United States most recession-proof cities

The “Keep Austin Weird” campaign must have worked, because the Texas capital is among the country’s oddball cities that bucked the downturn.

In fact, Texas cities starred on the new list of recession-proof metro areas, with six of 21 spots, according to MetroMonitor, a quarterly report released by Brookings Institute’s Metropolitan Policy Program.

These 21 large metro areas were singled out by Brookings for keeping their labor and housing markets stable and posting robust economic activity during the past few years.

In fact, all but five of the 21 leading cities have economic output levels that top records set just prior to the recession.

“Most of these cities have some general characteristics in common,” said Howard Weil, author of the report and a fellow at the Metropolitan Policy Program. “They didn’t experience huge housing bubbles followed by a crash, and their economies weren’t rooted in the auto industry.”

Weil added that a number of cities are also government centers, like Austin, where job cuts have been limited and spending remains healthy.

Gross metropolitan product, a broad measure economic activity, has surged the most in the nation’s capital. In first quarter of 2010, the economy in Washington D.C. expanded by 6.3% from its pre-recession peak. Austin also touts considerable growth at 5.3%.

“We’ve seen a significant increase in government spending since the start of the recession, and even though it has been spread throughout other parts of the country, some of that extra spending stays in the D.C. metro area,” Weil said. “But if government hawks succeed in cutting spending, we could see the growth in Washington slow down.”

Meanwhile, as unemployment rates climbed higher in every major city across the nation during the recession, the jobless rate in Austin only rose to 7.1% in March 2010 from 3.5% three years earlier. During the same period, the U.S. unemployment rate spiked to 9.7% from 4.4%.

“We have a stable base of employment with the University of Texas, one of the largest universities in the country, and the second largest state government with 65,000 employees,” said Austin Mayor Lee Leffingwell.
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Similarly, job losses were muted in Austin, as employment in Texas’s capital city dropped by 2.3% from its pre-recession peak through the first quarter of 2010.

Leffingwell said that a decade ago, Austin worked to attract high-tech companies, and while some manufacturing jobs in the sector have since diminished, companies are still expanding their workforce, including Samsung Electronics, which recently announced a $3.6 billion project that boosts the company’s payroll by 500 permanent positions.
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And during the last two quarters, Austin welcomed job growth, adding nearly 8,000 new jobs during the period and increasing payrolls by more than 1%. Augusta, Ga.; Jackson, Miss.; Dallas; and Honolulu also posted similar gains.

“We’ve worked hard to diversify our economy and are aggressively targeting companies focused on renewable energy, medical technology and digital media,” Leffingwell said.

Earlier this year, Texas invested $1.4 million through its Texas Enterprise Fund to lure Facebook into opening its first office outside of Palo Alto, Calif., in Austin. The social media giant opened the office last month and is actively hiring for its online sales and operations team. Facebook said it plans to hire over 200 employees in Austin over the next four years.

Meanwhile, further south, McAllen, Texas, which also made the top 21, has been boasting job growth for the past four straight quarters, and employment in the city has only declined by a modest 1.1% during the recession.

Houston, another Texas city, is included among the recession-proof metro areas for enjoying the smallest slide in housing prices at just 0.5% through the first quarter of 2010 compared to three years earlier. Austin followed close behind with a 0.6% dip during the same period.

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