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Cities With the Fastest Growing (and Shrinking) Economies

U.S. economic output grew by 2.2% in 2014 to $15.77 trillion. Some sectors — such as the manufacturing and mining industries — grew. Others — including agriculture and government — shrank. Similarly, some metropolitan area economies grew much faster than the nation, while other city economies actually contracted.

U.S. metro areas are the largest contributors to U.S. economic growth. The Bureau of Economic Analysis (BEA) recently released GDP growth estimates for U.S. metro areas. Midland, Texas, led the nation by a wide margin, with its economy growing by 24.1% in 2014 — more than double the growth rate of second-place San Angelo, Texas. Of the 381 U.S. metro area economies, 95 shrank. In Homosassa Springs, Florida, GDP contracted by 7.5%, the worst in the nation.

Click here to see the fastest-growing city economies.

Click here to see the fastest-shrinking city economies.

The professional and business services sector drove growth on a national level, although this industry was not a significant contributor to growth for most of the fastest-growing city economies. In the fastest-growing metro economies, the primary driver of growth was usually either the natural resources and mining, or manufacturing industries.

Five of the 10 fastest-growing local economies are in Texas, the nation’s leader in crude oil reserves and production. Oil and natural resources mining were major industry drivers in these areas, including natural gas hubs like Midland. However, the price of oil has declined sharply since the middle of last year, and a downturn that so often follows such large economic booms may be imminent even in the nation’s fastest-growing areas.

Some of the fastest-shrinking city economies may be further along the cycle of boom and bust. In an interview with 24/7 Wall St., Sharon D. Panek, chief of the Gross Domestic Product by State Services Section at the BEA, said, “The [mining] industry does have a tendency to show significant growth and also has the opportunity to show noticeable declines.” Just as the mining industry was the largest contributor to growth in some cities, it was also the largest drag on the economy in others. In six of the 10 metro areas with the largest GDP contractions, the natural resources and mining industry was the largest impediment to the region’s economic growth.

The largest driver of growth in a particular area was not necessarily the largest industry in that area, or even the fastest-growing industry. For example, while manufacturing was the largest contributor to the San Jose metro area’s economic growth, the professional and business services segment was the fastest-growing industry in the region. Similarly, while mining dominated the Midland metro area economy in both size and as a contributor to growth, the region’s art and entertainment industry grew faster than any other in the area.

Education levels are often linked to economic circumstance. However, the college attainment rate exceeded the national rate in only three of the fastest growing metro areas. Panek explained that many of the industries driving economic growth may be “more labor intensive than others. And those industries may rely on technical skills which may not lead up to the bachelor education level.”

Despite flagging economies, the unemployment rate declined from the previous year in all 10 of the fastest shrinking metropolitan economies. Panek explained that an area’s unemployment is an aggregated rate and “may show a different trend if you were to look at it by industry.” Unemployment is subject to multiple factors including labor force participation. Declining unemployment could mean that many people in cities with shrinking economies stopped looking for work. It could also suggest that employment increased in industries that did not have as significant an impact on GDP. The unemployment rate in seven of the 10 hardest hit cities was higher than the national jobless rate of 6.2%.

To identify the metropolitan areas with the fastest growing (and shrinking) economies, 24/7 Wall St. reviewed the highest and lowest real gross domestic product growth rates in 2014 among the nation’s 381 metropolitan statistical areas (MSA) from the Bureau of Economic Analysis (BEA). We also used last year’s unemployment rates are annual averages and are from the Bureau of Labor Statistics (BLS). Among the 15 industries examined, a few were comprised of several industry the government groups together. For instance, finance, insurance, real estate, rental and leasing are grouped as a single industry.

These are the cities with the fastest growing (and shrinking) economies.


The Fastest Growing Metropolitan Economies

10. Corpus Christi, TX
> 2014 GDP growth:
6.5%
> 2014 GDP: $21.43 billion
> Largest industry: Manufacturing
> Largest industry’s share of GDP: 14.0%

Corpus Christi’s economy grew by 6.5% in 2014, one of the fastest growth rates in the country. The unemployment rate also improved, dropping a full percentage point from 6.2% the year before. Finance, insurance, real estate, rental, and leasing, which the government categorizes as a single industry, expanded by 9.5%, faster than any other industry. Manufacturing, the city’s largest industry by contribution to total GDP, grew by nearly 8%, the second fastest rate of any industry. The city’s largest industry by employment experienced minimal growth. The government groups educational services, health care, and social assistance into one industry, and it accounts for 23.1% of all area jobs. This industry grew only slightly more than a tenth of a percent in 2014.

ALSO READ: Cities Spending the Most (and least) Per Student

9. San Jose-Sunnyvale-Santa Clara, CA
> 2014 GDP growth:
6.7%
> 2014 GDP: $205.99 billion
> Largest industry: Manufacturing
> Largest industry’s share of GDP: 26.3%

The manufacturing sector accounted for well more than one-quarter of the San Jose area economy. The durable goods manufacturing sector was also the largest contributor to economic growth, adding 2.3 percentage points to the area’s GDP growth of 6.7%. Durable goods include vehicles and other common manufactured products, but in the San Jose area, the industry manufactures computer components and other electronic devices more than any other durable product. The area’s information sector, while not as active as manufacturing, made up 16.8% of the area’s total 2014 economic output, more than three times its contribution to the national economy and larger than the industry’s contribution in every other U.S. metro area. The Silicon Valley tech sector hub is home to dozens of S&P 500 companies.

8. Victoria, TX
> 2014 GDP growth:
6.7%
> 2014 GDP: $5.34 billion
> Largest industry: Mining
> Largest industry’s share of GDP: 21.6%

The Victoria metro area is one of five fastest growing metropolitan economies located in Texas, the nation’s largest oil producer. As was the case in other fast-growing Texas economies, the natural resources and mining sector was the largest contributor to growth in Victoria. The industry accounted for 4.7 percentage points of economic growth in 2014, over half of the area’s total economic growth rate. No other sector in the area contributed more than 1 percentage point. Mining activity also made up 21.6% of the Victoria’s economy, the largest of any other industry in the area.

7. Bismarck, ND
> 2014 GDP growth:
7.6%
> 2014 GDP: $6.50 billion
> Largest industry: Government
> Largest industry’s share of GDP: 14.4%

Growing by 7.6%, Bismarck had one of the most rapidly expanding economies in 2014. Accounting for more than 14% of the capital city’s economy, government is the largest industry in Bismarck. While nationwide the government sector tended to be a drag on local economies, the public sector actually contributed more than a quarter of a percentage point to growth in the area. However, the sector was far from the city’s largest contributor to growth. No sector contributed more to economic expansion in the area than professional and business services. Generating $749 million in 2014, professional and business services contributed 1.3 percentage points to Bismarck’s total economic expansion.

6. Dallas-Fort Worth-Arlington, TX
> 2014 GDP growth:
8.5%
> 2014 GDP: $460.15 billion
> Largest industry: Finance, insurance, real estate, rental, and leasing
> Largest industry’s share of GDP: 18.5%

The Dallas metro area is one of the nation’s fastest growing local economies as well as one of the largest. The region’s economy produced goods and services valued roughly $460.2 billion last year, the fourth largest compared with other U.S. metro areas. Financial services made up the largest share of the area’s economy, accounting for 18.4% of total GDP, but it was the manufacturing industry that grew the fastest, expanding by nearly 30% in 2014. Within the industry, the nondurable goods manufacturing, specifically, was the largest contributor to overall economic growth, contributing 4 percentage points to the metro’s growth.


5. Wheeling, WV-OH
> 2014 GDP growth:
9.5%
> 2014 GDP: $6.61 billion
> Largest industry: Finance, insurance, real estate, rental, and leasing
> Largest industry’s share of GDP: 13.1%

While the Wheeling economy was among the fastest growing in 2014, several industries in the area were actually a drag on total growth. The biggest drag on the Wheeling economy was the manufacturing industry, which shrank by 12.5%. Nondurable goods manufacturing, specifically, reduced total GDP growth by 1.4 percentage points. However, high growth in other industries in the area, including professional and business services, more than compensated for the economic damage caused by shrinking industries. Accounting for nearly 8 percentage points of economic expansion, no industry contributed more to Wheeling’s 9.5% economic growth than mining and natural resource extraction.

4. Greeley, CO
> 2014 GDP growth:
9.9%
> 2014 GDP: $9.01 billion
> Largest industry: Mining
> Largest industry’s share of GDP: 13.7%

The U.S. mining industry grew by 7.2% last year, the fastest of any industry nationwide. Greeley’s mining industry, which grew by 24.6%, was also the fastest growing industry in the area. As the fourth fastest growing metropolitan economy, almost all of the industries in Greeley expanded at a relatively fast rate. The transportation and warehousing sector grew by 23.9%, the fifth fastest rate of any metro area, and the construction sector grew by 14.4%, the 10th fastest rate of any metro area in the country. Only the information sector in Greeley contracted, shrinking by 5.1%.

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3. Lake Charles, LA
> 2014 GDP growth:
10.3%
> 2014 GDP: $11.65 billion
> Largest industry: Manufacturing
> Largest industry’s share of GDP: 43.6%

Lake Charles was one of the fastest growing economies in the United States in 2014. Accounting for nearly 44% of the city’s GDP, manufacturing was by far the city’s biggest industry. Manufacturing, however, did not expand as much or contribute as much to total growth as construction. The construction industry grew by 54.3%, accounting for 3.8 percentage points of the metro area’s 10.3% total growth. The economic expansion improved conditions for Lake Charles’ residents. The unemployment rate dropped by half a percentage point from 6.4% in 2013 to 5.9% in 2014.

2. San Angelo, TX
> 2014 GDP growth:
11.4%
> 2014 GDP: $4.82 billion
> Largest industry: Government
> Largest industry’s share of GDP: 17.4%

Half of the 10 fastest-growing metropolitan economies in 2014 can be found in Texas — and San Angelo is one of them. No industry in San Angelo grew faster than mining, which expanded by 44.6%. Mining is a subsector of a broader industry — agriculture, forestry, fishing, hunting, and mining — which employs 11.6% of San Angelo’s working population. The share of workers employed by the industry, when considered alongside the industry’s rapid expansion, may partially explain the sharp decline in San Angelo’s unemployment last year. The unemployment rate declined by more than 1 percentage point, from 5.1% in 2013 to 4.0% in 2014, one of the lowest jobless rates of any city in the country.

1. Midland, TX
> 2014 GDP growth:
24.1%
> 2014 GDP: $26.26 billion
> Largest industry: Mining
> Largest industry’s share of GDP: 62.6%

Midland’s economy grew by 24.1% last year, more than twice the rate of San Angelo, the metro area with the next largest economic growth. The exceptional GDP growth rate in Midland and other parts of Texas is largely due to fracking activity over the past five years, which has pumped billions of dollars into the state’s economy. Just 2% of the U.S. employed population worked in the mining sector, which also includes agriculture, forestry, fishing, and hunting. In Midland, 21.5% of the labor force worked in the sector, predominantly in mining.

While Midland’s oil industry appears to be very healthy, there are signs that the growth is unsustainable. Oil prices fell rapidly over the first half of this year, already hurting the industry’s revenue. And if prices continue to decline, production will eventually also decline. According to The Dallas Morning News, drilling applications fell over the 10 months through January of this year, and the number of rigs in the region is dropping at a record pace.


The Fastest Shrinking Metropolitan Economies

10. Pine Bluff, AR
> 2014 GDP growth:
-3.1%
> 2014 GDP: $2.77 billion
> Largest industry: Government
> Largest industry’s share of GDP: 22.5%

The national economy grew by 2.2% last year, but the growth was not uniform across the country. The Pine Bluff metro region’s economy shrank by 3.0%, the 10th largest economic contraction of the 381 U.S. metro areas. As in six other metro areas with the fastest-shrinking economies, the natural resources and mining industry in Pine Bluff contributed the most to the economic contraction, contributing roughly 1 percentage point to the area’s economic decline.

A weak economy often has a tangible impact on area residents. The Pine Bluff metro area had one of the nation’s highest unemployment rates of 8.6% in 2014. Also, more than 26% of people lived in poverty, the 11th highest poverty rate in the nation.

ALSO READ: America’s Richest (and Poorest) States

9. Champaign-Urbana, IL
> 2014 GDP growth:
-3.1%
> 2014 GDP: $9.38 billion
> Largest industry: Government
> Largest industry’s share of GDP: 27.6%

Three of the 10 hardest hit urban economies in 2014 are located in Illinois — and Champaign-Urbana is one of them. Unlike most of the of the other cities with the fastest shrinking economies, the percentage of adults with at least a bachelor’s degree in the Champaign area far exceeded the corresponding national rate. While slightly more than 30% of adults nationwide had a bachelor’s degree, nearly 39% of adults in Champaign had at least that level of education. However, higher educational attainment did not make the metro area recession-proof. Government and mining were the biggest drags on the local economy, detracting 0.8 and 2.7 percentage points, respectively, from local economic growth — the city’s economy shrank by 3.1% in 2014.

8. Fayetteville, NC
> 2014 GDP growth:
-3.2%
> 2014 GDP: $15.89 billion
> Largest industry: Government
> Largest industry’s share of GDP: 52.8%

Government comprises more than half, or 52.8%, of Fayetteville’s total GDP, the fourth highest concentration of government in any metropolitan economy. However, the government sector shrank by 2.0% last year, one of the largest declines of U.S. metro area government sectors. Fayetteville is home to the country’s most populous army base, Fort Bragg, which accounts for a significant portion of the area’s government GDP contribution. As a result, Fayetteville’s economy can fluctuate alongside national defense budgets. Other prominent industries in Fayetteville are manufacturing and –grouped as one sector– finance, insurance, real estate, rental, and leasing, which both composed about one-tenth of GDP.

7. Rocky Mount, NC
> 2014 GDP growth:
-3.2%
> 2014 GDP: $5.56 billion
> Largest industry: Manufacturing
> Largest industry’s share of GDP: 41.6%

Manufacturing comprises 41.6% of Rocky Mount’s economy, the fifth highest concentration of that sector in any area. When a metropolitan area’s economy is concentrated in a single industry, the area’s fortunes are highly tied to that of the industry’s. In Rocky Mount, the manufacturing sector shrank by 5.0%, one of the larger contractions of that industry in a metro area. This industry’s downturn accounted for 2.1 percentage points of Rocky Mount’s 3.2% GDP drop, the second largest drag on a metropolitan area’s economy by manufacturing. In the rest of the country, manufacturing made up 12.2% of total GDP and grew 3.3%. Despite its shrinking economy, Rocky Mount’s unemployment rate dropped 2.6 percentage points from 11.2% in 2013 to 8.6% in 2014, the second largest drop in unemployment rate in country.

6. Bloomington, IL
> 2014 GDP growth:
-3.3%
> 2014 GDP: $10.19 billion
> Largest industry: Finance, insurance, real estate, rental, and leasing
> Largest industry’s share of GDP: 34.7%

While finance, insurance, real estate, rental, and leasing was Bloomington’s largest industry by GDP contribution, it was also one of the city’s fastest shrinking industries last year, contracting by 3.3%. Consequently, with the exception of mining, no industry did more damage to total GDP in the metro area. Finance, insurance, real estate, rental, and leasing reduced Bloomington’s economic output by roughly 1.2 percentage points. Despite the bad year of economic growth, the 5.6% unemployment rate in Bloomington was lower than the national unemployment rate in 2014.


5. Lafayette, LA
> 2014 GDP growth:
-3.4%
> 2014 GDP: $24.46 billion
> Largest industry: Mining
> Largest industry’s share of GDP: 20.8%

Lafayette had the fourth largest mining industry in the country in 2013, with a GDP contribution of $5.9 billion. By 2014, mining decreased by about $828 million, dropping the industry to eighth largest. The mining industry in Lafayette shrank by 14.0% while in the rest of the country it grew by 7.2%, the fastest growing industry nationwide. Lafayette also had one of the fastest government contractions in the country, as the government sector decreased by 3.9%. Privatization of government functions by Louisiana Governor Bobby Jindal has decreased the size of the government sector across the state. Each of the nine fastest shrinking government sectors in the country are in Louisiana.

4. Carbondale-Marion, IL
> 2014 GDP growth:
-3.6%
> 2014 GDP: $4.35 billion
> Largest industry: Government
> Largest industry’s share of GDP: 27.5%

The economy shrank in nearly 100 cities in 2014, but only three were hit harder than the Carbondale-Marion metro area. As was the case in six of the 10 metro areas with the fastest-shrinking economies, the mining industry was the biggest drag on the Carbondale economy. The area’s manufacturing industry, which grew by nearly 8%, was not enough to offset the economic damage done by mining. Shrinking by more than 26%, the mining and resource extraction industry was a 2.6 percentage point drag on the area’s total GDP. As in most metropolitan areas with rapidly shrinking economies, unemployment in Carbondale was higher than the national unemployment rate.

ALSO READ: Highest Paid Public Employee in Every State

3. East Stroudsburg, PA
> 2014 GDP growth:
-3.6%
> 2014 GDP: $4.76 billion
> Largest industry: Manufacturing
> Largest industry’s share of GDP: 22.3%

Contracting by 3.6% in 2014, East Stroudsburg was the third fastest shrinking metropolitan economy in the country. No industry was hit harder than agriculture, forestry, fishing, and hunting, which contracted by 50.0%. The biggest drag on the local economy as a whole, however, was the finance, insurance, real estate, rental, and leasing industry, which reduced total economic output by 1.4 percentage points. Economic growth was driven primarily by durable goods manufacturing, which contributed nearly a quarter of a percentage point to total GDP.

2. Terre Haute, IN
> 2014 GDP growth:
-4.0%
> 2014 GDP: $5.90 billion
> Largest industry: Manufacturing
> Largest industry’s share of GDP: 29.4%

The manufacturing industry in Terre Haute made up 29.4% of the area’s economy. The industry’s output shrank by 5.5% in 2014, however, in contrast with the 3.3% growth in manufacturing nationwide. The area’s mining industry, which accounted for a relatively small 2.3% share of the economy, shrank even faster and was the largest contributor to economic contraction across the metro area. The industry shrank by more than 40%, contributing 2.3 percentage points to the overall GDP decline.

While the Terre Haute economy shrank faster than most U.S. areas last year, some industries reported exceptionally strong growth. The arts and entertainment industry, which also includes accommodation and food services, grew 15.1%, the fastest industry growth in the region. Of all entertainment industry growth in US cities, this was also the fastest.

1. Homosassa Springs, FL
> 2014 GDP growth:
-7.5%
> 2014 GDP: $2.75 billion
> Largest industry: Utilities
> Largest industry’s share of GDP: 25.2%

The Homosassa Springs area economy shrank by 7.5%, by far the largest economic contraction of any U.S. metro area. Just as economic growth is not uniform geographically, some industries in Homosassa Springs contracted dramatically and some had strong growth. The area’s manufacturing industry, for example, grew by nearly 23.1% last year, the fastest growth for a single industry in the area and the third largest manufacturing expansion nationwide. The mining industry, on the other hand, shrank by 32%, in sharp contrast with the 7.2% growth across the mining sector nationwide. Utilities companies accounted for 25.2% of the Homosassa Springs economy, by far the largest share from the industry of any metro area in the country.

By Thomas C. Frohlich, Sam Stebbins and Evan Comen


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