Community Bankers of Iowa Monthly Banker Update November 2013 | Page 18
Creighton
Main Street
Economic Survey
Ernie Goss
U N I V E R S I T Y
Growth Expands for Rural Mainstreet Economy:
Federal Shutdown Affecting One-Fourth of Mainstreet Economy
October Survey Results at a Glance:
• Rural Mainstreet Index indicates rural economy improved
over the past month.
• October blizzards in western Nebraska and South Dakota
are expected to have significant negative impacts on livestock producers in the weeks and months ahead.
• Approximately one-fourth of bank CEOs reported that the
federal shutdown had a negative impact on their local
economy.
• Bankers expect cash farmland rents to expand by only 2.5
percent over the next 12 months.
• Approximately 87.9 percent of bankers support the construction of the Keystone XL pipeline.
Growth for the Rural Mainstreet economy remains positive according to the October survey of bank CEOs in a 10-state area.
Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, rose for
the first time since June of this year to 54.3 from 52.4 in September.
“While the overall index is up for the month, I still expect growth
in the Rural Mainstreet Economy to be slower in the months
ahead. Agriculture commodity prices for select products have
declined significantly and are approaching breakeven for some
producers,” said Ernie Goss, the Jack A. MacAllister Chair in
Regional Economics at Creighton University.
Farming: The farmland-price index declined for the 10th time
in the past 11 months. The October index fell to 50.9, its lowest
level since January 2010, and down from September’s 54.0.
“Weaker agriculture commodity prices and poor weather conditions in some parts of the region lowered the farmland price
index. Clearly, farmland price growth and cash rent expansions
in the months ahead will not be as healthy as has been experienced in the past couple of years,” said Goss.
Even so, we are still seeing some record prices for cropland in
the region. For example, James Brown, president of Hardin
County Savings Bank in Eldora, Iowa, reported a record sale
of 80 acres in Grundy County last week for $17,600 per acre.
The early snowstorms in Nebraska and South Dakota are expected to have significant negative impacts on livestock producers in the months ahead and will likely spill over into the broader
economies in those areas. According to Todd Douglas, CEO of
the First National Bank in Pierre, S.D., “Recent record snowfall
in the western part of the state is estimated to have caused up to
16
CBI Banker Update
.
November 2013
25,000 cattle deaths which will have a major impact on producers in the areas hit hardest by the storm. However, winter wheat
progress is promising with the recent moisture over the rest of
the state.”
This month bankers were asked to how much they expect
farmland cash rents to increase by over the next 12 months. On
average, CEOs estimate that cash rents will expand by only 2.5
percent. This is down significantly from the 9.3 percent expected
growth reported by bankers six months earlier. “Bankers clearly
expect farmland prices and rents to grow at a much slower pace
over the next year,” said Goss.
Farm equipment sales declined for the fourth straight month.
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