Fears of trade disputes and tariffs are hitting rural America, with three-quarters of the bankers surveyed in a new report saying there's already been a negative impact on their local economy.
Rural Mainstreet Index came in at 53.8. While that's down from June's 56.1, it's a marked improvement from a year ago, when the index sank to 40.7. This is also the sixth consecutive month in which the index is above growth neutral, the first time that's happened since July 2014.
That said, there is cause for concern.
"Surveys over the past several months indicate the Rural Mainstreet economy is solid but with less positive economic growth," said Ernie Goss, a professor at Creighton University's Heider College of Business in Omaha, Nebraska, which compiles the index. "However, the negative impacts of recent trade skirmishes have begun to surface with the weakening of already anemic grain prices."
How anemic? In the words of Pete Haddeland, CEO of the First National Bank in Mahnomen, Minnesota, "Grain prices are at, in some cases, 10-year lows. Not good."
And it's not just grains.
"The trade issues/tariffs have been devastating on our local dairy industry when tacked on top of already below cost or break-even milk prices," said Fritz Kuhlmeier, CEO of Citizens State Bank in Lena, Illinois. Kuhlmeier and Haddeland are among the regional bank leaders in a 10-state area surveyed for the index.
When those bankers were asked to gauge the impact of the rising trade skirmishes and tariffs, 78 percent reported a negative impact on their local economy. That helped sink the confidence index to 42.7 in July, down from 48.8 in June.
"Just as last month, an unresolved North America Free Trade Agreement (NAFTA) and rising trade tensions/tariffs with China continue to be a concern," said Goss.
July's farmland and ranchland-price index remained below the growth-neutral mark of 50.0 for the 56th month in a row, though the 44.7 showing was up from June. The farm equipment-sales index was also up, but at 38.8 it's now below growth neutral for 59 straight months.
The home-sales index proved to be a bright spot, hitting its highest level in nearly three years: 65.9. Retail sales also increased from June, coming in at 51.2 for July.