What drives the economic momentum of the most dynamic metros in the United States? Each year, the Milken Institute's Best-Performing Cities report identifies the latest trends and most relevant factors powering regional growth. Our index uses a comprehensive, fact-based set of criteria to rank the nation's metropolitan areas. Among them are job creation, wage gains, and technology trends that shape current and potential patterns of growth. For metros looking to craft cohesive economic strategies, the report provides valuable data and insight.
Here are highlights of the 2015 rankings:
This year's findings reveal how technology and oil again played significant roles in regional economies but in vastly different ways as those industries moved in opposite directions. The nation's tech centers are prominent among the index's top performers, as are cities that have experienced high technology growth rates. Conversely, the slashing of oil prices has undercut the economic performance of several metros whose fortunes are tied to shale-oil extraction.
In the United States overall, business and consumer spending on technology products and services is a powerful force in economic growth. Metros involved in designing and creating these products and services are growing most rapidly. Specifically, the composition of growth has shifted toward software and social media, and away from information and communication technology (ICT) equipment. In fact, businesses now spend more on software than on ICT equipment. This softer, creative side of high tech is spurring a renewal of many urban cores. Look to San Francisco, Seattle, Denver, and even New York City to see the extent of this phenomenon. Witness, too, the contributions of science-based industries such as biotechnology, medical devices, and diagnostic and semiconductor equipment manufacturing.
These thriving sectors are in contrast to the shale-oil exploration industry. The decline in oil prices from roughly $100 per barrel in September 2015 to around $45 currently has rubbed the economic sheen off communities that benefited from the surge in hydraulic fracturing-driven oil exploration. Oil production has remained at elevated levels, but new exploration has dropped by more than 50 percent. The economics of U.S. shale-oil exploration are such that, for most projects to cover capital costs, prices needed to be around $70 per barrel. Some oil deposits could be economically developed at oil prices substantially below $70 and remain active areas of exploration. On the other hand, the lower price regime reveals the value of diversification: Several metros that branched out to other industries even when their economies were formally dependent on oil now continue to thrive. Here, think of Dallas, Denver, and San Antonio, among others.Download the Full Report