Rural bankers in Midwest agriculture-and-energy states say local economies still doing well, but pandemic taking a toll

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A September survey of rural bankers in 10 Midwestern states that rely on agriculture and energy found slightly declining but still optimistic outlooks about the economy. But bankers also had concerns about the pandemic and proposed asset-inheritance laws. 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.

In September the overall Rural Mainstreet Index fell slightly to 62.5 from August's 65.3, remaining above growth-neutral (50.0) for the 10th month straight. The farmland price index hit record high of 85.2, and 35.7% of surveyed bankers said their local economy has expanded in the past month. "Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy," writes Creighton University economist Ernie Goss, who compiles the index. Agriculture Department data "show that 2021 year-to-date agriculture exports are more than 27.6% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy."

However, 49.9% of the bankers reported that the pandemic hurt their local economies more in the past month, and 39.3% said the pandemic's harms remained the same. Only 7.3% said the pandemic's effects on the local economy decreased at all. And more than 8 in 10 bankers said President Biden's proposed changes to asset inheritance (most notably here, farmland) would hurt the agricultural sector. But as one banker noted, the change would mostly affect investors who rent out land to farmers, not family farmers who intend to work the land they inherit. And House Democrats have dropped the idea of changing the "stepped-up-basis" rule, which brought the most objections from farm interests.