A TALE OF TWO SAN'S



For an insider comparison of the past and present of the recovery, compare San Antonio and San Jose. In 2009, San Antonio seemed like America's most recession-proof city, and it had the most resilient housing prices and median incomes in the country. But in December 2011, it was one of the 20 worst-performing metros as total employment hit a post-recession low. San Jose, by comparison, was one of the 40 weakest metros in the country by the end of 2009. Today it's the high-tech heart of the country, among the leaders in both job gains and overall economic growth.



From MetroMonitor -- a Brookings barometer of the fastest-recovering cities by growth, employment and housing prices -- here's a look at the strongest (BLUE) and weakest (RED) cities in December 2009 and then in December 2011. Watch as the blue dots move from the Great Plains and state capitals toward knowledge capitals in the West, manufacturing strongholds in the Great Lakes region, and natural resource hubs throughout the country. Today, the top 20 are led by newly resurgent metros: Grand Rapids, Boise City, Nashville, New Orleans, Phoenix, Portland, San Jose, and Toledo. All of the hold-overs from 2009 are either in Texas or Oklahoma: Austin, Dallas, Houston, and Oklahoma City. Rounding out the 20 fastest-recovering metros are: Bakersfield, Ca., Cape Coral, Fl., Charleston, Ogden, Ut., Worcester, Ma., and Youngstown.*



2009



2011



ASSUME THE FUTURE



What's the third phase of the recovery? It's a million-dollar question for which I have no good answers, only assumptions. Here are three:



Assumption (1): The City Makes a Comeback. After two decades of suburban and exurban expansion, we're in the middle of a re-urbanization revolution that you can see in the Brookings graph below. For most of the 2000s, we spread apart. In the last three years, we came together in cities and dense suburbs. The three fastest growing cities by population between 2007 and 2010 were Austin and Raleigh and Provo, Utah (home to Brigham Young University): high-productivity knowledge bases with lower cost of living than, say, New York or Los Angeles, and large research universities. That's good news for fans of the creative class.



Assumption (2): The San Antonio Model Weathers the Storm. Not every American will become an engineer. Not every barber can have millionaires for clients. Not every city can be San Francisco. Two years ago, I visited San Antonio, a classic feds/eds/meds metro, and I deemed it the tortoise of the U.S. economy: Slow, steady, and winning the race. That was in 2010. This is 2012, and government cuts have taken their toll. Still, I think this is a durable model. Local and state tax revenue will bounce back with the economy and stanch the bleeding in public sector employment. Health care employment will continue to grow. Plenty of cities that don't have high-tech scenes will still lean on feds/meds/eds and grow at a slow and steady pace.