Rural Index Turns Negative Again
The Rural Mainstreet Index maintained by Creighton University dipped below growth neutral in the latest July posting. This marks the first time since April that the index dipped below the neutral 50 level by sinking to 49.3 from 52.6 in June and 54.3 in May.
Like other economic indicators, this index appears to be signalling that there is slowing in the national economy including rural areas, however, the farmland-price index continues to move above growth neutral for the sixth consecutive month to close at 52.5 down slightly from June’s 54.7. One banker noted that “The farm economy has clearly improved from last year and we are seeing that reflected in farmland prices.” Also, with the recent dramatic rise in wheat prices, I would expect this trend to continue or even accelerate.
The farm equipment-sales index slipped from 53.1 in June to 51.8 in July.
Bankers on an overall basis do not believe that the financial reform bill passed by Congress will help their borrowers. About 29 percent view it as positive while 66 percent anticipate a negative effect on the economy.
Retail sales for the rural area took a nosedive in July with a reading of 41.7 down from 52.6. This represents an almost 21% drop in the index.
A lot of analysts are talking about a double dip recession and these readings may reflect those opinions. We will have to wait and see how the next few months turn out.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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