To hear the Federal Reserve’s leadership talk, employment is nearly as good as it can be and economic strength has started to rekindle very modest inflation. Don’t tell farmers who live and work in the major agricultural states. Their attitudes about their business fortunes are pessimistic.

One of the benchmark studies of attitude in the grain belt is the monthly “Mainstreet Economy Report,” a poll of bankers conducted by Creighton University. These bankers offer their opinions about the local economies in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North and South Dakota and Wyoming. The bottom line for December was:

The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 16th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

More specifically:

For a 16th straight month, the Rural Mainstreet Index remained below growth neutral though the index advanced to its highest level since June 2016.

• Farmland prices declined for the 37th straight month.
• Bank CEOs expect loan defaults to rise by 5.6 percent over the next 12 months. This estimate is up slightly from 5.4 percent recorded in July of this year.
• Bankers expect holiday sales for Rural Mainstreet retailers to expand by a scant 0.4 percent over 2015 levels.
• States with December Rural Mainstreet expansions: Iowa, Nebraska, and South Dakota; States with December Rural Mainstreet contractions: Colorado, Kansas, Illinois, Missouri, North Dakota and Wyoming, and Minnesota.

The overall index was 42.9, and a figure of 50 represents “neutral growth.”

The situation of the farmers in these states is ironic because most of them have among the lowest unemployment rates in the country. However, as commodities prices have continued to be soft, the future of the labor market has weakened. The hiring job gauge was just above neutral at 51.2.

The core of the problem in the region is not just commodities prices. The research also shows a weak housing market. Since home values are often the most significant portion of an individual’s net worth, the dismal attitudes are even more understandable.

The research may not be definitive. It covers 200 cities with an average population of 1,300. However, it is considered a strong “real-time analysis” of the economy and outlook for the region. And those are not good.

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