Rural index weak, but rises again

Significant economic weakness remains in the rural Midwest, a survey of small-town bankers in 11 states indicates, although the resulting index improved for the third straight month.

The survey by Creighton University economist Ernie Goss indicates that job losses continue and that home sales and retail sales are still weak. Also, bankers in the survey were somewhat less optimistic about the economy’s performance six months from now than they were in October.

“The decline in farm income related to pullbacks in agricultural commodities from last year continues to weigh on the rural, agriculturally dependent economy,” Goss said.

The survey’s Rural Mainstreet Index for November was 38.4, up from 37.5 in October but still below the growth-neutral level of 50. An index above 50 would indicate economic growth; the index has been below 50 for 21 consecutive months.

Nebraska’s index was 39.5, up from 38.7 in October. Iowa’s index was 38, up from 37.1 in October.

Goss and Greeley, Neb., banker Bill McQuillan originated the survey, which this month received responses from 155 bank executives in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.

Goss said bankers in the survey expect crop income to be about the same this year as in 2008 and livestock income to decline by about 5 percent. That’s a better outlook than the decline of nearly one-third projected by the U.S. Department of Agriculture, he said, although some bankers said weather-related harvest delays make predictions difficult.

The survey index on farmland prices remained below 50 for the 13th straight month, although it was up slightly from October.

Contact the writer:

444-1080, steve.jordon@owh.com

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