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Rural Mainstreet Economy Surging: Farmland Prices at Record High
USAgNet - 11/23/2021

For the 12th straight month, the Creighton University Rural Mainstreet Index (RMI) remained above growth neutral, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region's overall reading for November rose to 67.7 from October's 66.1. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

"Solid grain prices, the Federal Reserve's record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. USDA data show that 2021 year-to-date agriculture exports are more than 23.2% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy," said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Farming and ranching: The region's farmland price index improved to a very strong, and record high of 85.5 from October's 81.5. October's reading represented the 15th straight month that the index has moved above growth neutral.

Jim Eckert, president of Anchor State Bank in Anchor, Ill., said, "Harvest started well, but was delayed by rains in October. Corn harvest is now nearly complete, but lots of soybeans remain to be combined."

The November farm equipment-sales index slipped to a strong 62.1 from 64.8 in October. Readings for farmland prices and equipment sales over the last several months represent the strongest consistent growth since 2012.

Banking: The November loan volume index slipped to 53.2 from October's 53.6. The checking-deposit index advanced to 71.0 from October's 66.1, while the index for certificates of deposit, and other savings instruments increased to 32.3 from a very weak 32.1 in October.

Hiring: The new hiring index dropped to a still robust 67.7 from 71.4 in October. Labor shortages continue to be a significant issue for Rural Mainstreet businesses.

Despite recent strong job gains, U.S. Bureau of Labor Statistics data indicate that, compared to its pre-COVID-19 level, Rural Mainstreet has lost 2.5% of its nonfarm employment (non-seasonally adjusted).

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out sank for the fifth straight month to 48.4, its lowest level since August of last year, and down from October's 51.8.

Home and retail sales: The home-sales index sank to a healthy 65.0 from October's 73.2. The retail-sales index for November climbed to 58.1 from 55.4 in October. "Healthy farm prices and federal stimulus spending are having very positive impacts on Rural Mainstreet retail sales and home sales," said Goss.

This month the Creighton survey asked bank CEOs to estimate holiday and Christmas retail sales in their area. On average, bankers expect holiday and Christmas sales to expand by 5.7% from the same period last year.

The survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005 and launched in January 2006.

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