The story at a glance
- The San Francisco Bay Area experienced the fastest economic growth in 2022.
- The growth was largely due to the success of technology sectors and the migration of US residents to the southern and western regions of the country.
- By comparison, Milwaukee ranked at the bottom of the list, with its economy shrinking 0.5%.
The shift to high-tech jobs, migration to the West and South, and the recovery of the leisure and hospitality sectors after the COVID-19 pandemic are all behind the economic growth seen in the most major U.S. 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 to gather economic data and analysis on cities and counties across the country. 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, with the region’s GDP growing 4.8% in 2022. It was followed by Austin, Texas; Seattle; Raleigh and Durham, North Carolina; 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, hiring freezes and potential layoffs in this sector could hit the region hard, while “sharp jumps in the number of active property listings – as well as measures of homebuyer demand and competition – indicate that the region’s housing market is among the fastest declining nationally,” the authors wrote.
As more Americans emerged from the COVID-19 pandemic with a travel bug, the economies of popular destinations like New Orleans also benefited. Between August 2021 and August 2022, the city’s leisure and hospitality services grew by 6%, placing it ninth on the list of fastest growing economies.
Meanwhile, tourism to Orlando, Florida’s many theme parks and its popularity as a trade show destination ranks the area 10th. Its economy grew by 2.4% in 2022.
The researchers also assessed population totals and growth, noting that “a total of 216 million people live in the 50 largest EMAs, or 65% of the US population.”
These regions account for more than 72% of the country’s economic activity each year, representing approximately $18 trillion in GDP.
In terms of population, the largest EMA is New York, which encompasses parts of New Jersey, Connecticut, New York, and Pennsylvania. Over 23 million people reside in this EMA and collectively generate over $2 trillion in economic activity annually.
Each EMA experiences different labor market conditions, the authors explained, but an economic downturn in 2023 could weigh on individual microeconomies.
“Normally, manufacturing and construction wobble the most during recessions, especially those in which the Federal Reserve raises rates,” the report said.
“Rising mortgage rates and auto loans continue to weigh on demand, but we still face a housing shortage and automakers remain unable to meet demand.”
However, any long-term shift toward relocating or returning American manufacturing jobs from overseas could benefit areas like Detroit, Denver and Dallas.
Following the COVID-19 pandemic and the 2020 recession, the technology sector has experienced one of the strongest recoveries. It remains to be seen whether the sector can withstand a future recession, while any significant slowdown could affect the tech-heavy economies of Austin and San Francisco.
Other unknown circumstances, such as the future of the war in Ukraine, could also affect the micro-economies. For example, if Ukraine were to cause a major military rebuild, it could increase the fortunes of Virginia Beach in Virginia, an area with a large defense presence, or move No. 11 from San Antonio, Texas, home to the largest common base in the country, in the top 10 fastest growing micro-economies, according to the authors.
The Institute is a nonpartisan trade policy think tank associated with the Kenan-Flagler Business School at the University of North Carolina.