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Is it really a depression?

By Laurent Belsie and Howard LaFranchiStaff writers of The Christian Science Monitor / April 24, 1986



Evelyth, Minn.

SOMEWHERE in the 1980s, rural America took a wrong turn on the road to prosperity. If urban America's highway seems well paved and well lighted these days, rural Americans find themselves on a fogbound road full of potholes. Not all rural Americans are stuck in the mud. But the problems many face are severe enough to emerge as major issues in this decade. Rural communities are going through a period of economic contraction -- but their citizens haven't lost hope.

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Here on the Iron Range, in a small, green living room with a dirty red curtain pulled back at one end, John Golden of Evelyth fills out job applications. Four years ago he lost his $24,000-a-year job mining taconite, a key ingredient in steelmaking. Now, he scrapes by on $3,000 a year in welfare payments and food stamps. ``This is all I need,'' he says of his small, dilapidated house.

Outside Bucklin, Mo., Jerry and Jeanne Parks used to live in a large home and rent a two-bedroom house to others. When bankruptcy took their larger home, the farm couple moved to their smaller property. Last month, unable to keep up the payments, they lost ownership of the second house and the rest of their land. ``We're going on a wing and a prayer,'' says Mrs. Parks. Now the couple hope to rent the house and the land they used to own.

``If what has happened to agriculture had happened to the whole country, there's no doubt that it would have been deemed a depression,'' says Neil Harl, an agricultural economist at Iowa State University.

``It's a rural depression, although you can be nice and call it a recession or deflation if you want,'' says Carl Anderson, an agricultural economist at Texas A&M University.

Up to now, however, it has been a selective depression, pinching some and crushing others. The question facing America is how far the decline will spread.

The trouble stems from the contraction in natural-resource industries that began in the early 1980s. During the deep recession of that period, the economy flip-flopped. Instead of high inflation and low interest rates, which had fueled the '70s boom in manufacturing, agriculture, and other natural-resource industries, the opposite became true. Consumers and service industries zoomed out of recession, while resource-related industries, major rural employers, never fully recovered.

``In 1983, people looked at it as another recession'' on the Iron Range, says an economist at the University of Minnesota. But in all these historically up-and-down industries, there is a widespread perception that the current downturn is more permanent.

Oregon's lumber industry is a classic example. While production shows signs of recovery, nearly back to the boom years of the late '70s, prices remain low and consolidation is keeping employment 22 percent below 1979 levels. ``The timber industry will never be back to that level locally,'' says Dale Young, who heads the economic development effort of Union County, Ore.

The other big question mark is oil. No one seems to know if the six-month tumble in prices is short-term or long-term. Analysts point in all directions. West Texas is just beginning to feel the effect.

``We're seeing some of our oil-related businesses close, which might be expected,'' say Scurry County judge Preston Wilson. On top of an already weak farm economy, the declines don't bode well, he adds. ``In the past few weeks, we've lost two clothing stores and two furniture stores.''