From Creighton University's Heider College of Business:
- Overall index remains at a high level indicating strong growth.
- Despite recent solid job gains, U.S. Bureau of Labor Statistics data indicate that the Rural Mainstreet nonfarm employment remains 2%, below its pre-COVID-19 level.
- In three states, Kansas, Missouri and Nebraska, current employment exceeds pre-pandemic levels.
- For the first time since 2013, Creighton’s survey has recorded nine straight months of farmland prices above growth neutral.
- Survey is tracking the best growth in agriculture equipment sales since 2012.
- Only 30% of bankers expect the current increase in inflation to be transitory.
- More than three-fourths of the bankers think the Federal Reserve should begin raising interest rates before the end of 2021.
OMAHA, Neb. (June 17, 2021) – For the seventh straight month, the Creighton University Rural Mainstreet Index (RMI) remained 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.
Overall: The overall index for June fell to still strong 70.0 from May’s record high of 78.8. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
Approximately, 46.7% of bank CEOs reported that their local economy expanded between May and June.
“Strong grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. Even so, current rural economic activity remains below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
However, several bankers raised future concerns. Steve Simon CEO of South Story Bank and Trust in Huxley, Iowa, reported, “Continued dry conditions will start to have an effect on markets and crops soon”
Bankers were asked to name the greatest threat to 2021-22 bank operations. Approximately one-fourth identified a downturn in farm income, and an equal one-in-four named rising government regulation as the greatest threats.
Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, named another concern stating that, “In my view, $29,000,000,000,000 in total debt with no real plan to reduce that debt, or balance the annual budget is the biggest threat to our economy's success.”
He argues that neither political party, nor the Federal Reserve, has engaged in a serious discussion to solve the problem.
Farming and ranching: For a ninth straight month, the farmland price index advanced significantly above growth neutral. The June reading slipped to a very strong 75.9 from May’s 78.1. This is first time since 2013 that Creighton’s survey has recorded nine straight months of farmland prices above growth neutral.
The June farm equipment-sales index rose to 71.6 from 67.9, its highest level since 2012, and up from May’s 67.9. After 86 straight months of readings below growth neutral, farm equipment sales bounced into growth territory for the last seven months. This is the best growth in this index since 2012.
Banking: The June loan volume index declined to 54.9 from May’s 59.0. The checking-deposit index fell to a very solid 70.0 from May’s 87.9, while the index for certificates of deposit, and other savings instruments, slumped to 35.0 from 43.9 in May.
More than half, or 53.3% of the bank CEOs judge the current uptick in the consumer price index (CPI) a. Only 30% expect the increase to be transitory.
More than three-fourths of the bankers think the Federal Reserve should begin raising interest rates before the end of 2021....
....MUCH MORE
