Mainstreet Economy

Rural Mainstreet Index Improves for December:
Retail Sales Soar to Highest December Reading Since 2014

December Survey Results at a Glance:

*   The overall index expanded from November’s weak reading, but remained below growth neutral. Over the past year, the overall index is up by 11 percent.
*   Retail sales unexpectedly soared for the month. 
*   Bankers reported an average yearly cash rent per acre of $205 which is down by approximately 10 percent from two years earlier.
*   Only slightly more than one-fifth, or 20.4 percent, of bankers reported that their local economy was expanding.
*   Approximately one in three bankers reported a decline in bank-financed farmland purchases over the past two to five years. This continues a downward trend in bank-financed farmland purchases. 

OMAHA, Neb. (Dec. 21, 2017) – The Creighton University Rural Mainstreet Index improved from November’s weak reading but remained below growth neutral, according to the latest monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. 

Overall: The index, like all indices in the survey, ranges between 0 and 100 with 50.0 representing growth neutral, expanded to 47.8 from 44.7 in November. While the overall index remained below growth neutral, it is up approximately 11.4 percent from December, 2016. 

“While the overall Rural Mainstreet Index (RMI) for December remained below growth neutral, this is the highest December reading that we have recorded since 2014. Clearly, based on our recent surveys, the negatives are getting less negative,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. 

Only one-fifth, or 20.4 percent, of bank CEOs reported that their local economy was expanding.  While this indicator remains bearish, it is well up from the 8.7 percent reporting an expanding local economy in February 2016.

Farming and ranching: The farmland and ranchland-price index for December rose to 39.8 from 36.5 in November. This is the 49th straight month the index has fallen below growth neutral 50.0.

The December farm equipment-sales index improved to 29.3 from November’s 26.2. This marks the 52nd consecutive month the reading has dropped below growth neutral, 50.0.

Bankers reported an average yearly cash rent per acre of $205 which is down by approximately 10 percent over the past two years.

Banking: Borrowing by farmers climbed for December as the loan-volume index stood at 67.1, up from November’s 49.1. The checking-deposit index fell to 47.8 from November’s 59.4, while the index for certificates of deposit and other savings instruments slumped to 42.1 from 44.8 in November. 

Approximately one in three bankers reported a decline in bank financed farmland purchases over the past two to five years. This continues a downward trend in bank-financed farmland purchases.

Hiring: The employment gauge climbed to 59.6 from November’s 57.6. Rural Mainstreet businesses not linked to agriculture increased hiring for the month, and at a faster pace than in November.

Confidence: The confidence index, which reflects expectations for the economy six months out, increased to 51.2 from 40.6 in November, indicating an improvement in the economic outlook among bankers. “Concerns about trade, especially current NAFTA negotiations, and low agriculture commodity prices continue to restrain bankers’ economic outlook,” said Goss. 

Home and retail sales: The home-sales index moved lower for the Rural Mainstreet economy for December, falling to a solid 53.5 from November’s 56.6. The December retail-sales index improved significantly to 52.4 from 40.7 in November. “This is the highest December retail index recorded since 2014,” reported Goss.  

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.  

This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives 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 in 2005.

Below are the state reports:

Colorado: Colorado’s Rural Mainstreet Index (RMI) jumped to 50.3 from 44.8 in November.  The farmland and ranchland-price index fell to 40.5 from November’s 49.5. Colorado’s hiring index for December climbed to 64.9 from November’s 58.0.

Illinois: The December RMI for Illinois advanced to 46.7 from 44.8 in November.  The farmland-price index rose to 39.9 from 36.5 in November. The state’s new-hiring index slipped to a healthy 57.5 from last month’s 58.1.   

Iowa: The December RMI for Iowa rose to 48.0 from 45.1 in November. Iowa’s farmland-price index for December increased to 39.8 from November’s 36.6. Iowa’s new-hiring index for December expanded to 60.0 from November’s 58.7.

Kansas: The Kansas RMI for December climbed to 43.3 from November’s 39.2. The state’s farmland-price index increased to 38.4 from 34.8 in November. The new-hiring index for Kansas rose to 50.7 from November’s 46.8.

Minnesota: The December RMI for Minnesota expanded to 45.4 from 44.2 in November.  Minnesota’s farmland-price index climbed to 42.5 from 36.3 in November. The new-hiring index for the state jumped to 78.0 from November’s 54.9.  

Missouri: The December RMI for Missouri declined to 55.4 from 56.8 in November. The farmland-price index slipped to 40.1 from 40.9 in November. Missouri’s new-hiring index soared to 78.0 from 61.2 in November.

Nebraska: The Nebraska RMI for December advanced to 48.3 from November’s 45.6. The state’s farmland-price index dipped to 35.8 from last month’s 36.8. Nebraska’s new-hiring index stood at a strong 60.6, up from 59.6 in November.

North Dakota: The North Dakota RMI for December increased to 52.2 from November’s 50.5. The state’s farmland-price index moved higher to 41.1 from 38.2 in November. North Dakota’s new-hiring index dipped to 68.4 from 69.3 in November.

South Dakota: The December RMI for South Dakota increased to 41.2 from 39.6 in November. The state’s farmland-price index climbed to 37.8 from 35.0 in November. South Dakota's new-hiring index slumped to 46.5 from November’s 47.7.  

Wyoming: The December RMI for Wyoming expanded to 45.7 from 42.9 in November. The December farmland and ranchland-price index jumped to 39.1 from 36.0 in November. Wyoming’s new-hiring index climbed to 55.5 from November’s 54.2.

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