From Creighton's Heider College of Business:
January Survey Results at a Glance:
- Overall index rose to its second highest reading since before COVID-19.
- Bankers biggest economic concerns for 2021 are excessive inflation and higher long-term interest rates.
- For the first time since 2013, Creighton’s survey has recorded four straight months of above growth-neutral farmland prices.
- Farm equipment-sales index rose to its highest reading since April 2013.
- Approximately 44% of bank CEOs expect low loan demand to be the greatest issue facing their banks for 2021, up from 7% last year at this time.
- Only 4% of bankers indicated that rising loan defaults and bankruptcies represented their greatest concern for 2021, down significantly from the 32% in 2020 survey.
OMAHA, Neb. (Jan. 21, 2021) - For the third time in the past four months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its second highest level since January 2020.
Overall: The overall index for January rose to 52.0 from December’s 51.6. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
“Recent sharp improvements in agriculture commodity prices, federal farm support payments, and Federal Reserve’s record-low short-term interest rates have underpinned the Rural Mainstreet Economy in a solid and positive growth range. However, the rural economy remains well below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
“Bankers reported that their biggest economic concerns for 2021 are excessive inflation and higher long-term interest rates,” said Goss.
Jim Levick, president of Nebraska State Bank in Oshkosh, Nebraska said, “I feel the economy is moving in a positive direction that can be rattled by a combination of higher taxes, higher inflation, and a return of stricter regulation.”
Farming and ranching: For a fourth straight month, the farmland price index advanced above growth neutral. The January climbed to 56.3, its highest level since July 2013, and up from 55.0 in December. This is first time since 2013 that Creighton’s survey has recorded four straight months of above growth-neutral farmland prices.
The January farm equipment-sales index rose to 54.5, its highest reading since April 2013, and up from 50.2 in December. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the last two months.
“As a result of the rapidly improving farm economy, the farm Exchange Traded Fund (MOO) traded on the New York Stock Exchange has risen to a record high of $83.32,” said Goss.
Banking: Bankers once again reported anemic loan volumes. The January loan volume index dropped to 33.9 from December’s 43.7, but up from November’s record low 25.8. The checking-deposit index soared to record high 88.0 from December’s 78.1, while the index for certificates of deposit, and other savings instruments increased to 46.0 from 42.2 in December.
“Approximately 44% of bank CEOs expect low loan demand to be the greatest issue facing their banks for 2021. This is up from 7% that recorded this as a top concern last year at this time,” reported Goss....
....MUCH MORE
