-hiring index increased to 55.2 from 53.4 in May.
Iowa: The June RMI for Iowa expanded to 62.2 from 58.1 in May. The farmland-price index sank to 49.6 from 60.7 in May. Iowa’s new-hiring index for June weakened to a still solid 55.3 from May’s 59.1
Kansas: The Kansas RMI for June decreased slightly to 60.5 from 61.5 in May. The farmland-price index sank to 49.6 from 53.6 in May. The state’s new-hiring index climbed to 56.7 from 54.4 in May. However, more and more bankers are concerned about recent strong growth. Dale Bradley, CEO of The Citizens State Bank, in Miltonvale, said, “Still watching for a bubble in our markets!”
Minnesota: The June RMI for Minnesota tumbled to a healthy 59.7 from May’s 67.2. Minnesota’s farmland-price index fell to 58.5 from 65.7 in May. The new-hiring index declined to 61.2 from last month’s 62.5.
Missouri: The June RMI for Missouri declined to 59.2 from May’s 77.0. The farmland-price index for June surged to 81.5 from 72.1 in May. Missouri’s new-hiring rose to 76.7 from 66.7 in May.
Nebraska: After moving below growth neutral for January, Nebraska’s Rural Mainstreet index has now moved above growth neutral for five straight months. The June RMI slipped slightly to 56.5 from last month’s 57.7. The farmland-price index for June advanced to 59.2 from 53.9 in May. Nebraska’s new hiring index stood at 53.7, down from May’s 53.9.
North Dakota: The North Dakota RMI for June dipped slightly to a regional high of 81.8 from 83.7 in May. The farmland-price index climbed to 87.6 from May’s 85.3. North Dakota’s new-hiring index declined to a very robust 80.6 from May’s 83.6.
South Dakota: The June RMI for South Dakota increased to 60.5 from 60.3 in May. The farmland price index slumped to 51.5 from May’s 56.6. South Dakota's new-hiring index for June expanded to 56.5 from 56.3 in May.
Wyoming: The June RMI for Wyoming dipped to 52.6 from 54.4 in May. The June farmland and ranchland price index decreased to 40.8 from May’s 46.2. Wyoming’s new-hiring index was unchanged from May’s 49.4.