Rural America continues to see strong economic gains. For the eighth straight month, the Creighton University Rural Mainstreet Index (RMI) remained above growth neutral.
For July 2021, the RMI fell to a healthy 65.6 from June’s strong 70. The index ranges between 0 and 100 with a reading of 50 representing growth neutral.
Around one-third of rural bank CEOs reported that their local economy expanded between June and July.
“Solid, but somewhat weaker, grain prices, along with the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. Even so, current rural employment remains below pre-pandemic levels,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI.
Farmland prices show continued strength, as the farmland price index stayed significantly above growth neutral for the tenth straight month. For July 2021, the farmland index fell to a strong 71 from June’s 75.9. This is first time since 2012-2013 that Creighton’s survey has recorded 10 straight months of farmland prices above growth neutral.
Yet, bankers see price softness on the horizon. On average bank CEO’s estimated farmland price growth for the previous 12 months at 5.8%, but projected growth at only 2.4% for the next 12 months.
June 2021 RMI Highlights:
- 47% of bankers reported damaging drought conditions for farmers in their area. However, there was significant variation among reports.
- The July farm equipment-sales index declined to 67.2 from 71.6 in June. Readings over the last several months represent the strongest consistent growth since 2012.
- The loan volume index declined to 53 from June’s 54.9. The checking-deposit index fell to a very solid 67.7 from June’s 70, while the index for certificates of deposit, and other savings instruments, slumped to 32.3 from 35.0 in June.
- The new hiring index decreased to 67.6 from 71.7 in June. Despite recent solid job gains for the region, data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment for the Rural Mainstreet economy is down by 55,000 (non-seasonally adjusted), or 1.3%, compared to pre-COVID-19 levels.
The confidence index, which reflects bank CEO expectations for the economy six months out, decreased to 65.6 from June’s 71.7.
“Federal stimulus checks, healthy grain prices, and advancing exports have supported a strong confidence numbers over the last several months,” Goss says.
This RMI, which started in 2005, represents an early snapshot of the economy of rural agricultural and energy-dependent portions of the nation. It focuses on 200 rural communities with an average population of 1,300.
