Economy Lifting Most U.S. Cities as Growth Quickens, Report Says

Nearly every U.S. city’s economy is projected to grow this year, including areas that struggled to rebound from the recession, according to a report released by the U.S. Conference of Mayors.

All but seven of 363 metropolitan areas will see economic gains as the national expansion accelerates, according to the report today prepared by IHS Global Insight, an economic analysis company. That would mark a shift from 2013, when about one-fourth contracted despite national growth.

“We’re in the real recovery, not just the recovery that economists talk about,” said Mayor Scott Smith of Mesa, Arizona, president of the mayors group, in an interview. “We see light at the end of the tunnel.”

The economy expanded during the third quarter at the fastest since 2011, driven by increases in consumer spending and business investment, and forecasters estimate that growth will accelerate this year.

While the nation has yet to recover all the jobs lost since the 18-month recession that began in 2007, the gains this year should be felt broadly across the country, according to the report. Nearly all metropolitan areas are projected to gain jobs in 2014, while 340 will see economic growth of 1 percent or more this year, up from 183 in 2013, the mayor’s group said.

“It’s taken a long time for the economy to ramp up across the U.S.,” said Jim Diffley, chief regional economist for IHS, which is based in Englewood, Colorado. “It’s been a horrible recession, with an even much longer period of recovery.”

Energy Boomtowns

Some of the biggest gains in 2013 were in states where natural-gas production has risen. Midland and Odessa, Texas, were the two fastest-growing metropolitan economies last year. The top 10 also included Sioux Falls, South Dakota; Fargo, North Dakota; and Cheyenne, Wyoming, according to the report. Among the worst performers were Shreveport, Louisiana; Decatur, Illinois; and Binghamton, New York.

Cities are also being helped by a real-estate rebound, Diffley said. A congressional budget agreement, which eases the risk of another government shutdown, has also reduced uncertainty.

“We have become more confident that we’re growing,” he said. “And we don’t have the federal government threatening to shut down.”

Among the areas expected to see fastest growth are the Florida cities of Naples, Port St. Lucie, and Sebastian, all among the hardest hit by the housing market collapse.

The property-market gains are easing the fiscal pressure on cities, which were forced to fire workers and trim spending when diminished property tax collections left them without enough money to cover their bills.

Smith, head of the mayors’ group, said some cities are starting to hire police and firefighters after dismissing them because of the recession. Mayors are hesitant to spend money, given the depth of the downturn, the worst since the 1930s, he said.

“Cities are proceeding with caution,” Smith said.

To contact the reporter on this story: William Selway in Washington at wselway@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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