The economy in rural, agriculturally dependent areas in a 10-state region continues to expand at a positive pace. The June overall index for the Rural Mainstreet economy, developed by economists at Creighton University, Omaha, Neb., moved above growth neutral for an eighth straight month.
The Rural Mainstreet Index, calculated from a monthly survey of bank CEOs in a 10-state region, rose to 56.0 in June from May’s healthy 54.9, but down from 59.4 in April.
Creighton University economist Ernie Goss said, “Even though the Rural Mainstreet economy is expanding, I expect flooding and weather-related issues to slow growth in the months ahead.” Goss and Bill McQuillan, CEO of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005. The survey states are Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
Responses from 158 bankers suggest farmland values may be softening but still indicating growth. Goss said the survey’s farmland price index for June was 62, the lowest level since October and down from May’s 75 but still indicating growth for the 17th consecutive month.
“We are beginning to see some of the air exiting the farmland price bubble,” Goss said. “In my judgment, this is not a bad outcome. A significant upturn in the value of the dollar stemming from the European debt crisis could drive the dollar higher and agricultural commodity prices lower. This would weaken farm income and growth and take even more of the air from the bubbles we have been seeing in farmland and farm equipment sales.”
The survey’s confidence index, projecting economic conditions six months into the future, was 55.3, down from 63.7 in May.