OMAHA, Neb.—High energy prices have led to languishing economic growth and continued job losses in 10 Midwestern and Plains states, according to a survey of rural bankers.
The overall economic index for the region rose slightly to 47.5, from 46.3 in March, still weak and below the nearly two-year low of 50 measured in February.
An index greater than 50 indicates a growing economy over the next three to six months. Last April’s reading was 66.9.
The April new hiring index rose slightly to 43.4, from March’s 42.5.
Farmers aren’t the only ones hurting from higher energy prices, according to the survey.
“Higher fuel costs are crippling loggers and truckers needed to haul wood,” said Brian Nicklason, president of Woodland Bank in Remer, Minn.
The survey includes Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. The average community population covered in the survey is about 1,300.
“Higher energy prices appear to be the culprit in the (index’s) downturn,” said Creighton University economics professor Ernie Goss.
Goss and Bill McQuillan, chief executive officer of City National Bank in Greeley, Neb., created the monthly survey of rural bank presidents and chief executives.
More than 80 percent of bankers expect the fallout from the recent subprime mortgage crisis to generate higher compliance and regulatory costs.
“Any time there are abuses of the financial system by the large financial firms, community banks pay the price,” said Jim Stanosheck, CEO of State Bank in Odell, Neb.
The farm equipment sales index was a strong 71.4 in April, down slightly from 72.5 in March but up from 64.3 in April 2007. The farmland price index stood at 71.3, down from March’s 78.1
Retail sales remained unchanged from March’s weak 40.3, down significantly from 53.3 in April 2007.
April’s home sales index rose slightly to 33.6, from March’s 25.8.
Bank indicators were mixed for April. Farmers pushed loan volumes up, to 57.3 from 54.5 in March. Checking deposits declined for a third consecutive month, to 54.8 from 61.2 in March and 67.5 in February.
Meanwhile, certificates of deposit and other savings instruments rebounded to 57.3 from March’s 51.5.
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