While federal subsidy payments have helped the overall Midwest rural economy improve, a survey of bank chief executives found continuing problems.
The Creighton University Rural Mainstreet Index climbed to 55.9 last month, from 50.2 in December, its highest level since June 2018.
It was the fifth straight month the reading has moved above 50 in the 10-state region dependent on agriculture and/or energy.
Readings above 50 indicate an expanding economy and those below 50 show a declining economy.
Borrowing by farmers weakened again in January with loans falling to the lowest level in almost seven years. The borrowing index declined to 48.5, its lowest level since February 2013, from December’s 50.
Despite the decline in borrowing, only 17.7 percent of bank CEOs reported that their local economy was in an economic downturn, according to Ernie Goss, regional economics professor at Creighton University’s Heider College of Business.
“This is an improvement from a year ago when 22.9 percent indicated that their local economy was in a recession or economic downturn,” Goss said in a statement accompanying the survey.
The confidence index, which reflects bank CEO expectations for the economy six months out, increased to a still weak 50, from 45.8 in December. The index continues to indicate a negative economic outlook among bankers.
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“Creighton’s January survey was conducted before the signing of the Phase 1 trade agreement with China and the Senate passage of United States-Mexico-Canada Agreement,” Goss said. “I expect the passage of USMCA and the Jan. 15 trade agreement with China will boost business confidence in the months ahead.”
Iowa’s Rural Mainstreet Index for January increased to 56.1 from December’s 53.5. The state’s farmland price index slumped to 45.3 from December’s 52.5.
Iowa’s new-hiring index for January advanced to 57.2 from December’s 48.7. Over the past 12 months rural areas have experienced job losses with employment growth at minus 0.6 percent compared with a stronger 1.1 percent increase for urban areas of the state.