Rural Mainstreet Economy Slumps Fifth Straight Month

For a fifth straight month, the overall Rural Mainstreet Index (RMI) stayed below growth neutral. However, the region’s overall reading for January rose to 48.1 from 41.7 in December. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. 

“Higher interest rates, weaker agriculture commodity prices and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses and on Rural Mainstreet farmers. Jim Eckert, CEO of Anchor State Bank in Anchor, Ill. indicated that unless crop prices improve, 2024 will not be a good year for area farmers,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University.

Farm equipment sales: The farm equipment-sales index for January sank to 47.9 from December’s weak 49.5. “This is the seventh time in the past eight months that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment,” said Goss.

Farming and ranching land prices: The region’s farmland price index fell to a still strong 64.0 from December’s 67.2. The farmland price index has remained above growth neutral for every month since November 2019. “Creighton’s survey continues to point to solid, but slowing, growth in farmland prices. Approximately, 28.0% of bankers reported that farmland prices expanded from December levels,” said Goss. 

Hiring: The new hiring index for January increased to growth neutral, 50.0, from December’s 49.0. “Almost 100% of bankers reported no change in hiring from December’s hiring activity,” said Goss. 

Retail sales: Retail sales were below growth neutral for the last three months. The retail-sales index for January fell to 46.0 from 46.6 in December. “High consumer debt and elevated interest rates are cutting into retail sales in rural areas of the region,” said Goss.

Confidence: Rural bankers remain very pessimistic about economic growth for their area over the next six months. The January confidence index sank to 38.5 from December’s 43.3. Falling agriculture commodity prices and higher interest rates over the past several months continued to constrain business confidence. 

Source: Creighton.Edu