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Will energy markets refuel the rural economy?


  • Jason Henderson
  • Maria Akers


The rural economy began 2006 facing an uncertain outlook. For two years, rural growth had been unusually strong. But rising energy prices threatened to stall the expansion. Many businesses had already been weakened by high input costs, and many households were feeling squeezed by higher costs for gas and heating fuel. As the year progressed, however, some rural communities were able to harness the power of high energy prices by taking part in its production. ; Energy activity helped boost the fortunes of many rural places, but the rural economy as a whole slowed in 2006. Nonfarm economic growth moderated as production costs increased and construction activity cooled. Farm incomes also declined as severe drought limited production and higher energy prices cut profits. Still, rising crop prices fueled by ethanol production kindled optimism for new economic engines in rural America. ; Henderson and Akers review the state of the rural economy. First, they discuss the slower, but steadier, expansion on Main Streets. Then they examine the health of the farm economy. Finally, they explore rural prospects for 2007 and discuss the influences of robust energy activity on the rural economy.

Suggested Citation

  • Jason Henderson & Maria Akers, 2007. "Will energy markets refuel the rural economy?," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 53-74.
  • Handle: RePEc:fip:fedker:y:2007:i:qi:p:53-74:n:v.92no.1

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    References listed on IDEAS

    1. Jason Henderson & Stephan Weiler, 2004. "Defining "rural" America," Main Street Economist, Federal Reserve Bank of Kansas City, issue Jul.
    2. Shoemaker, Robbin A. & McGranahan, David A. & McBride, William D., 2006. "Agriculture and Rural Communities Are Resilient to High Energy Costs," Amber Waves, United States Department of Agriculture, Economic Research Service, April.
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    Cited by:

    1. Brady, Michael P. & Nickerson, Cynthia J., 2009. "A Spatial Analysis of Conservation Reserve Program Participants: The Impact of Absenteeism on Participation Decisions," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49369, Agricultural and Applied Economics Association.
    2. Brady, Michael P. & Breneman, Vincent E., 2008. "A Spatial Analysis of Farm Payment Recipients Using the FSA 1614 Dataset," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6418, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    Rural areas ; Rural development;


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