The COVID-19 pandemic has caused physical, mental and financial pain across the country. In rural America, lenders expect it to push their local areas into a recession, according to the Rural Mainstreet Index (RMI). The monthly survey of bank CEOs in a 10-state Midwest region sits at 12.1 for April 2020.
April’s decline represents the largest one-month fall since the survey was initiated in January 2006. In March, the RMI was at 35.5, and February’s RMI was at 51.6, which posted the sixth straight month of economic growth. The index ranges between 0 and 100, with 50 representing growth neutral.
“More than nine of 10 bank CEOs expect the coronavirus to produce a recession in their market area. This is up significantly from March when 61.3% of bankers anticipated such a recession,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI.
“The economy will suffer for a long time due to the shutdown,” adds Jim Eckert, president of Anchor State Bank in Anchor, Ill.
Here’s how lenders say COVID-19 has impacted their banks:
Borrowing by farmers expanded for April, with the borrowing index hitting to 75.8, up from March’s 66.1.
Farmland prices continue to slide. April’s reading fell to 40.9 from March’s 46.6. This is the 76th time in the past 77 months the index has been below growth neutral.
The confidence index, which reflects bank CEO expectations for the economy six months out, sank to 27.4 from March’s 28.3. This decline follows March’s reading which represented the greatest one-month decline in the confidence reading since the survey was initiated.
This RMI, which started in 2005, represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. It focuses on 200 rural communities with an average population of 1,300.
Meet the man behind the Rural Mainstreet Index: Ernie Goss.