OMAHA, Neb.
National economic problems, export declines and a weaker farm sector are being blamed by rural bankers for problems showing up in 11 Midwest and Plains states. The problems are reflected in the December report on a monthly survey of the bank executives. The survey's Rural Mainstreet Index rose slightly this month, to 25.0 from November's record low of 22.1. A year ago, the index stood at 54.3, well above growth-neutral. Creighton University economist Ernie Goss and Bill McQuillan, CEO of City National Bank in Greeley, Neb., created the survey, which is conducted in 11 states: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming. "As agricultural commodity prices have tumbled, farmland price growth has now moved into negative territory for a second straight month," said Goss in a Thursday news release about the survey. "After peaking at 81.0 in January of 2008, the index declined to 37. 1, a record low, from November's 45. 2. "The stronger dollar, lower agricultural commodity prices and elevated farm input costs have likewise caused farmers to delay purchases of farm equipment," he said. The survey's confidence index, which reflects expectations for the economy six months from now, remained in its trough for a fourth straight month. The December figure was 15.6, compared with November's record low of 13.0. Said Kathy Thuman, president, Farmers State Bank in Maywood, Neb.: "Everyone is concerned about the precipitous drop in grain prices." An index on new hires rose slightly to a feeble 25.8 this month, from November's record low of 23.6. Goss said the hiring index has been below growth-neutral for 12 months in a row, "due in part to a national economy that is negatively affecting growth for Rural Mainstreet." In a brief referendum on the national economic recovery efforts, most of the bankers who responded to the survey (87.3 percent) favored aid to U.S. automakers. But many of them echoed the sentiments of John Nelsen, president of First Tier Bank in Holdrege, Neb. "Reorganization under bankruptcy laws may fit the auto industry," Nelsen said. "It appears to me that labor contracts could be revisited and approved by the bankruptcy court, as well as all aspects of their financial problems. Then, and only then, would I support a government-backed cash injection." An index on home sales showed even more weakness. The December figure was a record low of 15.9, compared with 20.6 in November and 29.0 in October. The bankers' loan volume index dropped to 44.7 from November's 46.4. Almost 200 communities are represented in the survey. The average community population is about 1,300. ___ On the Net: Creighton University economic surveys: http://www2.creighton.edu/ business/economicoutlook
