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Mainstreet index forecasts weaker farm economy

The latest Rural Mainstreet Index (RMI) suggests the farm economy will weaken next year as interest rates continue to climb.

Ernie Goss is an ag economist with Creighton University and says, “I think for the long term trend, the era of very cheap money is gone.”

The Rural Mainstreet Index is a survey of ag bankers in 10 states including: Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, and South Dakota.

He tells Brownfield producers should keep an eye on the Federal Reserve’s balance sheet to help monitor potential rate hikes. “That’s where the Federal Reserve buys and sells bonds, and they bought a heck of a lot of bonds, which is meant to keep interest rates lower.” Goss said. “The deficit this year is going to be $2 trillion, which means the federal government is going to have to borrow more money and the Fed’s not going to be out there buying those bonds.”

The August RMI slumped to growth neutral after four straight months of above growth neutral readings.