Rural business continues to slump
The Rural Mainstreet Index (RMI), which ranges between 0 and 100, fell to 49.3 in August from July’s healthy 55.7. This was the third straight month that the index declined and put the measure below a growth-neutral reading of 50 for the first time since October 2010.
The RMI for Iowa slumped to 50.8 from July’s reading of 58.7.
Creighton University economist Ernie Goss said: “The Rural Mainstreet economy is clearly slowing down. According to our August survey, more than one-third, or 35 percent, of bank executives expect the U.S. economy to dip into recessionary territory before the end of 2011.”
The monthly economic survey gathers opinions from bank CEOs in 10 states.
The farmland price index advanced to 61.9 from 59.4, and the farm equipment sales index expanded to 56.9 from July’s 53.7. The bank loan volume index for August slipped to 62.1 from 66.4 in July.
Jim Ashworth, president of Carlinville National Bank in Carlinville, Ill., said bankers were continuing to experience disappointment with the U.S. Treasury Department’s approval and administration of the Small Business Lending Fund (SBLF).
August’s Rural Mainstreet jobs index was unchanged from July’s 49.3. “Healthy farm income has produced very little to no new hiring by Rural Mainstreet businesses,” Goss said.
The economic confidence index, which reflects expectations for the economy six months out, plummeted to 44 from July’s 55. According to one bank executive, “The downgrade of U.S. debt by S&P (Standard and Poor’s) has created a great deal of uncertainty both locally and throughout the country. I think this will continue to erode consumer confidence and, subsequently, put the country back in a recession.”