By Dave Gatton
July 14, 2008

A new economic report released on June 20 by the U.S. Conference of Mayors in Miami forecasts that U.S. economic growth for 2008 has weakened considerably, while unemployment and consumer prices have risen sharply.

The U.S. Metro Economies Report forecasts that the nation’s 363 metro economies will see real gross metropolitan product (GMP) growth slow to 1.4 percent, almost one-third below last year’s rate of 2.0 percent and half of the average growth rate for the last three years of 2.8 percent. GMP growth for 2009 is expected to remain sluggish at 1.5 percent.

The report, prepared by Global Insight and sponsored by the Conference’s Council for the New American City, also finds that unemployment growth for 2008 will remain sluggish as well with only a 0.4 percent increase. One-third (113) of U.S. metros will experience actual job declines this year.

The current slowdown also compounds the fact that many metros are suffering from a prolonged employment downturn. Eighty metros have not regained the jobs they lost since the last recession in 2001. Additionally, 71 metro areas will not see any gains in employment for the entire decade. Over half of these metros, led by Detroit and Cleveland, are located in the Midwest.

Despite these economic concerns, the report finds that U.S. metros continue to dominate the U.S. economy. In 2007, U.S. metros accounted for 86 percent of the nation’s employment and almost 90 percent of the gross domestic product (GDP) and labor income.

New York continues to lead the nation in economic output, with a 2007 GMP of $1.21 trillion, followed by Los Angeles-Long Beach, $608 billion, and Chicago at 506 billion. Last year, metro economies produced $207 billion (92 percent) of the $226 billion increase in real economic output.

"Our findings highlight how critical U.S. metro economies are to the future economic security of this nation," said U.S. Conference of Mayors Past President Trenton Mayor Douglas H. Palmer. "When our cities and suburbs grow, the nation prospers; when they struggle, the nation struggles."

The report also forecasts that the nation’s housing crisis continues to worsen. It predicts U.S. housing starts will reach an all-time low of 930,000. Existing homes sales and housing values will continue to decline throughout the year.

In a grim finding, the report predicts that metro area housing values are expected to tumble nearly $1.46 trillion in 2008, worse than the Conference’s previous forecast of $1.2 trillion.

"These forecasts make it even more urgent that Congress and the President complete mortgage foreclosure legislation as soon as possible," Palmer said. "The nation’s mayors, again, strongly urge the mortgage industry to increase and accelerate its efforts to prevent foreclosures. The overall situation is not getting better," he added.

The entire U.S. Metro Economy report, including charts and graphs can be found on the website www.usmayors.org/metroeconomies.