A recent survey taken of rural bankers in ten Midwest and Plains states shows signs of a revitalized economy. The overall index jumped to 54.3 in May from 44.2 in April. Last year’s May index was 36.2. When the number is lower than 50, this means the economy will contract within the following couple of months. When the index is 50 or greater, it suggests the economy will expand. The index was less than 50, for 26 consecutive months.
While the good news of the jump in index is certainly promising, some bankers are still wary of celebrating too soon. Larry Rogers, President of First Bank of Utica, in Nebraska said, “It seems as though the weaknesses are a little more pronounced than they have been.” “I still feel that mortgage foreclosures have not hit bottom and will show more problems for the economy this summer,” said Dale Bradley, CEO of Citizens State Bank, based in Kansas.
Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming were surveyed. They acknowledged a jump in home sales just as federal tax credits, for first-time buyers, expired at the end of last month. The index climbed from 52.5 in April to 58.8.
Additionally, for the third straight month, loan volumes, checking deposits and CDs were either 50 or greater. Bankers also noted more improvement in farmland prices. The index rose above neutral growth for the fourth consecutive month to 52.7 (it was, however, higher in April when it was a robust 59.5). Farm equipment sales dropped from April’s 57.2 to 50.9.
While the survey sparks some debate, it mostly provides hope and promise. Because the index numbers seem dip and change so erratically, one can never be 100% about the overall future of our economy. But index jumps like the ones recently reported, help illustrate something right is, indeed, happening.