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The strongest (and weakest) American cities

Rick Newman
Senior Columnist

You won’t be surprised to hear the technology industry’s doing just fine. But parts of the manufacturing sector are thriving as well, no matter what Donald Trump says about it.

The Milken Institute’s annual ranking of best-performing cities crowns the same top 5 as last year, in slightly different order—San Jose, Calif., Provo, Utah, San Francisco, Austin and Dallas. Those cities represent Silicon Valley and other tech hubs that have been thriving for years.

A new part of the story, however, is a strong showing by a few southern and Midwestern cities that reflects the revival of the US auto industry. Detroit rises from 155 last year to 111 this year—fairly far down the list, but a huge improvement. Nashville jumps 11 places to No. 7, largely because of ramped-up production by Nissan and Cadillac. And Monroe, Mich., lands at No. 14 on the best small-cities list, up from 30 last year, thanks to new investments by Tesla (TSLA) and other automotive producers.

“The good news in the Midwest has been that if you have auto or parts production, you’re part of that supply chain, you’re doing a bit better,” Ross DeVol of the Milken Institute tells Yahoo Finance in the video above. Here are this year’s top 10:

Source: Milken Institute

The Milken project evaluates the nation’s 200 largest cities according to economic criteria such as job and wage growth and the presence of wealth-creating high-tech industries. The annual results usually reflect trends in the overall economy. The energy bust, for instance, pushed Houston down 42 places, to No. 68 this year. Fargo, N.D., a shale-oil hub that exploded in growth in recent years, fell from first among small cities last year to 15th in 2016.

Other parts of the Midwest haven’t been as lucky as some of the auto cities. The strengthening dollar has hurt exports this year, and that, in turn, has hurt cities dependent on foreign markets, such as Indianapolis, Lexington, Ky., and Little Rock, Ark. A marked slowdown in China’s economic growth hurt cities that do a lot of trading with Asia, such as Tacoma, Wash.—which fell 70 places to 131st. At the bottom of this year’s list are Shreveport, La., and Gulfport, Miss.–both dependent on oil drilling–and Erie, Pa.

But there’s more good news than bad in this year’s rankings, since the overall economy has been adding jobs and pay is starting to drift upward nationally. Happy days have finally returned to Florida, after the housing bust wrecked the real-estate market in several overheated cities, literally driving people out of the state. Daytona Beach jumped 68 places, to No. 69 on this year’s list, making it the biggest gainer in 2016. Other winners were Jacksonville and Port St. Lucie. If the sun is out in Florida, the clouds might start to part elsewhere as well.

Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.