NewGeography.com blogs

2007 was a good year for rural America. Driven by "bumper crops, strong demand, and high prices" in commodity markets, farmers across the United States enjoyed an "exceptional year". Strong conditions continued into the first half of 2008, spurring farmers to increase "purchases of capital equipment and household consumption," and fueling "double-digit percentage gains in cropland values," in many areas of the nation.

Unfortunately for rural America, these boom times appear to be drawing to a close. Over the past few months, prices for wheat, soybeans, corn, and other commodities have come back to earth, while input costs have soared. According to the Fargo Forum, the USDA calculates that expenses faced by farmers "increased half as much in just the past year as they rose in the previous 15 years combined," leaving farmers "hard-pressed to make money next year even if they enjoy good yields". This has left many farmers concerned that farm country may be facing a repeat of the lean times faced during the farm crisis of the late 70's and early 80's. One long-time farmer, Harlan Meyer of Davenport, Iowa, expressed his reservations about the situation to the AP, stating that,

"I guess you could say there's an awful lot of concern in the rural communities and with some of the city people... I would think there would be a lot of cautiousness among farmers because most of the people can remember the '80s and I would think there's probably a lot of cautious people now on spending a lot of money."

While rural communities may be facing tougher economic times in the face of a bursting commodity bubble, it appears that their banks will be able to meet such challenges from a position of relative strength. According to Reuters, banks throughout rural America "are not freezing credit to customers like large money center banks, offering a bright spot in an otherwise gloomy economy". Such banks have "largely steered clear of the subprime housing loans," have "low to no exposure," to credit derivative instruments, and are able to draw on a strong base of deposits to continue to provide loans. Those loans will also be made at far better terms than those seen during the farm crisis, with banks today offering farmers "interest rates that are one-third or one-half of what they were in the late 1970s."

While conditions may have some ways to go to match the bleak days of the farm crisis, some legislators are already expressing concern about access to credit in farm country. This week, Sen. John Thune of South Dakota called for a hearing to explore the impact of the credit crisis on rural America. While rural banks may be in relatively sound health, it appears that those same banks are, according to the AP, requiring "more collateral and higher interest rates," for loans, and are, in the words of a Texas A&M economist, "turning conservative". However, the AP also notes that even in the face of such tightening, lending will continue, as "the industry's traditional lenders — independent commercial banks — are on more solid financial footing than the country's largest investment banks and commercial banks".

Talk of bailing out US automakers has dominated the news recently, and we all know that means Michigan. Michigan is home to roughly a quarter of the country's auto manufacturing jobs, and the industry is in rapid decline there and in Ohio, but the state of automaking employment in the rest of the country may surprise you.

The economies of Michigan, Alabama, Ohio, Indiana, and Missouri are the most highly dependent on auto manufacturing. While Michigan and Ohio have lost more than 43,000 auto jobs since 2001, Indiana actually added almost 3000 over the same time period and Alabama more than doubled its auto industry, adding 8600 jobs.

In fact, the rest of the nation aside from Ohio held about the same number of automobile manufacturing jobs in 2001 as the state of Michigan. While Michigan has shed more than 35% of its employment in the industry, the rest of the country actually held its own over the same period.

One major caveat - this source of BLS data is only current through the end of 2007, so it doesn't quantify the effects of the recent credit market implosion. What it does show is a strong decentralizing trend in the auto manufacturing industry.

Looking at average annual pay, the small vehicle sector in Minnesota leads the way - jobs there average over $100,000. At well over $90k per job in Michigan, you can see what the rapid decline in automaking has contributed to the evisceration of the state economy. In the top four highest paying states - where workers make more than $90,000 on average per year - automakers have cut more than one third of the jobs in those states since 2001.

So while the failures of major automakers would send ripples throughout the North American industrial economy, what we are really contemplating here is doling out support for the declining states of Michigan and Ohio.

Working on a construction crew back in college with a few workers each from Mexico and Guatemala, I was amazed at the animosity between the two groups. They would joke, not good-naturedly, about how much cheaper the prostitutes were in the neighboring country or how stupid the other's politicians were. I traveled in Central America a few years later and found the same thing.

This great article from earlier in this week's LA Times shows the economic and cultural effects of these nationalist tensions in the U.S. It chronicles how immigrants from El Salvador have to assimilate to the existing Mexican power structure in Los Angeles for jobs. Since the dominant Latin culture in LA is Mexican, and there is a strong nationalistic bias in some communities, El Salvadorians are changing their accents and even adopting their cuisine and mores to fit in.

The reverse is true in other cities. When one of the Mexican construction workers I knew flew out to D.C., he entered a taqueria in the Adams-Morgan area. Upon hearing his accent, the cashier from another Central American country promptly said, "The Mexicans eat over there." Looks like you better choose your adopted city carefully if you're a Central American immigrant.

North Dakota is not a state known for supporting Democratic candidates in Presidential elections. In the the past 80 years, it has only backed the Democrat three times- Franklin D. Roosevelt in 1932 and 1936, and Lyndon B. Johnson in 1964.

Notably, these three elections mark the three largest popular vote landslides by Democrats during that period of time. In 1932, FDR won nationally by a margin of 18%, in 1936 he won by 24%, and in 1964, LBJ defeated Barry Goldwater nationally by 22%. No other Democratic presidential candidate has run up a double digit margin during that period, with FDR coming closest in 1940, winning by 9.9%. (And, it should be noted, losing North Dakota.)

This year, however, North Dakota may be in play. While President Bush won the state in 2004, 63% to 35% over John Kerry, the most recent polls of the state, by Research 2000 and the Fargo Forum, place the 2008 race in a dead heat.

This may be a reflection of a wider trend in rural areas. A survey of rural voters in 13 battleground states released in late October by the Center for Rural Strategies, showed Sen. Obama and Sen. McCain tied among rural voters. In September, similar polling by the center had shown McCain with a 10 point lead among rural voters. According to Reuters, in 2004, President Bush "won rural districts nationwide by 19 points."

If the recent 2008 polling proves accurate, Tuesday night may be an unhappy evening for McCain supporters, with Sen. Obama facing the possibility of winning by a healthy margin, potentially bringing rural states such as North Dakota along for the ride.

A new study from Maplight.org, a "nonpartisan, nonprofit research group illuminating the connection between money and politics," reports that "U.S. House members raised $700 million in campaign funds," during the 2005-2007 time period, with 79%, or $551 million of that amount coming from outside the district of the House member running for office.

According to Maplight, around 21% of campaign contributions to U.S. House members originated in Washington, D.C., with Virginia, California, New York, and Texas rounding out the top five source locations for contributions. The reports states that the majority of campaign funds not only came from out of district, but out of state sources as well:

About two-thirds of House members, 274 out of 421 (65%), raised half or more of their funds from out-of-state. Ninety-two House members (22%) raised 70% or more of their funds from out-of-state. Eight House members raised 90% or more of their funds from out-of-state. The average percentage of funds each Representative raised from out-of-state is 56.7%, and the median percentage is 56.1%.

It should be noted that the Maplight report only looks at donations of over $200, the point above which the donor must be identified to the Federal Elections Committee. Much has been made of the move, particularly by the Obama campaign, towards utilizing a base of small donations, under this $200 dollar threshold. Estimates place somewhere between one quarter and one half of Sen. Obama's $600 million of campaign contributions in this class.

This potential move towards smaller donations does not appear to have had as much of an impact on Congressional races. According to the Campaign Finance Institute, registered candidates for the U.S. House raised $447 million in the first four months of 2008, with "less than 10% of this total [arriving] in amounts of $200 or less." This, states the CFI, marks little or no change from prior years.