Rural Midwestern bankers say local economies thrive, but predict economic downturn with little impact from E15 sales

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An April survey of rural bankers in 10 Midwestern states that rely on agriculture and energy showed still-growing local economies amid deepening concerns about the near future. The index surveys 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.

The overall area economic index fell to a still-positive 62.0 from 65.4 in March; above 50 is growth-positive. Farmland prices are still soaring, home sales are up, retail sales are growing and hiring is up, bankers said.

"The region recorded a 34% gain in farm commodity prices over the past 12 months, but low short-term interest rates and healthy farm income have underpinned the Rural Mainstreet Economy," writes Creighton University economist Ernie Goss, who compiles the index.

However, the loan-volume index fell from 61.9 in March to 51.9 in April, and the confidence index, which predicts the area economy six months from now, dropped from 54 in March to 39.1. Most bankers surveyed (56.5%) believed President Biden's decision to allow the sale of E15 fuel (which has more ethanol) this summer would have little or no impact on their economies, while 39.1% believed it would have a positive effect and 4.4% believed it would have a negative effect.

The vast majority of bankers (91.7%) predicted that the Federal Reserve's Open Market Committee will raise the interest rate by 0.5 percentage points at its next meeting, and 8.3% said the committee will raise the rate by 0.25 points. None predicted the rate would remain unchanged.