The most recent Rural Mainstreet Index shows that bankers' real-time assessment of the rural economy has declined for the fourth straight month to 62.5, compared to August's 65.3. However, the overall index is still above growth-neutral for the 10th consecutive month and indicates “slower, but positive, growth for the next several months," the September report said.
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.
Nearly 36% of bank CEOs reported economic growth between August and September. Along with solid grain prices and record-low interest rates, strong agricultural exports are another “important factor" supporting the rural economy, said Ernie Goss, a professor at Creighton University's College of Business in Omaha, Nebraska, which produces the index.
U.S. Department of Agriculture data show that 2021 year-to-date agriculture exports are more than 28% higher compared to the same time last year, Goss added.
Bankers continue to look unfavorably on President Joe Biden's $3.5 trillion spending bill before Congress. More than eight of 10 surveyed expect the bill's capital gains proposal to hurt the rural economy, said Goss.
The survey's confidence index, which reflects bankers' expectations for the economy six months out, hit 65.4 in September compared to August's 59.7.
“Improving farm exports, healthy agriculture prices, and healthy consumer spending pushed the economic outlook upward. On the other hand, 53.6% of bank CEOs reported that the Delta variant of COVID-19 was having rising negative economic impact," said Goss.
Bankers are also reporting a record-high farmland price index. This month, the index climbed to 85.2, up from August's 76.6 and marking one year of consecutive growth. At the same time, September's farm equipment-sales index climbed to 66.0 from 64.7 in August, continuing a pattern of the strongest consistent growth since 2012.
The new hiring index slipped to 67.9 from 70.3 in August. While that's still a strong reading, labor shortages continue to be a significant issue for rural businesses.
The home-sales index, which hit a record high in August at 84.4, slipped to 71.4 in September. Meanwhile, September's retail-sales index was 58.9, compared to 54.7 in August.
“Healthy farm prices and federal stimulus spending are having very positive impacts on Rural Mainstreet retail sales and home sales," said Goss.