Rural Mainstreet economy rises sharply in September
The rural economy increased for the first time since June according to the September survey of Creighton University’s Rural Mainstreet Index. The Rural Mainstreet Index increased sharply to 36.5 from 32.0 in August, and well above the February record low of 16.9 (a reading of 50.0 is considered growth neutral). The confidence index decreased slightly to 43.5 from 46.0 in August, despite positive economic news over the last few months.
Creighton University economist Ernie Goss said, "The RMI has remained below growth neutral for 19 consecutive months. After bottoming out earlier in the year, the index, which gauges overall economic activity, has indicated little improvement in the rural economy as reported by bankers."
In the September survey, bankers were asked when they expect the Federal Reserve to raise interest rates from their current record low 0% to 0.25%. 16% of respondents expect a rate hike before the second quarter of 2010 and 14% anticipate a rate increase to occur beyond 2010. The remaining 70% expect the Fed to raise interest rates in the final three quarters of 2010.
The expected decline in farm income related to lower agriculture commodity prices appear to be restraining growth in the Mainstreet economy. Bill Anderson, CEO of First State Bank, commented, “The recent decline in corn prices has us concerned as we enter harvest time.”
Farmland prices
Bankers also were asked how much farmland prices had changed over the past six months. Over 52% responded that farmland prices declined, while 8% responded that farmland prices had risen over the past six months. The September farmland-price index reflected this weakness with a reading of 41.1 which was down from 43.7 in August, but well above the record low of 33.1 from March of this year.
The RMI indexes are comprised of bank CEOs and presidents of a 10-state area. There are about 1,300 bankers surveyed each month.
- Colvin
Creighton University economist Ernie Goss said, "The RMI has remained below growth neutral for 19 consecutive months. After bottoming out earlier in the year, the index, which gauges overall economic activity, has indicated little improvement in the rural economy as reported by bankers."
In the September survey, bankers were asked when they expect the Federal Reserve to raise interest rates from their current record low 0% to 0.25%. 16% of respondents expect a rate hike before the second quarter of 2010 and 14% anticipate a rate increase to occur beyond 2010. The remaining 70% expect the Fed to raise interest rates in the final three quarters of 2010.
The expected decline in farm income related to lower agriculture commodity prices appear to be restraining growth in the Mainstreet economy. Bill Anderson, CEO of First State Bank, commented, “The recent decline in corn prices has us concerned as we enter harvest time.”
Farmland prices
Bankers also were asked how much farmland prices had changed over the past six months. Over 52% responded that farmland prices declined, while 8% responded that farmland prices had risen over the past six months. The September farmland-price index reflected this weakness with a reading of 41.1 which was down from 43.7 in August, but well above the record low of 33.1 from March of this year.
The RMI indexes are comprised of bank CEOs and presidents of a 10-state area. There are about 1,300 bankers surveyed each month.
- Colvin
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