NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — For a ninth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the May survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
"The farm sector is, I won't call it struggling, but it's moving sideways to down," said Creighton University economist Ernie Goss. "Look no further than John Deere that came out with their announced income, which was not good. Farm equipment sales are down, this is the first time since 2020 that we've had a pullback in farm land prices. If you look at cash rents, they were almost flat from three or four years ago."
Part of the challenge in surveying bankers to find out about farmers right now, is that bankers are having their own problems.
"I would argue that they get some of their own banking sector issues connected to the farm sector," Goss said. "That obviously has a strong connection, but it's not everything. Bank deposits were down. Those who deposit money in the banks are moving money around to get higher returns. That puts pressure on the bank. It's another indicator. We saw interest rates, they're much higher, what they charge for operating loans. Also, farm land sale financing, that was still high. Interest rates are causing some difficulties for the farm sector and the banking sector."
Goss also believes that the overall numbers being provided on economic conditions in some respects just aren't something you can count on.
"The BLS that does the monthly survey of hiring and employment, they're getting it wrong," Goss said. "Those numbers are just not reliable coming out of the Bureau of Labor Statistics. How do you know? They do a quarterly estimate, which revises the monthly estimate. The quarterly estimate has 95% of the companies across America. The monthly survey includes 1% of the businesses across America. That 1% sample, I would argue, is quite unreliable. We may in fact determine later on, that we are in a recession right now."
The National Bureau of Economic Research won't put out a number until late summer.
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