Economy Watch: US, World Metro Areas’ Economic Growth Vastly Uneven
- Jan 23, 2015
The fastest-growing metro areas in the United States year-over-year in 2014—including both employment growth and GDP per capita growth combined—were (in order beginning with the strongest): Austin, Houston, Raleigh, Fresno and Dallas. That’s according to a report released Thursday by the Brookings Institution’s Metropolitan Policy Program, which ranked the world’s 300 largest metro areas in terms of economic and job growth. “With only 20 percent of the population,” the organization says, “the world’s 300 largest metropolitan economies accounted for nearly half of global output in 2014.” Though unstated, the rankings also list a country’s relatively strong real estate markets, or at least those with the most growth potential: as jobs grow, and overall economic output grows, so does the demand for every type of real estate within the market.
By the Brookings’ rankings, greater Austin was the 38th-fasted growing metro in the world in 2014, with the following metros rounding out the top 10 in the country: Houston (39th in the world), Raleigh (41) Fresno (49), Dallas (63), Baton Rouge (65), Oklahoma City (66), Las Vegas (68), Grand Rapids (69) and San Jose (72). Job growth in all of these places last year was between the 2.9 percent recorded in Oklahoma City and the exceedingly robust 4.5 percent enjoyed by Fresno. Nationwide, and in fact worldwide, metros with utilities, trade and tourism, and manufacturing specializations were associated with higher growth. Metro areas with high concentrations of business, financial, professional services grew more slowly: New York, for instance, was the 176th-fastest growing metro in the world, while Chicago came in at 203.
That no U.S. metro is any higher than 38 is partly a function of that fact that metros in developing nations—countries that still have a lot of growing to do before they’re mature economies—tend to grow faster than those of developed nations. Also, most of the developed world, which was hit hard especially by the housing bust, hasn’t returned to pre-recession GDP, while most of the developing world has. In an economic performance index combining employment and GDP per capita growth, developing metro areas accounted for 80 percent of the top performers, led by metro areas in China and Turkey. No. 1 on the list happened to be the Chinese gambling and resort mecca of Macao, followed by three metros in Turkey (Izmir, Istanbul, and Bursa), then Dubai, then three more metros in China: Kunming, Hangzhou and Xiamen.
The Brookings report also noted that metro areas continue to power national economic growth, with most of them registering faster GDP per capita or employment growth in 2014 than their respective countries. A third of the world’s 300 largest metropolitan economies were “pockets of growth,” outpacing their national economies in both indicators. That echoes the pattern of the real estate recovery in the United States since the recession: dramatically uneven. Some metros, such as in the tech-heavy West Coast or energy-heavy Texas, have been pockets of real estate growth since the end of the recession (though with an energy trough looming, all bets are now off for metros and their real estate markets, such as in Houston).