Sorry New York and San Francisco, these 4 red-state cities could be the future of America

Sorry New York and San Francisco, these 4 red-state cities could be the future of America

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The skyline of Houston, Texas, at sunset.
Houston is the fourth-largest city in the US and the home to 26 Fortune 500 companies.

  • Houston, Dallas, Miami, and Nashville are poised to become economic powerhouses in the US. 
  • Americans and businesses are flocking to these places, often leaving coastal cities behind.
  • The future of the energy, healthcare, and finance industries could be in these cities.

The future of the US economy could be powered by cities in the Sunbelt.

Economic and societal power in the US is shifting away from colossal coastal cities like New York and San Francisco to metropolitan areas tucked below the Mason-Dixon line, according to a recent article from Barron’s. That’s because economic power is flowing to the middle of the country — and places like Houston, Dallas, Nashville, and Miami are becoming hotspots.

Just like New York City has Wall Street and San Francisco has Silicon Valley, Houston has its energy economy and Miami has its proximity to Latin America and growing financial industry. And while Los Angeles has Hollywood and Washington, DC has politics, Dallas has a blossoming environment of diversified business behemoths, and Nashville is a healthcare and tech hub.

“You used to have two coastal power zones where you could live your best life, never really touching down in the red states,” Stanford historian Niall Ferguson told Barron’s. “We now have much more of a multipolar America rather than a bipolar America. That reflects taxes, quality of life, cost of living, the ability to build, and incredibly striking differentials in quality of governance.”

A March Redfin analysis of its user search data found that San Franciso, New York City, Los Angeles, and Washington, D.C. were the top four cities Americans were looking to relocate from. Miami, meanwhile, was the city users were most interested in relocating to — Dallas and Houston ranked eighth and tenth, respectively. Lower taxes and housing costs are among the top factors motivating movers.

Here’s why these four cities could be central to America’s economic future.

An above view of downtown Houston, Texas.
Houston could capitalize on the US’s shift toward renewable energy.

Houston is the fourth-largest city in the US and the home to 26 Fortune 500 companies, trailing only New York City and Chicago.

Major energy companies like Exxon Mobil, Phillips 66, and ConocoPhillips call the city home, and as a result, as much as 40% of Houston’s economy is tied directly or indirectly to oil and gas.

However, renewable energy could provide economic opportunities if the city is open to the transition. By 2040, Houston could receive $250 billion in annual investments tied to the emerging energy industry due to its existing infrastructure and skilled workforce, according to McKinsey.

Home to NASA, Houston is also poised to be the center of the space industry.

Dealey Plaza, The Grasy Knoll, Old Red Museum of Dallas County History & Culture in Dallas, Texas.
Companies are moving to Dallas in part because the city is full of young workers.

Between 2021 and 2022, Dallas experienced the largest numerical population increase of any US metro area, with a net increase of over 170,000 people, according to the Census Bureau.

Since 2010, over 175 companies have moved their headquarters to the North Texas area that includes Dallas. Additionally, other business behemoths are expanding to the city. For example, Goldman Sachs has plans to add around 5,000 jobs in Dallas once its new regional office is completed.

During a time when some companies are struggling to find workers, Dallas offers a growing cohort of “prime working age” individuals, who are between the ages of 23 and 38, Steve Hagerman, the chief technology officer at Wells Fargo, previously told Insider. The city also offers many graduates with tech degrees, which could position it to grow as a tech hub in the future.

Miami, Florida
Miami’s proximity to Latin America could help its economy in the years to come.

Miami’s population increased by 1.7% between 2021 and 2022, the fourth fastest rate among the 50 largest US cities. Amazon founder Jeff Bezos is even moving there after 29 years in Seattle.

While the city’s crypto boom hasn’t gone according to plan, other companies in the finance industry have flocked to the city as well, including the hedge funds Elliot Management and Citadel.

Given its proximity to Latin America, Miami also is home to the headquarters of over 1,100 multinational corporations. In the years ahead, strong immigration levels to the city could continue to boost its workforce and economic growth.

Miami is also a popular destination for tourists and the wealthy. Between 2012 and 2022, the number of Miami millionaires grew by 75%, one of the fastest rates in the country, according to the consulting firm Henley and Partners.

Nashville, Tennessee
Nashville’s healthcare industry has created thousands of jobs for residents.

Nashville is the top city in the US for job opportunities and earnings potential, according to an analysis by the HR firm Checkr released earlier this year. In May, the Milken Institute’s rankings of the nation’s best-performing cities — based on labor market performance and economic opportunities — put Nashville at number four.

“While Nashville is a well-known and popular tourist destination, its economy is bolstered by more than just the music and hospitality industries,” the report noted.

The city, which has been called the healthcare capital of the US, is home to over 500 companies in the industry, including 17 public healthcare companies. The industry accounts for roughly 570,00 jobs in the Nashville area.

Nashville also has the potential to grow its tech industry. Amazon and Oracle are among the firms that have invested in the city in recent years.

Entering the limelight could have its challenges
A commercial building being built in Dallas, Texas.
Growing populations in cities can contribute to rising housing costs.

Despite the economic gains, the advancements of these cities will likely come with some obstacles.

To varying degrees, these cities are already getting a glimpse of how high housing costs can plague an area with surging demand.

What’s more, these southern metros and their high temperatures could also face future challenges tied to climate change. Miami, in particular, could be vulnerable.

Meanwhile, it could be a battle over bragging rights in the years to come between the coastal cities and Sunbelt metros as to which offers the most economic power.

Read the original article on Business Insider

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