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- The San Francisco Bay Area experienced the fastest economic growth in 2022.
- The growth was due in large part to success in technology sectors and U.S. residents migrating to southern and western regions of the country.
- In comparison, Milwaukee ranked at the bottom of the list as its economy shrunk by 0.5 percent.
The shift to high-tech jobs, migration to the West and South, and the recovery of leisure and hospitality sectors following the COVID-19 pandemic are all behind economic growth seen in the United States’ largest metropolitan areas in 2022, according to new research from the Kenan Institute of Private Enterprise.
The findings are part of the Institute’s American Growth Project, an initiative aimed at amassing economic data and analyses on the country’s towns, cities and counties. As part of the project, researchers ranked the country’s top 50 extended metropolitan areas (EMAs) based on the speed of their economic growth in 2022.
The San Francisco Bay Area ranked first, as the area’s GDP grew by 4.8 percent in 2022. It was followed by Austin, Texas; Seattle; Raleigh and Durham, N.C.; and Dallas.
The San Francisco Bay Area is home to Silicon Valley, one of the most popular locations for tech start-ups — a fact that likely fueled the growth seen in the region throughout 2022.
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However, potential hiring freezes and layoffs in this sector could hit the region hard, while “sharp jumps in the number of active real estate listings — as well as measures of homebuyer demand and competition — indicate the region’s housing market is among the fastest declining nationwide,” authors wrote.
As more Americans emerged from the COVID-19 pandemic with a travel bug, the economies of popular destinations like New Orleans also reaped the benefits. Between August 2021 and August 2022, the city’s leisure and hospitality services grew by 6 percent, putting it ninth on the list of fastest-growing economies.
Meanwhile, tourism to the many theme parks in Orlando, Fla. and its popularity as a trade show destination put the region in the 10th spot. Its economy grew by 2.4 percent in 2022.
Researchers also assessed population totals and growth, noting that “in total, 216 million people live in the largest 50 EMAs, which is 65% of the U.S. population.”
These regions account for more than 72 percent of the nation’s economic activity each year, amounting to around $18 trillion in GDP.
By population, the largest EMA is New York, which encompasses parts of New Jersey, Connecticut, New York and Pennsylvania. More than 23 million individuals reside in this EMA and collectively generate more than $2 trillion in economic activity annually.
Each EMA experiences different labor market conditions, authors explained, but an economic slowdown in 2023 could take a toll on the individual microeconomies.
“Normally, manufacturing and construction falter the most during recessions, especially ones in which the Federal Reserve jacks up rates,” the report reads.
“Higher mortgage rates and auto loans continue to squeeze demand, but we still face a housing shortage and automakers remain unable to keep up with demand.”
However, any long-term shift towards reshoring, or bringing American manufacturing jobs back from overseas, could benefit regions like Detroit, Denver and Dallas.
Following the COVID-19 pandemic and 2020 recession, the technology sector experienced one of the strongest recoveries. Whether the sector can weather a future recession remains to be seen, while any significant downturns could affect the tech-heavy economies of Austin and San Francisco.
Additional unknown circumstances, like the future of the war in Ukraine, could also affect micro-economies. For example, should Ukraine cause a significant military rebuild, it could boost the fortunes of Virginia Beach Va., an area with a large defense presence, or move No. 11 San Antonio, Texas, home to the nation’s largest joint base, into the top 10 fastest growing micro-economies, authors speculated.
The Institute is a nonpartisan business policy think tank associated with the University of North Carolina Kenan-Flagler Business School.
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