Rural Leads in Economic Recovery

[imgbelt img=SeptJobs528.jpg]A Federal Reserve economist says higher commodity prices are allowing rural America to lead the country out of recession. But how long will those prices stand up?


[imgcontainer] [img:SeptJobs528.jpg] [source]BLS/Daily Yonder

This map shows the unemployment rates in all rural counties relative to the national average of 9.2% in September. Blue counties have rates below the national average; purple counties are above. Click on the map to see a larger version.

The rural unemployment rate dropped for the third month in a row in September, according to county job figures released by the Bureau of Labor Statistics.

And the rural unemployment rate of 8.9% in September remains below both the urban rate of 9.3% and the national rate of 9.2%.

Unemployment was lowest in exurban counties. These largely rural counties close to urban areas had an unemployment rate of 8.5% in September. (The monthly county by county statistics differ slightly from the national rate, which was 9.6% in September. The rates aren’t the same because the data is collected differently.)

The map above shows how rural counties compare to the national unemployment rate. Blue counties had unemployment rates below the national average of 9.2% in September. The purplish counties had rates higher than the national average. (Click on the map to see a larger version.)

Most rural counties (1,269 out of 2,038, or 62%) had unemployment rates in September below the national average. (Go to the next page to see the counties with the highest and lowest rates.)


As we’ve seen throughout this recession, the farm and Great Plains states are faring better than are rural counties on the West Coast, in the Southeast or through the Midwest from Kentucky north to Michigan.

There are two different rural economies. The one driven by the sale of commodities from the big states in the middle of the country is doing well — far better than the rest of the country.

The states with rural economies dependent on manufacturing or construction have unemployment rates above the national average. 

A vice president of the Federal Reserve Bank of Kansas City recently said that rural areas in the Plains are leading the nation out of recession as commodity prices rise — largely, he said, as a result of action by the central bank.

“As we increase the supply of money, it pushes down exchange rates and raises commodity prices,” Jason Henderson said in early November at the Rural Economic Outlook Conference at Oklahoma State University.  He said that rural economies are improving as a result.

But this happy circumstance has a downside, Henderson warned. “Commodity markets do come to an end. How can we do more so rural economies don’t just lead the first year of a recovery but in all years of a recovery?” he said.

Meanwhile, the land boom in rural America continues. The Kansas City Fed reported last week that farmland values in the central U.S. increased again in the third quarter, as prices for corn, wheat and soybeans rose.

The prices of cotton, corn, wheat, and soybeans are up, 119%, 49%, 39% and 35%, respectively, from a year ago.

Land prices followed, and in some parts of the farm belt land was selling for 12 percent more than last year.

Higher prices for commodities are also driving increased purchases of tractors, grain-storage bins and other farm equipment. 

Lower unemployment, however, does not necessarily mean that rural America is adding jobs. 

The Yonder compared the number of jobs in rural America in September of this year with September 2009. There are 17,000 fewer jobs in rural counties this year than in 2009.

J. Stephen Conn

Jerauld County, South Dakota, had the second lowest unemployment rate in rural America in September. This is a picture from the outskirts of Wessington Springs, the county seat.

Seventeen states have rural unemployment rates below the national average. The highest rural unemployment rates can be found in South Carolina, Nevada and California, which all have rates of 12.9%.

The other states with rural unemployment rates higher than the national average are Michigan (12.3%); Florida (12%); Arizona (11.8%) Georgia (11.2%); Tennessee (11.1%); Mississippi (11%); Oregon (10.7%); Kentucky (10.4%); Ohio (10.4%); Alabama (10.3%) North Carolina (10%); Indiana (9.7%); Illinois (9.4%) and West Virginia (9.2%).

The Dakotas have the lowest unemployment rates in the country. North Dakota has a 3% unemployment rate and South Dakota has a 3.9% rate.

Here are the 50 rural counties with the lowest unemployment rates in September 2010.[img:lowestSept.gif]

Here are the 50 rural counties with the highest unemployment rates in September 2010.


Roberto Gallardo is a research associate at the Southern Rural Development Center at Mississippi State University.