War economy fuels rural growth, Fed report says

A report released by the Federal Reserve Bank of Kansas City shows that increasingly rural American economies are becoming dependent on defense spending for growth. Kris Kromm of Facing South, the online magazine of the Institute of Southern Studies, asks if this is a good thing:

"The two biggest gains have come from (1) military personnel stationed at bases, and (2) defense contracts," Kromm notes. "The impact? 'These two aspects of defense spending have accounted for more than 4 percent of total rural U.S. economic growth.'" The report looks at eight Southern states (Alabama, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia) that have seen big influxes of military money.

There are drawbacks to becoming reliant on the war economy for growth, such as fatalities of local soldiers, and taxes diverted to pay for war and not domestic programs. (Read more)