Concerns Over Trade Weigh Heavily on Rural Bankers

April 19, 2018 02:37 PM

OMAHA, Nebraska - A newly released index measuring the economic outlook in farm country took a beating as bankers expressed concern about trade tensions and the potential impact on the farm economy. “An unresolved North America Free Trade Agreement (NAFTA) and rising trade tensions with China are significant concerns,” said Ernie Goss, an economist with Creighton University and author of the Rural Mainstreet Index (RMI).

The confidence index is a sub-category of the broader RMI. It reflects expectations for the economy six months out. It sank from 58 in March to 50 this month. The index ranges between 0 and 100 with 50.0 representing growth neutral.

The overall RMI slipped in April but remained above growth neutral for a third straight month.

Goss said that indicates an upward trend with improving economic growth. “However, weak farm income continues to weigh on the rural economy,” said Goss.

The RMI also shows bankers in the ten-state district have concerns about un-resolved trade matters. Recent trade spats, including implemented and proposed tariffs against China, have reverberated throughout agricultural areas of the region.

More than three-fourths (76.2%) of bank CEOs reported that export markets were very important to their local economy.

The RMI survey showed almost one third (31%) of bankers support dismantling the North American Free Trade Agreement (NAFTA) and striking a new agreement. Forty percent support the current pact with Canada and Mexico.

The index is based on the results of a monthly survey of bank CEOs in 200 rural and farming areas of a 10-state region covering parts of the Midwest and Great Plains. The average population is 1,300 people. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.


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Spell Check

Grand Forks, ND
4/19/2018 06:31 PM

  Bankers are scared of there shadow what do you expect. Risk in farming is always high.

bad axe, MI
4/19/2018 09:43 PM

  With the credit market debt being 14 times higher than what it was in 1980 when it blew up last time. I think I would be worried about something. Then you have all theses young guys running around paying astronomical rent for land because FHA will guarantee there loans. Trump going to try to run gas up this summer to create more inflation so his tax cuts will work . This farming is really going to get bad.

Lincoln, NE
4/20/2018 11:42 AM

  Some American farmers are making 2018 farm decisions of what crop to plant related future price opportunities, weather precipitation, costs of inputs, machinery improvement updates, and how to leverage their assets to the maximum. These factors require working and updating bank lenders frequently. Nobody especially farmers like surprises as do also bankers. Hopefully the next farm bill can answer some unknowns.


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