Business

Almost a quarter of rural bank CEOs see Midwest rural recovery

September hiring exceeded layoffs, furloughs

Ernie Goss

Creighton University
Ernie Goss Creighton University

A monthly survey of rural bankers in Iowa and nine other Midwestern states found almost a quarter — 23.1 percent — said their local economies were back to pre-coronavirus levels.

Since falling to a record low in April, the Creighton University Rural Mainstreet Index has increased for five straight months, but it remained in recession territory this month.

The overall index for September increased to 46.9 from August’s 44.7.

“Recent improvements in agriculture commodity prices, federal stimuli and Federal Reserve record low interest rates have underpinned the rural mainstreet economy,” said Ernie Goss, Creighton University regional economics professor who supervises and compiles the monthly survey.

“Bank CEOs estimated that farm income, including government support, was down only 1.5 percent from this time last year.”

Borrowing by farmers expanded for September, and at a faster pace than in August. The borrowing index expanded to 60.9 from August’s 53.9.

Hiring for September exceeded layoffs and furloughs for the month. The new hiring index rose to 54.8 from 47.4 in August.

Data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment levels for the region are down by 222,000 or 5 percent, compared with pre-COVID-19 levels.

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“It will take many months of growth to get back to pre-COVID-19 employment levels for the region,” Goss said.

The confidence index, which reflects bank CEO expectations for the economy six months out, improved to 50, from August’s 44.6.

“COVID-19-related farm support payments and improving gain prices have boosted confidence offsetting pessimism from the impact of the derecho in several of the survey states,” said Goss.

On Friday, the federal government it will hand out an additional $14 billion to farmers to compensate them for difficulties selling their crops, meat and milk due to the pandemic, the Associated Press reported.

The U.S. Department of Agriculture has estimated that 550,000 acres of Iowa corn will not be harvested this fall due to damage caused by the Aug. 10 windstorm that swept across the state.

Approximately 38.7 percent of bankers indicated government support by way of the CARES Act and the Paycheck Protection Program were crucial to their local economy.

Only 3.8 percent said these two programs had little or no impact.

The home-sales index climbed to a strong 75.0 from August’s 68.9. The retail-sales index for September increased to a frail 43.8, from August’s 38.2.

“Higher unemployment and business closures linked to COVID-19 continue to harm the region’s retailers,” Goss said.

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The September Rural Mainstreet Index for Iowa dipped to 46.5 from 46.8 in August. Iowa’s farmland-price index slumped to 42.8, from 53.2 in August.

Iowa’s new-hiring index for September rose to 54.7 from 51.7 in August.

Compared with the same month last year, Iowa’s Rural Mainstreet economy has lost 6.8 percent of its nonfarm employment, representing 47,000 jobs.

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