Mainstreet Economy Expands For September

SEPTEMBER SURVEY RESULTS AT A GLANCE:
* Economies of non-urban portions of eight-state area expanded, but at a slower pace.
* Over 63 percent of the bankers expect the next move by the Fed will be to reduce rates.
* New hiring improved over August levels.
* Almost 37 percent of the bankers expect renewed beef exports to Japan to have a positive and significant impact on the Mainstreet Economy.

The Mainstreet Economy Survey for September indicates that the economies of the non-urban, agriculturally dependent portions of an eight-state area expanded from August, according to the latest Mainstreet Bankers survey. Each month, community bank presidents and CEOs are surveyed regarding current economic conditions in their area and their projected economic outlook six months down the road.

http://www.outlook-economic.com/MainstreetEconomy.html

"Bank presidents and CEOs in the region reported expanding economic conditions as the overall index rose above growth neutral 50.0 to 52.6, from August’s 51.4," said Creighton University Economist Ernie Goss, who along with Bill McQuillan, CEO of City National Bank in Greeley, Neb., created the economic survey.

This month’s pause in interest rate increases by the Federal Reserve was welcomed on Mainstreet. Given clear indications of an economic slowdown on and off Mainstreet, bank CEOs expect the next move by the Fed will be to reduce short-term interest rates. Almost two-thirds of the bankers, or 63.3 percent, anticipate that the next move by the Fed will be lower rates to combat a slowing economy.

Retail sales remain weak with a September retail index of 43.6, up slightly from August’s 43.1. Some Mainstreet bankers contend that at least a portion of this weakness can be traced to big-box retailers “Main Street commercial businesses continue to be challenged by low-ball pricing from Wal-Mart.” said McQuillan.

“Much like the rest of the nation, Mainstreet bankers have reported weak home sales over the course of the last several months. “September’s index of 35.5, while up from August’s 30.9, signals a housing market that has been sapped by higher interest rates and elevated energy prices,” said Goss.” Declining retail sales, higher energy prices and lower farm income are pushed the confidence index down to 43.6. The confidence index tracks the Mainstreet economic outlook six months out.”

On a more positive note, 36.7 percent of the bankers expect the opening of the Japanese market to U.S. beef to have a positive and significant impact on their rural economy. “I expect the positive impacts to be most pronounced in Kansas and Nebraska,” said Goss.