Bill Knight - April 26
11:35 am
Wed April 25, 2012

The Rural Economy Report Card

The vast area of the country between the cities has considerable strengths, recent studies show, although population growth generally has some negatives and the need for grocery stores specifically remains an unmet need. Creighton University’s Rural Mainstreet Index, which assesses rural economic health based on a scale from 0 to 100, examines about 200 communities with an average population of 1,300 in Illinois and nine other Great Plains states.

While the index shows rural health, uncertainty remains. However, the good news is substantial. Hiring last month rose to 60.0 from 53.7 in February, a gain of 20.6 percent.

Creighton economist Ernie Goss said, “Job growth for Rural Mainstreet communities has strengthened over the past several months after many months of stagnation.”

 Also, bankers said deposits were up but loan demand was weak because farmers have lots of cash, although demand improved from February. Further, the overall economic confidence index reflecting expectations for the next six months rose 4.4 percent.

Goss added, “Improving national economic reports along with very healthy exports are clearly and positively affecting the economic outlook of bankers in our survey.”

The survey also showed strong gains for home sales and retail business. For only the second time since July, Rural Mainstreet home sales climbed, 16.5 percent in March. The retail sales index for March advanced 6.8 percent from February. Another positive was loan volume (a robust 55 percent gain).

 Questions centered on declines of certificates of deposit, down 3.2 percent, from 50.0 to 48.4, and ag equipment sales, falling 2.9 percent, from 63.4 to 61.5.

Goss said, “Higher energy and fuel prices have not slowed growth in the farm economy. Compared to last year, the Rural Mainstreet economy is expanding at a faster pace with almost all economic dimensions stronger. Exports continue to be an important driver of growth.”

 Another question mark is an apparent bubble in land prices, Goss said, adding, “Record low interest rates and very healthy agriculture commodity prices continue to bolster farmland prices. Farmland prices cannot continue on this growth path. Higher interest rates and softer agriculture commodity prices will take some of the air out of the farmland price bubble as early as mid-year.”

 Meanwhile, population growth in rural America slowed in the first 10 years of the 21st century, with rural areas growing by just 2.2 million – half the growth during the 1990s. But during that period, the diversity of the rural population accelerated, according to new research from the Carsey Institute at the University of New Hampshire.

 Kenneth Johnson, a Carsey demographer and sociologist at New Hampshire, said, “Rural population growth slowed primarily because of fewer people moving to rural areas after 2000. During the 1990s, migration accounted for nearly two-thirds of the entire rural population gain. After 2000, it accounted for less than one-half of the gain.”

 Carsey’s research shows that west-central Illinois counties’ populations fell up to 10 percent between 2000 and 2010: Fulton, Henry and McDonough declined as much as 5 percent, and Knox and Warren up to 10 percent.

 Elsewhere, an important rural business remains often elusive for small towns.

David Procter, director of Kansas State University's Institute for Civic Discourse and Democracy, said, “Local grocery stores represent a critical piece of infrastructure that sustains America's rural communities by providing food, supporting jobs and generating taxes. Yet independently-owned grocery stores struggle to remain in business.”

 To help rural areas attract groceries, KSU has a Rural Grocery Initiative that meets with communities to give residents options such as creating a nonprofit grocery store, a co-op or partnerships with local schools, and is sponsoring a national Rural Grocery Summit in June in Manhattan, Kansas, where discussions will range from building and maintaining a consumer base to securing state and federal funding necessary to upgrade and repair freezers, coolers and air conditioning.

Bill Knight is a freelance writer who teaches at Western Illinois University. The opinions expressed are not necessarily those of WIU or Tri States Public Radio.