Friday, December 16, 2016

Rural Mainstreet Index highest since June, but still negative for 16th straight month; crop prices low

The Rural Mainstreet Index for December reached its highest level since June, but remained below 50 on a scale of 100 for the 16th consecutive month, indicating continued economic weakness in the 10-state region from Illinois to Wyoming that is dependent on agriculture and energy. Creighton University economist Ernie Goss surveys bank CEOs in rural areas of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wyoming and the Dakotas.

The December index is 42.9, up from 36.6 in November but down from 43.9 in June. Goss said: “Weak farm commodity prices continue to slam Rural Mainstreet economies. Over the past 12 months, livestock commodity prices have tumbled by 19 percent and grain commodity prices have slumped by 11.5 percent. The economic fallout from this price weakness continues to push growth into negative territory for seven of the 10 states in the region."

Goss notes that farmland prices declined for the 37th straight month. He said bank CEOs "expect loan defaults to rise by 5.6 percent over the next 12 months. This estimate is up slightly from 5.4 percent recorded in July of this year. Bankers expect holiday sales for Rural Mainstreet retailers to expand by a scant 0.4 percent over 2015 levels."

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