Texas Cities Top List of Best Performing Metro Areas

Texas cities take four of the top five spots in a job creation and growth survey.

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After weathering the recession better than anywhere else in the country, cities in the Lone Star State are holding strong and improving faster as the United States shows signs of growth

According to a new report by the Milken Institute, a nonpartisan, economic think tank, the San Antonio metro area is in a better position than any other in the country. Three other Texas cities (El Paso, Austin, Fort Hood) made the top five of its "2011 Best-Performing Cities" list. Fort Collins, Colo., at third place, was the highest-ranking non-Texas city. 

"They did well during the recession itself, but have also been recovering stronger," Ross DeVol, chief research officer at Milken and one of the report's authors, says of the Texas cities. DeVol says a combination of factors such as less restrictive business regulations, increased trade with Mexico, and a higher demand for domestic oil drilling have kept Texas' economy strong. 

The institute looked at job and wage growth, especially in the high-tech sector, to determine which cities were contributing the most to the national economy. 

Although Texas' economy held up over the past year, the most encouraging news, according to DeVol, was the recovery of Silicon Valley and other information technology hubs that struggled during the recession. 

San Jose jumped 81 spots to number 51 on the list, while San Francisco, Portland, Seattle, and Cambridge, Mass., saw similar gains.

"They got hit hard during the recession, but they're starting to come back as we're seeing increased demand for IT domestically and abroad," DeVol says. "I think that story will continue to unfold through the next year, they'll be doing much better." 

Other cities that saw a big recovery, such as Merced and Ventura, Calif., merely saw a return to the mean after being decimated by the housing bubble. 

Cities hit hardest this year include many along the Gulf Coast, such as Lafayette and Baton Rouge, La., that have failed to recover from the BP oil spill. Cities with many state government workers such as Albany, Richmond, and Tallahassee, also suffered sharp declines due to tightening state budgets. 

Going into 2012, DeVol thinks midwestern manufacturing hubs will begin to recover as the demand for American goods grows overseas.

"I think we're going to see places like Peoria, Fort Wayne, and Milwaukee begin to move up the list," he says. "We'll see a few more [cities whose economies] are more auto-related as demand for cars and auto parts increases."

San Antonio topped the list, but here's how the rest of the top 10 shook out.

City 2011 Rank 2010 Rank
San Antonio 1 14
El Paso 2 9
Fort Collins, Colo. 3 50
Austin 4 2
Killeen / Fort Hood Texas 5 1
Salt Lake City 6 49
Anchorage, Alaska 7 8
Huntsville, Ala. 8 3
Provo-Orem, Utah 9 25
Kennewick, Wash. 10 5