New Report Released by U.S. Conference of Mayors Shows Contribution of Metro Economies Hit Record Levels for Fourth Consecutive Year
Boston, MA. – A new report released today by the U.S. Conference of Mayors (USCM) during its 86th Annual Meeting, shows that U.S. cities and their metro regions continue to dominate the nation’s economic growth, accounting for 99.5%, or $337 billion, of GDP expansion in 2017. This contribution increased to record levels in 2017 for the fourth consecutive year. The full report, conducted by IHS Markit, can be found here. A link to the report’s key findings can be found here.
The report also indicates that metro areas added 1.9 million jobs, or 95.9% of all new jobs created in the economy last year, and were home to 91.2% of the nation’s GDP. Additionally, U.S. metro economies accounted 91.6% of personal wage income in 2017.
“This report makes clear, in no uncertain terms, that cities continue to drive the national economy and are the engines of its growth. We are the ecosystem for future jobs and innovation, and all signs point to this trend continuing,” said USCM President Columbia (SC) Mayor Steve Benjamin. “This is why we need, and continue to seek, a strong partnership with the Administration and Congress on such issues as infrastructure, inclusion and innovation. By addressing the nation’s challenges together, we will be able to build a brighter—more inclusive—future for all Americans.”
The report forecasts that for the remainder of this year, the economy will add around 200,000 monthly jobs, but will drop to an average about 100,000 monthly gains in 2019, and 70,000 in 2020.
While the report projects economic growth to be 2.8% in 2018 and 2019, it concludes that slow labor force growth will be a drag on GDP and GMP growth. Real GDP growth will average only 2.0% annually over the forecast horizon. The labor force participation rate in April was 62.8% in April and is projected to peak during the recovery at 63.1%. The report found that if the labor force participation rate could reach its 2000 level of 67%, the economy could grow an additional .5% to an average rate of 2.5% over the next five years.
The report indicates that worker trends will create significant headwinds, and dampen growth over 2019 and 2020. The report cites that as baby boomers begin to retire, the share of the U.S. population aged 65 years and over will jump from 16% in 2017 to 22% by 2048. The growth rate of the working-age population will slow more than that of the overall population. After increasing 0.9% annually over the past 30 years, the population aged 16–64 years will grow only 0.4% over this time period. Total civilian employment will rise at an average annual rate of 0.7% from 2018 to 2048.
“The bottom line is that our economy needs more and better trained workers now and into the future. Every day businesses tell me they need skilled workers. This is a great opportunity to attract new people into the workforce, and to reskill and upskill current workers,” Louisville Mayor Greg Fischer, who chairs the Council on Metro Economies and the New American City.
“This report makes clear that to stay competitive in an ever-expanding global economy, the U.S. must continue to invest in its cities and metro areas,” says USCM CEO and Executive Director Tom Cochran. “While cities are driving the economy, we know there is still work to be done. This is why the Conference is calling on Congress and the Administration to increase funding for community colleges, trade schools and workforce development programs so that we can sustain and strengthen the nation’s prosperity.”
Key findings of the report include:
U.S. Metro Performance in 2017
- US Metros were home to 91.2% of real Gross Domestic Product (GDP) in 2017.
- US metro shares of US total personal income equaled 89.0%; total wage income equaled 91.6%.
- US metro share of total employment increased to 88.0% as metros added 1.9 million jobs, accounting for 95.9% of all US job gains.
- US Metros contributed 99.5% ($337 billion) of the increase in GDP in 2017.
- Combined, the nation’s 10 highest-producing metro economies generated $6.8 trillion in economic value in 2017, surpassing the output of the sum of 37 US states.
- Many US metros have larger economies than states. New York’s gross metropolitan product (GMP), the largest among metros at $1.66 trillion, exceeds the Gross State Product (GSP) of Texas, and Los Angeles’s exceeds that of Florida, the fourth ranked state in GSP.
- In 21 states the metro share of GSP exceeds 90%, and in 32 it exceeds 80%.
- Of the largest 100 world economies, 37 are US metros.
- New York’s GMP would rank 10th among the nations of the world, ahead of Canada and Russia. Los Angeles would rank 17th, ahead of Indonesia, and Chicago’s metropolitan economy ranks 23rd, larger than Argentina. Dallas, Washington, San Francisco, Houston, Philadelphia, Boston, Atlanta, Seattle, and Miami all rank among the top 50.
Employment and GDP Forecast
- US economic growth is projected to reach 2.8% in 2018 and 2019, its highest since 2015.
- Real GMP growth will exceed 3% per year in 72 metros (19%) in 2019-2020, and 2% per year in 239 (63%). In 2020, 81 metros (21%) will have unemployment rates less than 3%, and 247 (65%) less than 4%.
- Solid gains in employment, driven by robust growth in production, will contribute to a further 0.4-percentage-point decline in the unemployment rate, to 3.5%, by early 2019.
- As US unemployment falls to 3.5% in 2018, 63 metros (19%) will have rates less than 3%, and 195 (51%) will have unemployment rates under 4%.
- Total employment gains are expected to average about 200,000 per month over the balance of this year, before slowing to around 100,000 per month in 2019 and roughly 70,000 per month in 2020.
- The labor force participation rate was 62.8% in April, a scant 0.3 percentage point below its expected recovery peak of 63.1%.
- With baby-boomers aging, participation rates will not return to their earlier peaks. Those small gaps leave little room between now and judgment day for labor force growth, when labor force gains are constrained by population growth.
- Growth of hourly labor compensation is expected to accelerate because of the further tightening in labor markets. The rise in the employment cost index is expected to increase from 2.5% in 2017 to 3.0% in 2018 and 3.5% by 2021.
- As baby boomers begin to retire, the share of the US population aged 65 years and over will jump from 16% in 2017 to 22% by 2048. The growth rate of the working-age population will slow more than that of the overall population. After increasing 0.9% annually over the past 30 years, the population aged 16–64 years will grow only 0.4% over this time period.
- The report projects that if the nation, over the next half-decade, could raise the labor force participation rate to its 2000 level, 67%, we would boost GDP growth by almost one-half a percentage point, from 2.0% to near 2.5%
ABOUT USCM’S 86th ANNUAL MEETING
Starting on June 8, more than 250 of the nation’s mayors will meet in Boston at the Marriott Copley Place for USCM’s 86th Annual Meeting. Under the leadership of USCM President Columbia Mayor Steve Benjamin and host Boston Mayor Martin J. Walsh, mayors will discuss a wide variety of priorities that contribute to the overall health of America’s cities, as well as consider and adopt the policy resolutions that guide the advocacy agenda of the organization. The Meeting will run through Monday, June 11, 2018. A draft agenda and list of pre-registered mayors are available here.
Members of the media are encouraged to register in advance. See this link. All business/day-time sessions are open to the press unless otherwise indicated. All evening events are closed to the press. On-site registration will be available with current press credentials.
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