Regional economy weakens as pessimism grows

The regional economy weakened this month as bank CEOs were more pessimistic over future economic conditions, according to Creighton University’s July rural mainstreet index. .The index, which tracks the sentiments of bank CEOs in rural areas of a 10-state region, fell below the growth-neutral score of 50 for the fifth time in the past six months, to 42.1 from 52.6 in June. Rural bankers were pessimistic over potential economic growth in the next six months, with the economic confidence index falling to 34.2 from 42.1 in June. “Weak grain prices, higher input costs and volatility stemming from the Iran War continue to weigh on banker confidence,” said Ernie Goss, chair in regional economics at Creighton’s Heider College of Business.Recent diplomacy to end the war in Iran has ended, with the United States continuing to strike Iranian targets and putting back into place naval blockades in response to attacks from Iran on commercial shipping in the Strait of Hormuz. The farm and ranchland value index increased above 50 for the third straight month, but dropped to 52.8 from 55.3 in June. The regional farm equipment sales index signaled contraction for the 35th straight month, falling one point to 27.8 amid negative cash flow and volatility from trade and tariffs. “Though farm and ranchland values have been holding up much better than farm and ranch income, weak farm income, lower farm liquidity and somewhat tougher credit standards have restrained growth in farmland values,” Goss said. More than half of bankers said their banks had not tightened credit standards in the last three months, while 46.3 percent said they had tightened “somewhat.” Fifty-two percent said lackluster commodity prices will be the No. 1 challenge to the ag economy in the coming months.The hiring index increased to 50.1 from 47.4 in June. Goss said the rural job market has been weak for several months. States included in the survey are Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. Other report findings included: Lackluster grain income and increasing input costs sparked a drop in the home sales index to 44.7 from 50.0 in June. July’s regional retail sales index fell to 41.6 from 42.1 last month.July’s loan volume index dropped to 73.7 from 76.3 in June, while the checking deposit index fell to 50.0 from 57.9. The region’s certificates of deposit index increased to 52.6 from 47.4 in June. Fifty-eight percent of CEOs said their banks are going to use, or are already using, artificial intelligence to detect fraud.