Rural America Is on The Verge of Collapse

The comments below are an edited and abridged synopsis of an article by Tyler Durden

The Economic Innovation Group’s Distressed Communities Index shows that a significant economic transformation has 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.

Rural America Is on The Verge of Collapse | BullionBuzz
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Since the crisis, the number of people living in prosperous zip codes expanded by 10.2 million. Meanwhile, the number of Americans living in distressed zip codes decreased by 3.4 million, indicating that the economic pain is in rural America.

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 have done the best 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 a 3.6 million jobs surplus over 2007 levels, more than the bottom 80% of distressed zip codes combined. It took 5 years for prosperous zip codes to replace all jobs lost from the financial crisis; meanwhile, distressed zip codes will never recover.

Five counties (Los Angeles, Brooklyn, Houston, Queens and Miami-Dade) 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, the entire agricultural complex is on the verge of disaster, with farmers in rural America caught in the crossfire of an escalating trade war.

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

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