Will energy markets refuel the rural economy?

The rural economy began 2006 facing an uncertain outlook. For two years, rural growth had been unusually strong. But rising energy prices threatened to stall the expansion. Many businesses had already been weakened by high input costs, and many households were feeling squeezed by higher costs for gas and heating fuel. As the year progressed, however, some rural communities were able to harness the power of high energy prices by taking part in its production. ; Energy activity helped boost the fortunes of many rural places, but the rural economy as a whole slowed in 2006. Nonfarm economic growth moderated as production costs increased and construction activity cooled. Farm incomes also declined as severe drought limited production and higher energy prices cut profits. Still, rising crop prices fueled by ethanol production kindled optimism for new economic engines in rural America. ; Henderson and Akers review the state of the rural economy. First, they discuss the slower, but steadier, expansion on Main Streets. Then they examine the health of the farm economy. Finally, they explore rural prospects for 2007 and discuss the influences of robust energy activity on the rural economy.