Rural mainstreet index falls below growth neutral for 16th time in 17 months

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Iowa’s rural mainstreet index continued its slide in January, dropping to 40.7 from 41.7 in December and 49.6 in November.

The state’s farmland price index dipped to 41.3 from 41.5 in December, but the new hiring index improved to 46.2 from 45.5.

For the 16th time in the past 17 months, the 10-state region’s overall rural mainstreet index reading was below growth neutral but improved to 42.3 in January from December’s 39.6. The index ranges from 0 to 100, with a reading of 50.0 representing growth neutral.

Iowa exports of agricultural goods and livestock for the first 11 months of 2024 sank by $25.1 million from the same period in 2023 for a 1.6% reduction, according to trade data from the International Trade Association. However, regional exports of agricultural goods and livestock for the rose by $673.4 million to $11.6 billion in the first 11 months of 2024, up 6.2% from the same period in 2023, the data shows.

Bankers surveyed expect about 1 in 5 grain farmers to experience negative cash flow for 2025.

“Despite another one-year extension of the Farm Bill, and $20.8 billion in farm disaster relief, the farm (grain) economic outlook remained weak for the first half of 2025,” Ernie Goss, Creighton University’s chair in regional economics, said in a prepared statement. “However, grain prices have recently improved, but not enough for profitability for many producers. On the other hand, regional livestock producers continue to experience solid prices, thus maintaining profitability.”

The region’s farmland price index increased slightly to 42.0 from 41.3 in December, remaining below growth neutral for the eighth time in the past nine months. “Elevated interest rates and higher input costs, along with below breakeven grain prices for some farmers in the region, have put downward pressure on ag land prices,” Goss said.

The farm equipment sales index improved to 17.4 from December’s 14.3, which was the lowest reading since October 2016. “This is the 18th straight month that the index has fallen below growth neutral,” Goss said. “High input prices, tighter credit conditions and weak farm grain prices are having a negative impact on the purchases of farm equipment.”  

Other regional findings from the report include:

  • The loan volume index dropped to 60.0 from 69.6 in December; the checking deposit index improved to 48.0 from 47.8; and the index for certificates of deposits and other savings instruments climbed to 58.0 from 50.1.
  • The new hiring index increased to 47.9 from 45.7.
  • The January confidence index rose to 42.3 from 37.5. “Improving, but still weak agriculture commodity prices and negative farm cash flows, combined with downturns in farm equipment sales over the past several months, continued to push banker confidence below growth neutral,” Goss said.  
  • The home sales index dropped to 40.0 from 43.5.
  • The retail sales index sank to 44.0 from 52.1.