A key barometer of the rural economy improved this month, but experts said many in the heartland still can't shake off fears of trade wars and tariffs.
Rural Mainstreet Index rose a full point from July to August, coming in at 54.8. This makes seven consecutive months in which the index has been above the growth-neutral mark of 50.0.
"Surveys over the past several months indicate the Rural Mainstreet economy is expanding outside of agriculture," said Ernie Goss, economics professor at Creighton University's Heider College of Business, which produces the index. But he cautioned that all is not well.
"Just as last month, an unresolved North America Free Trade Agreement (NAFTA), rising trade tensions/tariffs with China and opening trade battles with Turkey are big concerns," said Goss.
"The negative impacts of recent trade skirmishes have begun to surface, weakening already anemic grain prices."
While the confidence index climbed to 46.5 in August, the report called that "weak" and indicative of "a pessimistic economic outlook among bankers."
Indeed, community bankers in 10 states were asked their position on recently implemented and proposed tariffs on imported goods. Just over half support cutting or eliminating those tariffs, while nearly 42 percent favor continuing current tariffs and trade policy. Another 7 percent want a more hawkish approach by raising tariffs.
Jeffrey Gerhart, chairman of the Bank of Newman Grove in Nebraska, didn't mince words.
"Agriculture has been hurt and will continue to be hurt by the current trade war," said Gerhart. "Tariffs are not good for our farmers. Tariffs are not the answer."
August's farmland and ranchland-price index remained unchanged at 44.7, marking 57 months in a row below growth neutral. Nearly a third of the bankers surveyed said they're rejecting a higher percentage of farm loans because of weak farm commodity prices and income.
The August farm equipment-sales index fell a full point this month to 37.8. It's now been below growth neutral for 60 straight months.
Among the bright spots, the employment gauge improved to 68.7 this month, up from July's 65.6.
"The Rural Mainstreet economy is now experiencing positive job growth. Over the past 12 months, the Rural Mainstreet economy added jobs at a 1.1 percent pace," the report said.