Heard on the Street: The financial strain is increasing for farmers and manufacturers in America's heartland
By Lauren Silva Laughlin Updated Sept. 30, 2019 1:23 pm ET With the fortunes of flashy young companies such as We Co. and Peloton stealing headlines, it may be easy to forget about the worsening economic condition of flyover country, USA. That would be a mistake.
One heartbeat of the Midwestern economy, farming, has been under serious pressure throughout the spring and summer. Agricultural exports to China have plummeted over the past two years, particularly soybeans. While a wet planting season kept crop yields in check, the lack of crop buyers has kept prices for soybeans and corn under pressure, too, which has been a double whammy for farmers.
But it isn’t just farmers that are hurting. The Federal Reserve Bank of Chicago tracks nonfarm business activity in five states—Iowa, Indiana, Illinois, Michigan, and Wisconsin—through its Midwest Economy Index. The index was in negative territory for the fifth straight month in August, the Chicago Fed said Monday. Readings below zero indicate that growth is below the historical average rate. The July reading, at minus-0.37, was the worst since early 2010.
Meanwhile, third-quarter business confidence measured in the same report dropped 4.9 points compared with the previous quarter to 47.3, leaving it at the lowest level on a quarterly basis since the third quarter of 2009. “There was anecdotal evidence of tariffs affecting prices and business activity,” said the report, out on Monday.
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