Friday, November 20, 2009
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Main Street Economics

Growth and Development | Main Street Economics
Prison Closings Affect Rural Communities
03/22/2009

 

As the federal government increases spending, state and local governments cut back. In New York, that means Camp Pharsalia, a minimum security prison near Norwich may close. The prison and other prison camps, according to the Washington Post's Keith Richburg, "have become something of an economic lifeline, for decades providing not just manpower, but also jobs, in a region where work is hard to come by. But with most governors and legislatures grappling with crushing budget deficits, what's good for rural economies is often proving bad for states." 

New York is facing a $13 billion deficit and the state has fewer inmates. So Gov. David Patterson has proposed shutting four prisons, including two near Norwich. That would save $26 million. The Post reports this phenomenon is playing out across the country, as prisons built in rural areas in the '80s and '90s, during the farm crisis, are now being closed. For Norwich, that would mean the loss of 59 jobs; moreover, 40 local businesses have contracts with the prison.

Norwich Evening Sun reporter Melissa Stagnaro writes that state cuts paint "a somewhat dismal picture of what the future could bring for our upstate communities. A slow degradation of our education system, a decline in health care, sky high unemployment and overburdened public assistance...We can't just sit back and let this happen." 

 

Main Street Economics
AIG Subsidiary Seeking 50% Rate Hike in Rural Kentucky
03/18/2009

 

Forget the $165 million in bonuses for those AIG executives. If you live in two rural  Kentucky towns, you are more concerned about the 50.8 percent rate hike in the local water bill being sought by an AIG subsidiary. The story is told in the West Kentucky Journal of Politics and Issues. And from what we can tell, the subsidiary apple doesn't fall very far from the corporate AIG tree.

It seems that Water Services of Kentucky delivers water to 7,991 customers in Clinton and Middlesboro. Water Services is a subsidiary of Utilities, Inc., which is owned by AIG (of the $165 million in bonuses fame). Utilities, Inc. decided to "improve" its billing procedure in 2006 and proceeded to spend $14 million in the process. The bills were messed up from the start, according to the Journal. Some people got several bills a month. The Kountry Cafe was getting three a month.

Then the company filed for that 50.8% rate increase to help pay for this "improvement." The AIG subsidiary says this increase will allow them to "earn a range of common equity cost ration of 11.6% to 12.1%." That's pretty sweet — as long as you don't remember that these rates of return are coming out of the hides of some small towns.

 

BioFuels and Energy | Main Street Economics
Is 'Cap-And-Trade' a Tax on Rural?
03/16/2009

Rural people use more energy. So when limits are placed on carbon emissions, will there be a redistribution of money from the center of the country to the urban coasts?

BioFuels and Energy | Main Street Economics
Energy-Producing Counties in the West Fall Behind
03/05/2009

Basing a county's economy on mining coal or drilling for oil and gas can produce high incomes in boom times, but over the long run rural counties were better off without fossil fuels.

Main Street Economics | Politics and Government
Largest Share of Army Recruits Come from Rural/Exurban America
03/02/2009

Rural and exurban counties provided more than their share of recruits to the U.S. Army in 2008. Rural counties have been disproportionately represented in the military since the beginning of the Iraq War.

Main Street Economics | Politics and Government
U.S. Army Recruits by State, 2008
03/01/2009

This chart ranks the states by the rate of U.S. Army recruits from each state in 2008.

Main Street Economics | Politics and Government
U.S. Army Recruits from Exurban Counties, 2008
03/01/2009

This chart ranks the states by the rate of U.S. Army recruits from urban counties in 2008.

Main Street Economics | Politics and Government
U.S. Army Recruits from Urban Counties, 2008
03/01/2009
Main Street Economics
Yonder 40 Stock Index Beats City Averages
03/01/2009

The Yonder 40 — the 40 stocks picked to reflect the rural economy — fared better than the other major stock indexes last week. The DY 40 was down by 1.3% while the Dow Industrials lost over 4% and the S&P 500 tumbled 4.5%. Since the Yonder 40 began in July 2007, the rural stock index holds a small lead over the Dow, the S&P and the NASDAQ.

Which rural companies did well last week? Nobody did better than the gunmaker Sturm Ruger, which jumped 45% last week. The company's net sales were significantly higher in 2008 than in '07. Firearm sales grew from $144 million in 2007 to $174 million in 2008. (Those reports of higher gun sales in November apparently were real.) Regions Financial was up more than 20% for the week, but is still battered along with the rest of the financials. Smithfield Foods, a pork producer, and chicken king Tyson were both up over 9%.

Most of the Yonder 40 were down, like the economy. The housing market is awful, so capet-maker Mohawk dropped by more than 20% last week. Energy companies also dropped, as prices for fuel remain low.

Main Street Economics
Rural Bankers Support Pay Limits for Bailout Recipients
02/25/2009

Creighton University's Rural Mainstreet Economy index fell in February, as jobs continued to be lost in the 11-state region of the Midwest and Great Plains. The index of various economic indicators based on interviews with rural bankers has been negative for 12th consecutive months. Equipment sales were slow. Land prices were level or dropping. The bank CEOs interviewed by the Creighton economists all expressed declining confidence in the economy.

"Hiring in the area has been anemic since the beginning of 2008 and weakened almost every month for 2008 with the negative trend continuing for 2009," the report said. Unemployment is lower in the Midwest and Great Plains than in the rest of the country — see the Yonder story on this page — and almost all the bankers reported unemployment rates below 7 percent.

Bank conditions on the rural Main Street are strong, according to the survey, a trend that runs counter to the turmoil of the national financial system. The Main Street bankers reported increases in checking accounts and steady loan volumes. Six out of ten of these community bankers said the supported executive pay limitations for those companies that accept federal bailout money.

Daily Yonder | Keep It Rural
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