Friday, December 18, 2015

Rural Midwest economy worst since 2010; 6-month outlook remains pessimistic

The rural Midwestern economy has fallen into its worst slump in five years, according to the Rural Mainstreet Index, which gave the region a score of less than 50—out of 100—for the fourth consecutive month, Steve Jordan reports for the Omaha World-Herald. "From a survey of 164 bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming, the index was 41.5, down from 43.7 in November and 50 in December 2014."

Ernie Goss, an economist at Creighton University, which publishes the index, said "the low commodity prices worsened the 10-state region’s 'economic malaise,' including a record low rating for farm equipment sales: 8.8, down from 14.2 in November and 23.7 in December 2014," Jordan writes. "He said the stronger U.S. dollar and economic weakness in other countries have pushed down farm prices by 8 percent over the past year. Farmers bought equipment steadily in 2012-13, but sales slowed sharply last year and continue to slump, Goss said. Lagging equipment sales hurt manufacturers in the region who make the equipment."

"The bankers retained their pessimistic outlook for the coming six months, registering a Confidence Index of 39.8, up slightly from 38.9 in November," Jordan writes. "Average farmland prices declined for the 25th straight month, leading to an index of 28.8, although Goss said price trends vary by location and some prices have increased. The bankers, on average, said they expect land prices to decline an additional 5.9 percent over the coming year. But the index showed that rural home sales, hiring and retail sales are increasing, with hiring mostly by businesses less affected by farm and energy prices. Holiday retail sales may be 1 percent higher than last year, the bankers said." (Read more)

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