A monthly survey of bank CEOs in Missouri and nine other Midwestern states shows a dismal outlook.
The report shows the February score fell to 38 on a zero-to-100 scale, where 50 is growth neutral. Creighton University Economics Professor Ernie Goss said the new numbers are reminiscent of the COVID era, and he cited struggling commodity prices as one of the big reasons for the Midwest economy’s continuing slump.
“Agricultural commodity prices, particularly grain, are moving up a bit lately, but still not as strong as we’d like to see,” Goss said. “On the flipside, to give us some good news, livestock is doing somewhat better. When we asked the bankers about looking forward to 2025, they were much more positive about the livestock sector.”
About 71% of bankers surveyed expect livestock ranchers to experience positive cash flow or net income this year, while nearly half expect grain farmers to experience negative cash flow.
Meanwhile President Donald Trump’s recently announced tariffs on products from Canada and Mexico have them concerned.
“Retaliation is really a concern among bankers and economists, as well,” Goss said. “We’re talking about 47% of the exports of agricultural and livestock goods coming from this part of the country — 47% go to Mexico. So, if you see retaliation there, that would hit the economy really hard.”
Only 9% of those surveyed expect positive outcomes from Trump’s tariffs, as Canada and Mexico are major trade partners.
Another factor is the ongoing cases of highly pathogenic avian influenza, or HPAI, detected in poultry in Missouri and elsewhere.
“That’s a big issue, even without any contamination over to livestock,” Goss added. “We ask each month for the bankers to look forward another six months. They were pretty darn negative.”
Goss also said the lack of action on a Farm Bill in Congress is also creating uncertainly among survey respondents across the region.
“There’s so much uncertainty in agriculture and farming,” he said. “We don’t have much positive input from the U.S. federal government. We got a one-year farm bill. We need to see a five-year farm bill instead of a one-year farm bill, (but) that’s what we’re getting. Each year, we’re getting less and less support from the federal government.”
Goss says farm equipment sales continue to struggle, though February’s mark of 18.2 is actually up from last month’s level of 17.4.
Radio Iowa contributed this report.
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