The nation's corn and soybean belt has been especially hard hit over the last three months, the report said. That region has experienced its seventh warmest and 10th driest April-to-June period.
"Topsoil has dried out and crops, pastures and rangeland have deteriorated at a rate rarely seen in the last 18 years," the report said.
The report is based on a data set going back to 1895 called the Palmer Drought Index, which feeds into the widely watched and more detailed U.S. Drought Monitor.
It reported last week that 61 percent of the continental U.S. was in a moderate to exceptional drought. However, the weekly Drought Monitor goes back only 12 years, so climatologists use the Palmer Drought Index for comparing droughts before 2000.
In southern Illinois' Effingham County, Kenny Brummer is facing a double whammy - the drought has savaged the 800 acres of corn he grows for his 400 head of cattle and 30,000 hogs, leaving him scrambling to find the couple of hundred thousand bushels of feed he will need.
"Where am I going to get that from? You have concerns about it every morning when you wake up," Brummer, 59, said Monday. "The drought is bad, but that's just half of the problem on this farm."
The drought is damaging crops and rural economies and threatening to drive food prices to record levels. Agriculture, though a small part of the $15.5 trillion U.S. economy, had been one of the most resilient industries in the last three years as the country struggled to recover from the recession.
"It might be a $50 billion event for the economy as it blends into everything over the next four quarters," said Michael Swanson, agricultural economist at Wells Fargo & Co. in Minneapolis, the largest commercial agriculture lender. "Instead of retreating from record highs, food prices will advance."
"The drought will have regional, national, and even international impacts," Ernie Goss, a professor of economics at Creighton University in Omaha, Nebraska, said in an e-mail. Farm income, which has underpinned the growth of many rural states, will be under "significant downward pressure," Goss said.
This article contains information from Bloomberg News.