In a recently released report, the Brookings Institution examined the economic recovery of America’s 100 largest metropolitan areas during the last quarter of 2011, the latest for which figures are available. The news is, as they say, a mixed bag. Let’s start with the good news:
- By December, 2011, the unemployment rate was lower in 93 out of 100 major metropolitan areas than it had been a year earlier. The unemployment rate was higher in six areas (Augusta, Chicago, Honolulu, Jackson, New York, and Raleigh) and was the same in one (Omaha).
- High-tech and auto-manufacturing centers have experienced particularly strong recoveries from the recession that began in 2007. Among the 20 metropolitan areas recording the strongest growth are those with information technology (Austin, Boise, Ogden, Portland [OR], Provo, San Jose) or biotechnology (Worcester) industries, as well as those that specialize in the manufacture of automobiles, auto parts, and related materials (Detroit, Grand Rapids, Toledo, Youngstown).
- Seventy out of 100 of the largest metropolitan areas showed growth in both jobs and output. Most of the remaining thirty, however, lost jobs but increased output.
- Of 100 metropolitan areas, 24 gained jobs in all four quarters of last year, including those in the Great Lakes region, in the Southwest, and in places with high-tech industries.
But there’s bad news, too:
- By December, 2011, the unemployment rate remained over 6 percent in all but 11 of 100 metropolitan areas. The 11 winners were: Omaha, Madison, Provo, Honolulu, Salt Lake City, Minneapolis, Washington, Oklahoma City, Boston, Ogden, and Des Moines. Thirteen areas had unemployment rates between 10 and 15 percent, while three cities in California — Fresno, Modesto, and Stockton – had rates over 15 percent.
- Seventy-six of 100 metropolitan regions lost more jobs in the 16 quarters after the recession of 2007 than in the 16 quarters after previous recessions. In comparison, 16 quarters after the beginning of the 1981-82 recession, employment in the 100 largest metropolitan areas had grown by 8 percent.
- Only one out of four metropolitan areas gained back more than half the jobs they lost. The report compared the number of jobs these areas had at their peak between 2004 and 2009 and compared it to the number they lost once the recession began. Only 6 regained all of the jobs they lost, and 4 of those (Austin, El Paso, Houston, McAllen) were in Texas (the other two were Pittsburgh and Worcester).
- The recovery in manufacturing jobs slowed in Q4 of 2001. Throughout major metropolitan areas, the growth of manufacturing jobs decreased from 0.7 percent in Q2 to 0.2 in Q3, finally dropping to 0.02 in Q4. Ominously, while 72 out of 100 metropolitan areas had experienced manufacturing job growth during the first quarter of 2011, by the fourth quarter that number was only 46, a loss of over a third.
An important subtext of the analysis is the role that government funds play in the recovery in various areas. As the report indicates, places with high-tech and automobile industries tended to do better than others, but these are industries most likely to receive federal grant funding (for high-tech firms) or TARP payments (General Motors and Chrysler together received $79 billion from the TARP fund).
Also, the report notes that economic recovery has generally been strongest where growth in government jobs, including military jobs, has been greatest, while the loss of government jobs has coincided with weak recoveries. Even the most indispensable government jobs must be paid for through taxation, and the dollars that are spent on these cannot be invested in new private-sector jobs, cannot be used to start new businesses, and cannot be saved. Is the dependence of the recovery upon tax dollars removed from the private economy a good long-term investment for the American taxpayer?