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Annual report stresses the economic
importance of American metro areas

By Tony Favro, USA Editor

27 June 2011: The gross metropolitan product (GMP) of the immense New York City region - that is, the total output of all goods and services produced in the region - is greater than the gross domestic product (GDP) of all but 12 countries in the world. But who would have guessed that the GMP of Jacksonville, Florida is bigger than the GDP of Syria? Or that Baton Rouge, Louisiana’s annual economic output is greater than Uruguay’s? Or that if metro Madison, Wisconsin (population 560,000) were a country, it would have a larger economy than Lithuania?

The statistics are part of the findings of the 2011 US Metro Economies report, which paints its usual picture of the power of the American economy. Published annually by the research firm IHS Global Insights for the United States Conference of Mayors, the report reviews and forecasts economic activity and employment for 363 US metropolitan areas.

The US Metro Economies report gives America’s urban mayors something to boast about each year. They can point out that their cities and surrounding areas are bigger than most people think in terms of economic production and impact on the global economy. More important, it shifts the focus from national and state economies to metropolitan areas — not always an easy task in the US where most regions are fragmented into many independent and competing municipalities. The data show that central cities and their suburbs are really self-contained economies that are economically productive and globally competitive. The report reminds people, according to Mayor Scott Smith of Mesa, Arizona, that “opportunities and solutions come from cities.”

This year’s report shows that, since the recession began in 2007, only about a quarter of metro areas saw a decline in real GMP. Economic output increased in all others. Looking at the full decade from 2000 to 2010, the economy grew in all but two of the 363 US metro areas.

However, increased economic output doesn’t necessarily translate into more jobs. This year’s US Metro Economies report has a new wrinkle: a prediction of when employment in individual metro areas will recover to pre-recession levels. The news is sobering for many metro areas. “Nearly half of the nation’s metros will face a slow recovery after drudging through a lost decade characterized by job loss and increasingly slackened labor markets,” the report said. The study estimates 46 metro areas that experienced job declines over the previous decade won’t return to peak employment until 2021, so those areas are looking at two decades of no economic progress.

Leaders of large and small communities with poor prognoses for economic recovery dismissed the report’s projections. Steve Herwat, Deputy Mayor of Toledo, Ohio, asserted that the report "takes a look at a lot of statistical measures and doesn't take a look at what is really happening within cities. Although it will take us awhile to recover, we don't believe it will take us 10 years.” City Manager Toby Cotter of Bullhead City, Arizona called the report “flawed in its attempt to group young rural communities like Bullhead alongside dying industrial towns.”

Showing remarkable confidence in their communities, or perhaps with an eye on the next election, Cotter, like other local officials, displayed fierce determination. “We’ve got the right weather, the right political environment, the right location,” said Cotter. “We’ve got a lot going for us, and I think our residents know that our local government isn’t sitting idle. We’re not going to wait 10 years to create jobs we’re working on it now.” Mayor Anthony Foxx of Charlotte, North Carolina was equally resolute. "I would take the challenges we have in Charlotte over any city in the country," said Foxx. "The combined willpower we have to surmount our obstacles really makes us special."

The US Metro Economies report is also for a vehicle for the US Conference of Mayors to weigh in on national debates and influence federal policy. The report states that while the US economy “needs a credible long-term deficit reduction plan, it does not need an immediate dose of austerity” - a clear rebuke to conservative Republicans in Congress whose only solution to the budget deficit and national debt is cutting government services. As several noted American economists have pointed out in the media recently, government purchases and hiring can be just as beneficial to the economy as private purchases and hiring. Economist Alan Binder, for example, wrote recently in the Wall Street Journal that the idea that government spending destroys jobs in “dead wrong”.

This doesn’t mean that the US Conference of Mayors supports all federal spending. On the same day that it released the US Metro Economies report, the US Conference of Mayors passed a resolution urging Congress to quickly end the wars in Iraq and Afghanistan and spend the money on domestic priorities. The resolution maintains the $126 billion spent each year on the wars should be used at home to create jobs, rebuild infrastructure, develop sustainable energy, and provide for other needs.

Los Angeles Mayor Antonio Villaraigosa said it is “mind-boggling that money is being spent to build bridges in Kandahar and Baghdad and not Baltimore and Kansas City”.

Thousands of economic studies are issued each year in the United States; most end up in obscurity. The US Metro Economies report is notable in that hundreds of American media outlets annually disseminate the study’s data. The US Metro Economies report allows comparisons to be made between communities, satisfying American’s thirst for competition. It also subtlety reinforces Americans’ deep belief in their exceptionalism: the idea that Americans are uniquely capable of making their local economies better through legislation, advocacy, policymaking, program development and administration, research, public education, and - the report’s contribution to the creed - a focus on regional connections.





...the New York metro region having a larger economy than most countries in the world


On other pages
The larger the city, the larger the gap between rich and poor
The largest cities in the United States are generally considered to be at the vanguard of social and economic progress. For example, Pricewaterhouse Coopers’ 2011 Cities of Opportunity report on the world’s top cities calls New York, Chicago, and Los Angeles “vibrant engines of the global economy.” However, city size in the US is also directly related to income inequality according to another recent study — the larger the city, the larger the income gap between rich and poor residents.

Income inequality has been rising in the United States since the 1970s and is now the highest in the Western world. The reasons include tax policies which favor the wealthy, government retreat from social programs for the poor, a minimum wage that has not kept pace with inflation, declining union memberships, an influx of low-skilled workers from poorer nations, and the shift from a manufacturing economy to lower-paying service jobs.

The study controlled for these factors and found that the unique economies of larger cities also contribute to income inequality.

“Our results show that overall up to one-third of the growth in the wage gap between the rich and the poor is driven by city size,” says Ronni Pavan of the University of Rochester who co-authored the study, Inequality and City Size, with Nathanial Baum-Snow of Brown University. More