Tractor Supply’s (NASDAQ:TSCO) core hobby farmer customer is expected to continue to see outsized income and income growth in 2014 compared to the median U.S. household. Hobby farmer income growth is projected to be +3.5% in 2014 vs. the median U.S. household of 2.2%. Separately, after running well below the metro (i.e. urban) unemployment rate from 2008-2012, the non-metro (i.e. rural) unemployment rate of 6.8% is now essentially at parity with the metro unemployment rate of 6.7%.

All in, we believe the TSCO’s rural consumer positioning and long-term market share opportunity will allow it to drive comparable store sales growth well into the future. Furthermore, the stability of hobby farmer income and net worth over the last decade suggests TSCO experiences less downside during recessionary periods compared to most retailers that serve metro areas.

The median income growth for hobby farmers was +2.9% in 2013 compared to +2% for the median U.S. household. This drove the median hobby farmer income to $81,811 vs. the U.S. median income of $52,058 (all 2013 numbers are still estimates at this time). Additionally, hobby farmer income growth is projected to be +3.5% in 2014 compared to +2.2% for the median U.S. household.

Both non-metro and metro unemployment rates declined over the course of 2013. However, metro unemployment saw the largest change over the course of the year with a 90 bp decrease vs. non-metro with a 70 bp decrease. This is a trend we will continue to monitor as non-metro unemployment tends to run higher than metro unemployment during economic expansion years such as 2000, 2005, & 2006. However, non-metro unemployment ran well below metro during the most recent recession (2008/2009) and for the following two years (2010/2011). This dynamic may help to limit the downside TSCO experiences during recessionary periods compared to most retailers that serve metro areas.