Economic conditions continue to deteriorate according to Creighton University’s Rural Mainstreet Index. The confidence index, which shows bank CEO’s expectations of the economy 6 months out, fell below neutral growth to 44.6 from June’s 52.2. The overall Rural Mainstreet Index fell to 32.6 from 34.0 last month. The indexes are compiled from bank CEOs from an 11-state region.

Creighton University economist Ernie Gross, who created the index, said, “The RMI has remained below growth neutral (50) for 17 consecutive months. After appearing to bottom out earlier in the year, the index, which gauges overall economic activity, is now trending downward.” Farm equipment sales and land price indexes have been low as well, this month they read 36.2 and 41.4 respectively. 

One third of bank CEOs believe that 2009 farm income will be lower than in 2008 because of lower grain prices. Bradley Robson of First State Bank in Belmond, Iowa said “It appears that yields will be 10-15 percent higher than last year, however, prices will be down close to 25 percent.”

This month, the CEOs were asked if they thought that the 2009 federal stimulus package impacted the Rural Mainstreet economy. About 1/3 of CEOs said it did no help, while 2/3 believed that the impacts were small. No respondents indicated that the impacts were meaningful. 

When the economy is slow, land sales slow down as well. It makes sense that the farm equipment, farmland price, homes sales, and retail business indexes are all extremely low. Buyers and sellers are timid during these times. This creates a good time to invest in farmland. As soon as land becomes available, expect farmland prices to climb once again.

Now that USDA planting reports have come out, we’ll turn our attention to yield reports in the future and see if the rural economy can’t turn around soon.

-Colvin