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Federal Reserve Bank of Kansas City
Economic Review
Will rural prosperity prevail in 2008?
Jason Henderson
Maria Akers

The rural economy was strong in 2007. Record farm incomes were fueled by rising ethanol demand and by stronger export demand, which was driven in part by a weaker dollar. Farmers used the year’s higher profits both to strengthen their financial conditions and to boost investment in land and equipment. Meanwhile, businesses on Main Streets reaped benefits from the higher farm spending, and the fortunes of energy-dependent regions brightened with higher energy prices. ; As the year progressed, however, the outlook for the rural economy began to dim. Following national trends near the end of the year, Main Street activity waned. The higher costs for gas and heating fuel pinched rural household budgets. And, despite robust outlooks for ethanol production and exports, rising energy costs began to trim profit margins for farm and nonfarm businesses alike.

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Jason Henderson & Maria Akers, "Will rural prosperity prevail in 2008?" , Federal Reserve Bank of Kansas City, Economic Review, issue Q I, pages 69-86, 2008.
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Keywords: Rural areas ; Rural development ; Farm income
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