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(Omaha, NE) -- The latest economic report released by Creighton University finds continued, pressure on the ag economy. Creighton Economics Professor Ernie Goss says after rising above growth neutral last month for the first time since July 2023, the overall Rural Mainstreet Index (RMI) sank below the 50.0 reading in December, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. Goss says while farm income is down, farm loan delinquencies are also low. He also expects the ag economy to be better next year than this year.
December 2024 Survey Results at-a-Glance:
For the 11th time in 2024, the Rural Mainstreet Index dropped below growth neutral.
For the 7th time in the past eight months, farmland prices sank.
Farm equipment sales dropped for the 17th straight month.
On average, farm loan delinquency rates rose by only 1.2% over the past six months.
Approximately one in five bank CEOs expect a recession in 2025.
According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for 2024 year-to-date rose to $9.98 billion from $9.71 billion from the same period in 2023 for a 2.8% gain.
Roughly, 21.7% of bankers indicated that their bank had raised credit standards over the past 12 months.
Overall: The region’s overall reading for December plummeted to 39.6 from November’s much-stronger 50.2. It was 11th time this year that the overall reading has fallen below growth neutral. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“In retrospect, and based on bank CEO comments, there appears to have been a significant November upturn resulting from the surprising Trump election results. That positive bump disappeared in December as continuing weak grain prices and farm income losses weighed on a significant proportion of farmers in the region,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
As reported by Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois, “Our area farmers continue to be hurt by increased input prices, higher interest rates and low commodity prices.”
Approximately one in four bankers reported that their local economy was either currently in a recession or would enter a downturn in 2025. The remaining three of four bankers expect slow growth but no recession for 2025.
Other comments from bankers in December:
Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, said, “Based upon reluctance of Congress to pass the FARM Act and assist farmers of all sectors, the continued commodity price crisis will continue into 2025.”
Larry Winum, CEO of Glenwood (Iowa) State Bank, said, “I want to express my condolences to the Bill McQuillan family with his recent passing. Bill was an awesome community banker and advocate for the industry. I know he worked closely with Dr. Goss to create the Mainstreet survey that we all benefit from each month. Rest in peace my friend!”
Farming and ranch land prices: For the 7th time in the past eight months, farmland prices sank. The region’s farmland index fell to 41.3 from November’s weak 44.4. “Elevated interest rates and higher input costs, along with below breakeven grain prices for some farmers in the region, have significantly reduced farmer demand for ag land,” said Goss.
Jeff Bonnett, CEO of Havana National Bank, said, “The pessimistic view in my responses comes from the fact that we are pretty much a "grain production" funding Ag bank. That is the makeup of the market that we serve.”
Farm equipment sales: The farm equipment sales index slumped to 14.3, its lowest level since October 2016 and down from 14.6 in November. “This is the 17th 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 December loan volume index advanced to 69.6 from November’s solid 58.9. The checking deposit index fell to 47.8 from 59.3 in November. The index for certificates of deposits (CDs) and other savings instruments sank to 50.1 from 53.7 in November. Federal Reserve interest rate policies have boosted CD purchases above growth neutral for 25 straight months.
Hiring: The new hiring index for December dropped to 45.7 from November’s 50.0.
Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The December confidence index slumped to 37.5 from November’s weak 46.4. “Weak agriculture commodity prices and negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to push banker confidence below growth neutral,” said Goss.
Home and retail sales: Home sales improved slightly to a weak 43.5 from 42.6 in November. On the other hand, regional retail sales, much like the nation’s, were stronger with a reading of 52.1, up briskly from November’s reading of 42.0.