The Chicago Journal

Davis Peters of Iowa State University Reveals How Inflation Affects Rural America

Inflation has been cruel to 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 Dave Peters, a professor at Iowa State University.

Peters found that while rural Americans’ incomes increased 2.6%, their spending increased 9.2%.

Rural households

Dave Peters’ report shows that Americans in rural areas 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: Amid “Unacceptably High” Inflation, the White House Stays Adamant That the Country is Not in Recession

Areas hit

Peters’ report points out that rural communities face the same problems as city dwellers, indicating 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, affecting all US households.

A major cause 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 are paying $2,500 more per year for gasoline than in 2020.

It also showed rising prices for health insurance, veterinary care and fuel to heat homes and cars.

“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: Experts and Analysts Are Pointing to Recession to Combat Inflation

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 dipping into their savings, which is happening now. People will then use their money for necessities before going into debt with their credit cards.

Peters, however, expressed greater concern that rural America would draw lines of credit due to rising real estate values, particularly 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.

A move to cities

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