Tuesday, January 22, 2019

Rural Midwestern bankers say they expect loan defaults to be their biggest challenge in 2019

The latest Rural Mainstreet Index found that economic growth in the rural Midwest is slowing, though still slightly above "growth neutral." Overall jobs are growing, but more slowly than in urban areas, and the farming sector is hurting because of the trade war with China and low crop prices, says Creighton University economist Ernie Goss, who compiles the index via a monthly survey of small-bank CEOs in a 10-state region where agriculture and energy are critical to the economy: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
Creighton University chart; click on the image to enlarge it.
Farmland prices rose slightly but remained below growth neutral for the 62nd month straight, home sales remained just under growth neutral, and retail property sales decreased but remained slightly above growth neutral. A plurality of bankers surveyed, 45.7 percent, said they would characterize the rural Midwest as having "little or no growth" while 31.4 percent said it was in a "modest economic downturn.

More than 4 in 10 of the bankers surveyed said they expect rising loan defaults to be their biggest economic challenge in 2019. The bankers' confidence index climbed slightly to 45.7 percent but still indicates a pessimistic outlook on the rural Midwestern economy for 2019.
Creighton University chart; click on the image to enlarge it.

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