(Omaha) — One of KMAland’s leading indicators shows the Midwest economy continues to struggle.
Creighton University’s August Rural Mainstreet Report fell to 48.1. That’s down from July’s rate of 50.6 and June’s 51.9. It’s the six time in 2025 the rate dropped below growth neutral, which is 50.0. Bank CEOs from 10 Midwestern states–including Iowa, Nebraska and Missouri–participate in the survey. Speaking on KMA’s “Morning Line” program Monday morning, Creighton University Economist Dr. Ernie Goss sums up August’s declining numbers in two words: supply and demand.
“I think in this case, it’s too much supply for most of the grain products out there,” said Goss. “The bankers expect one-fifth the grain farmers to experience negative cash flow. Of course, that’s not good negative income. And again, it’s all about those prices for grain. As we saw better numbers, for example, for soybeans, we’re seeing corn and wheat not doing so well. So, it’s all about demand and supply, and they’re not so good right now.”
For the 15th time in 16 months, farmland prices slumped below growth neutral at 46.2. Likewise, farm equipment sales slumped to 14.6, down from July’s 16.7. Goss says two states, in particular, are bogging down the rural economy.
“If you look at two states, Iowa and Nebraska have the worst economic from the fourth quarter of 2024 to the first quarter of 2025,” he said. “The worst in the nation. That’s all about agriculture, and it telegraphs backward for agricultural equipment prices, particularly in Iowa.
Goss says one factor that could help the rural economy is a Federal Reserve rate cut expected to be announced next month. However, he warns any cut by the feds will only a short-term fix.
“The last time the fed cut, the actual long-term interest rates froze,” said Goss. “Short term interest rates came down by a full percentage point–that would be in quarter four of 2024–and long-term interest rates moved upward because of inflationary pressures. We’ll have to wait and see in this one. I expect that to happen again. I think short-term interest rates should definitely come down. That will make it easier to purchase that equipment.”
Goss predicts a reduction of about a half-cent in the prime rate at the Federal Reserve’s next meeting September 16th and 17th. Approximately six of 10 bank CEOs support a Federal Reserve rate cut. You can hear the full interview with Dr. Ernie Goss here:
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Creighton University Economics Professor Dr. Ernie Goss analyzes August’s Rural Mainstreet Index report.