The rural economy moved narrowly back into positive territory in August, but continued weakness in farm income, land prices and equipment sales points to ongoing financial pressure across farm country.
Creighton University’s Rural Mainstreet Index climbed to 50.3 in August, up sharply from 42.1 in July. A reading above 50 indicates economic growth, while a reading below 50 suggests contraction.
Despite the improvement, the survey of rural bankers showed continued concern about the agricultural economy. Nearly half of bankers surveyed expect farm income to decline during the next 12 months, while only about 16 percent anticipate an increase.
Farm and ranchland prices also fell below the index's growth-neutral level during August.
Farm equipment sales remained particularly weak. The equipment sales index dropped to 22.2, with equipment sales now remaining below growth-neutral for three consecutive years.
Creighton University economist Ernie Goss said producers continue to face pressure from high input costs and weak grain prices. Uncertainty surrounding tariffs and the conflict with Iran is also weighing on the agricultural economy.
Drought conditions are creating additional challenges in some areas, prompting some ranchers to liquidate cattle.
Despite those pressures, agricultural lenders have not broadly tightened access to credit. Nearly 54 percent of bankers surveyed said they had not tightened agricultural credit standards during the previous three months.
The Rural Mainstreet Index surveys bank executives in rural areas dependent on agriculture and energy and is designed to provide a snapshot of economic conditions across rural communities.