By Richard Ciccarone
The majority of U.S. metro areas experienced economic growth in 2013, according to recent data released by the U.S. Bureau of Economic Analysis.
Gross domestic product (GDP) by metro area, defined as the “sub-state counterpart of the nation’s gross domestic product, the Bureau’s featured and most comprehensive measure of U.S. economic activity,” is based on the sum of economic activity across all industries in the metro area.
In 2013, GDP rose in 292 of the 381 metro areas across the nation. Overall, growth in real GDP for metro areas rose 1.7 percent in 2013, slightly less than the 2.6 percent increase in 2012. Usually, metropolitan rankings for GDP correlate precisely with population size; however, whenever GDP rankings get out of step with population rankings, the difference may be acting as a signal that leads to an eventual population direction change. A metro economic base that has a consistently higher GDP ranking than its population level suggests that conditions are conducive to gains in personal wealth and also attractive for higher in-migrations to the area. Among the top ten highest real GDP areas, Houston, Washington and San Francisco did better than their population size ranking in 2013, while Dallas and Philadelphia ranked lower than what might be expected if population and GDP size were perfectly matched.
The 10 Metro Areas with the Highest Real GDP in 2013 were:
(Note: Metro areas are listed in order of GDP ranking; population ranking noted in parenthesis)
1. New York-Newark-Jersey City, NY-NJ-PA (also ranked #1 by metro area population)
2. Los Angeles-Long Beach-Anaheim, CA (2)
3. Chicago-Naperville-Elgin, IL-IN-WI (3)
4. Houston-The Woodlands-Sugar Land, TX (5)
5. Washington-Arlington-Alexandria, DC-VA-MD-WV (7)
6. Dallas-Fort Worth-Arlington, TX (4)
7. San Francisco-Oakland-Hayward, CA (11)
8. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (6)
9. Boston-Cambridge-Newton, MA-NH (10)
10. Atlanta-Sandy Springs-Roswell, GA (9)
Note: The Miami-Fort Lauderdale-West Palm Beach, FL metro area, ranked as the 8th largest by population, ranks 12th for metro area GDP.
The 10 Metro Areas with the Greatest Annual Percentage Increase in GDP in 2013 were:
1. Mt. Vernon-Anacortes, WA (+10.6%)
2. Greeley, CO (+10.1%)
3. Beckley, WV (+9.4%)
4. Wheeling, WV-OH (+9.0%)
5. The Villages, FL (+8.8%)
6. Bellingham, WA (+8.6%)
7. Madera, CA (+8.0%)
8. Lake Charles, LA (+7.9%) and
Lima, OH (+7.9%) (tie)
9. Beaumont-Port Arthur, TX (+7.2%)
10. Billings, MT (+7.1%) and
Casper, WY (+7.1%) (tie)
Source: Bureau of Economic Analysis (BEA), U.S. Department of Commerce
Fracking and Oil Related Economies Propel Big Gains
Nationally, finance and its related industries led to economic growth in 268 of the nation’s 381 metro areas in 2013, according to the data. Collectively, this sector – which includes finance, insurance, real estate, rental and leasing – “accounted for more than half of real GDP growth in 61 metro areas, and contributed more than one percentage point to growth in 55 metropolitan areas.”
Usually, metropolitan rankings for GDP correlate precisely with population size; however, whenever GDP rankings get out of step with population rankings, the difference may be acting a signal that leads to an eventual population direction change.
Among the fastest growing areas, oil and gas-related industries were heavily responsible for boosting the economies of a number of smaller metropolitan areas. Although natural resources and mining was not a major contributor to growth for the nation overall, the top ten fastest growing list was largely comprised of oil-fueled economies. Several metropolitan areas were located within the Utica, Marcellus and Niobrara shale formation regions which saw substantial GDP expansions related to mining in those areas. They included Beckley, WV (11.5%); Wheeling, WV-OH (8.5%); and Charleston, WV (3.6%) and Greeley, CO (10.1%). In addition, Lake Charles, LA; Beaumont-Port Arthur, TX; and Lima, OH as well as the fastest growing economy on the BEA list, Mount Vernon – Anacortes, WA, have a significant presence in the oil and gas industry, primarily related to refining.
The Most Robust of the Biggest Local Economies
The Houston-The Woodlands-Sugar Land, TX metro area, where oil has long been a primary driver, had the fastest growing economy of the nation’s largest metropolitan areas with a real growth rate of 5.2% in 2013 versus 2012. While not in the ten largest GDP areas, two high tech centers, San Jose-Sunnyvale-Santa Clara, CA and Seattle-Tacoma-Bellevue, WA grew by the next fastest rates among the nation’s largest metro areas at 4.4% and 4.1%, respectively. After Houston, the Seattle-Tacoma-Bellevue MSA was the second fastest of the ten largest economies with a real growth rate of 2.4%. The Washington-Arlington-Alexandria, DC-VA-MD-WV and New York-Newark-Jersey City, NY-NJ-PA metro areas lagged the nation and experienced the weakest GDP real growth rates among the ten largest economies with a (-.8%) for Washington and a .9% gain for New York. Just for the record, the Detroit-Warren-Dearborn, MI MSA had a tepid 1.3% real growth rate which is a far cry from Houston, but, at least it bested Washington and New York.
The significance of this data extends far beyond rankings and lists. Tracking GDP growth among metropolitan areas is a litmus test for local leaders to evaluate the success of their efforts to encourage opportunities and economic development within their respective regions.
Richard Ciccarone is the President and CEO of Merritt Research Services, LLC and Co-Publisher of MuniNet Guide.