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Kansas, Midwest rural economies continue to softenProspects for economic recovery in rural America continued to slow in August, bankers in Kansas and nine other Midwestern states told a new survey. The Rural Main Street Index compiled by Creighton University economist Ernie Goss showed economic optimism in Kansas continued to slip in August, to 46.8 on a 100-point scale from 51.2 in July and 53.1 in June. Typically, readings above the midpoint 50 on the scale point to expanding economic prospects while readings below 50 indicate contraction. Index readings for all 10 Midwestern and Mountain states polled each month fell to 46 in August, from 49.3 in July and 52.6 in June. Two of the indicators rural bankers in the survey watch--farmland prices and farm machinery sales--improved during the month, but home sales and retail purchases tumbled, Goss said. More than four in 10 of the bankers surveyed also said they thought it either likely or very likely that recession would return in 2011. "There is too much uncertainty (coming from Washington)," Frank Sullentrop, president of Legacy Bank in Colwich, Kan., told pollsters. "Businesses do not like to take financial risks in uncertain times." Weak hiring prospects both in the Midwest generally and rural Kansas specifically also weighed on sentiments. "The economy is certainly not out of the woods yet," said Dale Bradley, chief executive of Citizen's State Bank in Miltonvale, Kan. Elsewhere. pollsters found: --Colorado's Rural Mainstreet Index slipped to 42 from 45.5 in July as perceived weaker farm equipment sales offset slightly improved optimism for farm and ranch land prices. Renewed oil drilling in Colorado may improve conditions later, one banker said. --Illinois' index dipped to 50.3 from July's 53.4, though farmland price trends, machinery sales and better than average employment prospects deflected potentially deeper declines. --Iowa's index dropped to 48 from a month earlier 52.5, highlighted by anemic prospects for farm equipment sales and rural jobs. --Minnesota's index moved more than four points lower, to 50.1 in August from 54.5 in July, as farmland price indicators, farm equipment sales prospects and rural home sales all fell. --Missouri's index also fell in August, to 44.5 from 49.6 in July, reflecting lower prospects for farmland prices, farm equipment sales and rural jobs. --Nebraska's index sank to 48.7 from 53.2, though bankers in that state expressed hope that higher grain prices would imrpove their local economies after harvest. --North Dakota's index, the region's highest for 15 months now, slipped to 51.5 from 56.5 in July as the outlook for farmland prices and farm machinery sales turned softer. --South Dakota's index dropped below 50 for the first time since April, to 47 from 50.8 in July. Local flooding, and its expected effects on farm incomes and equipment or retail sales contributed to the decline. --Wyoming's index fell to 44.3 from 47.5 on dimmer prospects for farm equipment sales and rural jobs. The Rural Mainstreet Index, which focuses on rural or commodity dependent communities of about 1,300 in the 10 states surveyed, is one of two monthly polls conducted by Creighton forecasters. Their other report, the Mid-America Business Conditions Index, which covers manufacturing conditions and the economies of larger Midwestern communities, also declined in the latest snapshot taken two weeks ago. Values slipped to 49.3 in Kansas and to 60.8 for the region.
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