Rural economy remains weak amid rising costs, tariffs

Rural bankers continue having a weak economic outlook amid high interest rates, rising input costs and tariff-fueled volatility, according to Creighton University’s May rural mainstreet index..The index dropped below 50 for the 20th time in the past 21 months, increasing to 44.0 from 40.0 in April, according to the monthly survey of bank CEOs. “The economic outlook for 2025 farm income remains weak, according to bank CEOs,” said Ernie Goss, chair in regional economics at Creighton University’s Heider College of Business. Rural bankers continued to lack optimism about economic growth over the next six months, with May’s confidence index dropping to 30.0 from 36.0 in April. “Weak grain prices, negative farm cash flows, combined with tariff retaliation concerns pushed banker confidence lower,” Goss said. Farmland prices and farm equipment sales remained low, Goss said. The index for farmland prices fell below the growth-neutral mark of 50 for the 12th time in the past 13 months, dropping to 39.6 from 41.7 in April. The index for farm equipment sales dropped below 50 for the 21st straight month, increasing only to 23.9 from 17.4 in April. More than two-thirds named lower agriculture commodity prices as their top farming threat, while 23.5 percent cited higher tariffs as the No. 1 risk factor. Regional exports of agriculture goods and livestock fell 19.3 percent in the first quarter of the year to $2.7 billion from $3.4 billion in the same period of 2024. Mexico was the top spot for regional ag and livestock exports with more than half, according to the report. May’s loan volume index increased to 75.0 from 70.8 in April, while the checking deposit index dropped to 45.8 from 58.7 in April. The index for certificates of deposits and other savings instruments grew to 60.4 from 58.3 in April. The survey tracks 10 states: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. Other report findings included: Home sales remained weak this month, with the related index rising to 47.9 from 45.8 the previous month. The regional retail sales index remained relatively weak, rising to 41.7 from 39.6 in April. May’s new hiring index increased to 52.1 from 43.8 in April as job gains for nonfarm employers have been low for the past several months. 54.2 percent support extending the 2017 Tax Cuts and Jobs Act.