Sorry, New York and San Francisco: These 4 red-state cities could be the future of America
Jacob Zinkula
- 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 US economy could be powered by cities in the Sunbelt.
Economic and societal power in the US may be shifting away from colossal coastal cities such as New York and San Francisco to metropolitan areas tucked below the Mason-Dixon line, as Barron's recently reported. That's because economic power is flowing to the middle of the country — and places such as Houston, Dallas, Nashville, and Miami are becoming hot spots.
Just as 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.
A Redfin analysis from March of the company's user search data indicated San Francisco, New York City, Los Angeles, and Washington, DC, were the top four cities Americans were looking to leave. Miami, meanwhile, was the city users appeared to be most interested in relocating to — Dallas and Houston ranked eighth and 10th, respectively. Lower taxes and housing costs are among the top factors motivating movers.
"You used to have two coastal power zones where you could live your best life, never really touching down in the red states," Niall Ferguson, a Stanford historian, 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."
The South has the highest job openings rate and the lowest unemployment rate of any region, according to a Bank of America report published on December 7. What's more, in recent months, the region has seen the largest uptick in credit card spending. The economic growth of cities like Houston, Dallas, Nashville, and Miami are among the reasons why.
Here's why these four cities could be central to America's economic future.
Houston
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 such as ExxonMobil, 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.
But renewable energy could provide economic opportunities if the city is open to the transition. Time reported on data from McKinsey that suggested by 2040, Houston could receive $250 billion in annual investments tied to the emerging energy industry because of its existing infrastructure and skilled workforce.
Home to NASA, Houston is also poised to be the center of the space industry.
Dallas
From 2021 to 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, more than 175 companies have moved their headquarters to the North Texas area that includes Dallas. And other business behemoths are expanding to the city. Goldman Sachs, for example, has said it plans to add about 5,000 jobs in Dallas once its new regional office is completed.
Steve Hagerman, the chief technology officer at Wells Fargo, previously told Business Insider during a time when some companies were struggling to find workers that Dallas was offering a growing cohort of "prime working age" individuals who were between the ages of 23 and 38. The city also offers many graduates with tech degrees, which could position it to grow as a tech hub.
Miami
Miami's population increased by 1.7% from 2021 to 2022, the fourth-fastest rate among the 50 largest US cities. Jeff Bezos, the founder of Amazon, even said he was 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 more than 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. A report from the consulting firm Henley and Partners said that from 2012 to 2022, the number of Miami millionaires grew by 75%, one of the fastest rates in the country.
Nashville
Nashville was ranked as the top city in the US for job opportunities and earnings potential in 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 said.
The city, which has been named the healthcare capital of the US, is home to more than 500 companies in the industry, including 17 public healthcare companies. The industry accounts for roughly 570,000 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.
Despite the economic gains, the advancements of these cities will probably 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 the climate crisis. 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.
Have you moved to Houston, Dallas, Miami, or Nashville over the past few years and are willing to share why you relocated? If so, reach out to this reporter at jzinkula@insider.com.
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