You probably don’t need to be told this, but the Silicon Valley economy is still going gangbusters. More encouraging: other regions are, too.
The Milken Institute’s annual list of the best-performing American cities is an intriguing snapshot of who’s thriving and who’s not, and the latest rankings reveal a few surprises amid the obvious. The top-performing city—no drum roll needed—is San Jose, Calif., a proxy for Silicon Valley. No. 2 is San Francisco, about 30 miles north. “Our best-performing metros clearly have the innovation advantage,” Ross DeVol of the Milken Institute tells me in the video above. “The creative, softer side of technology as well as the hardware side.”
Silicon Valley has no monopoly on prosperity, though. Some other findings from the report:
Tech hubs outside California are thriving, too. They include Provo, Austin, Raleigh, and Boulder. That’s good news for techies who want to cash in on good salaries and plentiful jobs but avoid the high cost of living in northern California. And it means tech businesses can still find talent in cheaper locales with looser regulations on business than super-strident California.
Florida is back. The Sunshine State tied California for having the most cities that improved in the rankings since last year. While tech is the big story in California, Florida’s resurgence seems to be driven by a dramatic improvement in the once-wrecked housing market. Among Florida’s most-improved cities: Port St. Lucie, Gainseville, Lakeland, and Ocala.
Texas and North Dakota are hanging in there. These two states boomed during the shale-oil revolution, but the plunge in crude prices has brought hard times to some corners of the oil patch. Still, a diversified economy kept Dallas at No. 5 in the 2015 rankings, with Houston a respectable 26. Fargo, N.D., ranked No. 1 among best-performing small cities, with the economy there expanding beyond oil into education, healthcare, finance, and insurance. Bismarck was No. 2 among small cities, on account of similar diversification.
The auto industry is booming—but not where you might think. Strong auto sales this year have helped auto-dependent cities such as Nashville, Columbus, Ind., Charleston, S.C. and Bend, Ore. But traditional auto hubs such as Detroit, Dayton, and Kansas City, Mo., are still far from the top due to overcapacity and a move away from unionized plants.
The strong dollar is hurting Main Street. A drop in exports—due largely to the strength of the dollar against foreign currencies—pushed trade-reliant cities such as Los Angeles (home to America’s biggest port) and Peoria, Ill. (where Caterpillar is based) far down the best-performing list.
The energy bust is causing pain. Once-booming burbs such as Lafayette, La., New Orleans and Tulsa now top the list of cities falling by the most in the Milken rankings. Plunging crude prices have shredded jobs and company profitability in energy-dependent metros, with 2016 not looking much better. But if energy recovers like housing someday, look for these cities to be on top once again.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.