Rural economy index reaches 2 1/2 year high

The rural economy improved this month, with the rural mainstreet index climbing to its highest level since mid-2023, according to Creighton University’s monthly survey of bank CEOs across a 10-state region..The index increased to 52.0 from 50.1 in December, higher than the growth-neutral threshold of 50. Despite the improvement, more than one-third of surveyed bankers said their local economy remains in a recession, and confidence over the months ahead is still relatively limited.“Weak grain prices, high input costs and trade uncertainty continue to weigh on rural communities,” said Ernie Goss, chair in regional economics at Creighton’s Heider College of Business.Bankers remain divided on monetary policy before the Federal Reserve’s meeting later this month. Nearly one in four respondents said they support a quarter-point cut in short-term interest rates during the Jan. 27-28 meeting, while roughly three-quarters favor leaving rates unchanged. Almost 40 percent of bankers support reducing tariffs imposed under President Trump, citing ongoing pressure on farm income and export demand.Ag conditions continue dragging on the rural economy. The index tracking farm and ranchland prices slipped back under 50 after a brief rise in December, and farm equipment sales remained depressed for the 29th straight month.Regional exports of agricultural goods and livestock fell 2.4 percent in the first 10 months of 2025 compared with the same period a year earlier, according to International Trade Administration data.Banking conditions were mixed. Loan volume slowed from December but remained strong, according to the report, while deposit activity was stable. Certificates of deposit showed modest improvement. Hiring conditions edged up to a neutral reading, though job growth among nonfarm rural employers has been soft in recent months.Consumer-related indicators reflected caution. Home sales improved from December but stayed below growth neutral, while retail sales weakened after a strong holiday season. Banker confidence about economic growth over the next six months improved to its highest level in nearly two years but remained pessimistic, according to Creighton.