Growth in rural economy continues despite concerns over COVID, Afghanistan
Iowa’s rural economy is expected to continue growing over the next six months, but maybe at a slightly slower pace, according to a survey of rural bankers released Thursday.
Creighton University’s Rural Mainstreet Index for August showed Iowa’s index fell to 61.9, from 64.6 in July. Despite the decline, some of the indicators measured in the index performed stronger than in the previous month.
Iowa’s farmland-price index increased to 71.1, up from 67.8 in July, and the state’s new-hiring index grew to 66, from 64.6 the prior month. According to the survey, Iowa rural Mainstreet nonfarm employment expanded by 3.2% over the past year.
The survey asks community bank presidents and CEOs in rural areas to project the economic outlook for their communities for the next six months. It represents a snapshot of the economy in agriculture- and energy-dependent communities in a 10-state region including Iowa. It focuses on 200 rural communities with an average population of 1,300 people.
The index ranges from zero to 100, with 50 representing neutral growth.
For the region, the index remained above neutral growth for the ninth straight month, but dipped slightly to 65.3 in August, from 65.6 in July. The continued growth comes despite ongoing concerns with the COVID-19 pandemic and unrest in Afghanistan.
“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 25% above that for the same period in 2020,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton. “This has been a prime factor supporting the Rural Mainstreet economy.”
According to the survey, 34.4% of bank CEOs responding said their local economy expanded between July and August.
For the region, the farmland price index grew to 76.6, up from 71 in July. It was the 11th straight month the farmland price index remained above growth-neutral, the first time that’s happened since 2012-2013.
The farm equipment sales index declined nearly 3 points in August to 64.7, but the last several months have represented the strongest consistent growth in that indicator since 2012, the survey showed.
Regionally, the new hiring index jumped almost 3 points in August to 70.3, but labor shortages continue to be a big concern for businesses.
Confidence also took a hit in August, with that index decreasing for the third straight month to 59.7, down from 65.6 in July.
“Rising COVID-19 infections, the turmoil in Afghanistan, and negative views of [the infrastructure bills before Congress] damaged the economic outlook of bank CEOs,” Goss said.
Other highlights of the survey include:
- Approximately 15.6% of bankers reported that continuing drought conditions are the greatest threat to banking operations over the next 12 months.
- 40.6% of bank CEOs see low loan demand as their bank’s greatest challenge over the next 12 months.
- Home sales climbed to a record high for the month.