Rural economic index hits record low

February 21, 2009


— A survey of bankers suggests the rural economy continues to falter in the face of national economic woes and widespread job losses.

The problems are reflected in the February report on a monthly survey of the bank executives in 11 Midwest and Plains states. The survey’s overall index dropped to 16.9 from January’s 24.6. It was the lowest reading since the survey first began in 2005.

A year ago, the index was at 50.0. An index greater than 50 indicates a growing economy over the next three to six months.

All states in the survey area are being hurt by the national and global recession, said Creighton University economics professor Ernie Goss.

Goss and Bill McQuillan, CEO of City National Bank in Greeley, Neb., created the survey, which covers Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming.

Goss said weak energy prices are hampering growth in Colorado, Montana, North Dakota and Wyoming. Other states are hurt by downward pressures on farm income.

The survey’s farmland index rose slightly to 38.3 from January’s 36.6. That’s well below the high of 81 the farmland index hit last January.

“Land prices have leveled off and in some instances have dropped slightly,” said Dale Torpey, president of Federation Bank in Washington, Iowa. “If some of the farmers can’t renegotiate their rent prices, we could be looking at losing some of them in 2010.”

The survey’s confidence index, which reflects expectations for the economy six months from now, slipped to 21.2 from January’s 25.9. The outlook for rural retail sales remained weak. That index hit a record low of 18.4, down from January’s 24.2

Almost 200 communities are represented in the survey. The average population is about 1,300.


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