Rural Midwestern bankers still optimistic about economy, but worry about drought, hiring shortages, and infrastructure bill

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A July survey of rural bankers in 10 Midwestern states that rely on agriculture and energy showed slightly declining but still strong optimism about the economy, with the overall Rural Mainstreet Index falling slightly to 65.3 from July's 65.6. The index is a survey of bankers in about 200 rural communities with an average population of 1,300 in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

Record-low interest rates, solid grain prices, and growing exports are key to rural economies in the areas surveyed. Agriculture Department data show that 2021 agriculture exports are more than 25 percent higher than from the same period in 2020, reports Creighton University economist Ernie Goss, who compiles the index.

The home-sales index hit a record 84.4 from July's 77.4, while the retail-sales index dropped from July's 64.1 to a still-positive 54.7. The farmland price index rose to 76.6 from July's 71.0, marking the first time since 2012-2013 that the survey has recorded 11 straight months above growth neutral. The farm equipment sales index declined to 64.7 from July's 67.2, but the readings over the past several months have represented the strongest consistent growth since 2012, Goss reports.

However, the confidence index for local economies six months out fell to 59.7 from July's 65.6. That reflects bankers' worries about drought, rising coronavirus infections, political turmoil in Afghanistan, and widespread dislike among the surveyed bankers about the $3.5 trillion social-infrastructure spending bill before Congress. Only 9.4% of surveyed bankers support the bill (see chart below). And, though the new hiring index rose to 70.3 from July's 67.6, many bankers worry about continuing labor shortages that hinder rural businesses' growth.