August Rural Mainstreet Index

OMAHA, Neb. (Aug. 20, 2020) – The Creighton University Rural Mainstreet Index (RMI) increased slightly to a weak level from July’s frail reading. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, August’s index represented the sixth straight month with a reading in a recessionary economic zone.       

Overall: The overall index for August increased slightly to 44.7 from July’s 44.1, but still well below growth neutral, though it was up from July’s 44.1 and April’s record low 12.1. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Farm commodity prices are down by 10.4% over the last 12 months. As a result, and despite the initiation of $32 billion in USDA farm support payments in 2020, only 8% of bankers reported their area economy had improved compared to July, while 18.4% said economic conditions had worsened,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.  

State’s have varied in the impact of COVID-19 on the economy depending on government enforced shutdowns. For example, Todd Douglas, CEO of the First National Bank in Pierre, South Dakota, said, “As for South Dakota, we were a state that did not shut down. Western part of the state has seen a significant boost to the economy due to tourism from shut down states.”   

Banking: Borrowing by farmers expanded for August, but at a slower rate than in July. The borrowing index fell to 53.9 from July’s 57.4. The checking-deposit index advanced to 78.9 from 64.7 in July, while the index for certificates of deposit and other savings instruments slumped to 40.8 from 52.9 in July.      

This month, bankers estimated that farm loan defaults would rise by 5.3% over the next 12- month period. This is up slightly from the 5% recorded last month, and from 4.8% registered one year ago.

Douglas, CEO of the First National Bank in Pierre, South Dakota, said, “We have a large amount of Paycheck Protection Program loans that have inflated our loan balances and checking balances. We should be back to normal by October if loans get forgiven.”

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, improved to 44.6 from July’s 43.9. “COVID-19 related farm support payments have boosted confidence, partially offsetting pessimism from weak agriculture commodity prices, frail retail sales, and August storms,” said Goss.

Below are the state reports for Kansas and Missouri:

Kansas: The Kansas RMI for August climbed to 50.8 from July’s 46.4. The state’s farmland-price index climbed to 52.7 from 47.0 in July. The new-hiring index for Kansas advanced to 54.8 from 54.4 in July. Compared to the same month last year, Kansas’s Rural Mainstreet economy has lost 5.9% of its employment representing 25,000 jobs.   

Missouri: The August RMI for Missouri rose to 42.7 from July’s 38.4. The farmland-price index increased to 46.0 from 44.4 in July. The state’s hiring gauge fell to 35.5 from 46.7 in July. Don Reynolds, chairman of Regional Missouri Bank in Marceline, said, “We most certainly have had people and businesses that were significantly damaged, like cattle, restaurants, etc. In the same time many have benefitted from more shopping at home and the various governmental programs. Compared to the same month last year, Missouri’s Rural Mainstreet economy has lost 9.5% of its employment representing 31,000 jobs.