Omaha economist’s survey of bank executives shows ‘rural mainstreet’ economy still stumbling

A farmer harvests a field of dry, edible beans in Nebraska's Panhandle. (Courtesy of Gary Stone)

OMAHA — For the 12th consecutive month, a Creighton University-led survey of regional bankers reported a below growth neutral reading for the economy on “rural mainstreet.”

Creighton University since 2006 has released its monthly Rural Mainstreet Index , which is based on a survey of bank chief executives in 10 states including Nebraska, targeting about 200 rural communities with an average population of 1,300.

It is intended to provide a “real-time” economic analysis of rural agriculture- and energy-dependent parts of the nation, said Ernie Goss, a Creighton economist who created and launched the survey with Bill McQuillan, former chair of the Independent Community Banks of America.

For August, the region’s overall index reading fell to 40.9 from 41.3 in July. It was the lowest reading since last November, he said. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“Weak agriculture commodity prices, sinking agriculture equipment sales and declining farm exports pushed the overall reading below growth neutral for the 12th straight month,” said Goss.

A media release offered perspective from Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois: “The sad part is that most of our farmers will lose money or just break even due to poor commodity prices.”

Goss said bankers were asked in the latest survey to compare the current business environment in their area to pre-COVID times. About 22.8% reported business conditions were worse; 18.2% said business conditions were better; and the remaining 59% said conditions had barely changed.

Other states included in the survey are Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, North Dakota, South Dakota and Wyoming.

The survey also provides a more focused look at the individual states.

For Nebraska, the overall rural mainstreet index for August dropped to 36.5 from 38.6 the month before.

Looking more specifically at Nebraska farmland, the index slumped to 43.6 from 50.3 in July.

The new hiring index dropped to 43.1 from 47.8. Goss said that according to the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were up by $136.8 million, or 39.3% from the same period in 2023.

Regional highlights:

• Farmland prices declined for the third time in the past four months. Goss also said farm equipment sales sank for the 13th straight month while farm loan delinquency rates over the past six months climbed by an average of 1.1% across the region.
• On home sales, the August index rebounded to 50.0, after July’s 33.3 and June’s 62.5.
• Retail sales, much like that for the nation, were weak in August, with a retail index of 38.6, the lowest reading since November 2020 and down from 39.1 in July.

Said Goss: “High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales for the rural mainstreet economy.”

Respondents were asked to identify the greatest threat to regional banking operations in the next 12 months. Nearly 61% named falling farm commodity prices; 17.6% said the Fed’s high interest rates; 8.1% pointed to rising regulatory costs; 6.4% named low loan demand; and the remaining 8.1% identified other factors.

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