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Floodwaters are rising in the Midwest and confidence among rural bankers in their region’s economies is falling, according to a long-term assessment of the rural economy released last week.
The Rural Mainstreet survey’s confidence index, which reflects bank CEO expectations for the economy six months out, fell to 45.7 in March from February’s 48.5. In addition, more than half of manufacturing supply managers reported negative economic impacts from flooding, according to the survey.
“March floods, tariffs, trade tensions, and anemic farm income negatively influenced the economic outlook of bank CEOs,” said Ernie Goss, economics professor at
Creighton University’s Heider College of Business, which produces the index.
Farmers facing financial stress are more likely to restructure loans, according to nearly 83 percent of bankers in the 10-state survey. “Another 14.3 percent indicated that farmers were slow paying their loans and 2.9 percent reported financially stressed farmers selling the farm to more economically viable farm operators,” the survey said.
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Despite weak farm commodity prices and farm income, rural businesses are hiring at improved rates—65.7 in March compared to February’s 60.6—an indicator that the rural economy is expanding outside of agriculture, said Goss.
The survey's overall index rose to 52.9 in March from 50.2 in February, the highest level since December 2018. Unlike the confidence index, which provides a longer-term assessment of economic health, the overall index measures activity in a given month.
Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming were surveyed.