Rural Mainstreet Index Shows Dip

The rural economy moved into negative growth territory, according to the February survey of bank CEOs in a 10-state area, reported Creighton University.

“The overall index for the Rural Mainstreet Economy indicates that areas of the nation highly dependent on agriculture and energy are losing economic steam. Despite year-over-year declines in agriculture commodity prices, bankers expect even more weakness for 2014. Almost 90%, of the bank CEOs consider lower agriculture commodity prices as the biggest threat to the 2014 economy. These softer prices have had, and will likely continue to have, negative impacts on the Rural Mainstreet economy,” said Ernie Goss at Creighton University.

At least a portion of the weaker numbers for February can be attributed to unusually harsh weather.

Farm equipment sales remained below growth neutral for the eighth straight month. The February index sank to a weak 30.9, the lowest reading since May 2009, and down from January’s 41.0. “Agriculture equipment manufacturers continue to experience strong sales abroad. However, equipment dealers and farm equipment manufacturers selling domestically are experiencing pullbacks in sales and production,” Goss noted.

Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, indicated that, with farm income down for 2013, “Some farmers may come up a little short of covering their operating debt, and that will require more scrutiny by farmers and bankers as they plan for operational needs in 2014.”