Growth Unchanged from October for Rural Mainstreet Economy:
Bankers Expect Farmland Prices to Decline Next Year
November Survey Results at a Glance:
- Rural Mainstreet Index indicates rural economy continues to grow.
- Bank CEOs expect farmland to decline by an average of 1 percent over the next year.
- Approximately 17.9 percent of bankers expect the Federal Reserve to begin QE3 tapering before the end of the first quarter of 2014.
- Only 13.6 percent of bank CEOs agree with the EPA’s recommended cut in mandated ethanol levels.
- Region adds jobs for the month.
For Immediate Release: November 21, 2013
For Immediate Release: Nov. 21, 2013
OMAHA, Neb. – Growth for the Rural Mainstreet economy remains positive according to the November 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, was unchanged from October’s moderate 54.3.
“The overall index for the Rural Mainstreet Economy continues to point to positive, but slow economic growth in the months ahead,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.
Farming: For only the second time in the past 12 months, the farmland-price index advanced. The November index rose to 54.3 from 50.9 in October. “Despite the expansion in the index for the month, I expect farmland prices to grow at significantly slower rates for the first six months of 2014 than they did for the same period in 2013. In the November survey almost half, 49.1 percent, bankers indicated they expect farmland prices to decline by an average of 1 percent over the next 12 months,” said Goss.
Dan Coup, president of the First National Bank in Hope, Kan., said, “Based on sales at recent public auctions, it appears there is a definite weakness in prices (farmland) in some of our market areas. In my opinion due to two factors – declining wheat and corn prices and an increase in farmland acres being offered for sale.”
Bankers were asked for their response to the last week’s recommendation by the Environmental Protection Agency (EPA) to reduce the original 2014 mandated ethanol blend level by 20 percent. According to the November survey results, only 13.6 percent of bankers supported the EPA’s recommendation.
Farm equipment sales remained below growth neutral for the fifth straight month. The November index increased to a weak 47.3 from October’s 44.6. “According to bankers in our survey, farmers continue to reduce their purchases of big ticket items such as farm equipment,” said Goss.
Banking: The loan-volume index remained above growth neutral for the month at 56.9 but well down from October’s 64.7. The checking-deposit index soared to 72.0 from October’s 48.3, while the index for certificates of deposit and other savings instruments rose to a frail 44.8 from October’s 35.4.
Hiring: November’s hiring index sank to 54.4 from October’s 56.1. “Durable-goods manufacturers expanded jobs as nondurable goods producers, including food processors, lost jobs,” said Goss.
Confidence: The confidence index, which reflects expectations for the economy six months out, climbed to a weak 48.3 from 44.7 in October. “The lack of a farm bill, lower agriculture commodity prices and the EPA’s proposed changes in the mandated ethanol blending level weighed on bankers’ economic outlook,” said Goss
Home and retail sales: The November home-sales index declined to a still solid 56.2 from October’s 58.0. The November retail-sales index fell to 47.4 from 52.6 in October. “Much like the national housing market the Rural Mainstreet housing market continues to grow at a solid pace, even with the higher mortgage rates. On the other hand, the weaker retail reading should be a concern for businesses depending heavily on the holiday buying season,” said Goss. \
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