Nashville and Phoenix have landed on the list of major US cities expected to continue growing in 2025, even amid fears of a recession.
Controversial tariffs, immigration policies and federal spending can create uncertainty and slow growth, economist Gerald Cohen told the USA Today Network.
“Job creation continues to look quite healthy,” he said. “There was not much heat in the economy despite a lot of smoke.”
Cohen, the chief economist at the Kenan Institute for Private Enterprises at the University of North Carolina, led a team of researchers who predicted the top medium-sized and large cities predicted to continue growing in a report titled “Employing American cities.” The long-standing project is a partnership between the Institute and the fifth third bank, unlike many other public lists of growing cities, and is delved deep into a variety of economic factors beyond population growth.
Among the metropolitan cities, Austin tops the list of growing urban labs, while Nashville is listed fifth mostly for its prosperity in the music and entertainment industry and its status as a national healthcare hub. Phoenix, home to the heartfelt real estate market, has landed at No. 10.
In the mid-sized city, Amarillo, Texas, took the top spot for expected growth, while Des Moines ranked fourth. Florida’s Space Coast, known as Palm Bay in this study, ranked 10th. A key driver for Des Moines is its position as a financial hub. The space coast is fixed through engineering, manufacturing and defense operations.
A network reporter from USA Today, who lives and works in the city that made the list, took a closer look at the unique path to success in his hometown and how fellow residents benefited or suffered along the way.
A wider area survey
The Kenan Institute team defined and analyzed “economic trajectories,” known as extended metropolitan areas that can be reached across the geographical boundaries of metropolitan statistical regions of the US Census. The track includes counties where cities, towns and counties are linked together.
Research findings show that growing cities, including Phoenix and Nashville, have an “environment” to attract up to 100 miles of work, homes and amenities from the city centre to attract up to 100 miles of workforce. This is part of a post-pandemic trend that is expected to continue.
Other factors that drive the growth of the best cities include affordable housing, green space, lack of state income tax, walkable areas and warm climates, according to the Institute’s findings.
Cohen, a research professor in financial studies, said it is too early to measure the impact of ongoing policy changes launched by President Donald Trump.
Evolving immigration policies and historic tariffs, including products from Mexico and Canada, could impact supply chains and labor, drive costs for cars and other products, and help slow consumer spending.
“If we want to continue growing the economy, we need foreign-born workers,” Cohen said. “Foreign-born workers are very powerful saying they are additives to the economy. They do jobs that are not the population we were born in.”
Productive workforce
The project also examines the city’s ability to attract and maintain workers and their productivity.
Nashville, known as Music City, has the highest per worker input rate in the leisure and hospitality category, Cohen said.
“This is twice the productivity rate in the US, 20% higher than No. 2 in Las Vegas,” the economist said.
In Nashville, economic output adjusted for inflation exceeds $100,000 per worker in leisure and hospitality fields, Cohen said, compared to the US average of $50,000.
Increased productivity usually comes from three things: Better skilled people by hiring more skilled workers or providing additional training to existing staff. Upgraded technology or equipment. and innovation.
Amazing Financial Hub
Des Moines defeated New York City as the city with the largest percentage of gross domestic product or economic output from the financial sector, Cohen said.
Iowa capital has a thriving market in banking and insurance, and is pushing finance to get almost 26% slices of GPD, but the national average is above 7%. Des Moines defeated all 150 cities investigated.
Robots help drive the growth of this city
The Florida Space Coast, home to the Kennedy Space Center, is moderate, but ranks sixth in terms of the production of durable goods in all 150 cities surveyed.
The area makes everything from boats and electronics to military explosive detection robots for rockets that can withstand extreme environments, to explosive robots.
Over the past decade, the Space Coast manufacturing sector has grown at 9% per year compared to the annual average, which is just above 1% per year, Cohen said.
Selling the Valley of the Sun
The robust commercial and residential real estate market and the successful insurance sector will help drive the Phoenix economy.
The area has the fifth largest real estate sector of the 50 major cities surveyed. Commercial and residential real estate constitutes more than 17% of the region’s GDP compared to the national average of less than 14%.
The median home prices for the Valley of the Sun in April were $445,000, about $30,000 more than the national median existing home prices.
The population growth rate in the Phoenix region is over 4% per year, twice the national average.
“What’s noteworthy about this region is that it has a great combination of both people influx and productivity boosting, which drives the economy,” Cohen said.
“It was a special sauce there.”