Rural Mainstreet Index signals Ongoing Economic Weakness
For the ninth time in 2025, the overall Rural Mainstreet Index fell below growth neutral, according to a monthly survey of bank CEOs in a 10-state region reliant on agriculture and/or energy. Despite improvements in data for each individual state,including Iowa,bank executives anticipate a rural recession due to prolonged poor economic performance.
Index highlights include:
* The region’s overall index dipped below growth neutral for the ninth time this year.
* 31.8% of bankers reported their rural economy is currently in a recession.
* Farmland prices have fallen below growth neutral for 18 of the last 19 months.
* 58.3% of bankers predict farmland prices will decline in 2026.
* Bank CEOs project 18.3% of local farmers and ranchers will experience negative cash flow in 2025.
* Farm equipment sales, after 27 months of decline, again fell below growth neutral, reaching 15.1.
* Regional ag exports are down 5.9% year-over-year, according to the International Trade Association.
The overall regional reading for November rose to a weak 44.0 from October’s 34.6 – the lowest level as May 2020. A reading of 50.0 represents growth neutral.
Approximately 31.8% of bankers reported a recession in their local economy. Over one-third (34.7%) foresee continued growth with no recession in 2026, while 30.9% anticipate a recession next year despite current stable conditions.
“Weak agriculture commodity prices and high input costs for grain producers continue to dampen economic activity in the 10-state region. On average, bank CEOs expect 18.3% of farmers and ranchers in their area to record negative cash flow for 2025,” stated Ernie Goss,chair in regional economics at Creighton University.
Livestock farmers and ranchers are currently in a stronger financial position. Joseph Anglin, chief financial officer for Pioneer Bank and Trust in Belle Fourche, S.D., noted, “we are primarily in western S.D. with cattle ranchers that are ‘raisers of beef,’ so we do not see the negative cash flow of row crop farming cash flow issues.”
However, the struggles are widespread. Jeff Bonnett, president of Havana National Bank in Havana, Ill., explained, “In talking with our small business owners on Main Street…the stories are all the same: customers are struggling with tight cashflows…This is a reality throughout rural America here in the Midwest. We are in an ag crisis and relief is needed. No business can survive operating at below breakeven for two to three consecutive years.”
Farmland prices have slumped below growth neutral for the 18th time in the past 19 months,with the regional price improving to a frail 43.2.
Rural Economy Shows Signs of Weakening in November, Despite Some Gains
Omaha, Nebraska – December 2, 2024 – The Rural Mainstreet Index (RMI) indicates a softening rural economy in November, despite improvements in some areas. The overall index fell to 64.6 from 72.0 in October, signaling a slowdown in economic activity across agriculturally- and energy-dependent regions of the nation.The index covers 10 states and 200 rural communities with an average population of 1,300.
Key Findings:
* Loan Volume Declines: November saw a decrease in loan volume, with the loan volume index dropping to 64.6, down from 72.0 in October.This suggests reduced demand for credit in rural areas.
* Checking Deposits Increase: A positive sign was the increase in checking deposit index to 58.3 from 52.0 in October, possibly indicating increased savings or cautious spending.
* CD Purchases Cool: After 35 consecutive months of growth fueled by Federal Reserve interest rate policies, certificate of deposit (CD) purchases declined. The CD index fell below growth neutral to 47.9, down from 50.1 in October, suggesting a shift in investment behavior as interest rate policies stabilize.
* Hiring Shows Slight Improvement: The new hiring index rose to 49.5 from 44.0 in October, but job gains across non-farm employers remain sluggish.
* Banker Confidence Remains Low: Rural bankers expressed continued pessimism about the economic outlook for the next six months. The confidence index decreased slightly to 32.0 from 32.7 in October. Ernie Goss, a regional economist, attributed this to “weak grain prices and negative farm cash flows, combined with tariff retaliation concerns.”
* Home and Retail Sales Remain Weak: Home sales saw a slight improvement, rising to 43.8 from 40.0 in October, but remain at a weak level. Regional retail sales were also fragile, increasing to 41.7 from 36.0 in October.
Iowa Shows Positive Trends:
Iowa demonstrated some positive momentum. The state’s overall index climbed to 47.0 from 37.7 in October. Specifically:
* Farmland Prices: Iowa’s farmland price index increased to 45.2 from 43.0 in october.
* New Hiring: The state’s new hiring index rose significantly to 51.8 from 46.7 in October.
* exports: Iowa’s year-to-date exports of agricultural goods and livestock reached $1.2 billion in 2024,a 28.4% increase from $967.2 million during the same period in 2023. (note: The original text stated 2025, which is incorrect as we are currently in 2024)
Overall Outlook:
The Rural Mainstreet index, created by Ernie Goss and the late Bill McQuillan in 2006, provides a real-time snapshot of the rural economy. The November report suggests a challenging surroundings for rural communities, with ongoing concerns about farm income, trade policies, and overall economic growth.
Sources:
* The original provided text.
* Creighton University – Rural Mainstreet Index (Accessed December 2, 2024) – Used to verify the index’s existence and methodology.
* Iowa Department of economic Progress – Trade Statistics (accessed December 2, 2024) – Used to verify Iowa export data.