While rural banks and businesses are seeing slight improvement from the economic havoc caused by the COVID-19 pandemic, weak retail sales, layoffs and low commodity prices persist in the heartland, according to a monthly survey.
Rural Mainstreet Index remained below growth neutral at 44.7—a slight uptick over July’s 44.1 and a big upswing compared to April’s record low of 12.1. Any score below 50 suggests a shrinking economy, while a score above 50 suggests a growing economy.
Farm commodity prices are down by 10.4% over the last 12 months, said Ernie Goss, economics professor at Creighton University’s Heider College of Business, which produces the index.
“As a result, and despite the initiation of $32 billion in USDA farm support payments in 2020, only 8% of bankers reported their area economy had improved compared to July, while 18.4% said economic conditions had worsened,” Goss said.
August’s confidence index, reflecting expectations for the economy six months out, inched up to 44.6 from July’s 43.9.
“COVID-19 related farm support payments have boosted confidence, partially offsetting pessimism from weak agriculture commodity prices, frail retail sales and August storms,” he said.
Layoffs in the survey’s 10-state area exceeded new hiring, which had an index reading of 47.4, down from July’s 50.0. Federal data shows that job levels are down by 225,000, or 5.1%, compared to pre-COVID-19 levels in the 10 states.
“It will take many months of above-growth neutral readings to get back to pre-COVID-19 employment levels for the region,” said Goss.
The retail sales index for August slumped to 38.2 from July’s 41.2. “Business shutdowns linked to COVID-19 continue to harm the region’s retailers,” said Goss.