The San Francisco Bay Area may be the economic king of America, but Texas is next in line to the economic throne, according to a new study by Business Insider.
The analysis shows the San Jose, California, metro area — better known as Silicon Valley — ranks as the top economy among the country’s 40 largest metro areas, followed in second place by the San Francisco metro area, its next-door neighbor. Coming in at No. 3 is the Austin metro area.
Business Insider says Austin had the second highest rate of job growth among the 40 largest metro areas, with employment rising 3.7 percent between February 2017 and February 2018. The region’s February 2018 unemployment rate of 3 percent was tied for third lowest, and its 4.9 percent growth rate for GDP (a key measure of economic output) was the third highest in 2016.
William Mellor, vice president of Austin-based economic development consulting firm AngelouEconomics, says he views the Austin area as being No. 2 in the rankings, since the San Francisco and San Jose metros are essentially lumped together as one giant Silicon Valley.
Mellor says the Austin area is benefiting economically from an exodus of businesses and people from high-cost Northern California.
“Austin is still relatively affordable compared with Silicon Valley, both in terms of cost of living as well as the tax and operating environment,” he says.
Mike Berman, senior vice president of communications and marketing at the Austin Chamber of Commerce, notes that Austin continues to be one of the fastest-growing regions in the country thanks to a “wonderful combination” of a relatively low cost of living, top-notch talent, a diverse population, and a high-quality lifestyle.
In ranking the economic might of the country’s 40 largest metro areas, Business Insider took into account their unemployment rates, average weekly wages, job growth rates, GDP per capita and GDP growth rates.
So, how did the other Texas metro areas fare in the Business Insider rankings? Houston is toward the bottom of the pile. Like Austin, Dallas-Fort Worth has plenty to brag about, while San Antonio is in the middle of the pack.
Rank: No. 34
Houston was one of only two among the 40 largest metro areas to see a drop in economic activity in 2016, with a GDP growth rate of negative 3 percent, but its average weekly wage of $1,187 in the third quarter of 2017 was the seventh best.
Mellor says Hurricane Harvey, which bashed the Texas Gulf Coast in 2017, likely put a dent in the Houston area’s economic standing.
“I would expect Houston to be much higher up in the rankings in subsequent years,” he says.
Rank: No. 7
Dallas was tied for the seventh highest job growth rate among the 40 largest metro areas, with employment increasing 2.7 percent between February 2017 and February 2018. The region’s 2016 GDP per capita of $70,533 was the ninth highest.
“Despite the massive size of the Dallas-Fort Worth region, the metro still puts up job growth figures that rival smaller metros, which is impressive,” Mellor says. “The economic engine in Dallas is firing on all cylinders.”
Rank: No. 19
San Antonio’s 2016 GDP per capita of $48,033 was the third lowest among the 40 largest metro areas, and its average weekly wage in the third quarter of 2017 of $889 was the fourth lowest. However, the region’s February 2018 unemployment rate of 3.4 percent was the eighth best.
“Being in the top 20 is not bad, but there are greater things in store for San Antonio,” Mellor says.
Much of the growth in the San Antonio area is happening in the northern part of the region, he points out, so this means the distance between the southern reaches of the Austin area and the northern reaches of the San Antonio area keep narrowing.
“As the two cities become increasingly reliant on one another, the economic benefits will be seen in both cities,” Mellor says.