Cities across the U.S. may be struggling economically, but they still power much of the nation’s growth and remain its best hope for staying globally competitive, according to a report released this week by the U.S. Conference of Mayors. Despite slow growth and stagnant economies, the economic output of many U.S. metros remains stronger than that of some foreign countries, the report shows.
The findings illustrate “how critical metropolitan areas are to our nation’s economy and ongoing recovery,” United States Conference of Mayors president and Mesa, Ariz., mayor Scott Smith said in a press release.
Conducted by IHS Global Insight, the report analyzed both metro employment and economic impact in the nation’s 363 U.S. metropolitan areas, as well as the role of these MSAs in the U.S. and global economy. Currently, the economies of these cities and their surrounding suburbs account for more than 90 percent of the gross domestic product and nearly 86 percent of the nation’s population and jobs.
Big Impact, Slow Growth
Though their influence on the national economy is great, the economic outlook of most U.S. cities is tepid at best. According to the report, the percentage of metros with stagnant or declining economies this year has risen from one-fifth to one-third. Growth is happening in many cities, but it is very incremental. While two-thirds of all metros will experience some economic expansion in 2013, nearly 40 percent of those will grow by just 1 percent or less.
The report cited the impact of sequestration, the federal shutdown and slow economic growth in Europe as factors that have hindered economic growth this year. More cities have seen employment gains than have not — but even among those that have, average growth in employment and real income barely hovers over 1 percent. Some exceptions include metros like Salt Lake City, Houston, Dallas and Nashville.
In gross metro product, cities in Texas dominate, with Midland and Odessa topping the list of fastest growers at 7 percent and 6 percent respectively, and Corpus Christi rounding out the top 10 at 3 percent. All are metros where oil and gas production is booming and fueling international investment and exports.
The report held good news for metros in the housing bubble states of California, Arizona and Florida. Cities like San Francisco, San Jose, Tampa and Jacksonville are all expected to see economic output rise by more than 3 percent this year.
Another silver lining? Of the world’s 100 largest metropolitan economies, 36 of them are U.S. metros. New York ranks as the 13th largest economy in the world, followed by Los Angeles (20th), Chicago (23rd) and Houston (30th) — all of which experienced 1-2 percent growth in their gross metro product this year.
The metros of New York and Los Angeles together produce more than 46 states combined. And on the global scale, U.S. metros outpace many countries. For example, the Phoenix-Mesa metro economy, which produces more than $201.7 billion of economic output annually, is bigger than the economies of Peru or New Zealand.
“This report shows that our nation’s cities and their metro areas are real players on the international scene,” United States Conference of Mayors CEO and Executive Director Tom Cochran noted in the release. “If we choose to ignore our metro areas, we will do so at our own peril. To stay competitive as a country, we must invest in their economic growth and job generating power.”