Rural economy positive, still faces uncertainty

Bank CEO sentiments were stagnant but remained positive this month as farmland prices and optimism remained weak, according to Creighton University’s rural mainstreet index. The index fell to 50.6 from 51.9 in June, the first time it's been above the growth-neutral score of 50 since July and August 2023. .The farmland prices index fell below 50 for the 14th time in the past 15 months, increasing seven points to 47.9. Bank CEOs, on average, expect farmland prices to fall nearly 3 percent over the next 12 months. “Elevated interest rates, higher input costs and volatility from tariffs have put downward pressure on farmland prices,” said Ernie Goss, chair in regional economics at Creighton University.Rural bankers remained pessimistic over economic growth for the next six months, with July’s confidence index falling one point to 37.0. Goss attributed the drop to lackluster grain prices and negative farm cash flows along with concerns over potential tariff retaliation. Forty percent expected higher tariffs from President Donald Trump to be met with retaliation among trading partners, therefore hampering farm income. Lower farm commodity prices caused July’s loan volume index to reach a record high of 87.5 from 73.1. More than three-in-four bankers named low commodity prices as the top threat to the farm economy over the next 12 months, while less than 20 percent cited tariffs. The checking deposit index increased to 45.8 from 40.4 in June, while the index tracking certificates of deposits and other savings instruments increased to 56.3 from 50.2. The farm equipment sales index dropped below 50 for the 23rd straight month, falling to 16.7 from 22.7 in June. “High input costs, tighter credit conditions, low farm commodity prices and market volatility from tariffs are having a negative impact on the purchases of farm equipment,” Goss said.Other July report findings included:The new hiring index fell two points to 50.0 as job gains for non-farm employers have been positive but relatively weak for the past several months. The home and retail sales index fell to 48.0 from 51.9. Regional retail sales were still relatively weak at 47.8, up from 44.2 in June. The survey includes bank CEOs in rural areas of a 10-state region depending on energy and/or agriculture: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.