(AP) — Carl Rupp and his neighbors around
Rupp has farmed his whole life. He lives in
That prudent financial bent, matched with the high prices paid for crops and energy in the past few years, has largely protected
But the safe zone is shrinking. Energy production and prices are sliding, especially for coal and natural gas. Crop prices are dropping, too, as there's less demand in
"To say that you're doing pretty well is just to say that it's the best-looking puppy in a pretty ugly litter," said Wyoming Gov. Dave Freudenthal, who recently imposed a 10 percent budget cut across his state's government in response to falling tax revenue from the energy sector.
The contiguous counties in the safe zone start in Montana and North Dakota, and cascade into Wyoming, South Dakota, Nebraska, Iowa, Kansas and Oklahoma, and end in northern Texas and eastern New Mexico. Those in the safe zone had an AP Economic Stress score under 5 in June, making them the economically healthiest in the
The AP calculates a score from 1 to 100 based on each county's unemployment, foreclosure and bankruptcy rates. The higher the score, the higher the economic stress.
The safe zone is largely rural — all but a dozen of the counties have populations of less than 25,000 people, many of whom make a living in agriculture. As the rest of the nation was riding the mortgage bubble, many farmers and ranchers in the safe zone who suffered through the agriculture crisis of the 1980s took on comparatively little debt. And when the recession hit, it didn't dampen demand for the row crops grown on the
Consumption of food and feed grains has increased 3 to 4 percent annually in recent years, while a federal mandate that gasoline contain certain levels of ethanol has also kept demand for corn and soybeans high.
"The last few years, ag has been pretty good," said Rupp, who sells alfalfa to dairies and feedlots. "In the long run, if there is such a thing, it's more stable than being in a county with energy as a primary industry. We miss out on the booms and busts, but overall we're in pretty good shape."
But while not in a bust cycle, ag prices are still down enough from last summer's highs to worry Doug Goehring,
"If you really want to hurt the economy, beat the heck out of agriculture," Goehring said. "It is a primary sector in our economy. It is generating new wealth. You can't just rely on services to drive your economy."
Elsewhere in the safe zone, the business is energy, and the recession is starting to take a toll on a business that was booming. While oil prices have increased this summer, it's the price of natural gas and coal that matters most here. Natural gas that traded for nearly $13 per 1,000 cubic feet last summer is now available for less than $4. The spot price for coal is running around $9 a ton, down from about $13 last year.
The number of rigs in
"The prices of coal are down. Production is going to be down," said Marion Loomis, executive director of the Wyoming Mining Association. "So we're going to see a pretty significant reduction probably this year, and it's really just based on the amount of electricity that the country is using."
When booming, energy extraction kept unemployment low. In
Because of a 45-percent dip in demand for its drilling services and installing pipeline, Three Way Inc. of
"Definitely people see some doom and gloom and are certainly disappointed," Mantle said.
Because of their small size, the AP index lacks foreclosure data for about half of the 200 counties that made up the safe zone in June; those with a population under 25,000 were assigned a foreclosure rate of zero. But there is widespread anecdotal evidence that real estate is an anchor in a place where many families proudly trace their land titles to homesteading ancestors who settled the frontier in the 1800s.
Aided by low interest rates, the value of farm and ranch land has grown by double digits this decade. Unlike
Mike Daly started First State Bank of Wheatland in 1981, first setting up shop in a mobile home in a southeastern
"The vast majority of our borrowers have had a pretty good run. And by that, I'm going to say eight to nine years of really (ag) good prices," Daly said. "They've increased their equity positions, they've paid down debt, and they're in a position, for the most part, to weather the storm."
Associated Press writers Dale Wetzel in