A new monthly survey of bankers contains good news. It suggests rural areas in 10 Midwest and Plains states are continuing to benefit economically from the strength of agriculture. The overall Rural Mainstreet index improved to 59.4 in April from March's 56.7. Anytime the index is over 50, it suggests the economy will expand over the next six months. Bankers in rural parts of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming were surveyed.
Importantly, the farmland price index remained above growth neutral for the 14th straight month slipping slightly to a strong 75.0 from 75.9 in February. The farm equipment sales index ballooned to 75.9 from 63.5. Jack MacAllister, Chair in Regional Economics at Creighton, says farm implement producers and dealers are experiencing a banner year as farmers spend their higher income. Escalating fuel prices are viewed as possible future pressure points.
Creighton University economist Ernie Goss says higher oil prices have yet to derail or even slow the pace of growth for the Rural Mainstreet economy. Goss and Bill McQuillan, CEO of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.
This month banks CEOs were asked what they considered to be the greatest threat to the Rural Mainstreet economy. Approximately 48% indicated that a significant downturn in farm commodity prices was the single biggest threat to the rural economy while 39% reported that high energy prices was the most significant threat to rural economy. The remaining 13% named changing federal policies regarding alternative energy production and other federal regulatory changes as the number one threat to the Rural Mainstreet Economy. Just four months ago when asked the same question, 28% said a downturn in agriculture commodity prices was their chief concern.
For a fourth straight month the Rural Mainstreet economy added jobs with a April index of 56.2 from 52.5. And the economic confidence index, which reflects expectations for the economy six months out, was down, but a still strong 65.2 from 70.9 in February.