As the coronavirus pandemic continues, a monthly assessment of the rural economy shows recession fears among a majority of rural bankers.
this month’s Rural Mainstreet Index, “approximately 61.3% of bank CEOs expect the coronavirus to produce a recession in their market area,” said Ernie Goss, a professor at Creighton University’s Heider College of Business, which produces the index.
The overall index plummeted to 35.5 from February’s 51.6, the largest one-month drop since the survey began in January 2006. It’s the first reading below growth-neutral after six straight months above the 50.0 threshold. Any score above 50 suggests a growing economy, while a score below 50 indicates a shrinking economy.
The index, a real-time analysis of the rural economy in 10 states, is based on a survey of bank CEOs in some 200 rural communities with an average population of 1,300.
The survey’s confidence index, which reflects bank CEO expectations for the economy six months out, also registered its largest one-month drop since 2006: 28.3 in March after February’s favorable 58.1.
The survey showed that the coronavirus is also affecting banking operations, with nearly half of bankers reporting a decline in foot traffic over the last two weeks and 14.3% reporting an increase in staff absences.
The bankers said the pandemic also is pushing some rural residents to seek financial relief. “Almost one-fourth, or 23.8%, indicated that their bank had experienced higher loan applications resulting from the coronavirus threat,” said Goss.
More than half of bankers said they had a disaster plan to deal with COVID-19, while 29% reported their bank was still developing one.
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