Study: San Antonio is America's top recession-resistant city

Want to escape the recession? Try cities in Texas or Oklahoma – and avoid those in Florida or California.

That's the conclusion of a new Brookings Institution study. It finds that five of the top 10 metro areas likely to emerge from the slump first are in Texas and two are in adjoining Oklahoma. By contrast, four metro areas in Florida and two in California are in the bottom 10 metro areas and are likely to be stuck in recession for a while. Detroit, not surprisingly, is the worst performer. (Click on the chart to the right for the rankings.)

The purpose of the report, released Wednesday, is not to embarrass cities – or cause chest-thumping. Metro areas are a useful way to look at the effects of recession, since they are America's economic engines, the report points out. The 100 largest metro areas contain two-thirds of US jobs and generate three-quarters of its economic output.

The report might also help policymakers target cities that need the most help, says Alan Berube, research director of Brookings’ metropolitan policy program and one of the authors of the report. “The stimulus package is not all that geographically-oriented,” he says in an interview. “It was just divided into sectors and programs that can spend money quickly.”

Despite the stellar showing by the Texas metro areas, Mr. Berube says every US city is suffering. Some have experienced a shallow downturn while the weakest areas should prepare themselves for a long recovery period. As of March, only 10 of the 100 metro areas had begun to show signs of recovery, according to the report, which is based on first quarter economic data.

McAllen, Texas (ranked sixth) is the only metro area that had growth in both employment and output in the first quarter. Employment also gained in New Haven, Conn., and Baton Rouge, La., while output increased in Seattle; Austin, Texas; Virginia Beach, Va.; Washington, D.C.; Richmond, Va.; San Jose, Calif.; and Riverside, Calif. “Still, none of these areas has yet returned to its prerecession levels of employment or output,” says the study.

There are now two distinct manufacturing belts – the one in Michigan and Ohio, which depends on the auto sector, and the one in the Northeast, which are more geared to aerospace and photonics, Berube says. The Northeast is experiencing fewer layoffs and home price declines.

The Sun Belt is also divided into two parts. Florida, Arizona, Nevada, and inland California have been damaged by the collapse of their housing markets. But Texas, Oklahoma, New Mexico, Arkansas, and Louisiana have done better because of their affinity to either energy developments or government spending (think universities).

In fact, concentrations of universities, medical centers, and government offices have shielded many places from large job losses. That’s why cities such as Boston, New Haven, Springfield, Mass., and Provo, Utah, are ranked reasonably high

So then why is San Antonio the nation’s best-performing metro area when it has neither a major university nor a large state government presence?

Berube says San Antonio has benefited from the growth of financial services, such as USAA (which started off as an insurance company for military personnel), and some significant military installations. Tourism and hospitality have also been powerful economic drivers. There are five Fortune 500 companies located in the metro area as well as South Texas Medical Center – major economic forces.

As for Detroit, recent headlines about automakers' problems explain why it’s in last place.

– Guest blogger Ron Scherer is a Monitor staff writer.