NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — The Rural Mainstreet Index survey from Creighton University is showing some signs of increasing economic headwinds, as the September overall number is at 49.5, which is below growth neutral.
"Farm income is down," Creighton University economist Ernie Goss said. "Exports are down, exports of processed food and agriculture are down. Of course, that has a lot to do with what's going on in China, or not going on in China. Germany and Europe are also slowing down and even in recession. It's a little tougher out there right now. The Federal Reserve recognized that and decided not to raise rates."
Economic headwinds are even stronger in the short term in Kansas than the survey showed for the region and survey respondents see problems continuing in the banking sector.
"We're going to see more issues related to banking," Goss said. "The federal government, in its regulatory zeal, is putting pressure on some of the banking sectors, particularly smaller banks. As Janet Yellen says, big banks, too big to fail, small banks, perhaps too small to succeed."
Even though the Fed held the line this time, Goss doesn't see that as their strategy for long, not even until the end of the year.
"I think we're going to see one more rate hike of twenty-five basis points," Goss said. "The Fed is trying to send a message. We stand ready to raise rates, not lower them. We hear calls for, hey, let's raise the target inflation rate from two percent to three percent. Jay Powell says, not on my watch. In other words, he's fearful of others, those of us in the buying community and wage community, asking for higher wages because we think inflation is picking up. Wages are picking up, real wages, that's inflation adjusted wages, are now rising."
The September reading is the weakest reading of the index since March.
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