Lower Agricultural and Energy Commodity Prices Rippling Through Rural MainstreetTue, 22 Sep 2015 18:22:34 CDT
Oklahoma and Texas look to continue to face a headwind of tough times. Lower oil and agricultural commodity prices have dealt the region a tough blow to the two largest economic drivers. The latest downturn has a rippling effect through rural communities, said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
"It's certainly not good and it starts food processors and goes all the way back to steel and metal manufactures," Goss said. "All of them are feeling that and they are feeling it with dealers. For example, the dealerships in these communities across Oklahoma and across the Midwest, the farmers aren't just not buying equipment and when do buy equipment, they want to trade in their old equipment and the dealers have more old equipment than they actually need. So, it's a tough situation."
Agricultural equipment sales have dropped to record low numbers. The Rural Mainstreet index report from Creighton University shows that bankers remain pessimistic about the short and intermediate prospects for agriculture equipment dealers and producers. Lower farm equipment sales have led to layoffs for manufacturers, like John Derre, Case IH, CLAAS, Caterpillar, among others. This downturn also impact metal manufactures. Goss said overall manufactures are doing alright with strong a strong automobile sector, but for manufactures that focus on agriculture aren't doing as well.
With two major sectors, energy and agriculture in a slump, Goss said rural America has held up better than expected. For the remainder of 2015, he is predicting modest growth for construction, retail and the service sectors. It's not entirely a negative situation, as gas prices have fallen below $2 a gallon in some places. Goss said that is good for Oklahoma consumers. If you measure the impact of lower fuel prices, he said the lower prices though aren't as good for Oklahoma as some other Midwestern states.
Overall, the economic outlook for America is less favorable for rural regions versus the urban sector, that is more diversified. For the rest of the year, Goss expects slight gains for parts of the Midwest with hiring in construction, retail sales, service, engineering and architecture. Oklahoma and North Dakota can continue to expect slight job losses for the remainder of the year.
Radio Oklahoma Network's Leslie Smith interview Dr. Ernie Goss. To listen to the full interview, click or tap on the LISTENBAR below.
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