Mainstreet Index Above Growth Neutral – Highest Since May 2022

After declining below growth neutral for March, the overall Rural Mainstreet Index expanded above the threshold for a second straight month, according to the May monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

May 2023 Survey Results at a Glance:

  • The May 2023 Rural Mainstreet Index (RMI) rose above growth neutral to its highest reading since May 2022.
  • On average, bankers estimated that farmland prices in their area rose 4.3% over the past 12 months.
  • On average, bankers expect farmland prices in their area to remain stagnant (0%) for the next 12 months. 
  • For the second straight month, checking deposits decreased to a record low. 
  • Approximately 84.6% of bank CEOs expect banks to continue to report insolvency challenges.
  • Between the 2008-09 banking crisis and December 2022, the region lost 41.5% of its banks through mergers and insolvencies.

Overall: The region’s overall reading in May climbed to 55.8 from April’s 50.1. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. 

“The Rural Mainstreet economy continues to experience slow economic growth. Only 11.5% of bankers reported improving economic conditions for the month, with 88.5% indicating no change in economic conditions from April’s slow growth,” said Dr. Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farm equipment sales: As a result of sinking farm financial conditions, the farm equipment-sales index fell to a weak 50.2 from 54.3 in April. The index has risen above growth neutral for 28 of the past 30 months.

Farming and ranching land prices: The region’s farmland price index dropped to 56.3 from April’s 64.6. This was the 32nd straight month that the index has advanced above 50.0. 

Bankers reported that non-pasture farmland prices in their area grew by an average of 4.3% over the past 12 months. The bankers responded negatively about the future by reporting an average expected price growth of 0.0% over the next 12 months.

Banking: The May loan volume index expanded to a strong 75.0 from 62.5 in April. The checking-deposit index plummeted to a second consecutive low of 22.0 from April’s 25.0, while the index for certificates of deposit and other savings instruments declined to 70.0 from April’s 74.0.

“Two consecutive record low checking deposit indices point to higher deposit outflows, even for community banks,” said Goss. 

Only 15.4% of bank CEOs anticipate the end of the banking insolvency crisis while the remaining 84.6% expect banks to continue to report insolvency challenges.

Hiring: The new hiring index for May climbed to 58.0 from 54.2 in April. Labor shortages continue to be a significant issue constraining growth for Rural Mainstreet businesses. Over the past 12 months, the Rural Mainstreet Economy has expanded jobs by 2.5% compared to a lower 1.9% for urban areas of the same 10 states.

Confidence: Higher borrowing costs, deposit outflows and labor shortages continued to constrain the business confidence index to a weak 38.5 for May, up slightly from 38.0 in April. “Over the past 12 months, the regional confidence index has fallen to levels indicating a negative outlook,” said Goss.

Home and retail sales: The home-sales index climbed to 55.8 from April’s 44.0. “After 11 straight months of below growth neutral readings, the home-sales index bounced above the threshold,” said Goss.

The retail-sales index for May expanded to 56.0 from April’s weak 41.7. “Bankers were pessimistic regarding the economic outlook for retail sales for the second quarter after an anemic quarter one,” 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.

Source: Mainstreet Economy (