When it comes to economic clout, New York will far outpace other U.S. metros for decades to come

But San Jose, Calif., is expected to have the best annual growth rate through 2035, according to Oxford Economics’ latest Global Cities report.

December 19, 2018 |

More than half of New York's Gross Domestic Product is generated by is financial and business services sector that is the world's largest. Image: Pixabay

The New York metropolitan area is on track to generate $1.797 trillion in gross domestic product in 2019, which would rank first among all metros in the United States by a wide margin. New York is projected to hold onto that ranking through at least 2035, when its GDP could reach $2.511 trillion, according to the annual Global Cities report published by Oxford Economics, a London-based independent global advisory firm.

The change in New York’s GDP would represent 2% annual growth, driven by a finance and business services sector that is the largest of any major world city. However, Oxford Economics projects that San Jose, Calif., with its high-tech and entrepreneurial ecosystem, will lead all American metros in annual GDP growth through 2035, at 3%, followed by Portland, Ore., and Austin, Texas (2.6%), and Seattle, Charlotte, N.C., Nashville, and San Francisco (2.4%).

Oxford believes that San Jose’s greatest asset is the “scale and diversity of its technical workforce.” This metro’s annual GDP growth averaged 7.4% during the years 2013-17. In Portland, where manufacturing accounts for roughly 40% of its annual growth, high-tech production is expected to sustain its robust economy.

Nashville, whose population has roughly doubled in the last 40 years, was recently chosen by Amazon for a new operations center that will employ 5,000 people. Apple plans to invest $1 billion in Austin, where the tech giant could eventually employ 15,000 people.

Behind New York, the cities that rank highest for projected GDP for 2019 and 2035 are Tokyo, Los Angeles, and London. L.A.’s GDP is expected to hit $1.093 trillion next year, and expand by 41.4% to $1.545 trillion in 2035. Oxford expressed some surprise about L.A.’s likely position, given that its financial and business services sector only accounts for 39% of its economy. But L.A.’s west-coast location and economic diversity are surely benefits.

Oxford also considers urban economies in terms of industrial output. On that score, two Texas cities, Houston and Dallas, are being driven by their low-tax, low-regulation model, and relatively abundant land, to achieve strength in moderately high-value manufacturing segments. (Dallas and Houston are ranked 4th and 7th, respectively, in projected 2019 and 2035 GDP.)

Conversely, Oxford wonders about Chicago’s prospects. The Windy City ranks third in projected GDP for both years tracked, but its financial and business services sector, relative to the city’s size, is actually smaller than Boston’s, San Francisco’s, and Washington D.C.’s.

“Fundamentally, it is tough being a Midwest city such as Chicago: regional growth is not so strong; many corporate headquarters and production facilities have moved south in search of lower taxes, laxer regulations, cheaper costs and more sun; and the start-up and tech scenes are elsewhere,” writes Oxford. On the other hand, Oxford points out that naysayers who wrote off Chicago in past years have been proven wrong because Chicago continues to offer “acceptable compromises,” such as affordability, livability, and opportunity, that keep it competitive nationally and globally.

While a large share of America’s GDP is clustered within its 10 largest cities, Oxford Economics notes that around two-thirds of U.S. economic output still comes from medium- and small-sized cities and towns. Of the top 20 metros by forecasted GDP growth through 2022, nine have fewer than 500,000 people. Many of these cities are located in the Southwest and Mountain regions, and benefit from an improved energy sector, immigration (although that remains an uncertainty, given the current political climate), and an evolving economic base.

 

Fastest growing U.S. cities 2019-35

Rank              City                 avg. annual % growth

1                     San Jose                     3.0

2                     Portland                       2.6

3                     Austin                          2.6

4                     Seattle                         2.4

5                     Charlotte                     2.4

6                     Nashville                     2.4

7                     San Francisco             2.4

8                     Orlando                       2.3

9                     Dallas                          2.3

10                   Salt Lake                     2.3

 

Top U.S. cities by size of economy

Rank 2035    Rank 2019    City                             GDP                GDP              % chg.

                                                                               $B 2019         $B 2035                    

 

1                      1                      New York                  1,797             2,511              39.7

2                      2                      Los Angeles              1,093            1,545              41.4

3                      3                      Chicago                       713                957              34.3

4                      4                      Dallas                          573                839              46.4

5                      6                      San Francisco             532                796              49.6

6                      5                      Washington                 559                779              39.3

7                      7                      Houston                       529                758             43.2

8                      9                      Boston                         461                656              42.5

9                      8                      Philadelphia                467                 650              39.4

10                   10                     Atlanta                        402                 575              42.9

 

Source: Oxford Economics

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