For 13 straight months, the rural economy has posted healthy and consistent growth. That’s according to the December Rural Mainstreet Index (RMI) from Creighton University.
For December 2021, the RMI sits at 66.7, slightly lower from November. The index ranges between 0 and 100 with a reading of 50 representing growth neutral and is generated by a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
“Solid grain prices, the Federal Reserve’s record-low interest rates and growing exports have underpinned the Rural Mainstreet Economy,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI. “USDA data show that 2021 year-to-date agriculture exports are more than 21% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy.”
“With the paycheck protection program (PPP) monies and good commodity prices, even with some areas of reduced yields due to lack of moisture, agriculture borrowers should be in good shape for 2022,” added Todd Douglas, CEO of First National Bank in Pierre, S.D.
Bankers were asked: How would you describe the economy in your area?
- 7% reported strong economic growth
- 63% reported modest economic upturn
- 23% reported little or no growth
- 7% reported modest economic downturn
For the third straight month, the farmland price index set a new record. For December, it sits at 90, up from November’s 85.5. December’s reading was the 15th straight month the index has moved above growth neutral.
According to Bank CEOs, annual cash rents for non-irrigated, non-pasture farmland soared to $262 from $218 one month prior to the pandemic in February 2020.
But there were warnings from some bankers.
“Inflation is real and affecting folks in our service areas,” reported Jeff Bonnett, CEO of Havana State Bank in Havana Ill.
The December farm equipment-sales index soared to 74.1, up from 62.1 in November. This is the 13th straight month that the index has advanced above growth neutral and the strongest index recorded since April 2011.
Bankers were asked: Which of the following represents farmers’ current financial condition in your area?
- 83% reported a solid cash position
- 14% reported an unchanged cash position
- 3% reported financial stress
“(Seeing) very strong working capital and net worth gains even from marginal customers,” reported Jim Brown, CEO of Hardin County Savings Bank in Eldora, Iowa.
After declining for five consecutive months, the confidence index, which reflects bank CEO expectations for the economy six months out, rose to 55.2 from 48.4 in November.
The 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.
