A monthly assessment of the rural economy has returned to pre-pandemic levels, but bankers are continuing to worry about recessions and other negative effects of COVID-19 on local economies.
Rural Mainstreet Index for October climbed to 53.2 from 46.9 in September, the sixth straight month of growth and highest assessment since January. Any score above 50 suggests a growing economy, while a score below 50 indicates a shrinking economy.
The confidence index, which reflects bank CEO expectations for the economy six months out, also improved this month, to 51.6 from September's 50.0.
Still, bankers have areas of concern, with more than one-third reporting recessions in their areas.
“Recent improvements in agriculture commodity prices, federal farm support, and the Federal Reserve's record low interest rates have underpinned the Rural Mainstreet Economy, but still more than one-third, or 35.5%, of bank CEOs reported their local economies were experiencing recessionary economic conditions," said Ernie Goss, a professor at Creighton University's Heider College of Business, which produces the index.
Uncertainty about a COVID-19 vaccine is another cause for pessimism among bankers. “This will hurt our hopes for an economic recovery looking forward," said Lonnie Clark, president of the State Bank of Chandler in Minnesota.
This month, bankers were asked to identify the industry in their area most harmed by the pandemic. More than eight in 10 respondents said restaurants and bars either have shut down or reduced hours because of the pandemic. Other hard-hit areas identified by bankers were farming (3%), medical care (3.4%), retailers (6.3%) and hourly workers (6.7%).
The retail-sales index for October increased to 46.8 from September's 43.8 but was still below growth-neutral.
“Higher unemployment and business closures linked to COVID-19 continue to harm the region's retailers," said Goss.