Survey Shows That Things Are Looking Up For Ag Economy
For the second time in the past three months, the Creighton University’s overall index for the Rural Mainstreet economy declined and remained below growth neutral, according to the April survey of bank CEOs in a 10-state region.
The Rural Mainstreet Index (RMI), which ranges between 0 and 100, sank to 44.2 from 47.4 in March. Despite the pullback, the index is more than double the reading of 21.7 for April 2009. A reading of 50.0 is considered growth neutral.
The farmland-price index moved above growth neutral for a third straight month to 59.5 from 58.2 in March. After beginning a downward slide in spring 2008, farm and ranch land prices have once again begun to grow.
The farm equipment-sales index soared to 57.2 from March’s 41.4 and February’s 42.4 reading. Prior to February, both farmland price growth and farm equipment sales had been slipping. “We are tracking significant improvements in farm and ranch land prices and farm equipment sales. I expect both of these factors to remain healthy in the months ahead,” said Creighton University economist Ernie Goss.
| The Mainstreet Economy: Index Above 50 indicates expansion | Apr-09 | Mar-10 | Apr-10 |
| Farmland Prices | 41.2 | 58.2 | 59.5 |
| Farm Equipment Area Sales | 29.6 | 41.4 | 57.2 |
| Confidence Index | 45.6 | 54.3 | 60.2 |
| Loan Volume | 50.8 | 55.2 | 61.1 |
| Rural Hiring | 15.8 | 45.7 | 46.7 |
| Retail Business | 20.5 | 42.4 | 43.4 |
The survey also showed that hiring in rural areas has yet to bounce above growth neutral. However, the new-hiring index moved higher to 46.7 from March’s 45.7. This was the 28th consecutive month that the index has been below growth neutral.
Only 10% of the bankers said hiring was up from last month, while 17% of bank CEOs reported that April hiring was down from March. “Despite a weak hiring index, the rate of job losses for Rural Mainstreet is approximately one-fourth of what the region was experiencing just six months ago,” said Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton.
Respondents were also asked the following questions:
How important is the revival of a $1-per-gallon biodiesel tax credit to the economy in your area?
- Important Or Very Important: 72%
- Neutral Impact: 28%
- Negative Impact: 0%
Should the 45-cent-per-gallon blender credit for ethanol production be extended beyond its Dec. 31, 2010 expiration date?
- Yes: 82%
- Not Sure: 10%
- No: 8%
In terms of the policy of too big to fail, in banking what should the federal government do?
- Not intervene; let markets decide: 57%
- Support Only Bigger Banks: 0%
- Support All Banking: 43%
The survey represents an early snapshot of the economy of the rural, agriculturally and energy dependent portions of the nation. For the full survey details go to: creighton.edu/business/economicoutlook/mainstreet.