Midwest, Plains economy hurt by inflation, poor farm outlook

Inflation remains a big concern of supply managers in the Midwest and Plains region, while rural bankers worry about profitability for farmers this year.

The majority of those who responded in September to two Creighton University surveys that serve as economic indicators in the region continued to have pessimistic economic outlooks.

The overall reading for the Mid-America Business Conditions Index — which surveys supply managers in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota — sank below growth-neutral for the fifth time this year, to 48.1, down from 48.7 in August. Any readings above 50 on the index that ranges from 0 to 100 suggests economic growth in the months ahead, with readings below 50 indicating decline.

The Rural Mainstreet Index — which surveys rural bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming — slumped to 37.5 in September, down from 40.9 in August. It was the the lowest level since the beginning of the coronavirus pandemic.

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“Weak agriculture commodity prices, sinking agriculture equipment sales and elevated input costs pushed the overall reading below growth neutral for the 13th straight month,” said Creighton economist Ernie Goss, who oversees the monthly surveys.

Rural Mainstreet

The Rural Mainstreet Index focuses on about 200 rural communities with an average population of 1,300 people. Bankers who responded to the September survey expect almost 40% of farmers in the region to lose money this year.

“The question regarding what percent of our area farmers will have a net loss for 2024 is interesting,” said Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois. “Based upon current corn and soybean prices of about $1.50 to $2.00 below break-even, I believe this will be a high percentage.”

The survey’s business confidence index, which looks ahead six months, fell to 22.9, down from 27.3 in August and its lowest level in nearly a year.

“Weak agriculture commodity prices, negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to constrain banker confidence,” Goss said.

Mid-America Economy

The business confidence index for the Mid-America survey slipped from 26.7 in August to 26.2 in September.

“Approximately 62% of supply managers expect a recession or worsening business conditions over the next six months,” Goss said.

About 4 of 10 supply managers named higher inflation as the top challenge to their firm over the next year. On average, they expect input prices to rise by 6.2% over the next 12 months.

Goss said he expects the Federal Reserve to cut interest rates by 0.25% at its early November meetings.

North Dakota data

North Dakota’s overall index in the Mid-America survey in September was above growth neutral for a second straight month, at 50.8, after five consecutive months of being below the threshold. Components were: new orders at 43.5, production or sales at 44.4, delivery lead time at 65.8, employment at 49.3 and inventories at 51.1.

North Dakota has gained 600 manufacturing jobs so far this year, up 3.2%, according to the latest U.S. Bureau of Labor Statistics seasonally adjusted manufacturing data.

North Dakota’s overall index in the Rural Mainstreet survey also increased slightly, to 41.3, but remained below growth-neutral. The state’s new hiring index declined to 41.4 from 44.7 in August.

Year-to-date state exports of agriculture goods and livestock were up by $56.1 million or 10.4% from the same period in 2023, according to data from the International Trade Association.

The full Rural Mainstreet report is at The full Mid-America report is at bit.ly/3SavggB.

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