Close MenuClose
Close Menu

Mainstreet Economy

Rural Mainstreet Economic Index Falls Below Growth Neutral Again: Below Growth Neutral for Second Straight Month

July Survey Results at a Glance:

• The overall index fell for a fourth straight month, sinking below growth neutral for a second consecutive month.
• The survey recorded the worst back-to-back economic confidence numbers since April/May 2020.
• More than half, or 53.9%, of bank CEOs named rising input prices as the greatest economic threat to farmers in the next 12 months.
• Even with significant 2022 input price increases, bankers expect to record a half percentage point decline in farm loan delinquencies. 
• Bankers expect farmland prices to expand by only 2.1% over the next 12 months.

Creighton University Rural Mainstreet Index (RMI)

OMAHA, Neb. (July 21, 2022) — The Creighton University Rural Mainstreet Index (RMI) fell for the fourth straight month, sinking below growth neutral for a second consecutive month according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.       

Overall: The region’s overall reading for July slumped to 46.0 from 49.8 in June. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. This was the fourth consecutive decline in the region’s overall reading. 

“The Rural Mainstreet economy is now experiencing a downturn in economic activity. Supply chain disruptions from transportation bottlenecks and labor shortages continue to constrain growth. Farmers and bankers are bracing for escalating interest rates — both long-term and short-term,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Bankers were asked this month to identify the greatest risk for farmers over the next 12 months.  Regarding the top risks, 53.9% named rising input prices, 34.6% indicated falling grain/livestock prices, and 11.5% reported drought was the top threat.  
Among bankers naming drought as the greatest risk, Jim Eckert, CEO of Anchor State Bank in Anchor, Ill., said “recent rains have improved crop prospects, but our area in Central Illinois is still dry compared to northern and southern Illinois.”

Regarding risks to farmers, James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa, reported that “it's the combination of higher input costs and a potential fall in commodity prices that are the biggest risks to farmers. Not just one or the other.”

Farming and ranching: The region’s farmland price index for July declined to 66.0 from June’s 76.8, marking the 22nd straight month that the index has moved above growth neutral. July’s solid reading was the lowest index since February 2021. 

Bankers were asked this month to project the change in farmland prices for the next 12 months.  On average, bank CEOs expect farmland prices to advance by 2.1% over the next 12 months. 

Over the last 30 days, Peoples Company Appraisal Team tracked 125 cropland auctions across 51 Iowa counties. In total, 11,812 acres of cropland sold in auctions for approximately $151.0 million, or an average of $12,780 per acre.

Farm equipment sales: The July farm equipment-sales index sank to 56.5 from 71.4 in June.  This was the 20th straight month that the index has advanced above growth neutral, but it marked the lowest reading for the index since January 2021. 

Banking: The July loan volume index declined to a still strong 72.0 from 78.5 in June. The checking-deposit index sank to 47.9 from June’s 57.4, while the index for certificates of deposit and other savings instruments slumped to 33.3 from 35.2 in June. “Escalating costs of farm inputs supported strong borrowing from farmers,” said Goss.

Even with significant 2022 input price increases, bankers expect to record a half percentage point decline in farm loan delinquencies over the next 12 months. 

Hiring: The new hiring index improved to 60.9 from 57.4 in June. Labor shortages continue to be a significant issue constraining growth for Rural Mainstreet businesses. Despite labor shortages, the Rural Mainstreet expanded non-farm employment by 2.8% over the past 12 months. This compares to a faster 3.3% for urban areas of the same 10 states for the same period of time.

Confidence: The slowing economy, strong energy prices and agriculture input prices constrained the business confidence index to 26.0, its lowest level since May 2020, and down from 33.9 in June. This marks the lowest back-to-back readings since the beginning of the pandemic in April and May of 2020.

Home and retail sales: The home-sales index dropped to a weak 48.0, down from June’s solid 55.4. The retail-sales index for July sank to 46.0 from June’s 48.2. “Rising energy prices and higher interest rates reduced home and retail sales on Rural Mainstreet. This is the lowest home sales index since January 2019, and first back-to-back below growth-neutral readings for the retail index since January/February 2021,” said Goss.

The 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 provides the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.

Below are the state reports

Colorado

Colorado’s Rural Mainstreet Index (RMI) for July sank to 56.7 from June’s 59.4. The farmland- and ranchland-price index dropped to 59.3 from 82.3 in June. Colorado’s hiring index for July rose to 67.7 from 64.4. Over the past 12 months, U.S. Bureau of Labor Statistics (USBLS) data show that Colorado’s Rural Mainstreet Economy experienced a 6.3% increase in non-farm employment, while urban areas in the state gained 4.6% in non-farm employment.  

Illinois

The July RMI for Illinois fell to 44.3 from 47.5 in June. The farmland-price index moved down to 66.9 from 77.2 in June. The state’s new-hiring index climbed to 61.2 from June’s 58.1. Over the past 12 months, USBLS data show that Illinois’ Rural Mainstreet Economy experienced a 2.6% increase in non-farm employment, while urban areas in the state gained 4.8% in non-farm employment.  

Iowa

The July RMI for Iowa slumped to 45.1 from 49.1 in June. Iowa’s farmland-price index decreased to 68.4 from June’s 77.9. Iowa’s new-hiring index for July fell to 58.7 from June’s 59.0. Over the past 12 months, USBLS data show that Iowa’s Rural Mainstreet Economy experienced a 2.8% increase in non-farm employment, while urban areas in the state gained 1.6% in non-farm employment.  

Kansas

The Kansas RMI for July slumped to 38.7 from June’s 42.0. The state’s farmland-price index dropped to 64.5 from June’s 74.9. The new-hiring index for Kansas increased to 58.2 from 57.8 in June. Over the past 12 months, USBLS data show that Kansas’s Rural Mainstreet Economy experienced a 1.1% increase in non-farm employment, while urban areas in the state gained 1.5% in non-farm employment.  

Minnesota

The July RMI for Minnesota sank to a regional-low 36.6 from 39.3 in June. Minnesota’s farmland-price index declined to 63.6 from June’s 73.8. The new-hiring index for July advanced to 57.1 from June’s 53.8. Over the past 12 months, USBLS data show that Minnesota’s Rural Mainstreet Economy experienced a 1.3% gain in non-farm employment, while urban areas in the state added 2.8% in non-farm employment.  

Missouri

The July RMI for Missouri decreased to a regional-high 69.4 from 78.0 in June. The farmland-price index declined to 77.5 from 90.2 in June. The state’s hiring gauge decreased to 63.4 from 74.1 in June. Over the past 12 months, USBLS data show that Missouri’s Rural Mainstreet Economy experienced an 6.7% gain in non-farm employment, while urban areas in the state gained 1.8% in non-farm employment.  

Nebraska

The Nebraska RMI for July dropped below growth neutral to 49.1 from June’s 54.1. The state’s farmland-price index decreased to 68.9 from last month’s 80.0. Nebraska’s new-hiring index improved to 63.7 from 61.6 in June. Over the past 12 months, USBLS data show that Nebraska’s Rural Mainstreet Economy experienced a 3.2% gain in non-farm employment while urban areas in the state added 1.8% in non-farm employment.  

North Dakota

The North Dakota RMI for July sank to 51.7 from 58.0 in June. The state’s farmland-price index plummeted to 70.0 from 81.7 in June. The state’s new-hiring index dropped to 61.2 from June’s 63.6. Over the past 12 months, USBLS data show that North Dakota’s Rural Mainstreet Economy experienced a 3.3% gain in non-farm employment while urban areas in the state expanded by 1.8% in non-farm employment.  

South Dakota

The July RMI for South Dakota slumped to 38.4 from 42.5 in June. The state’s farmland-price index sank to 64.3 from 75.1 in June. South Dakota’s July hiring index measured 58.0, compared to the 55.5 reading in June. Over the past 12 months, USBLS data show that South Dakota’s Rural Mainstreet Economy experienced a 0.5% gain in non-farm employment, while urban areas in the state added 3.0% in non-farm employment.  

Wyoming

The July RMI for Wyoming declined to 46.5 from 52.0 in May. The June farmland- and ranchland-price index decreased to 67.8 from June’s 72.3. Wyoming’s new-hiring index declined to 57.8 from June’s 60.5. Over the past 12 months, USBLS data show that Wyoming’s Rural Mainstreet Economy experienced a 2.1% gain in non-farm employment, while urban areas in the state expanded by 1.7% in non-farm employment.  

Tables 1 and 2 summarize the survey findings. Next month’s survey results will be released on the third Thursday of the month, August 18, 2022.