Bankers Claim High Fed Rates Biggest Fear In Next 12 Months

Creighton University released its Rural Mainstreet Index report for June showing above growth neutral for the month to its highest level since May 2022.

The survey’s 10-state region overall reading for June climbed to 56.9 from May’s 55.8. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

Bank CEOs ranked Federal Reserve rate hikes as the greatest challenge in the 12 months ahead. Second, only to rising bank regulations. The June loan volume index expanded to 79.2 from May’s 75.0. Checking-deposit index increased to a still weak 37.5 in June from 22.0 in May, while the index for certificates of deposit and other savings instruments soared to 76.8 for June from May’s 70.0.

When looking by state, the Kansas RMI for June dropped to 55.3 from May’s 57.9. The farmland-price index climbed to 57.4 from 55.7 in May and the June new-hiring index for Kansas declined to 54.7 from 55.1 in May.

The RMI for Missouri dropped to 44.5 from 47.7 in May. The farmland-price index rose to 54.4 from 52.8 in May. The state’s new hiring gauge dipped to 50.9 from 51.6 in May.

More important takeaways:

• More than half of bankers reported that higher interest rates were impairing farm equipment purchases.
• Farm equipment sales declined for only the third time in the past 31 months.
• On average, bankers expect farm loan defaults to expand by less than 1% over the next 12 months.
• The region exported $13.3 billion of agriculture and livestock in 2022. This represented 26.5% growth from the previous year. Mexico was the chief destination, accounting for 55.2% of the region’s farm exports.

Posted June 15, 2023