Mainstreet Economy

Farming and ranching land prices:  For the sixth time in the past seven months, farmland prices sank. However, the region’s farmland index improved to a weak 44.4 from October’s six-year low of 38.5. “Elevated interest rates and higher input costs, along with below break even grain prices, have significantly reduced farmer demand for ag land,” said Goss.

On average, bank CEOs expect farmland prices to decline by 2.7% over the next 12 months.  

Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois said, “The pending FARM Act (H.R. 10045 - Farmer Assistance & Revenue Mitigation Act), if approved by Congress, would provide a huge boost to the ag and rural economy in our market area. With per acre estimates of about $100 for corn and almost $50 for soybeans, this targeted relief to farmers that suffered due to extremely low commodity prices (below the cost of production) for their 2024 harvest would at least recover part of their operating losses. Our bank is optimistic that this much needed legislation will pass.”

According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for 2024 year-to-date rose to $8.73 billion from $8.64 billion from the same period in 2023 for a 1.1% gain.

Farm equipment sales: The farm equipment sales index slumped to 14.6, its lowest level since October 2016, and was down from 18.8 last month. “This is the 16th straight month that the index has fallen below growth neutral. High borrowing costs, tighter credit conditions and weak farm commodity prices are having a negative impact on the purchases of farm equipment,” said Goss. 

Banking:  The November loan volume index declined to a solid 58.9 from a strong 73.1. The checking deposit index fell to 59.3 from 63.7 in October. The index for certificates of deposits (CDs) and other savings instruments sank to 53.7 from 63.5 in October. The Federal Reserve’s higher interest rate policies have boosted CD purchases above growth neutral for 24 straight months.

Hiring:  The new hiring index for November was unchanged from October’s 50.0.

Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The November confidence index increased to a weak 46.4, its highest level since March 2022, and up from October’s 29.6. “Weak agriculture commodity prices and negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to place banker confidence below growth neutral,” said Goss. 

Home and retail sales:  Home sales sank to 42.6 from October’s weak 46.3. Likewise, retail sales in the region were very weak with a November reading of 42.0, up from October’s even weaker 36.0.

“High consumer and farmer debt, elevated interest rates and weaker farm income are cutting into retail sales for the Rural Mainstreet Economy,” said Goss.

The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index that covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former Chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.