The January 2019 Rural Mainstreet Index (RMI) reveals the rural economy is seeing continued neutral growth. The monthly survey of bank CEOs in a 10-state Midwest region dropped to 51.5 for this month. In December 2018, the index was 54.2. January marks the 11th time in the past 12 months the index has been above the growth-neutral rating of 50.
“Our surveys over the last several months indicate the Rural Mainstreet economy is expanding outside of agriculture,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI. “However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector."
Bank CEOs were asked what they expected to be the biggest economic challenge for agriculturally dependent community banks in 2019. The results were:
- Rising loan defaults: 42.9%
- Competition from Farm Credit: 14.3%
- Falling farmland values: 11.6%
- Low loan demand: 11.4%
- Rising regulatory costs: 5.7%
Bank CEOs were also asked: How would you describe the economy in your area? Slightly less than half of respondents, 45.7%, reported little or no growth, while 31.4% reported modest economic downturn. The remaining bankers, 22.9%, reported modest economic growth.
Tariffs, trade tensions, weak agriculture commodity prices and the partial federal government shutdown negatively influenced the economic outlook of bank CEOs, Goss says.
The farmland and ranchland-price index for January increased to 37.9 from 35.7 in December. This is the 62nd straight month the index has fallen below growth neutral 50.
Read a Q&A with Ernie Goss, The Man Behind the Rural Mainstreet Index