Rural Mainstreet Economy Down Again for July
For an 11th straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the July 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 July sank to 41.3, its lowest reading since November 2023, and down from 41.7 in June. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“Weak agriculture commodity prices, sinking agriculture equipment sales and declining farm exports pushed the overall reading below growth neutral for the 11th straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Farm equipment sales: The farm equipment sales index for July plummeted to 19.0, its lowest level in more than seven years, and down from June’s 31.8. “This is the 12th straight month that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and weak grain prices are having a negative impact on the purchases of farm equipment,” said Goss.
Farming and ranching land prices: After falling below growth neutral for two straight months, farmland prices rose above the growth neutral threshold for July. The region’s farmland increased to 52.2 from June’s 49.9. “Only 8.7% of bank CEOs reported that farmland prices expanded from June levels,” said Goss.
According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024 year-to-date were down $198 million, or 3.6%, from the same period in 2023.
Banking: The July loan volume index stood at a very strong 67.4, but down from June’s 79.2. The checking deposit index increased to a weak 45.5 from June’s 34.8. The index for certificates of deposits and other savings instruments rose to 65.9 from 63.0 in June.
Interest Rates: Bankers were asked their recommendations for Federal Reserve interest rate actions for the rest of 2024. Almost half, or 47.8%, advocate for two rate cuts of one-quarter of one percentage point, or one-half of one percentage point.
Hiring: The new hiring index for July improved to 50.0 from June’s 47.7. In terms of economic risks for the region for the next 12 months, over half, or 52.2%, indicated a recession as the greatest risk, 26.0% named an upturn in inflation, 17.4% identified a debt crisis and 4.4% specified little or no economic risks for the next 12 months.
Home and retail sales: After expanding to a strong 62.5 in June, the home sales index tumbled to July’s 33.3. Likewise, retail sales in the region, much like that for the nation, were very weak with a July retail index of 39.1, down from 41.3 in June. “High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales for the Rural Mainstreet Economy,” said Goss.
The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. 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: Creighton.edu