Interest rates

The confidence of rural bankers in the shaken economy; farmers prepare for higher interest rates | State and Region

Economic confidence is down among rural bankers in 10 Midwestern and Plains states, including North Dakota.

Creighton University’s rural main street index in July fell for the fourth consecutive month and fell below neutral growth for a second consecutive month.

The survey’s overall economic index fell to 46.0 from 49.8 in June and 57.7 in May. Any reading above 50 on the index which ranges from 0 to 100 suggests growth in the coming months. Readings below 50 suggest a contraction.

“Supply chain disruptions from transportation bottlenecks and labor shortages continue to dampen growth,” said Creighton economist Ernie Goss, who oversees the survey. “Farmers and bankers are bracing for higher interest rates, both long and short term.”

Bankers have been asked to identify the biggest risk to farmers over the next 12 months. About 54% cited rising input prices, 35% cited falling grain and livestock prices, and 11.5% cited drought as the main threat.

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“It is the combination of higher input costs and a potential drop in commodity prices that pose the greatest risks to farmers. Not just one or the other,” said James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa.

The survey index measuring the economic confidence of rural bankers fell to 26.0 from 33.9 in June. These are the lowest consecutive readings since the start of the coronavirus pandemic in April and May 2020.

The index is based on a survey of rural bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming, states dependent on agriculture and/or energy. It focuses on approximately 200 rural communities with an average population of 1,300 people.

North Dakota’s index for July fell to 51.7 from 58.0 in June. The state’s farmland price index fell to 70.0 from 81.7 the previous month. The state’s New Hires Index fell to 61.2 from 63.6 in June.

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