After taking a beating this past spring and summer because of the COVID-19 pandemic, the rural economy is showing signs of life, but a total recovery remains elusive.
September’s Rural Mainstreet Index, a quarter of rural bankers reported their local economies were back to pre-COVID-19 levels and the index rose to 46.9 from August’s 44.7—the fifth straight month of increases. Yet it remains below growth-neutral.
“September’s reading represented the seventh straight month with a reading in a recessionary economic zone despite the increases over the past few months,” the report said.
The Rural Mainstreet Index is a 10-state survey of community bank presidents and CEOs on current economic conditions. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
Despite the looming threat of recession, the six-month economic outlook among bankers climbed to its highest level since the pandemic began. The confidence index improved to 50.0 from August’s 44.6.
“COVID-19 related farm support payments and improving grain prices have boosted confidence, offsetting pessimism from the impact of the derecho in several of the survey states,” said Ernie Goss, economics professor at Creighton University’s Heider College of Business, which produces the index.
Nearly 40% of bankers said federal support programs, such as the CARES Act and its Paycheck Protection Program, have been a huge help in their local economies.
“Recent improvements in agriculture commodity prices, federal stimuli and Federal Reserve record-low interest rates have underpinned the Rural Mainstreet economy,” said Goss. “Bank CEOs estimated that farm income, including government support, was down only 1.5% from this time last year.”
Hiring in September exceeded layoffs and furloughs, with a jump in the hiring index to 54.8 from August’s 47.4. However, federal data shows that non-farm employment levels are down by 222,000, or 5%, compared to pre-pandemic levels.
“It will take many months of above growth neutral readings to get back to pre-COVID-19 employment levels for the region,” said Goss.