Mainstreet sentiment dips despite economic performance

Two monthly surveys registered lower confidence in the outlook for the U.S. economy, despite solid growth, a stable job market, strong business investment and forecasts for more of the same..September results for the University of Michigan’s Surveys of Consumers sank to the lowest reading in four months, marking a 15 percent decline since the beginning of the year. Consumers’ views of their personal finances, both at the moment and for the year ahead, dropped by about 10%. Some moved ahead with durables purchases thinking it would help them avoid higher prices in the future. Concerns about persistent inflation drove year-ahead inflation expectations to their highest level since June. The September reading “substantially exceeds the 3.4 percent seen in February before the Iran conflict began, along with all 2024 readings,” said Joanne Hsu, director of the survey.The outlook for business conditions deteriorated too, Hsu said, “amid renewed worries that elevated fuel prices and re-escalating trade disputes could pass through to the economy as a whole.”The latest Rural Mainstreet Index from Creighton University also showed persistent pessimism, with results falling below the growth-neutral rating of 50 for the fourth time in six months.The index, which focuses on about 200 “agriculturally- and energy-dependent” communities in 10 states, fell nearly six points from August, to 44.7. In assessing the outlook for business and credit conditions, bankers in the index identified a number pressures that were likely to bear on customers. More than 52 percent said higher fertilizer costs were causing the greatest financial pressure, and the remaining respondents ranked “soaring fuel costs as the top factor.” 79 percent said tariffs were “having a negative impact on the agriculture and livestock economy.” “Pessimism from higher fuel and fertilizer costs exceeded the optimism stemming from higher grain prices,” said Ernie Goss, PhD, Creighton professor and co-creator of the index.In aggregate, regional exports expanded for the first seven months of the year but haven’t rebounded to 2024’s pre-tariff levels. And the expansion only occurred in half the states included in the index. Exports declined for Colorado, Missouri, Nebraska, North Dakota and South Dakota. The prime factor in the two-year slump is “a 59.9 percent slide in the 2024-2026 export of agriculture and livestock to China,” Goss said.Farm- and ranchland values were a relative bright spot, rising above growth neutral to 50.1 in September. But the index tracking farm equipment sales was below growth neutral for the 37th-consecutive month.