There's a cliché that young Americans head to the bright lights of the big cities to find their fame and fortune. It's still true, except that those cities aren't necessarily just the big ones anymore. And let's be thankful for that, because it's the U.S. mid-tier cities that are surprisingly generating the growth that will spur the global economy over the next decade.
Collectively, large cities -- which we define as metropolitan areas with a population of 150,000 plus -- in the United States are the center of gravity of the economy, generating almost 85 percent of U.S. gross domestic product (GDP) and nearly 20 percent of global GDP today. While New York and Los Angeles, the two American megacities with populations of more than ten million, have continued to tower above all others among the 259 large U.S. metropolitan areas, it's the 257 "middleweight" cities -- with populations of between 150,000 and 10 million -- that generate more than 70 percent of U.S. GDP today. The top 28 middleweights alone account for more than 35 percent of the nation's GDP.
It is America's large cities, and particularly the broad swath of middleweights, that will be the key to the U.S. recovery and a key contributor to global growth in the next 15 years. Large cities in the United States will contribute more to global growth than the large cities of all other developed countries combined. We expect the collective GDP of these large U.S. cities to rise by almost $5.7 trillion -- generating more than 10 percent of global GDP growth -- by 2025. While New York and Los Angeles together are expected to grow at a compound annual rate of 2.1 percent between 2010 and 2025, the top 30 middleweights (measured by GDP) are expected to outpace them with a growth rate of 2.6 percent.
What is behind the clout of middleweights in the United States? For a start, there are simply more of them than in other developed regions. Of more than 600 middleweight cities around the developed world, the United States is home to 257 of them. East Asia (Japan and South Korea) has 123 and Western Europe 183, both regions with GDP levels comparable to the United States. But it's not just that the United States has more middleweights than other developed regions -- its middleweights also have relatively high per capita GDP. Taking both their number and their relative prosperity into account, U.S. middleweights generate a much higher share of the country's total GDP -- more than 70 percent -- than those, say, in Western Europe, where they contribute just over 50 percent.
It is the dynamism of American middleweights that is behind their collective strength; but it is the diversity of their performance -- not the similarity -- that is striking.
Although New York, Los Angeles, and Chicago maintained their top three positions between 1978 and 2010, many middleweights among the top 30 cities measured by GDP have undergone considerable change. Five cities dropped out -- New Orleans, Louisiana; Milwaukee, Wisconsin; Columbus, Ohio; Indianapolis, Indiana; and Buffalo, New York -- and were replaced by Riverside, California; Portland, Oregon; Tampa and Orlando in Florida; and Sacramento, California. Within the top 30 there are changes as well: Cleveland, Ohio, for instance, dropped from 17th place to 27th, while Phoenix, Arizona, rose by 15 places, from 28th to 13th.
Overall, differences in population growth explain the most as to why some cities have grown faster than others, rather than differences in per capita GDP growth. Cities that have achieved the strongest economic growth have expanded their populations by two and a half times the rate of the national average. While slowing population growth and mobility will make it harder for U.S. cities to sustain rapid population growth rates, cities that want to grow their GDP will need to pay attention to attracting and supporting expanding populations. Many observers argue that it is the mix of local industries in a city that determines its ability to grow. This is true -- but to a much lesser extent than often assumed. Our analysis suggests that the mix of sectors explains only about one-third of the above-average growth of America's most rapidly growing cities.
Even when narrowing our focus to the strongest performing cities, again there is no single path to success -- no unique blueprint that all urban leaders should pursue. The cities that outperform their peers simply find ways to make the most of the economic opportunities they face, get lucky, or both. Some cities have been able to reinvent themselves; many others make the most of their endowments or their location.
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