Thursday, August 27, 2020

Aug. survey of rural bankers shows slight improvements, but sixth straight month of recession-level readings

Creighton University chart compares current month to month and year ago; click here to download it and chart below.
The rural Midwestern economy improved slightly over the past month, but is still below pre-pandemic levels, according to the August edition of Creighton University's Rural Mainstreet Index. The index is a survey of bankers in about 200 rural communities with an average population of 1,300 in 10 states where agriculture and energy are critical to the economy: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

"The overall index for August increased slightly to 44.7 from July’s 44.1, but still well below growth neutral, though it was up from July’s 44.1 and April’s record low 12.1. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral," Creighton economist Ernie Goss reports. "Farm commodity prices are down by 10.4 percent over the last 12 months. As a result, and despite the initiation of $32 billion in USDA farm support payments in 2020, only 8% of bankers reported their area economy had improved compared to July, while 18.4% said economic conditions had worsened."

Other things of note from the report:
  • August's index marks the sixth straight month with a reading indicating a recession.
  • The farmland price index inched above growth-neutral for only the second time in the last 81 months.
  • Some areas, such as western South Dakota, saw an economic boost from tourism and recreation because they didn't shut down businesses during the pandemic.
  • Nearly 46% of bankers surveyed who have ethanol plants nearby reported temporary shutdowns. The other 54% reported slow expansion of ethanol production.

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