Even though the rural economy is struggling, there is a difference between now and the farm crisis days of the 1980s.
“The primary difference is that in the 80s, the bankers had overextended credit to the farmers,” said Creighton University economist Ernie Goss. “In other words, the farmers had taken on too much debt. In this case, they have not. Both the farmer and the banker do remember that time. They have been much more diligent.”
Getting the USMCA passed and a deal done with China are both important, however.
“It has been reported as a crisis,” said Goss. “For some farmers, it is a crisis, but for the region as a whole, we’re not in crisis. We’re not in a return to the 1980s, when the farm sector was really…we’re
talking about foreclosures dramatically up. Right now, foreclosures are up, farm loan defaults are up, delinquencies are up, but not to the degree we would necessarily think.”
The bailouts from the Trump administration are holding the line, for now.
“The global economy is slowing down,” said Goss. “We are seeing at least, interest rates are coming down from the Federal Reserve. We’re seeing long-term interest rates being very competitive. The
problem for the farmer is getting that credit.”
More than 4 in 10 bank CEOs across the midwest report that their local economy is in a recession. In spite of that, the latest Rural Mainstreet Index was slightly above growth neutral for the region at 50.1.