When a recession hits the U.S., some cities are hit harder than others, according to a new study published in the Journal of Urban Economics that tracks monthly economic activity for the nation’s 50 largest metros over the course of several recessions between 1990 and 2015.
CityLab’s Richard Florida reports that the impact of recessions varies by geography. In the early 1990s, 26 out of the 50 largest metros experienced recessions. In the early 2000s, due to the dot-com bubble, high-tech hubs like San Francisco, Denver, Portland, San Jose, and Austin were hit hard. But this recession again hit hard at manufacturing-dependent Rustbelt metros like Detroit and Cleveland and Sunbelt metros, whose economies were more exposed to the downturn in housing. Meanwhile, the Washington, D.C. and Virginia Beach metro areas saw positive economic growth during this time, perhaps buoyed by federal spending.
But the Great Recession topped all other recent downturns. It hit 49 out of the country’s 50 largest metros, sparing only Oklahoma City. The metros that suffered the most were devastated by the housing collapse—again, mainly Rustbelt metros like Detroit and sprawling Sunbelt metros like Miami, Las Vegas, Tampa, Orlando, and Jacksonville. Meanwhile, a combination of resource-rich metros (like Oklahoma City) and knowledge hubs like Austin and Denver were less hard-hit by the Great Recession.
When determining why some cities are hit harder than others, the study points to two factors. First, the study echoes a wide body of research that identifies the effects of human capital, talent, or a highly educated workforce on economic growth and development. Here, the study finds that less-educated metros suffer from more severe recessions, most likely because their workers have a tougher time finding or keeping jobs during a period of economic decline. Second, metro economies that are more dependent on housing (or have “lower housing price elasticities,” in economic terms) are also more vulnerable to recession. These metros are also far more vulnerable to swings in housing prices.