The global recession officially ended in 2010. Since then many countries have begun experiencing economic growth again. However, North American and Western European nations are recovering at a much slower pace than the rest of the world. In fact, the slowest-growing metropolitan areas are located in the United States, Western Europe and earthquake-damaged Japan, according to Brookings Institute’s Global Metro Monitor 2011. 24/7 Wall St. has examined the Brookings report to identify the world’s largest cities that just cannot seem to recover.
Brookings Institute’s Global Metro Monitor 2011 rated the recovery of the 200 largest metropolitan regions in the world. The rankings are based on a combination of the change in income and employment in each city between 2010 and 2011. According to the report, the fastest-growing cities are located outside North America and Western Europe, while all the slowest-growing ones are within those continents.
Read: Ten Cities Crushed By The Global Recession
When it comes to large metropolitan economies, both the U.S. and Europe are being outpaced by the rest of the world. But unlike many cities in Western Europe, cities in the U.S. are generally recovering — albeit slowly. In the U.S., both income and employment in the cities increased 0.9% between 2010 and 2011. The country, however, is not recovering evenly. Nine of the world’s slowest-growing 25 metro regions are located in the U.S. But the U.S. also has 20 cities among the fastest-growing 100 areas as well.
Europe is a different story altogether. Eight out of the 10 metro regions with the worst growth are located in Western Europe. According to the Brookings report, “metro economies are … affected by the strength or weakness of their geographic neighbors and key trading partners. Nowhere was this clearer last year than in Western Europe, where crises affecting the eurozone hampered growth across many of the continent’s metropolitan areas.” With the exception of Germany, the European Union has generally stagnated. Austerity measures, imposed to reduce eurozone nations’ deficits and pay down sovereign debt, have only slowed these regions further.
The U.S economy has begun to recover as a nation, with a few exceptions. It is perhaps not surprising that the main cause for the slow growth in Western Europe is also hurting some American cities — mainly cuts in government expenditures. In Richmond and Sacramento, the two American cities on the list, the government is among the biggest employers. But with austerity measures imposed, just like in the eurozone, these cities have been particularly hurt by government layoffs. Also similar to eurozone cities, the port city of Richmond has been hurt by declining trade.
24/7 Wall St. examined Brookings’ 2011 Global Metro Monitor report, which ranked the 200 largest global metropolitan regions based on a combination of the change in income and employment in each city between 2010 and 2011. We specifically looked at the 10 metropolitan regions where employment and income contracted or stagnated. Brookings provided economic information by country on GDP, income, population and the annual changes. In our analysis of these 10 regions, 24/7 Wall St. included employment statistics and industrial profiles of the American cities from the U.S. Bureau of Labor Statistics.
These are the 10 metropolitan areas that have not recovered from the global recession.
10. Richmond, U.S.
> Change in employment (2010 – 2011): -1%
> Change in income (2010 – 2011): +0.2%
> Population: 1.27 million
> Income per capita: $48,083
> GDP: $61 billion
The city of Richmond, Va., experienced the 10th slowest economic growth among the world’s largest cities last year. Employment dropped 1% between 2010 and 2011 while the U.S.’s increased 0.9% during the same time period. The reason, according to the report, is because the city relies heavily on government jobs — more than one in six jobs, according to the BLS. Government employment, though, is one of the few areas that continues to worsen on a national level. In addition to government, Richmond’s economy also relies on its port, which further exposes the city to the slowed global economy. According to Senior Research Analyst Emilia Istrate, continuing difficulties in the eurozone have hurt international trade. This has affected Richmond more than other major U.S. cities.
Also Read: Spain’s Unemployment Situation Becomes Hopeless
9. Valencia, Spain
> Change in employment (2010 – 2011): -0.9%
> Change in income (2010 – 2011): -0.2%
> Population: 2.56 million
> Income per capita: $23,165
> GDP: $59 billion
Most of the eurozone struggled during the recession. Several countries, including Spain, Portugal and Italy, were hit particularly hard. Employment in many of the eurozone’s major metropolitan areas generally worsened, but none suffered as much as Valencia, Spain. In a single year during the recession, the number of employed people in the country dropped by 10%. Between 2010 and 2011, employment declined another full percentage point and income declined 0.2%. Valencia is one of just 12 large cities in the world to experience a decline in both income and employment last year.
8. Barcelona, Spain
> Change in employment (2010 – 2011): -1.2%
> Change in income (2010 – 2011): +0.2%
> Population: 5.43 million
> Income per capita: $29,767
> GDP: $162 billion
Like Valencia and the other major Spanish cities, Barcelona has been hurt by Spain’s floundering economy and a national unemployment rate in excess of 20%. According to Brookings, the metropolitan region experienced particularly strong growth and then an even worse crash, similar to the one seen in Las Vegas. During the prerecession boom, between 1997 and 2007, employment increased an average of 3.3% per year, one of the highest rates in Europe. Housing construction overwhelmingly fueled growth in Barcelona. The collapse has been as severe and Barcelona remains one of the slowest growing cities in the world, with a 1.2% drop in employment between 2010 and 2011 and income barely rising.
7. Naples, Italy
> Change in employment (2010 – 2011): -1.1%
> Change in income (2010 – 2011): -0.1%
> Population: 3.98 million
> Income per capita: $17,723
> GDP: $70 billion
Italy is on the verge of a recession following implementation of strict austerity measures. While most of the large European cities were severely affected by their respective country’s collapsing economy, this was not always the case. In Italy, for example, according to Brookings: “Venice-padova posted modest growth in income and employment thanks to a strengthening business and financial services sector, ranking it 130th overall.” Meanwhile, Naples “shed jobs and stagnated on income, ranking it 194th overall.” Between 2008 and 2009, employment decreased by 3.7%, and an additional 1.8% the following year. Between 2010 and 2011, it dropped another 1.1%, even as national employment in Italy actually increased slightly.
Also Read: Americans Want Government Aid for Housing, But Lack Ideas
6. Madrid, Spain
> Change in employment (2010 – 2011): -1.4%
> Change in income (2010 – 2011): +0.1%
> Population: 6.4 million
> Income per capita: $33,208
> GDP: $212 billion
Madrid is the third Spanish city on the list. It is also the country’s capital. Before the recession (between 1993 and 2007), Madrid’s employment was growing at an annual rate of 3.7%. Between 2008 and 2009, it dropped 5.7%, and has since dropped an additional 2%. Income fell more than 5% between 2008 and 2010, but actually increased slightly last year. Earlier this month, the Spanish government announced the first set of austerity measures to be imposed. This likely will have an immediate impact on the hundreds of thousands of government employees in the capital city.
5. Sacramento, U.S.
> Change in employment (2010-2011): -1%
> Change in income (2010-2011): -0.8%
> Population: 2.18 million
> Income per capita: $42,283
> GDP: $92 billion
The second American city on this list, the slowest-growing city in North America is not Detroit or Cleveland, but Sacramento, Calif. Sacramento grew rapidly in the prerecession years, growing employment at nearly double the level of the rest of the country. The city’s growth was partly due to the of the hundreds of thousands of residents that moved from the neighboring San Francisco region. According to the Brookings report, “60 percent of the decline in employment [in the city] originated in local/non-market services, of which government employment accounts for about half.” Like Richmond, Sacramento has a substantial population of government workers, which, due to regional austerity measures, were one of the hardest hit labor forces in the past few years. More than one in four nonfarm jobs in the region are public servants.
4. Seville, Spain
> Change in employment (2010 – 2011): -2%
> Change in income (2010 – 2011): -0.3%
> Population: 1.86 million
> Income per capita: $20,166
> GDP: $38 billion
Seville is the fourth and final Spanish city on this list. When the four largest cities in a country are among the world’s slowest growing metropolitan regions, it is a sure sign the country faces long-term economic troubles. Between 1993 and 2007, Seville’s employment was increasing at a rate of 3% each year. During the same period, income was increasing by 2.7% per year. Between 2008 and 2009, employment dropped an astounding 8.1%, while income dropped 5.5%. Between 2009 and 2010, employment dropped an additional 2.4%, while income fell 1.2%.
3. Dublin, Ireland
> Change in employment (2010 – 2011): -3%
> Change in income (2010 – 2011): -0.3%
> Population: 1.72 million
> Income per capita: $55,578
> GDP: $95 billion
In the years leading up to the recession, Ireland was considered Europe’s biggest success story. The country was attracting more new companies than anywhere else in Europe. Between 1993 and 2007, employment was climbing at 4.3% per year, and median income increasing at 5.6% per year. Both of these were the highest growth rates in Europe. Ireland’s housing market was one of the cornerstones of its stellar growth. And, like in the U.S., its housing market was hit particularly hard when the global economic crisis began. Besides the cities in Spain and Italy, Dublin was of the only metropolitan regions still in full-blown recession between 2009 and 2010, with income dropping 1.8% and employment falling a world-worst 4%.
2. Lisbon, Portugal
> Change in employment (2010 – 2011): -2.4%
> Change in income (2010 – 2011): -2.8%
> Population: 2.84 million
> Income per capita: $24,194
> GDP: $69 billion
After Greece, many believe Portugal is next in the eurozone to reach crisis level. In the years leading up to the global recession, Lisbon’s employment levels were increasing at a modest 0.8% per year compared to other large cities. But its bust was among the worst. According to the Brookings report, the capital city currently has the second-worst declining metropolitan economy in the world. The report states: “Similar to Dublin and Athens, Lisbon’s economy suffers because of poor national and regional macroeconomic conditions. Unable to finance its budget deficit on commercial financial markets, Portugal sought and obtained a bailout from the International Monetary Fund.” The deal with the IMF required strict austerity measures, which further exacerbated the metro region’s — and the country’s — already stagnating economy.
Also Read: Only Two Horses Left in the Smartphone Race
1. Athens, Greece
> Change in employment (2010 – 2011): -3.5%
> Change in income (2010 – 2011): -4.8%
> Population: 4.14 million
> Income per capita: $24,585
> GDP: $102 billion
According to the Brookings report, the bottom performer among the world’s largest cities is Athens — ground zero in the still unfolding European fiscal crisis. Even after an international bailout and continued austerity measures, Greece remains on the verge of an economic collapse not seen in half a century. Recently, talks on a potential restructuring of the country’s debt stalled. Without an agreement, catastrophe seems all but inevitable. In the past two years, income has declined more than 10%. Between 2009 and 2010, income fell 6%. Between 2010 and 2011, it fell an additional 4.7% — the worst in the world. During that time employment also declined by 3.5% — also the world’s worst.
Michael B. Sauter and Ashley C. Allen
Credit card companies are handing out rewards and benefits to win the best customers. A good cash back card can be worth thousands of dollars a year in free money, not to mention other perks like travel, insurance, and access to fancy lounges. See our top picks for the best credit cards today. You won’t want to miss some of these offers.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.