May Survey Results at a Glance:
- Overall index advances slightly from April’s record low.
- Almost three fourths of bankers have restructured farm loans to deal with weak farm income.
- Bank CEOs expect farm loan defaults to expand by only 5.4% over the next 12 months.
- Fully 100% of bankers gauged the federal Paycheck Protection Plan (PPP) as successful, and more than one of five bank CEOs support expansion of PPP.
- Business confidence sinks from April’s very pessimistic outlook.
OMAHA, Neb. (May 21, 2020) - The Creighton University Rural Mainstreet Index (RMI) increased slightly from Aprils’ record low. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, May’s reading represented the third straight month with close to record lows.Overall: The overall index for May increased to 12.5 from April’s record low 12.1, but down significantly from March’s weak 35.5. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.“Since this time last year, livestock and grain prices have sunk by 19.1% and 4.7%, respectively. Accordingly, approximately 73% of bankers reported restructuring farm loans. As a result of the restructuring, bank CEOs expect farm loan defaults to expand by only 5.4% in the next 12 months,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.Jeff Bonnett, president of Havana National Bank in Springfield, Illinois, expects the Rural Mainstreet economy to be up six months from now if the covid-19 lockdown has ended.
Farming and ranching: Farmland prices continue to slide. May’s reading fell to 39.7 from April’s 40.9. This is the 77th time in the past 78 months the index has been below growth neutral.The May farm equipment-sales index increased slightly to 21.9 from 20.0 in April. This marks the 80th month straight month that the reading has remained below growth neutral 50.0.Donald Vogel, president and CEO of Farmers National Bank in Prophetsville, Illinois, “Beginning to have a rain pattern (too much) similar to 2019.”Banking: Borrowing by farmers expanded for May, but at a slower pace than in April. The borrowing index slipped to 72.2 from April’s 75.8. The checking-deposit index soared to 86.1 from April’s 65.6, while the index for certificates of deposit and other savings instruments increased to 48.6 from 48.4 in April....
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And June 1, The Business Conditions Index:
May’s Mid-America Business Index Remains in Recession Range: More Than One-Third of Firms Cancelled Vendor Contracts
May survey highlights:
- The Business Conditions Index expanded to a still recessionary reading.
- Employment reading indicated that the rate of job losses slowed from April.
- Stimulus programs from the Federal Reserve and the federal government boosted economic confidence.
- As a result of COVID-19: 34% of firms extended the period of paying outstanding invoices; 35.9% revised or cancelled contracts; and 28.2% moved purchases from foreign sources to domestic sources.
- Between the middle of March and the first week of May, the percent of insured unemployed in the region soared from 1.3% to 10.5%.
OMAHA, Neb. (June 1, 2020) – The May Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, advanced to a still recessionary level.Overall index: After falling below growth neutral for March, the overall index has remained in recessionary territory for two straight months. The Business Conditions Index, which ranges between 0 and 100, increased to 43.5 from April’s 35.1, but down from March’s 46.7.“According to Creighton’s May survey of regional manufacturing supply managers, COVID-19 had a less significant impact on the manufacturing sector than other areas of the economy more directly tied to the consumer. This is a consumer led recession with manufacturing lagging. Nonetheless, Creighton’s survey indicates that the regional manufacturing sector is trapped in a recession,“ said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.Employment: The May employment index continued to indicate job losses, but at a slower pace than in April. The May index rose to 40.0 from April’s record low of 26.2.“In the middle of March U.S. Department of Labor data showed that only 160,170 workers in the nine-state region were unemployed and receiving unemployment insurance benefits. This represented only 1.3% of individuals covered by the unemployment insurance system. By the first week of May 1,328,520 workers were receiving unemployment insurance benefits, or 10.5% of covered workers,” said Goss.As a result of COVID-19: 34% of firms extended the period of paying outstanding invoices; 35.9% revised or cancelled contracts; and 28.2% moved purchases from foreign sources to domestic sources.Wholesale Prices: The wholesale inflation gauge for the month indicated deflationary pressures at the wholesale level with a wholesale price index of 48.6 for May, which was up from 44.0 in April.“I expect to see deflationary pressures at the wholesale level in the weeks and months ahead despite the Federal Reserve’s, and the U.S. government’s record economic stimulus programs,” said Goss....
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