The 20 Cities Leading the U.S. Recovery


There are four simple rules for being a resilient city in the Great Recession. Miss the housing boom, get a strong health care sector, add a large public university, and support it with stable government spending on military and local government. The cities that traded the boom-and-bust real estate business for Meds, Eds, Feds and Enlisteds got spritzed by the recession while most cities felt the full force of the economic tsunami.

Here are the 20 US cities leading the U.S. recovery. The list comes from the Brookings Metropolitan Policy Program, which ranks each metro area each quarter based on their home prices, economic growth and employment.

Overall the city-by-city report card, which uses data through September 2010, reveals a recovery "stuck in neutral." Job growth slowed across the country. Manufacturing, which tugged the economy along in early 2010, slowed in every city on this list except Rochester, NY. Foreclosures increased in all metro areas except for Portland, ME, and Scranton. In each city featured above, foreclosures increased throughout the summer.

Here's what the jobless recovery looks like: Nearly 90 percent of the surveyed metro economies grew over the summer, and two thirds experienced accelerated growth. But employment increased in only a quarter of the cities. US cities, like US corporations, are growing the pie, but hiring apparently isn't one of the ingredients.

This summer was a slog, but at least there is one big bright spot: economic output. "We are in a recovery," said Howard Wial, who co-authored the report with Richard Shearer. "Economic output is still growing across the country, and it's spread to more cities. House prices are in general going up, too."

With every leading indicator is pointing up except in housing, I asked Wial about his projections for home prices. In most parts of the country, he said, home prices are steady. In some parts, they're still falling. But it's not always where you'd think. "In Las Vegas," where the real estate crash was severe, "the market overshot and prices are starting to pick up. In the northeast, however, homes are overpriced and we still expect prices to fall."

The Great Recession was born when the housing bubble ruptured. So it's inevitable that most of the 20 cities leading the US recovery cluster in the Great Plains, Texas, and smaller state capitals that missed the wave of higher home prices. Notably, there are no cities on the list from California, Florida, Arizona, or Nevada, where the bust was most violent. Instead of banking on real estate, many of these cities have diverse economies that combine local services, like insurance, with global producers trading their wares to other overseas companies.

Some of these cities will surprise you. "What's Buffalo doing on the list?" asked one Buffalo native in the office. And what about Jackson, Mississippi? Baton Rouge? These don't sound like the kind of dynamic metros we'd expect to power a recovery. But they've been relatively successful in the downturn because they've been stable.

All but two of Brookings' 20 "strongest cities" have average or below average cost-of-living, according to a Wall Street Journal story. At a time when Washington can't seem to get employers and employees together, employment has been sticky where wages and living have been cheap.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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