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Economy & Business

The Coronavirus Pandemic Is Hurting Rural Economies More Than Big Cities

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John Paul Coonrod
Great Scott Community Market in Winchester, Ill., is an example of a small-town business that is critical to the rural economy. The community-owned grocery fits in the location of a former shoe store.

The economic downturn during the coronavirus pandemic has been harder on rural Midwestern areas than on bigger cities, said Ernie Goss, an economist at Creighton University.

Goss compiles and analyzes the Mainstreet Economic Outlook, a monthly survey of rural bankers in 10 Midwestern states including Missouri and Illinois. The November and December results showed low confidence in the economy around the holidays.

“One of the reasons, of course, is just the domination of rural areas with small businesses, and small businesses are being differentially and negatively affected by COVID-19,” Goss said.

One of the ways that is manifesting itself is through the shift from brick-and-mortar stores to the internet for gift buying.

Most people are doing more online shopping this year because of the coronavirus. Holiday spending online is expected to be up about 35% compared to 2019.

But Goss said rural communities in the Midwest have a higher percentage of small businesses that can’t compete with large internet companies.

“Those sales are being recorded in Seattle, Minneapolis, or other larger cities. And also, the warehouse impacts and transportation impacts of that online buying will be felt more in urban areas than in rural areas,” Goss said.

Bankers also reported a dramatic decrease in loans in rural areas at the end of 2020.

Goss said that’s likely because of a bright spot for rural economies. Farmers are doing better because of high grain prices and large government subsidies, and they're borrowing less money right now.

There may be help soon for rural Midwestern communities if a federal stimulus package comes to fruition.

“What we saw with the first stimulus was a greater economic benefit for rural areas compared to urban,” Goss said. “Depending on what’s included in a new package, that could happen again.”

Follow Jonathan on Twitter: @JonathanAhl

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