Spotting high-flyers among sluggish Midwest US metros
The Midwest economy has persistently underperformed, reflecting both its reliance on industrial manufacturing, but also its tendency to underperform in manufacturing, compared with other regions, and largely missing out on the tech boom. This has led to net out-migration in much of the region. But some metros are bucking the trend and have become hubs for certain industries, attracting skilled workers and driving growth. Examples include Minneapolis, Indianapolis, Kansas City, Ann Arbor, Cedar Rapids, and Grand Rapids.
What you will learn:
- Over the five years to 2019 the Midwest economy saw annual GDP growth of just 1.3%, compared to 2.4% nationally. And of its 11 largest metros, only Cincinnati grew faster than the US. Chicago has the benefit of a diversified economy, with many globally significant employers, but it has been held back by the slow growth of the region overall. The same is true for other Midwest metros.
- Sluggish Midwest growth and better job opportunities elsewhere have resulted in significant out-migration from the Midwest, and that has continued even though other regions such as the West Coast have become increasingly expensive. Chicago has been particularly hard hit by weak population growth and an exodus of skilled workers.
- However, some places are doing better. Minneapolis is home to clusters of corporate headquarters, and finance and professional services firms. Indianapolis and Kansas City are hubs for logistics firms. Ann Arbor, Cedar Rapids, and Grand Rapids have all managed to attract some of the high-growth sectors under-represented in the larger metros. Bolstered by outdoor amenities and skilled workers, we expect medium-term growth prospects in these metros to be the strongest in the region.
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