Mainstreet Economy Slumps For Fourth Straight Months
December 2023 Survey Results at a Glance:
- For a fourth straight month, the overall Rural Mainstreet Index sank below growth neutral.
- Farm loan delinquencies fell to one-tenth of one percentage point over the past six months.
- More than half of bank CEOs expect a 2024 recession.
- According to the International Trade Administration, the export of agriculture products from the region declined from $14.1 billion for the first ten months of 2022 to $12.0 billion for the same period in 2023 for a 14.7% slump.
For a fourth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the December survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The region’s overall reading for December rose to 41.7 from 40.4 in November. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“Higher interest rates and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses. Approximately 13.3% of bank CEOs indicated that their local economy was already in a recession while another 43.3% expect a recession in early 2024,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
When asked to name the greatest 2024 economic threat for community banks, approximately four of 10 identified a downturn in farm income as the chief 2024 hazard.
Farming and ranching land prices: The region’s farmland price index increased to 67.2 from November’s 66.7. “Creighton’s survey continues to point to solid, but slowing, growth in farmland prices. Approximately, 41.4% of bankers reported that a downturn in farm income was the greatest threat to community banks in 2024,” said Goss.
Farm equipment sales: The farm equipment-sales index for December was unchanged from November’s weak 49.5. “This is the sixth time in the past seven months that the index has fallen below growth neutral. Higher borrowing costs and tighter credit conditions are having a negative impact on the purchases of farm equipment,” said Goss.
Hiring: The new hiring index for December slipped to 49.0 from November’s 49.1. “Only 3.6% of bank CEOs reported an increase in employment in their area while 14.1% indicated a pullback in hiring for the month,” said Goss.
The Rural Mainstreet Index is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy.
Source: Creighton.edu