The economies of the vast majority of U.S. metropolitan areas expanded last year. In aggregate, GDP across the nation’s 382 metro areas grew by 2.5%, up from a 2.3% growth rate the previous year.
Last year’s growth was far from even across metropolitan areas. GDP grew by more than 6% in 10 of the metropolitan areas. The economy of Midland, Texas expanded by 9.4%, more than any metropolitan area in the country. Meanwhile, the GDP of 10 metro area economies shrank by more than 3%. The largest economic contraction was in Bloomington, Illinois, where GDP declined by 8%. Based on data released by the Bureau of Economic Analysis for 2015, 24/7 Wall St. reviewed the cities with the fastest growing and shrinking economies.
Three sectors contributed most to national GDP growth: the professional and business services sector, followed by the trade industry and the finance, insurance, real estate, rental, and leasing sector. These sectors were often the largest contributors to economic growth in the fastest growing cities. For example, the professional and business services sector alone accounted for 2.75 percentage points of the San Jose metro area’s 8.9% expansion.
However, metropolitan economies are very diverse, and the largest contributors to growth were in many cases industries that grew relatively slowly on a national scale. For example, the natural resources and mining sector contributed just 0.2 percentage points to national GDP growth, but it contributed 5.9 and 12.9 percentage points to the Visalia-Porterville, California and Midland, Texas metro areas’ growth rates, respectively.
Since GDP is the value of goods and services in an economy, GDP growth is the increase in that value. Industries contribute to this growth by increasing the profits they generate and the total income of their employees. For this reason, an area’s GDP rises when incomes in an industry rise or the industry employs more people. GDP falls if the opposite is true.
Consequently, the metropolitan areas with the largest GDP growth rates also tend to have significant increases in employment. Visalia and Bend, Oregon, two of the fastest growing economies in 2015, had among the top five employment growth rates, at 4.4% and 5.7%, respectively.
On the other hand, employment in the fastest shrinking economies either increased by less than 1% or contracted. Employment in Houma-Thibodaux, Louisiana and Odessa, Texas, two of the fastest shrinking economies in 2015, fell by 6.5% and 8.2%, respectively, in 2015.
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 2015 among the nation’s 382 metropolitan statistical areas from the Bureau of Economic Analysis. The BEA also estimated the contribution of each major industry to GDP growth or decline. Annual average unemployment rates and total annual employment figures are from the Bureau of Labor Statistics. Industry employment composition and earnings are based on data collected by the U.S. Census Bureau’s American Community Survey. Additional demographic measures, including household income, population, and median home values are from the Census Bureau’s American Community Survey as well.