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Source: Creighton University

While growth for the Rural Mainstreet economy remains healthy, it slowed a bit in July, according to the monthly survey of bank CEOs in a 10-state area.

Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, slipped to 57.3 from June's 60.5, but was well ahead of last July's 47.3.

"Last year at this time, the drought was having a significant negative impact on the Rural Mainstreet economy. This year, ample moisture has boosted the rural economy and the banker's economic outlook," said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.

Additionally, energy production has taken on an increasingly important role for the rural economy. As reported by Jim Stanosheck, CEO of State Bank of Odell in Odell, Neb., "The area has about 45 wind generators being built in the next six months. This activity should spur the rural economy for next six to seven months."

Farming: The farmland-price index declined for the seventh time in eight months. The July index fell to 58.2 from June's 58.4. "Our farmland-price index has been above growth neutral since February 2010. However, lower farm commodity prices and expected declines in farm income are slowing growth in farmland prices. I expect farmland price growth to continue to weaken as a stronger U.S. dollar weighs on agriculture commodity prices," said Goss.

This month bankers were asked to project farm income for 2013. On average, bankers expect farm income to be down by 3 percent from 2012. Approximately 59.6 percent of bank CEOs expect farm income to be down from 2012, while only 19.5 percent anticipate an increase in farm income and the remaining 20.9 percent expected no change.

Farm equipment sales also softened for July, with an index of 50.0, down from June's 53.2. "Farmers are getting increasingly cautious regarding economic conditions. This has been reflected in declines in our equipment-sales index and in the stock prices of agriculture equipment producers," reported Goss.

Banking: The loan-volume index moved above growth neutral for the month. The index soared to 75.7 from June's 66.7. The checking-deposit index advanced to 53.7 from June's 48.5, while the index for certificates of deposit and other savings instruments increased to a very weak 42.0 from 33.6 in June.

Community bankers are more upbeat that Congress will address the increasing concentration of U.S. banking. As reported by Pete Haddeland, CEO of the First National Bank in Mahnomen, Minn., "TBTF (too big to fail) is gaining some traction (in D.C.)."

This month bankers were also asked about the impacts of the federal spending sequester. Only 1.5 percent reported significant impacts, while 34.3 percent indicated moderate impacts with the remaining 64.2 percent detailing no impacts from the spending sequestration.

Hiring: July's hiring index declined to a strong 60.7 from June's 61.4. "Readings over the past several months are consistent with an annualized growth rate in jobs of 1 percent. Businesses linked to agriculture and energy continue to add jobs at this slow, but positive pace," said Goss.

Confidence: The confidence index, which reflects expectations for the economy six months out, fell to 56.6 from 60.0 in June. "While healthy crop conditions have fortified the economic outlook, recent weaker than expected agriculture commodity prices have lowered that outlook," said Goss

"More than three-fourths, or 77.9 percent, of bankers think that Congressional passage of a new farm bill is important or crucial to the Rural Mainstreet economy," said Goss.

Home and retail sales: The July home-sales index slipped to 76.6 from June's record high of 78.1. The July retail-sales index slipped to 53.1 from 53.9 in June. "Slightly higher mortgage rates failed to slow the rapidly improving Rural Mainstreet housing sector," said Goss.

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