Monday, March 29, 2010

The Recession in Rural America October 2, 2009

Call it a day by HarryBo73.
[Photo Credit]


Here in the Boulder Bubble we came the closest, yet, to a freeze last night. The leaves are turning and there are a few on the ground. This follows a summer of nearly perfect weather for human enjoyment. Rainfall is slightly below average for the year.

In this region, the next couple of weeks brings the international ASPO (The Association for the Study of Peak Oil and Gas) conference to Denver. And the Bioneers conference starts soon, here on the CU campus in Boulder.

There is a wide variety of Ag news below. Though some of it doesn't appear to be economic-related at first glance, most of it is a direct result of economic issues. The sustainability issues are often backlashes against the economically efficient industrial methods of agricultural production. The quest for healthier eating is an attempt to overcome some of the culture of fast food and advertising that has been bombarding us for a half a century.

The urban agriculture movement is partly a result of our economic insecurity. And the price of oil and natural gas has everything to do with all of the issues related to agriculture, including economics and our current ability to overproduce. As in all sectors, much of agricultural economics is related to politics. Politically, there is a strength of power from the rural state Senators, and the fact that the first presidential caucus is in Iowa.

In unfinished business, last week, I described agriculture and economics along the Colorado River on the West slope of Colorado around the towns of Grand Junction and Palisade. Shortly thereafter, the Denver Post ran an article about the economic difficulties facing this region, "Rural counties taking a beating." Admittedly, the terrible rural statistics in this article reflect the non-agricultural issues of construction, energy, and tourism here in Colorado.

From the Denver Post:

A dozen western Colorado counties have seen their unemployment rates increase 120 percent or more the past two years — with the region's average increase at 105.3 percent. Along the more heavily populated Front Range counties from Larimer in the north to Pueblo in the south, the average two-year increase in the unemployment rate was 94.1 percent. Adams and Douglas counties had the biggest increases, at 109 percent each.

In the eastern third of the state, unemployment rates have risen a smaller 66 percent on average. The preponderance of self-employed farmers and transient laborers keeps a lid on unemployment in those areas. The hurt inflicted on rural areas this downturn is a big change from the 2001 recession, when Front Range counties bled high-paying jobs in technology and telecom and less-populated areas were largely spared, said Richard Wobbekind, director of the business research division at the University of Colorado Leeds School of Business.

"There has been a huge drop-off in energy and a big drop-off in tourism," Wobbekind said. Falling commodity prices, especially for natural gas, and the disappearance of vacation-home construction are inflicting major economic pain, especially west of the Continental Divide.....when examined in terms of the percentage of jobs lost, Wobbekind said, rural areas both east and west are getting hit harder than urban areas.

This week, I found some data to confirm my suspicion that the rural areas are being more severely affected by this recession than the urban ones. The recent report by Ernie Goss would suggest this, as would the CNN poll, and the USDA study, below.

From Goss:

...Rural America is watching the recovery, thus far, from the sidelines....While government numbers on the broader economy have shown signs of improvement in recent months, Goss says conditions in Mid-America are not recovering as quickly....Ag is really underpinning this economy, and I think it has a lot to do with ag income which is down 25%.

From a CNN poll:

"Rural America seems to feel the pinch more than the rest of the country," Holland said. "Nearly half of people who live in rural areas say they are worse off, compared to 37% of suburbanites and 29% of people who live in cities."

Economic Research Service Map of Employment (USDA):

Economic Research Service

The Green areas gained employment from the second quarter of 2008 to the second quarter of this year. The red counties lost between 3.5% and 17.5% of their jobs in that year.

And from the USDA's annual Rural America At A Glance, 2009 Edition:

Update of an annual series, the 2009 edition of Rural America At A Glance deals with effects of the major recession on rural America. Initially, effects of the recession were mitigated in nonmetro areas by high commodity prices throughout much of 2008, but as the recession deepened, prices fell. Both nonmetro and metro areas experienced rising unemployment as manufacturing and other major employment sectors contracted, and they were similarly affected by the mortgage foreclosure crisis.

However, even before the current recession, nonmetro poverty rates had risen in the growth years after the 2001 recession, against the usual trend during a time of economic expansion; the nonmetro poverty rate has exceeded the national poverty rate since 2001. The nonmetro population continued to grow in 2007 and 2008, but at less than half the rate of the metro population. Nonmetro growth is largely due to a rise in births, offsetting a decline in net migration from metro to nonmetro areas.

Is it just me, or is there a prevailing mentality that thinks rural areas are weathering the recession better than urban? Not true, according to these above sources.