Rural Mainstreet Economy Remains Weak

OMAHA, Nebraska (May 15, 2025) — For the 20th time in the past 21 months, the overall Rural Mainstreet Index (RMI) sank below the 50.0 growth neutral reading in May, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for May increased to 44.0 from April’s 40.0. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

“The economic outlook for 2025 farm income remains weak according to bank CEOs. Almost one in four bankers rate tariff retaliation from trading partners as the top risk facing farmers in 2025 while 68.0% ranked lower farm commodity prices as the major risk factor for farmers,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Regarding the tax deliberations going on in Congress, a majority, or 54.2%, argue for extending the tax cuts as passed in 2017.

On the other hand, Terry Engelken, Vice President of Washington State Bank in Washington, Iowa said,  “I think the SALT (state and local tax) limit should be raised to $25,000 from $10,000 and no tax on tips and Social Security.” He argued that overtime should still be taxed.

Other comments from bankers in May:

·         Jeffrey Gerhart, former Chairman of the Bank of Newman Grove in Newman Grove, Nebraska said, “As a former agricultural banker, I’ve never been a fan of tariffs. I’m even less of a fan of the present tariffs that the administration is pursuing.  My concern is that it won’t end well for our farm economy and our rural communities. Congress needs to step up and do their job and not leave it all up to the administration.”

·         Jim Eckert, Executive Vice President and Trust Officer of Anchor State Bank in Anchor, Illinois reported that, “Planting is nearly complete in our area of Central Illinois (except for the usual ‘stragglers’). Our farmers who have been in southern Illinois say the further south you get the less has been planted due to very wet conditions.”

Farming and ranch land prices: For the 12th time in the past 13 months, farmland prices slumped below growth neutral. The region’s farmland price index dropped to 39.6 from 41.7 in April. “Elevated interest rates, higher input costs and volatility from tariffs have put downward pressure on ag land prices. Only 8.0% of bank CEOs are bullish on farmland prices for 2025,” said Goss.

When asked to name the top risk factor for farming in 2025, 68% named lower ag commodity prices as the number-one 2025 concern, while 23.5% indicated higher tariffs as the top risk factor. 

According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for the first quarter of 2025, compared to the same 2024 period, fell from $3.4 billion in 2024 to $2.7 billion in 2025 for a decline of 19.3%. For Q1, 2025, Mexico was the top destination for regional ag exports, accounting for 50.6% of total regional agriculture and livestock exports.

Farm equipment sales: The farm equipment sales index increased to a very weak 23.9 from 17.4 in April. “This is the 21st straight month that the index has fallen below growth neutral. High input prices, tighter credit conditions, low farm commodity prices and market volatility from tariffs are having a negative impact on the purchases of farm equipment,” said Goss.

Banking: The May loan volume index advanced to 75.0 from 70.8 in April. The checking deposit index fell to 45.8 from April’s 58.7. The index for certificates of deposits (CDs) and other savings instruments rose to 60.4 from 58.3 in April. Federal Reserve interest rate policies have boosted CD purchases above growth neutral for 30 straight months.

Hiring: The new hiring index for May improved to 52.1 from April’s 43.8.  Job gains for non-farm employers have been weak for the last several months.

Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The May confidence index slumped to 30.0 from 36.0 in April. “Weak grain prices, negative farm cash flows, combined with tariff retaliation concerns pushed banker confidence lower,” said Goss.

Home and retail sales: Home sales remained soft with a May reading of 47.9 from 45.8 in April. Regional retail sales remained very weak with an index of 41.7, but up from April’s even weaker 39.6.

The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index that covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy. Goss and the late Bill McQuillan, former Chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.

Below are the state reports:

Colorado: The state’s Rural Mainstreet Index (RMI) for May increased to 47.9 from 45.0 in April. The farmland and ranchland price index for May fell to a weak 40.8 from 42.7 in April. The state’s new hiring index increased to 52.3 from April’s 44.8. According to trade data from the International Trade Association (ITA), Colorado exports of agriculture goods and livestock for the first quarter of 2025 compared to the same period in 2024, rose by $21.9 million for a 21.6% gain. South Africa was the top destination to begin 2025, accounting for 30.9% of 2025 Colorado agriculture and livestock exports.

Illinois: The state’s May Rural Mainstreet Index (RMI) increased to 37.6 from April’s 34.6. The farmland price index for May sank to 37.9 from 39.8 in April. The state’s new hiring index climbed to 48.6 from 41.2 in April. According to trade data from ITA, Illinois exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, sank by $544.3 million for a decline of 41.1%. China was the top destination to begin 2025, accounting for 24.0% of 2025 Illinois agriculture and livestock exports.

Iowa: May’s RMI for the state improved to a weak 46.8 from 39.8 in April. Iowa’s farmland price index for May increased to 41.6 from 36.8 in April. Iowa’s new hiring index for May increased to 44.9 from April’s 37.5. According to trade data from ITA, Iowa exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, sank by $23.0 million for a decline of 4.7%. Mexico was the top destination for Q1, 2025, accounting for 70.9% of 2025 Iowa agriculture and livestock exports.

Kansas: The Kansas RMI for May sank to 36.8 from April’s 37.5. The state’s farmland price index declined to 31.6 from 33.5 in April. The new hiring index for Kansas rose to 40.9 from 33.5 in April. According to trade data from ITA, Kansas exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, sank by $25.0 million for a decline of 6.8%. Mexico was the top destination for Q1, 2025, accounting for 75.9% of 2025 Kansas agriculture and livestock exports.

Minnesota: The May RMI for Minnesota increased to 48.2 from 46.7 in April. Minnesota’s farmland price index sank to 40.9 from 42.8 in April. The new hiring index for May rose to 52.4 from 42.8 in April.  According to trade data from ITA, Minnesota exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, sank by $61.7 million for a decline of 23.4%. Mexico was the top destination for Q1, 2025, accounting for 34.9% of 2025 Minnesota agriculture and livestock exports.

Missouri: The state’s May RMI slumped to 40.1 from 46.7 in April. The farmland price index for May dropped to 33.8 from April’s 35.7. The state’s new hiring gauge for May increased to 43.6 from April’s 35.7.  According to trade data from ITA, Missouri exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, sank by $50.3 million for a decline of 19.2%. Mexico was the top destination for Q1, 2025, accounting for 86.0% of 2025 Missouri agriculture and livestock exports.

Nebraska: The Nebraska Rural Mainstreet Index for May increased to 35.8 from 32.8 in April. The state’s farmland price index for May fell to 37.3 from April’s 39.3. Nebraska’s new hiring index climbed to 48.0 from 40.6 in April. According to trade data from ITA, Nebraska exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, expanded by $28.5 million for a gain of 9.6%. Mexico was the top destination for Q1, 2025, accounting for 57.8% of 2025 Nebraska agriculture and livestock exports.

North Dakota: The state’s RMI for May increased to 42.0 from 39.1 in April. The state’s farmland price index slumped to 39.1 from April’s 41.0. The state’s new hiring index rose to 50.2 from 41.0 in April. According to trade data from ITA, North Dakota exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, sank by $26.7 million for a decline of 11.2%. Mexico was the top destination for Q1, 2025, accounting for 42.4% of 2025 North Dakota agriculture and livestock exports.

South Dakota: The May RMI for South Dakota increased to 40.8 from 37.9 in April. The state’s farmland price index sank to 38.8 from 40.7 in April. South Dakota’s May new hiring index climbed to 49.8 from April’s 42.3. According to trade data from ITA,  South Dakota exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, expanded by $26.6 million for a gain of 87.9%. Mexico was the top destination for Q1, 2025, accounting for 82.2% of 2025 South Dakota agriculture and livestock exports.

Wyoming: The May RMI for Wyoming increased to 45.0 from 42.1 in April. The May farmland and ranchland price index sank to 40.0 from April’s 41.9. Wyoming’s new hiring index rose to 51.3 from 43.8 in April.  According to trade data from ITA, Wyoming exports of agriculture goods and livestock for the first quarter of 2025, compared to the same period in 2024, expanded by $2.3 million for a gain of 372.9%. Canada was the top destination for Q1, 2025, accounting for 59.4% of 2025 Wyoming agriculture and livestock exports.