Austin Has Strongest Metropolitan Economy In America: Report

AUSTIN, TX — Austin has the strongest metropolitan economy in the nation, according to a newly released study that examined two dozen metrics over a 20-year period.

The POLICOM report is an annual assessment of "economic strength" rankings among 383 metropolitan statistical areas and 550 "micropolitan" regions classified as smaller economies. The reckoning yielded Austin as the top-ranked metro economy in the country, the same top ranking the city secured last year.

“With a diversified economy, the area has enjoyed consistent economic growth for a very long time,” researchers wrote in a press release in reference to Austin.

The only other Texas market breaking into the Top 10 list among metropolitan area is Dallas-Fort Worth, ranked 7th. Among "micropolitan" regions, Andrews, Texas, cracked the Top 10 list in the sixth ranking. Andrews is a small community of some 13,000 residents located in West Texas located 356 miles northwest of Austin. The biggest city in closest proximity to Andrews is Lubbock, Texas, located some 111 miles north of the latter.

The study also shows steady economic growth for Austin, its ranking on the report over the years a bellwether of steady growth. In 2009, Austin ranked as the nation's 19th-strongest economy before gradually reaching the top spot. By 2010, the city vaulted seven spots to earn its spot as the 12th-ranked economy in terms of strength.

POLICOM, based in Palm City, Florida, studies local and state economies and provides advice on how they can expand. While the rankings reflect how an area has behaved, it doesn’t necessarily indicate why it has behaved that way, researchers noted. Individual communities each have their own economic characteristics and can grow — or decline — for myriad reasons.

Still, a local economy’s growth and expansion is directly tied to the amount of money flowing into the area, Fruth said.

"The top rated areas have had rapid, consistent growth in both size and quality for an extended period of time," company President William Fruth said in a prepared statement. “For the most part, money is imported to a community by way of the business activity of the primary or contributory industries. These enterprises sell their goods or services outside the area, thus importing wealth to the economy."

The strongest economies have “nurtured and caused” their main businesses to grow and expand, Fruth added. In the weakest areas, the main businesses failed, causing the overall economy to dip.

The company used data from 1997 to 2016 for its latest study.A metropolitan area must be at least one county and have a city with at least 50,000 residents. Most are made up of multiple counties. Micropolitan areas are so termed given their smaller economies, and encompass at least one county and must have an urban center of at least 10,000 residents, but less than 50,000.

Here are the top 10 metropolitan areas for economic strength:

• 1. Austin-Round Rock
• 2. Napa, Calif.
• 3. Seattle-Tacoma, Wash.
• 4. Nashville-Davidson, Tenn.
• 5. San Jose-Sunnyvale, Calif.
• 6. Indianapolis-Carmel, Ind.
• 7. Dallas-Fort Worth
• 8. Salt Lake City, Utah
• 9. Raleigh, N.C.
• 10. Denver-Aurora, Colo.

These are the ten strongest so-called micropolitan areas ranked in terms of economic strength:

• 1. Bozeman, Mont.
• 2. Lewisburg, Penn.
• 3. Truckee-Grass Valley, Calif.
• 4. Traverse City, Mich.
• 5. Wooster, Ohio
• 6. Andrews, Texas
• 7. Durango, Colo.
• 8. Edwards, Colo.
• 9. Kapaa, Hawaii
• 10. Dickinson, N.D.

Economic Strength Methodology (provided text):

Regional Economic Information System (REIS) data is the principal data set used to create the rankings as it has been collected in a reasonably consistent manner from source data since 1969. Data for 2016 was released by the Bureau of Economic Analysis in November of 2017.

The formulas used to determine economic strength measure how the economy has behaved, not what has caused it to perform. The following are the data sectors used to create the rankings.

Group 1 – These sectors reflect the overall growth in size and quality. The “quality” of the economy is based upon what people earn, as this influences their “standard of living” more than anything.

• All Workers - Earnings
• All Workers - Jobs
• All Workers – Wages
• Per Capita Total Worker Earnings
• Per Capita Personal Income
• Earnings by Place of Residence
• Per Capita Earnings by Residences
• Wage & Salaried Workers - Earnings
• Wage & Salaried Workers - Jobs
• Wage & Salaried Workers - Wages

Group 2 – These sectors reflect how the economy is behaving. Small businesses and the construction and retail industries are extremely reactive to the “flow of money” coming into an area. They typically grow or decline in direct proportion to the condition of the economy. There are, of course, exceptions. Areas, which have become destinations for retirement age individuals will have high growth numbers in both construction and retail, while they might not have a strong economy.

• Non Farm Proprietors - Earnings
• Non Farm Proprietors - Jobs
• Non Farm Proprietors - Wages
• Construction - Worker Earnings
• Construction - Jobs
• Construction - Wages
• Retail - Worker Earnings
• Retail - Jobs
• Retail - Wages

Group 3 – These sectors are negative sectors. Growth in these reflects a poor economy. The economic strength rankings measure how the areas have behaved, not why.

• Per Capita Income Maintenance (welfare)
• Actual Per Capita Income Maintenance (welfare)
• Per Capita Medical Assistance for the Poor - (Medicaid)
• Actual Per Capita Medical Assistance for the Poor – (Medicaid)

To see the full POLICOM report, click here.

>>> Top image: Scene from downtown Austin, next to Austin Convention Center during 2018 SXSW, photo by Tony Cantú