Houston Recovery is looking good according to the Brookings Institution
December2011— MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas
Data for the nation’s 100 largest metropolitan areas do not fully reflect the most recent national trends because most metropolitan economic indicators are available only through the third quarter of 2011 (ending in September). The metropolitan data through the third quarter show widespread but generally very slow growth in both jobs and economic output.
Output growth accelerated during the third quarter in nearly all large metropolitan areas but job growth slowed in most. Unemployment rates, although lower than at the beginning of 2010 in most large metropolitan areas, remained very high. Housing markets began to improve, as most large metropolitan areas saw increases in house prices and declines in foreclosures during the quarter. Manufacturing employment continued to grow and remained an important contributor to economic recovery but this growth slowed and became less widespread during the third quarter. Government employment had an important impact on economic recovery. As always, metropolitan economic performance varied greatly among the 100 largest metropolitan areas. High technology and Great Lakes auto centers recovered strongly, while government and transportation/warehousing centers in the South generally lagged.
Recent comments by presidential candidates, news reports about Federal Reserve assistance to banks during the financial crisis, and protests by Occupy Wall Street and its allies have focused attention on the financial industries. This month’s MetroMonitor examines recent job and wage growth in three major financial industries, comparing those industries to the economy as a whole in each of the 100 largest metropolitan areas. It finds that in most of the nation’s 100 largest metropolitan areas these industries lost jobs more rapidly (or gained them more slowly) than the economy as a whole. However, financial industries differ as to whether their wages rose faster or more slowly than those in the economy as a whole.
High technology centers and Great Lakes auto-producing areas are recovering strongly from the Great Recession. High technology centers are recovering strongly, in part because of the current upturn in the information technology industry. San Jose, Ogden, Provo (information technology centers), Worcester (which has a specialization in biotechnology), and Boston (a center for both information technology and biotechnology) are among the 20 strongest-recovering metropolitan areas, as is Rochester, which specializes in technologically cutting-edge manufacturing. Austin, Boise, Minneapolis, and San Diego are among the 40 areas that are recovering the fastest.
Great Lakes metropolitan areas that specialize in the production of autos, auto parts, and related durable goods are also recovering strongly from the recession. Detroit, Grand Rapids, Toledo, and Youngstown are among the 20 metropolitan areas that have had the strongest economic recoveries, while Akron, Buffalo, and Indianapolis are among the 40 that have recovered most strongly.
Many Southern metropolitan areas that specialize in government or transportation/warehousing are having great difficulty recovering from the recession. Twelve of the 20 weakest-recovering metropolitan areas are in the South. These include government (including military) centers (Atlanta, Augusta, Columbia, El Paso, Jackson, Little Rock, Richmond, Virginia Beach) and transportation/warehousing hubs (Atlanta, Jackson, Little Rock, Memphis, Virginia Beach) as well as one metropolitan area that experienced a housing price collapse during and after the recession (Palm Bay). Some metropolitan areas outside the South that have strong specializations in government (Colorado Springs, Harrisburg, Honolulu), or transportation/warehousing (Chicago, Harrisburg) are also among the 20 weakest recoverers.
Texas metropolitan areas and areas hit hardest by the housing crisis exhibited mixed economic performance during the recovery, with some recovering very strongly and others recovering very weakly. Among Texas metropolitan areas, Dallas, Houston, and McAllen are among the 20 strongest-recovering metropolitan areas and Austin is also among the 40 metropolitan areas with the strongest recoveries. However, El Paso is among the 20 weakest-recovering areas and San Antonio is one of the 40 with the weakest recoveries.
The metropolitan areas with the strongest economic recoveries generally gained government jobs, while those with the weakest recoveries generally lost them. Eleven of the 20 strongest-recovering metropolitan areas (Bakersfield, Boston, Dallas, Des Moines, Houston, McAllen, New Orleans, Provo, San Jose, Worcester, and Youngstown) gained government jobs (federal (including military), state, and local combined) in the time since their total employment bottomed out, while one (Lakeland) had no change in government employment.
The metropolitan areas with the strongest recoveries generally gained manufacturing jobs, while those with the weakest recoveries were equally split between those that gained manufacturing jobs and those that lost them. Twelve of the 20 strongest-recovering metropolitan areas (Bakersfield, Boston, Detroit, Grand Rapids, Houston, North Port, Ogden, Provo, San Jose, Toledo, Worcester, and Youngstown) gained manufacturing jobs since their total employment hit bottom, while manufacturing employment was unchanged in one (Lakeland). Of the 20 metropolitan areas with the weakest economic recoveries, eight gained manufacturing jobs since their total employment bottomed out (Augusta, Greensboro, Birmingham, Chicago, Columbia, Harrisburg, Tucson, and Portland (ME)), eight lost manufacturing jobs (El Paso, Jackson, Virginia Beach, Colorado Springs, Honolulu, Little Rock, Memphis, and Philadelphia), and the rest had no change in manufacturing employment.
Twenty-six large metropolitan areas gained jobs in all of the last four quarters. These included metropolitan areas in the Great Lakes region (Akron, Louisville, Minneapolis, Pittsburgh, Rochester, and Youngstown) and the Southwest (Austin, Dallas, El Paso, Oklahoma City, Phoenix, Tucson, and Tulsa), and high technology centers throughout the nation (Boston, Ogden, Portland (OR), Provo, San Diego, San Jose, and Worcester).
Seventy-four of the 100 largest metropolitan areas lost a greater share of jobs 15 quarters after the start of the Great Recession (the fourth quarter of 2007) than they did during the first 15 quarters after the start of any of the previous three national recessions. Fifteen quarters after the start of the national recession, the 100 largest metropolitan areas combined had lost 5 percent of the jobs they had at the start of the Great Recession that began in 2007, compared to 0.8 percent for the 2001 recession. However, in the first 15 quarters after the start of the 1981–1982 national recession employment in the 100 largest metropolitan areas had grown by 7 percent and after the 1990–1991 recession it had grown by 1 percent.
Employment rebounded from its low point in 92 of the 100 largest metropolitan areas by the third quarter of 2011, but only 22 gained back more than half the jobs they lost between their employment peak and their post-recession employment low point, and only six made a complete jobs recovery. Only Austin, Boston, Dallas, El Paso, Grand Rapids, Houston, Madison, McAllen, New Orleans, Ogden, Oklahoma City, Omaha, Pittsburgh, Provo, Rochester, San Antonio, Springfield, Washington, San Jose, Milwaukee, Nashville and Worcester regained more than half of the jobs they had lost between their pre-recession high and their post-recession low, while 18 additional large metropolitan areas regained at least a quarter of the jobs they lost in the recession.
In the third quarter of 2011, overall government employment rose in 53 of the 100 largest metropolitan areas because increases in federal government employment outweighed state and local government job cuts. Federal government employment rose in 81 large metropolitan areas, while state government employment fell in 60 and local government employment fell in 53. In the period since total employment began to recover, overall government employment fell in 62 large metropolitan areas and was unchanged in seven.
Between the first quarter of 2010 and the third quarter of 2011, manufacturing employment grew in 60 of the 100 largest metropolitan areas, including all but five of Great Lakes metropolitan areas. During this period, when nationwide manufacturing employment grew by 2.5 percent, Youngstown, Tulsa, Provo, Akron, and Modesto had manufacturing job growth of more than 10 percent during this period, while 13 additional large metropolitan areas (Detroit, Ogden, Columbia, Oklahoma City, Houston, Charleston, San Antonio, Louisville, Milwaukee, Grand Rapids, Cincinnati, Toledo and Seattle) had manufacturing job growth between 5 percent and 10 percent.
The manufacturing job recovery slowed and became less widespread during the third quarter of 2011. In the 100 largest metropolitan areas combined, manufacturing job growth slowed from 0.7 percent in the second quarter to 0.2 percent in the third quarter. Meanwhile, the number of large metropolitan areas experiencing manufacturing job growth fell from 72 in the second quarter to 54 in the third quarter.
The unemployment rate in September 2011 remained above 6 percent in all but seven large metropolitan areas. Omaha’s unemployment rate in September, 4.5 percent, was the lowest among the 100 largest metropolitan areas. Madison, Oklahoma City, Des Moines, Honolulu, Minneapolis-St. Paul, and Portland (ME) also had unemployment rates below 6 percent. Modesto and Stockton had unemployment rates in excess of 15 percent and 23 other metropolitan areas had unemployment rates between 10 percent and 15 percent.
In September 2011, the unemployment rate was lower than it was a year ago in 77 of the 100 largest metropolitan areas. The greatest declines in the unemployment rate generally occurred in three types of metropolitan areas: those that suffered severe house price declines during and after the recession (Las Vegas, Cape Coral, North Port, Orlando, Jacksonville, Riverside, Lakeland, and Miami), those that had very strong gains in manufacturing employment since the beginning of last year (Grand Rapids, Detroit, Youngstown, and Tulsa), and high technology centers (Portland (OR), San Jose, and Worcester).
Sixty-one of the 100 largest metropolitan areas had made a complete output recovery by the third quarter of 2011. In all but one large metropolitan area (Cape Coral), output had increased from its recent low point.
Forty-three large metropolitan areas gained output in all of the last four quarters. However, Cape Coral lost output in all of the last four quarters, while Tucson and New Orleans lost output in all of the last three quarters. Metropolitan areas that suffered severe housing price declines during and after the recession generally had fewer quarters of output growth during the past year than those in Texas and the Northeast. Great Lakes auto-producing metropolitan areas and high technology centers had mixed performance; some had four quarters of output growth during the year but others had only two or three.
In the third quarter, only 19 large metropolitan areas had a rate of output growth that was consistent with sustained economic recovery. When sustained economic growth returned after each of the three recessions before the Great Recession, national GDP grew consistently at an annual rate of more than 3 percent. That annual growth rate is equivalent to a quarterly output growth rate of just under 0.8 percent. In the third quarter of this year, 19 large metropolitan areas (Albany, Austin, Boston, Buffalo, Dallas, McAllen, Houston, Ogden, Oklahoma City, Oxnard, Providence, Provo, Riverside, Rochester, Salt Lake City, San Jose, Seattle, Syracuse, and Tulsa) had output growth rates that high.
In the third quarter of 2011, house prices had recovered from their second-quarter lows in 69 of the 100 largest metropolitan areas. However, house prices hit new lows in the third quarter in the remaining 31 metropolitan areas, which included both a few areas that suffered severe house price declines during and after the recession (Cape Coral, Fresno, Las Vegas, Modesto, Oxnard, Stockton, Tucson) and many more that did not.
House prices in the third quarter remained more than 40 percent below peak levels in Detroit and 21 metropolitan areas that suffered severe house price declines during and after the recession. Those 21 were Bakersfield, Boise, Cape Coral, Fresno, Jacksonville, Lakeland, Las Vegas, Los Angeles, Miami, Modesto, North Port, Orlando, Oxnard, Palm Bay, Phoenix, Riverside, Sacramento, San Diego, Stockton, Tampa, and Tucson.
The number of foreclosures fell in the third quarter of 2011 in all but ten large metropolitan areas. Only ten large metropolitan areas in the South and Great Lakes regions (Akron, Baton Rouge, Cincinnati, Cleveland, Columbia, Greensboro, Madison, North Port, Omaha, Raleigh) had increases in the number of real estate-owned properties during the quarter.
The Financial Industries
This section examines three major financial industry groups: credit intermediation (a category that consists mainly of banks but also includes credit card issuers, mortgage brokers, and other kinds of lenders), securities and commodities (including investment banks, securities and commodities brokers, and investment advisors, among others), and funds and trusts (including investment funds, pension funds, and trusts and estates, among others).
Since the national recession began in the last quarter of 2007, the average wages in credit intermediation and securities and commodities grew more slowly than the overall average wage in most large metropolitan areas. Between the fourth quarter of 2007 and the fourth quarter of 2010 (the most recent quarter for which wage data are available), the average wage in credit intermediation increased more slowly than the overall average wage in 63 of the 100 largest metropolitan areas, including all the metropolitan areas that specialize strongly in credit intermediation.
However, since the national economic recovery began in the second quarter of 2009, the average wages in credit intermediation and securities and commodities grew more rapidly than the overall average wage in most large metropolitan areas. Between the second quarter of 2009 and the last quarter of 2010, the average wage in credit intermediation grew more rapidly than the overall average wage in 52 of the 100 largest metropolitan areas, including all but two (Dallas and Birmingham) that specialize strongly in that industry.
In most large metropolitan areas, the average wage in funds and trusts grew more rapidly than the overall average wage both since the beginning of the national recession and since the beginning of the national recovery. For funds and trusts, the industry average wage grew more rapidly than the overall average wage in 51 large metropolitan areas between the last quarter of 2007 and the last quarter of 2010 and in 56 large metropolitan areas between the second quarter of 2009 and the last quarter of 2010. In each period, some major centers of the funds and trusts industry saw industry wages rise more rapidly than overall wages, while others saw industry wages rise more slowly.
Both since the national recession began in the last quarter of 2007 and since the national recovery began in the second quarter of 2009, each major financial industry lost jobs more rapidly (or gained them more slowly) in most of the 100 largest metropolitan areas. Between the last quarter of 2007 and the last quarter of 2010, credit intermediation lost jobs at a faster rate (or gained them at a slower rate) than the economy as a whole in 73 of the 100 largest metropolitan areas. This was also true in 67 of the 100 largest metropolitan areas for the period from the second quarter of 2009 through the last quarter of 2010. For securities and commodities, these figures were 55 and 61 metropolitan areas, respectively; and for funds and trusts, 57 and 67 metropolitan areas, respectively. However, the opposite occurred in each of the top centers of each financial industry. In the metropolitan area that specializes most strongly in each industry, that industry gained jobs more rapidly than the economy as a whole.