Portland News

Inflation Heavily Affecting Rural America, Others Considering a Move to the City


Inflation has been brutal for everyone, and rural America is the next victim as more residents have considered moving to cities to ease financial pressures.

Inflation has hit rural communities hard, according to an analysis by Iowa State University professor Dave Peters.

Peters found that if the incomes of rural Americans increased by 2.6%, their expenditures increased by 9.2%.

The report on rural families

Dave Peters’ report shows that rural Americans are more affected by inflation than the rest of the country.

“Rural households are more vulnerable to inflation,” the report said. In 2020, rural household post-tax incomes stood at $58,012.

About 82% of rural incomes went towards expenses, leaving $10,661 in discretionary income for savings and unanticipated expenses.

However, by 2022 expenses rose by 18.5% overall. Earnings were not able to keep pace with inflation, rising by only 6.1%.

The net effect cut rural discretionary incomes by -49.1% between June 2020 and June 2020, reducing the cushion to only $5,426. Expenses now consume 91% of rural take-home pay.”

Read also: Despite Economic Troubles, Jerome Powell Doesn’t Believe a Recession Will Happen

Where it hurt most

Peters’ report points out that rural communities face the same problems as city dwellers, pointing to fuel prices.

“Mainly, fuel prices, particularly among the farmer and agricultural community,” he explained.

“They really are worried about the price of gas and diesel.”

Inflation hit its highest level in four decades last June, hitting every US household.

One of the main causes of problems, according to Peters, was travel.

“Rural people have to drive long distances for work, for school, for health care, just to get the daily necessities of life like groceries – there is no public transportation,” he elaborated.

Other affected areas

Dave Peters’ analysis also found that rural households pay $ 2,500 more per year for gasoline than in 2020.

He also showed that the prices of health insurance, veterinary care and fuel for heating homes and cars were rising.

“Most rural homes have to buy tanks of liquefied petroleum or liquefied propane, or they have to get fuel oil,” he added.

“And those have really risen in costs as well; that’s, I think, something like $1,000 more.”

Read also: Americans Well-Positioned for the Economic Storm, According to the White House

Davis Peters’ Warnings

Peters warned that if prices stay high for too long, it could trigger a dangerous cycle for some rural Americans.

He says it will start with people diving into their savings, which is happening now.

People will then use their money for necessities before going into debt on their credit cards.

However, Peters expressed greater concern that rural America would pull lines of credit due to rising home values, especially in the Midwest.

He also warns that such a strategy could backfire.

“That’s particularly dangerous if home prices fall back down and then they’re left with a mortgage that the value of their home doesn’t cover,” says Peters.

Moving to cities

As the factors pile up, Peters speculates that some people will be pushed closer to the cities.

“There are people that I’ve talked to in Iowa and in Nebraska… that are really trying to do that financial calculation,” he said.

“They would love to work and get city wages, but they can’t commute. It’s too expensive with the gas prices. And really, the thing that’s holding them back is the cost of homes.”

“Some people are contemplating moving closer to a city, moving to the suburbs, or moving to a small community 45 minutes from a city,” he added.

“So yeah, it will probably, if it continues, accelerate rural depopulation in parts of the Midwest and Great Plains.”


Inflation is crushing rural America and may even drive people to the cities

Inflation is hammering rural America, report shows



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