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| Graphs from Farm Journal AgWeb |
An index of small-town economies in 10 heartland states dependent on agriculture and energy remains below growth-neutral, as bank CEOs in the region said inflation is the top economic challenge.
The Creighton University Rural Mainstreet Index for September is 46.3, with 50 representing growth neutral. That was a slight improvement from the August index of 44, but rural economies in the region are “experiencing a downturn in economic activity,” said Ernie Goss, the Creighton economist who compiles the index. “Supply chain disruptions and inflationary pressures from higher farm input costs continue to constrain growth. Farmers and bankers are bracing for escalating interest rates, higher farm input costs, and drought below growth-neutral for the fourth straight month.”
The index report says, "Four of 10 bankers indicated that high and escalating farm input costs were the greatest economic challenge to their bank and area over the next 12 months." About two in 10 "reported drought impacts were the greatest economic challenge going forward."
Despite the current pressured, the region’s farmland-price index for September rose to 61.1 from August’s 60. It has been above growth-neutral for two years. "According to Jim Rothermich of the Land Talker, five farmland sales auctions between Aug. 27 and Sept. 2 yielded sales of greater than $20,000 per acre" in Ida, Dubuque and Sioux counties in Iowa.
"After falling below growth neutral in August, the farm equipment-sales index soared to 58 for September from 45.9 in August," the report said. "The index has risen above growth neutral for 21 of the last 22 months."
The index is based on 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. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, launched the survey in January 2006.
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