With talk of a possible recession dominating the news, it's already here in some parts of rural America, according to an October survey of bankers.
About a quarter of rural bankers say their communities have entered a recession, with the rest expecting a similar economic decline sometime next year, according to the
Rural Mainstreet Index.
This month's overall gauge of bankers' real-time economic assessment fell to 44.2 from 46.3 in September.
In the monthly survey of community bank presidents and CEOs in 10 states, the index ranges from 0 to 100, with a reading of 50.0 representing growth neutral. October marks the fifth consecutive month with a below-growth-neutral overall reading.
“The Rural Mainstreet economy is now experiencing a downturn in economic activity," said Ernie Goss, Creighton University business school professor and the study's author.
The confidence index, which reflects bank CEO expectations for the economy six months out, saw a significant drop to 30.8 this month from 40.7 in September.
“This is the lowest reading for the confidence index since May 2020," said Goss, citing the slowing economy, strong energy prices, higher interest rates and inflation for the decrease.
The home-sales index fell to 36.0 from September's 46.2, while the retail-sales index improved to 50.0 from September's 46.0. But bankers tempered that higher reading with early projections of low holiday sales, with growth at less than 1% from the 2021 season.
In agriculture-related readings this month:
The farmland price index for October declined to 58.0 from September's 61.1 but still remained above growth neutral for the 25th straight month.
The farm equipment sales index fell below growth neutral for the second time in the past three months, dropping to 47.8 from September's 58.0.
Bankers were asked to estimate the increase in farm equity for 2022. On average, they predicted a 3.4% boost from 2021 levels, compared to a 4.2% projection from the U.S. Department of Agriculture.