Looking ahead to #IHBCBrighton2020 with an ‘IMHO’ signpost from Reuters and Nashville: As U.S. ‘superstar’ cities thrive, weaker ones get left behind

In the depths of the financial crisis, when the world was shunning debt and battening down for the worst, city officials in Nashville zagged in what seemed a preposterous direction and spent $600 million on a new convention centre.

image: city at night by Fiona Newton

Reuters writes:

A decade later thousands of new hotel rooms soar over the site, including a 33-story Marriott that is just a tiny part of the investment and jobs boom that has made Nashville an envy of other cities trying to find their footing, an image cemented when Amazon announced it would put a 5,000-job logistics center here. ‘Look at the skyline, see the activity – whether it is a Monday night or a Saturday night – the city is thriving,’ said Tom Turner, president of the Nashville Downtown Partnership.

It is in many ways a positive story of how new winners can emerge even after a devastating recession. But it also represents a major fault line in the recovery that followed: Winning places like Nashville have won big, often for reasons that can’t obviously or quickly be replicated, while much of the rest of the country has struggled to stay even or slipped behind. It is a schism that helped elevate Donald Trump to the presidency with his massive support in less populated and slower-growing areas. The divide is also preoccupying U.S. central bankers and economists worried about what happens if large portions of the country never bounce back.

‘The superstar cities have pulled so far away,’ said MIT economist Simon Johnson …  In many ways the country has seemingly recovered from a 2007-2009 recession that was the worst downturn since the 1930s. Unemployment is near a 50-year low, household income has been rising, and the country is at a point in the business cycle when workers typically see their most robust gains.

But a Reuters analysis of federal data shows just how unevenly the spoils of growth have been divided. In a ranking of 378 metropolitan areas by how their share of national employment changed from 2010 to 2017, 40% of the new jobs generated during that time went to the top 20 places, along with a similar share of the additional wages. Those cities represent only about a quarter of the country’s population and are concentrated in the fast-growing southern and coastal states. None were in the northeast, and only two were in the ‘rust belt’ interior – Grand Rapids, Michigan, and a rebounding Detroit.

Nashville ranked 11th on the list, keeping company with other southern towns like Charlotte and Atlanta, and the usual fast-growth suspects like Seattle and San Francisco. The drop from there is steep. The next set of 20 cities captured about 10% of the jobs created from 2010 through 2017, close to their roughly 7.5% share of the population….

Among the decade’s winners, many have an obvious story to tell – Houston as a long-time oil town amid a boom in U.S. energy production or San Francisco as the epicenter of all things tech. But interviews with entrepreneurs and officials in Nashville point to a mix of factors behind its success, including some that were out of the city’s control, such as the state’s lack of an income tax, and others associated with its unique local assets. The once-in-a-generation decision to gamble on the convention center shows the importance of political leadership, something Federal Reserve officials and economists have begun to see as central to a local jurisdiction’s success. But it also depended on the city’s celebrated country music roots and seven-night-a-week year-round party scene…

With rock-bottom interest rates and companies competing aggressively for building work, ‘you could never build at that price again,’ said Turner of the convention center. ‘It gave the city a different way of looking at things… Private sector jobs in Nashville surged 31% since national employment bottomed in 2010, from 622,000 to around 820,000 through 2017, double the national job growth rate of around 15%, according to federal data. The 40 top job-generating metro areas saw employment expand 23% during those years. Jobs in other metro areas grew around 11%, and in counties outside of metro areas the job growth rate was around 4.5%. And there are quirks of history. Nashville’s downtown zoning rules had been notoriously strict. When they were eased in the 1990s, the result was fast growth from a low base, as builders turned empty land into new neighborhoods.

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