Tuesday, March 28, 2006

The Mainstreet Economy for March

My blogging buddy, Ed Morse, said that while watching Desperate Housewives this past Sunday night and flipping between stations, he accidentally came across the Mainstreet Economy which airs on NETV-1 and NETV-2, primarily in Nebraska. This is a new television show that we at Creighton University just launched covering the rural economies of Colorado, Iowa, Kansas, Missouri, Nebraska, South Dakota and Wyoming. For those of you who were not as fortunate as Ed and continued to watch the foibles of those lascivious characters on the Desperate Housewives, let me summarize the findings from our March survey (you can request that your local station carry this soon-to-be “gotta have” broadcast by contacting NETV in Lincoln, Nebraska):

The Mainstreet Bank CEOs Report Stable Non-Urban Economy But with Potential Drought Fallout

The third survey of the Mainstreet Economy completed in March indicates that the non-urban, agriculturally dependent portions of the seven-state survey area was virtually unchanged for the month, but with continuing weak retail sales and renewed concerns of the impact of drought conditions on the economy.

Bank presidents and CEOs in the region, which includes the rural and non-urban Portions of Colorado, Iowa, Kansas, Missouri, Nebraska, South Dakota and Wyoming, reported stable economic conditions as the overall index rose to 51.6, slightly above growth neutral 50.0, from February’s weaker 48.1. However, almost 80 percent of the CEOs expect drought conditions to have severe to moderate negative impacts on the non-urban portions of the economy. As reported by Craig Brewster, President of Butte State Bank in Butte, Nebraska, “My biggest concern for our area is weather conditions. In a county where crop production is almost all dryland weather conditions will play a major role on how people spend their money.” In Frankfort, Kansas, Joe Kennedy, CEO of the First National Bank stated that “The local economy is good but we need rain.” Hiring in the 7-state area was weak for March with an index of 48.3, up slightly from 44.0 in February. Job gains were weak in Iowa and Missouri, stable in Kansas, and strong in Colorado, Nebraska, South Dakota and Wyoming. Job growth was especially strong for areas with ties to mining and energy.

Across the region, bankers are enthusiastic about the prospects of renewable energy production. For example, Kurt Henstorf, President of the First National Bank of Shenandoah, Iowa stated that, “We have a new 50M gallon ethanol plant under construction, a Canadian company that just chose our community for a new ag implement manufacturing plant, and a new super Wal-Mart location just announced for our community. The construction crews for these three projects alone will enhance our local economy for the next year or more.” Bank presidents and CEOs in the region expect the Mainstreet economy to continue to grow, albeit at a slow pace, over the next six months, as the confidence index declined to a tepid 51.6 from February’s 51.9, and down slightly from January’s 53.3. “The bankers in our survey reported weak retail sales with an index of 34.4, but up from February’s 28.8. As in January and February, CEOs reported vigorous growth in farmland prices with an index of 64.1, down from February’s 72.0 and January’s 71.0. As in January, the Mainstreet economy relative to the urban economy was strongest in Colorado, Nebraska, South Dakota and Wyoming. On the other hand, Mainstreet businesses in Iowa, Kansas and Missouri were experiencing somewhat weaker economic growth than their urban counterparts.

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