CASPER — An economic turnaround in rural areas is closely tied to commodity markets, Creighton University economist Ernie Goss says.
“Areas dependent on commodities are not doing as well,” he said. “For Wyoming, of course, it’s a different commodity than it is in South Dakota, but it’s both commodities.”
He said relatively urban areas like Cheyenne, Casper and Laramie have fared better than rural areas, even though most areas are still losing jobs. He noted that rural communities in the region often are dominated by oil and gas.
Natural gas, a pivotal commodity for Wyoming, seems to be viewed with ambivalence by the Obama administration. In terms of its appeal, “it’s not wind, but it’s not coal,” Goss said.
Wyoming’s loan volume index, a part of the Rural Mainstreet Index, tumbled to 31.6 in January, down from 42.4 in December. “It’s not all toughening standards,” Goss said. “That’s part of it. But it’s also regulators.”
He said bank CEOs in rural areas are feeling pressure from regulators to lend less, while the White House wants more lending.
The Rural Mainstreet Index is based on a monthly survey of bank CEOs in 11 states. In February, the overall index for Wyoming dropped to 34.3, down from 39.2 in January.
Survey respondents were asked to identify the biggest economic challenge to the region’s economy in 2010. More than a third — 38 percent — said they expect a lack of new hiring by businesses to be the most significant hurdle.
About 30 percent said weak commodity prices will be the largest problem, while 16 percent cited expectations of high input prices to farms, such as for fertilizer, animal feed and fuel.
The survey’s overall index for February declined to 36.6, compared with 41 in January. It was the index’s first decline in six months.
The index ranges between 0 and 100. A score below 50 suggests the economy will contract in the next few months; above 50 indicates the economy will expand.
The index has remained below 50 for 24 consecutive months. Goss said the latest report generally is not positive. He said while some recent signals have pointed to better conditions, on other dimensions improvements are difficult to find.
Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota and Wyoming were surveyed.
The Associated Press contributed to this report
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