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.
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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.
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 neighbours 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 labour Statistics.
- 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.
- 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.
- 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 fuelled 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.
- 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.
- 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%.
- 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%.
- 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.