What America’s Fastest-Growing Economies Have in Common
Midland and Odessa in West Texas. Pascagoula, a port town on the Mississippi Gulf Coast. Fargo and Bismarck, the two largest cities in North Dakota. These were among America’s 10 fastest-growing urban economies in 2013, as ranked by growth in real gross metropolitan product (GMP), and they have a few things in common.
For one thing, none are huge population magnets. They’re also either at the center of the energy boom or indirectly benefiting from the advances in fracking technology. And they share another trait, too: Along with Columbus, Ind., also in the top 10, most of these metro areas depend on one major, export-oriented industry sector to bring in outside income and drive growth.
In Columbus’ case, it’s manufacturing. In Odessa and Midland’s, it’s oil and gas extraction. Fargo and Bismarck have diversified economies, but they’ve a seen surge in economic activity because of North Dakota’s oil and gas boom. And in Pascagoula, it’s shipbuilding (and shipments of liquefied natural gas through the Port of Pascagoula).
USA TODAY had a good rundown from 24/7 Wall St. of the top 10 (and bottom 10) 2013 economies earlier this month. The authors of the piece touched on the reliance most of these metros have on one industry, and the ups and downs that can come with that. In the case of Columbus, they pointed to EMSI’s recent analysis:
The area is highly dependent on manufacturing, and according to a 2012 report from Economic Modeling Specialists Intl., it highly “exemplifies the intriguing potential, and inherent risks, that come with relying on the manufacturing sector.” Engine and motor vehicle parts makers are a huge part of the area’s economy, where manufacturing jobs accounted for nearly 20,000 of the 53,000 total jobs as of November.
Columbus, a central Indiana metro that ranked No. 9 on the fastest-growing economy list, is home to engine-maker Cummins. It has a remarkable concentration of manufacturing jobs — more than a third of jobs in Columbus are manufacturing-based, and it has the highest share of mechanical engineers in the U.S. (just ahead of Peoria and Bloomington-Normal, Ill.). In recent years, employment growth in Columbus has sizzled, while Cummins continues to prosper.
When a regional economy relies on a single basic industry like manufacturing or energy for much of its employment and exports, it can mean lots of prosperity — and a big jump in gross metro product, as USA TODAY’s list indicates. But it’s also a risky proposition. For every spike in manufacturing production, there are pullbacks and plant shutdowns. Energy booms don’t (usually) last for decades. “If you’re a small metro area depending on a vulnerable export sector, once that industry goes, you’re in big trouble,” Alec Friedhoff of the Brookings Institution told 24/7 Wall St.
For metros like Midland and Odessa, the multiplier effects that come with energy booms will lead to more jobs in business services, retail, and especially transportation. Public-sector infrastructure jobs also usually follow. But the end goal is to spur innovation and sustainable job creation elsewhere in the economy.
With that in mind, which of these 10 metros is the most diversified already? The following table, ranked by 2010-2013 job growth, shows the largest contributor to gross regional product (as shown EMSI’s Analyst), as well as the sectors with the largest share of jobs in each metro.
Metropolitan Statistical Area | 2013 Jobs | 2010-2013 % Job Growth | Largest Sector | Largest Contributor to 2012 GRP (Private) |
---|---|---|---|---|
Source: QCEW Employees, Non-QCEW Employees & Self-Employed – EMSI 2013.4 Class of Worker; EMSI Input-Output Model (2012) | ||||
Midland, TX | 92,857 | 23% | Mining/Oil & Gas Extraction (22% of jobs) | Mining/Oil & Gas Extraction (55% of total) |
Odessa, TX | 80,360 | 23% | Mining/Oil & Gas Extraction (15% of jobs) | Mining/Oil & Gas Extraction (28% of total) |
Columbus, IN | 52,014 | 18% | Manufacturing (36% of jobs) | Manufacturing (50% of total) |
Bismarck, ND | 75,090 | 10% | Government (19% of jobs) | Health Care (13% of total) |
Fargo, ND-MN | 143,563 | 9% | Health Care (13% of jobs) | Manufacturing, Wholesale Trade, Finance/Insurance, and Health Care (each 10% of total) |
Sioux Falls, SD | 153,358 | 6% | Health Care (17% of jobs) | Finance/Insurance (18% of total) |
Cheyenne, WY | 53,917 | 6% | Government (32% of jobs) | Manufacturing and Real Estate (each 10% of total) |
Trenton-Ewing, NJ | 253,751 | 4% | Government (27% of jobs) | Professional, Scientific, and Technical Services (13% of total) |
St. Joseph, MO-KS | 60,643 | 2% | Manufacturing (17% of jobs) | Manufacturing (25% of total) |
Pascagoula, MS | 60,214 | -3% | Manufacturing (22% of jobs) | Manufacturing (46% of total) |
Manufacturing in Columbus makes up the highest percentage of jobs (36%), and mining and oil and gas extraction in Midland is the most dominant GRP force (55% of the 2012 total). Fargo and Bismarck, despite getting lumped in with other North Dakota oil hubs, are fairly spread out in both employment and contributors to GRP. And Pascagoula, where manufacturing accounted for 46% of GRP in 2012, is the only one of the 10 metros to see an employment decline (-3% since 2010).
Sioux Falls, however, stands out in terms of industry mix and GRP. Finance and health care are strong industries, and the metro has seen steady job growth.
The number of jobs in Sioux Falls has increased 17% since 2003, and the gains have been broad-based. Nine major sectors, including health care, retail trade, finance, government, and professional, scientific, and technical services, have added at least 1,000 jobs in the last decade.
That’s a diversified economy, all right. But most of the other less-diversified economies on this list are doing just fine, too.
The data for this post comes from Analyst, EMSI’s web-based labor market data and analysis tool. For more information, email Josh Wright. Follow us on Twitter @DesktopEcon.
Source: http://www.economicmodeling.com/2014/02/13/what-americas-fastest-growing-economies-have-in-common/
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