“The concentration of economic growth and prosperity in large metro areas defines the modern global economy, creating both opportunities and challenges in an era in which national political, economic, and societal trends are increasingly influenced by subnational dynamics.” -Brookings Institute

The Metropolitan Policy Program at the Brookings Institute has a new report out for 2018 called the Global Metro Monitor.

Here are some of the highlights (data is from 2014 to 2016):

- The 300 largest metro areas in the world accounted for 36% of employment growth and 67% of GDP growth.

- Metro areas in China and the Asia-Pacific region outperformed, whereas Latin American cities, and in particular the largest Brazilian cities, were weaker performers.

- The majority of large metro areas had growth rates that exceeded that of their respective regions. So again, cities are the driver.

And here is an interesting interactive chart (better to click through) that shows the % change in GDP per capita. 

Look at how much of an outlier San Jose is. Though, check out Dublin in the footnote. And if you look at the actual data table, it is all China, except for Dublin at the top.

For the rest of the charts, click here. And to download the full Global Metro Monitor report, click here.

According to newly released US census data for 2010-2017 – which Brookings analyzed here – the “back to the city” movement appears to have peaked in 2012. (This is something that we’ve looked at before on the blog.)

Here is a graph from Brookings showing the annual growth rate for urban and suburban counties. Note how growth in the “urban core” peaked in 2012 and how growth in both the “emerging suburb” and “exurb” have increased since then.

The other finings from Brookings are that growth has slowed in large metropolitan areas (small metro areas and non metro areas, on the other hand are up) and that people are continuing to move from the Snow Belt to the Sun Belt.

If you look at population gains and losses from 2016-2017 for the 100 largest US metro areas, the only Snow Belt gainers within the top 20 are New York (15th), Columbus (19th), and Boston (20th). Dallas, a Sun Belt city, was first with a gain of 146,000 people.

So what’s going on? The narrative is that soon as the US economy and housing market recovered from the Great Recession of 2008, the trend lines simply reverted back to business as usual: sun and sprawl.

The world is increasingly spiky. Inequality is growing and it is increasingly geographic in nature. We know that people tend to make more money in urban areas compared to rural areas – even when they possess the exact same level of education. The returns to being smart and educated are simply greater in cities.

But they also depend on the size of the city. Mark Muro and Jacob Whiton of Brookings recently published data looking at labor market performance – by metro size – from 2009-2015 (right after the financial crisis). What they found is that larger metropolitan areas simply performed better than smaller ones.

In summary:

City size matters because it’s a major influence on city prosperity and adaptability as well as local worker fortunes. Bigger cities are more productive. They are more innovative. They draw better-educated workers by offering higher wages.

The situation is even more pronounced across the pond. According to the New York Times (quote from Richard Florida), a third of Britain’s gross domestic product comes from London alone.

What is far less clear is what should be done to address the decline of some of the smaller cities in America – cities that are stagnating and feeling left behind. But perhaps the first step is acknowledging what has happened and what remains feasible in today’s global economy.

Here is another quote from the above NY Times article:

Mr. Trump’s promise to relieve the pain by reviving the coal and steel industries, by keeping immigrants out of the country and by raising barriers against manufactured imports is only a rhetorical balm to satisfy an angry base seeking to reclaim a prosperous past that is no longer available.

That rhetorical balm.