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Senior Contributor

Rural economy rebounding in 2011

Just saw some information from a couple economists that indicates 2011 could be a good year for the rural economy. Tight grain supplies and strong demand remain the biggest factors in the rebound, but factors like continued lagging home sales and construction continue to drag on things. 

 

Here's the full story

 

Do you share this optimism for the economy in your area for the coming year?

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26 Replies
Senior Advisor

Re: Rural economy rebounding in 2011

Hope the "intended inflation" does it's magic to relieve the debt pressure for local gov. as well state and fed---lot of budget deficits in our midst --most rural debt is probably in a good zone . 

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Veteran Advisor

Re: Rural economy rebounding in 2011

JC Happy new year first off.  I have a mixed emotion about 11. First it will most likely be a good year for ag in general.  so that will benefit the rural economy.  But the long term trend of youth moving out from our rural communities will continue at the current pace. as that does it will continue to put pressure on rural schools, hospitals and small business to have sufficient demand to keep things going long term.  I think the concentration of wealth, in an aging populous, doesn't bode well for the future. 

 

I also think energy prices will have a negative impact on housing values and wage discrepincy.Also services delivered to fewer people will require an increase in property taxes to keep those services.  As always it will be interesting. JR

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Senior Contributor

Re: Rural economy rebounding in 2011

Looked at from a regional basis, it may well be that ag in the midwest will do well for 2011.  Prices are volatile, which may make some farmers reluctant marketers.  Input costs are going up, e.g., fertilzier and fuel.  I think this

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Advisor

Re: Rural economy rebounding in 2011

It's hard to say.  We do not participate in the typical crop economy, and are the only hay farmers of any consequence in this county, so there is no real competition to gauge a market against. 

Hogs have done very well for us this year as contract growers, but I think the industry is still brittle and susceptible to harm from high energy prices, as well as other input costs, especially feedstuffs. 

I have heard some commentary of projections that this is going to be a banner year for America.  It is hard for me to muster that much enthusiasm.   

I honestly worry about the extremely high land prices that I keep reading about here...coupled with rising operating costs, it has to be a worry to some at some point. 

Interest has to go up at some point in time, and will be manipulated upward if inflation starts to hit the radar at the Fed, don't you think, Jeff?  What will people do when they are sitting on an eleven percent note, instead of a four percent one?  

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Senior Advisor

Re: Rural economy rebounding in 2011

It appears most of the land purchases are being made by stable financial positions--lot of cash and or tons of equity--a 180 from the housing side--as for business it is not comparable to other times in history due to the consolidation of everything from co-ops to what little small business that remain  ---I'll go with Buffet and call it stagflation--just  a personal hunch

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Advisor

Re: Rural economy rebounding in 2011

I had one other point in mind when I responded yesterday...in my position as planning board chairman,I have noticed a slight uptick in development. Bumped into a small builder when he picked up his son this morning where we train together in Taekwondo. He said he was on his way to pull permits for some spec homes...probably the first time for that in over two years. So,that is a good sign to me.
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Frequent Contributor

Re: Rural economy rebounding in 2011

It will most likely be a good year for segments of the rural economy.  Grain farmers in area's not affected by negative weather events should have a banner year.  If you can't make good money with $5-6 corn and $12+ beans you had better find another profession.  The news is not so good for dairy farmers.  At least in my area smaller dairy farmers continue to struggle.  Tobacco farmers also continue to see deteriorating profits. 

 

Overall we are still looking at a jobless recovery.  There are few, if any, new jobs being created.  I fail to see where the rural or the overall economy is going to see significant improvement.  Government deficit  spending is just prolonging the agony.  

 

One definition of insanity is doing the same thing over and over again and expecting a different result.  Our government continues to borrow and spend along with tax and spend.  What got us into this economic quagmire is not going to get us out. 

 

How long will Washington continue the insanity?  The money printing will eventually lead to hyperinflation at some point in time.  As interest rates increase as well as government borrowing there will be a point where the government will be unable to borrow what it takes to just pay the interest.  In that case money will be printed to make up the deficit which will eventually lead to hyperinflation.  Hope I am wrong but just trying to take an objective look at things.  .         

 

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Senior Contributor

Re: Rural economy rebounding in 2011

Jeff, my outlook is mixed right now.  Though I've captured great revenue from current prices, inputs like fertilizer are rising as fast as commodity prices.  So are certain items like farm tires.  So one thing is certain; we cannot rest on our laurels too long because if we are not focused on what is going on around us, we can easliy lose any gains we have made.

 

In my community, some businesses are struggling to make ends meet.  Our furniture store is going out of business, a bookstore is hanging on by a thread, so is a coffee shop that caters to the bookstore customers.  An auto dealership that was bought out several years ago is building on a new site near the main U.S. highway, and the parent company advertises for new positions, but I'm not certain that it is sustainable.  Local farm based manufacturers are still going strong, but they are not expanding or hiring new people.  Other major employers are doing okay, they seem optimistic but are not expanding, either.

 

The only really bright spot is agriculture, down on the farm.  I am grateful that we have not had to experience some of the bad times other sectors are going through right now.

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Senior Contributor

Re: Rural economy rebounding in 2011

Spending money that one does not have always has a bad result. How much are the farm debts rising for the sake of reduced taxes? One way or another we are going to pay the piper. Taxes are going to have to be increased to pay for the programs that many want. Who is going to pay their share for these programs is going to change all levels of governments as the past election has shown.

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