"World city" status not saving Chicago, great stats, DART falling, and more
Sorry about the late post this week - I was in New York for a conference. Continuing the smaller misc items from last week:
1. From 2001 to 2009, the Houston-Sugar Land-Baytown, TX MSA's portion of GDP grew from about $233 billion to about $363 billion (56%). This was the highest growth rate of the MSA's examined.
2. Houston's population grew by 1,231,393 from 2000 to 2010, the most of any MSA examined. Second was the DFW MSA, at +1,210,229. Also, Houston's population grew by 126% over this period. This is the third-highest growth rate of the MSA's examined - behind Riverside-San Bernardino-Ontario, CA (130%) and Phoenix-Mesa-Glendale, AZ (129%).
3. Houston's share of the total US GDP has grown from 2.54% in 2001 to 2.88% in 2009. The latter is the fifth highest of the MSA's studied. Also, the increase in this share - +13.29% - is the highest of the MSA's studied. (Washington was second, with an increase of +12.57%.)
4. Houston's per capita GDP (i.e., attributed GDP divided by MSA population) ranked 6th of the largest MSA's in 2009, at about $62k. The top 5 were: San Francisco ($78k); Washington ($74k); Seattle ($67k); Boston ($65k); and New York ($63k). Other peer cities to Houston in terms of population are: Philadelphia (#11 -- $56k); DFW (#12 -- $55k); Atlanta (#16 -- $48k); and Miami (#18 -- $46k).
5. Houston fell in the middle of the pack (11 of 25) in terms of its per capita GDP growth from 2001 to 2009. This figure grew by 29% over this period. Compare this to the top 5: San Diego (+41%); Washington (+39%); San Francisco (+36%); Los Angeles (36%); and Baltimore (+35%). Five large MSA's exhibited per capita GDP growth of less than the total inflation rate of 21% from 2001 to 2009: Riverside-San Bernardino; Dallas-Fort Worth; Phoenix; Atlanta; and Detroit.
Why are Dallas and Houston so divergent on GDP per capita? Two words: Energy industry - including the port activity. The energy boom has definitely pumped up our GDP per capita and incomes. DFW has a more diffuse set of companies/industries that more reflects the national average. All the cities that are shrinking GDP/capita just means lots of low income people are moving in looking for jobs - which also diluted the Houston numbers down to the middle of the pack. Those cities with the highest GDP/capita gains represent high cost-of-living cities that are driving out the poor and not attracting new ones (CA) or, IMHO, the largess of federal govt spending and pay increases (DC, Baltimore).
Clearly, Chicago needs to continue focusing on expanding the size of its Loop economy and ensuring that it remains a top global city destination in the future. But unlike some other places that can hang their hat on that if they want, Chicago has to go beyond just being a global city and also be something more. After all, Chicago does not enjoy a “lock” on any industry, like New York with finance and media, or even Houston in energy, the Bay Area in technology or Los Angeles in entertainment. In almost every major business category it is not the lead player, which allows for greater economies of agglomeration and, perhaps even more importantly, a powerful and enduring global signature.
A critical aspect of the challenge here lies with improving the state and local business climate, recently rated as one of the worst in the country by Chief Executive magazine. If you're a hedge fund partner, architect, or celebrity chef, things are great. But for bread and butter type businesses and workers, which constitute the vast majority of the economy, things are quite different. That's why everyone from the CEO of Caterpillar,based three hours from the city, on down is publicly complaining and threatening to move.
Fixing this means finally rooting out the corruption that undermines confidence in local government, restructuring state and local finances to provide more certainty to investors, continuing to focus on education, addressing the infrastructure investment deficit, and radically reducing the red tape that plagues small and medium sized businesses.
None of these are sexy or easy. In fact, the CEO of the Chicagoland Chamber of Commerce recently said he's not putting any faith in claims by Rahm Emanuel, the new mayor that red tape relief is on the way, reflecting the level of skepticism in the local business community right now. Today businesses in the city literally need a city ordinance passed in order to do seemingly simple things like add an awning or get a sidewalk café permit – something that is totally at the discretion of the alderman. The Chicago Reader recently reported that this sort of “ward housekeeping” accounts for over 95% of city council legislation. Clearly this approach is toxic to business. That’s why these items are absolutely mission critical items to creating a regional economy that can actually generate employment and pay the bills going forward. Glamor jobs and prestige employers downtown just aren't going to cut it by themselves anymore.
In the immortal words of Jim Goode, "You might give some serious thought to thanking your lucky stars you're in Texas."
Labels: economy, Metro, rankings, transit, world city