Ag Bankers Pessimistic About Rural Economy Moving Into Recession in 2023: Lowest Confidence Since May 2020
October RMI
The October Creighton University Rural Mainstreet Index survey shows ag bankers are concerned about economic downturn in 2023. It fell for the sixth time in the past seven months and is below growth neutral for the fifth consecutive month. The 10-state region's overall reading for October was 44.2 on a scale of 100. That compares to 46.3 in September. This indicates the Rural Mainstreet economy is now experiencing a downturn in economic activity.
Almost one in four bankers or 23% say the economy is in a recession, while 3 of 4 expect a recession to begin in 2023. This is the lowest confidence level in the rural economy since May of 2020 during the pandemic.
Dr. Ernie Goss, Economist at Creighton University says there are several factors contributing to the downturn. "One is just a global economic slowdown which is being telegraphed back to the region, also higher interest rates and higher interest rates tend to raise the value of the dollar which makes our ag sector less competitive abroad and we're also seeing the housing sector is really taking it on the chin."
The farm equipment sales index also slumped below growth neutral to 47.8 from September's 58. However, the farmland price index dropped just 3 points to 58
And farm equity is forecast to see a 3.4% t boost from 2021 levels. Goss says, "The farmers are in pretty good shape right now. They're not overborrowed, the bankers have not over lended." Plus, Goss says the ag economy is generally more buffered from recession.
