Economist Goss To Speak @ Spring Clinic

For many years we have kept a close watch on Creighton University economist Ernie Goss’ Rural Mainstreet Index. We could not be more pleased to see the results of his just released December survey of rural Midwestern bankers.

Profitable farmers have helped spur the economy in ten Midwest and Plains states to 2007 levels, according to the survey. “From farm equipment to farmland to trucks, agricultural producers in the area are spending at a brisk pace,” said Goss.

The overall index for the Rural Mainstreet economic survey reached 59.3% in January, up from December’s 55.4 and last January’s 41.0. The index this month hit its highest level since June 2007.

The farmland price index dipped from December’s 76.9 to 75.4. The farm equipment sales index was 74.6, down from 77.8 the previous month.

Still, the bankers surveyed remain upbeat about the economy, with the confidence index growing from 62.2 last month to 63.4.

“Even though we had a short crop in 2010 due to excessive moisture, our farmers are very optimistic for 2011. Pricing opportunities are plentiful,” said Charles Helscher, president of Farmers State Bank in Keota, IA.

The survey suggested that farmers are reducing the loan volumes at rural banks. The January loan volume index hit a record low of 33.9. The index was 52.3 in December.

“For this part of the country, rural areas are clearly outpacing the urban areas in terms of job growth. While employment in urban areas is virtually flat, annualized growth in the rural areas in a healthy 2%,” Goss said.

The current survey shows the highest level of economic growth in more than 2½ years, as well as increased hiring and growing optimism for the economy six months from now.

The monthly survey of 175 bankers in 10 states yielded a Rural Mainstreet Index of 59.3, the highest since June 2007. The index, on a scale of 0 to 100, indicates growth if it’s above 50. Last January, the index was 41.

Goss said that the survey indicates farmers have healthy and growing incomes and are spending money in rural areas, buying farm equipment, land and other goods.

The survey’s index of farmland prices showed growth for the 12th straight month. Three-fourths of the bankers expect farmland rent to grow by more than 5% in 2011, and about one out of five expect 10% increases, Goss said.

The index of bank loan volume declined to 33.9, the lowest since the survey began in 2005, likely because farm income reduced borrowing needs, he said. The survey’s jobs index showed increased hiring for the second month in a row, after a prolonged period of less hiring.

The bankers’ confidence index, reflecting their view of the economy six months in the future, remained in the growth zone and has been moving steadily higher over the past year, Goss said.

The survey, originated by Goss and Greeley, Nebraska, banker Bill McQuillan, includes bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

While we enjoy following the work of Goss, we are very please to report we have invited him to be our keynote speaker during our upcoming Spring Management Clinic at Saddlebrook Resort, near Tampa. FL. Full information on speakers, program and online registration is available at FarmEquip.org. ◆