Goss: Rural economy just above growth neutral

NICK GOSNELL

Hutch Post

HUTCHINSON, Kan. — Creighton University economist Ernie Goss saw a slight amount more strength in his latest survey of rural bankers across the Midwest. For the first time since May of this year, the region's overall reading in December rose above the growth neutral threshold, but just barely at 50.1. 50 is growth neutral.

"It was a bit of a surprise, but it's still very weak out there, much like what we're seeing in the national economy," Goss said. "The regional economy, certainly the rural areas, have been taking it a little bit tougher because of some of the small businesses on what we call rural main street not doing that well."

Farm income is doing okay, speaking relatively to the rest of the economy, which means the foundation is still there, but not much to build on, yet. The rate increases from the Fed have not stopped the stock market, in the aggregate, from gambling on growth.

"The governors of the Federal Reserve say, hey, we're raising rates, please take us seriously, you're going to get hurt," Goss said. "Investors continue to move higher. The last two days they've gotten hammered, that would be the stock market, but next week, they'll probably move higher again and Powell will have to say again, we're raising rates."

For consumers, borrowing is going to continue to get more expensive.

"Your wage growth is still not going to be good, when you subtract out your inflation. Jobs are still plentiful. You've got about one and a half to almost two jobs per unemployed worker, those who are searching for jobs. That's constraining growth, as well, just a shortage of workers. The labor force participation rate, that's the number of individuals that are available to go into the labor market and work, that's still below pre-pandemic levels. That's true in Kansas, as well."

Long-term interest rates are starting to stabilize, as there is optimism that inflation is slowing, at least as it pertains to mortgage rates.