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Rural America Is On The Verge Of Collapse

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The Economic Innovation Group’s (EIG) Distressed Communities Index (DCI) shows a significant economic transformation (from two distinct periods: 2007-2011 and 2012-2016) that occurred since the financial crisis. The shift of human capital, job creation, and business formation to metropolitan areas reveals that rural America is teetering on the edge of collapse.

Since the crisis, the number of people living in prosperous zip codes expanded by 10.2 million, to a total of 86.5 million, an increase that was much greater than any other social class. Meanwhile, the number of Americans living in distressed zip codes decreased to 3.4 million, to a total of 50 million, the smallest shift of any other social class. This indicates that the geography of economic pain is in rural America.

“While the overall population in distressed zip codes declined, the number of rural Americans in that category increased by nearly 1 million between the two periods. Rural zip codes exhibited the most volatility and were by far the most likely to be downwardly mobile on the index, with 30 percent dropping into a lower quintile of prosperity—nearly twice the proportion of urban zip codes that fell into a lower quintile. Meanwhile, suburban communities registered the greatest stability, with 61 percent remaining in the same quintile over both periods. Urban zip codes were the most robust—least likely to decline and more likely than their suburban counterparts to rise,” the report said.

Visualizing the collapse: Economic distress was mostly centered in the Southeast, Rust Belt, and South Central. In Alabama, Arkansas, Mississippi, and West Virginia, at least one-third of the population were located in distressed zip codes.

Prosperous zip codes were the top beneficiaries of the jobs recovery since the financial crisis. All zip codes saw job declines during the recession, each laying off several million jobs from 2007 to 2010. But by 2016, prosperous zip codes had 3.6 million jobs surplus over 2007 levels, which was more than the bottom 80% of distressed zip codes combined. It took five years for prosperous zip codes to replace all jobs lost from the financial crisis; meanwhile, distressed zip codes will never recover.

EIG shows that less than 25% of all counties have recovered from business closures from the recession.

“US business formation has been dismal in both magnitude and distribution since the Great Recession. The country’s population is almost evenly split between counties that have fully replaced (with 161 million residents) and those that have not (with 157.4 million). This divide is due to the fact that highly populous counties—those with more than 500,000 residents—were far more likely to add businesses above and beyond 2007 levels than their smaller peers. Nearly three in every five large counties added businesses on net over the period, compared to only one in every five small one,” the report said.

To highlight the weak recovery and geographic unevenness of new business formation, EIG shows that the entire country had 52,800 more business establishments in 2016 than it did in 2007.

Five counties (Los Angeles, CA; Brooklyn, NY; Harris, TX (Houston); Queens, NY; and Miami-Dade, FL. ) had a combined 55,500 more businesses in 2016 than before the recession. Without those five counties, the US economy would not have recovered.

On top of deep structural changes in rural America, JPMorgan told clients last week that the entire agriculture complex is on the verge of disaster, with farmers in rural America caught in the crossfire of an escalating trade war.

“Overall, this is a perfect storm for US farmers,” JPMorgan analyst Ann Duignan warned investors.

Farmers are facing tremendous headwinds, including a worsening trade war, collapsing soybean exports to China, global oversupply conditions, and crop yield losses in the Midwest due to flooding. This all comes at a time when farmers are defaulting and missing payments at alarming rates, forcing regional banks to restructure and refinance existing loans.

Today’s downturn of rural America is no different than what happened in the 1920s, 1930s, and the early 1980s.

Zerohedge



110 Comments on "Rural America Is On The Verge Of Collapse"

  1. I AM THE MOB on Tue, 28th May 2019 4:10 pm 

    Clogg

    Your GDP peaked over 40 years ago..And PPP is not a reliable metric..You are cherry picking..

    And China’s debt to GDP is over 300 percent..Possibly even higher..They are headed for a “Minsky moment”..Thats according to the head of China’s central bank..

    And 80 percent of their silk road are in junk status..Even India their next door neighbor refused to join due to the excessive debt levels..

    And china is the world largest oil importer, next to Europe..So when the global shortage hits..They are history..Just remember what a mere 3 percent shortage did to America in the 70’s..Now imagine a 10 percent or higher permeant shortage coming to EurAsia..

    Are you going to blame immigrants for your lack of oil?

    That’s the problem with fascism..You eventually run out of other people to blame..

    HAHAAH

  2. Cloggie on Tue, 28th May 2019 4:16 pm 

    You can’t make this stuff up: Marxist Labour party faces investigation from equality body because of anti-cementheadism:

    https://www.theguardian.com/politics/2019/may/28/equality-body-launches-investigation-of-labour-antisemitism-claims

    “Equality body launches investigation of Labour antisemitism claims”

    Hit em hard, Jeremy!

  3. Cloggie on Tue, 28th May 2019 4:18 pm 

    Your GDP peaked over 40 years ago

    Rubbish, we have been through this before. Our-self-styled “high-IQ” idiot can’t discern between GDP and GDP-growth. He claims these are the same. Mobster must have been a kindergarten drop-out.

  4. Cloggie on Tue, 28th May 2019 4:26 pm 

    Now on BBC news: “the EU loves to bicker among themselves, but in matters of Brexit there is a strong unified resolve: there will be no renegotiations with whoever will be the next PM”

    It is sign at the cross or get lost:

    https://www.dailymail.co.uk/news/article-7079731/Farage-says-absolute-rubbish-say-Theresa-Mays-deal-redone.html

    “Farage says it’s ‘absolute rubbish’ to say Theresa May’s deal can be redone as he blasts Hunt for shunning No Deal and challenges him to debate”

    “British” man of the century Winston Churchill destroyed the British empire.

    We can leave it to Nigel to destroy Britain proper.

    https://m0.joe.co.uk/wp-content/uploads/2016/06/24082953/GettyImages-531883850.jpg

  5. I AM THE MOB on Tue, 28th May 2019 5:52 pm 

    Clogg

    Without GDP growth your economy will collapse and every debt can’t be ever repaid..

    You are a dumb uneducated boomer..

    You lie about everything because you can’t handle the truth..

    Your country will be out of natural gas soon along with a massive oil shortage

    Another Dutch hunger winter is coming!

    Hope you like eating soup!

    HAHAH

  6. JuanP on Tue, 28th May 2019 7:45 pm 

    Fake Dossier’-Creator Steele Refuses To Cooperate With AG Barr’s Probe
    Having been practically a recluse since since the ‘fake dossier’ alleging links between Donald Trump and Russia that he produced was published by BuzzFeed in January 2017, Christophe Steele has reportedly refused to cooperate with AG Barr’s probes. Reuters reports that, according to a source with knowledge of the situation, Steele, a former Russia expert for the British spy agency MI6, will not answer questions from prosecutor John Durham, named by Barr to examine the origins of the investigations into Trump and his campaign team. However, buried deep in Reuters story is the same source claiming that Steele might cooperate with a parallel inquiry by the Justice Department’s Inspector General into how U.S. law enforcement agencies handled pre-election investigations into both Trump and Clinton. In the past Steele has cooperated, willingly being interviewed twice in the special counsel’s investigation, and submitting answers in writing to the Senate Intelligence Committee, but apparently this time he is not willing. With Steel refusing to cooperate, Joe DiGenova, former U.S. Attorney warned Monday on WMAL radio’s Mornings on the Mall radio show, “this is full scale war,” adding that “we are heading toward a gigantic, gigantic fight…The intelligence community, which includes the FBI, is in full resistance to disclosing what they did during the presidential campaign.” Sara Carter reports that DOJ Inspector General Michael Horowitz is expected to release his report on the FBI’s handling of the investigation into Trump within weeks. These investigation will hold those in the intelligence and law enforcement community accountable, depending on what evidence is discovered. This reporter is hearing from sources that it will be scathing. Those who abused their power and weaponized the tools meant to target America’s enemies against a political opponents should be held accountable.

  7. Davy on Tue, 28th May 2019 8:01 pm 

    Oops, sorry everyone. I forgot the link again.

    https://www.zerohedge.com/news/2019-05-28/fake-dossier-creator-steele-refuses-cooperate-ag-barrs-probe

  8. More Davy Identity Theft on Tue, 28th May 2019 8:18 pm 

    JuanP on Tue, 28th May 2019 7:45 pm

  9. JuanP on Wed, 29th May 2019 4:47 am 

    juanPee posting

    Davy on Tue, 28th May 2019 8:01 pm
    Oops, sorry everyone. I forgot the link again.
    https://www.zerohedge.com/news/2019-05-28/fake-dossier-creator-steele-refuses-cooperate-ag-barrs-probe
    More Davy Identity Theft on Tue, 28th May 2019 8:18 pm
    JuanP on Tue, 28th May 2019 7:45 pm

  10. Davy Identity Theft on Wed, 29th May 2019 4:50 am 

    JuanP on Wed, 29th May 2019 4:47 am

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