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Rural economic index falls again, but business still growingOMAHA, Neb. (AP)--An index of rural economic health in nine Midwestern and Plains states declined for the fourth consecutive month, but a healthy climate for hiring indicates continued economic growth. Creighton University economist Ernie Goss said the overall index in July dipped to 54.5 from June's 61.4 and May's 66.4. "A reading of 50.0 is growth-neutral, thus July's index indicates healthy but somewhat slower growth on Mainstreet," Goss said. Rural bank presidents and chief executives were surveyed for the Mainstreet economic index about current economic conditions in their states and their expectations for six months from now. The states are Colorado, Illinois, Iowa, Kansas, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. Goss and Bill McQuillan, chief executive officer of City National Bank in Greeley, Neb., created the monthly economic survey. Asked in July to name the biggest economic risk to their regions, more than three-quarters of the bankers who responded cited higher energy prices. Loan defaults, which are receiving attention nationally, were named by only 13 percent of the bank CEOs, and 10.9 percent listed a trade war as the biggest threat to regional economic well-being. The new farm bill cropped up in some survey responses. Said Bob Laird, CEO of Valley Bank in Sioux Falls, S.D.: "One of the biggest threats to Mainstreet is Farm Credit's Horizons project, which is attached to the 2007 farm bill. If Farm Credit, with its tax-exempt status, is given expanded powers, community banks servicing rural America will have a limited future." The bankers' economic confidence for the next six months declined to 58.3, the lowest reading for the year and down from 65.5 in June. They cited higher long-term interest rates and fuel costs. The survey index for new hiring was 55.5, down 6.4 percentage points from 61.9 in June and 12.8 percentage points from the record 68.3 in May. Areas with major interests in energy production have been hampered by a lack of workers. Scott McBride, CEO of First National Bank in Buffalo, Wyo., said hiring would be up if there were workers to take the open jobs. "Mainstreet job growth has dropped to its historical annual rate of 1.3 percent, but it is still above the current national growth rate," Goss said. The July home sales index of 42.7 was down 10.7 percentage points from 53.4 in June. Bruce Morgan, CEO of Valley State Bank in Roeland Park, Kan., said housing "continues to be soft both in new construction and in resales." Date: 8/16/07
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