Cities Run an Uneven Race to Pre-Pandemic Health

As COVID cases rise, the country is going through another round of lockdowns.

Small- and medium-sized businesses, especially ones that rely on in-person interaction, will face the risk of closing, which will mean job losses. Until a vaccine is widely disseminated, Oxford Economics says, “millions of workers in arts, entertainment, and recreation; accommodation and food services; and other services will remain without a job.”

Cities that rely on tourism, like Las Vegas, New Orleans and Orlando, are especially exposed until there is a vaccine. Popular ski and outdoor destinations face the same challenges. In large cities, like New York and Los Angeles, the closure of bars and restaurants puts many businesses in jeopardy.

But with a vaccine on the way, there are better days ahead. Oxford Economics projects employment growth of 2.6% for the US overall in 2021. It predicts that some of the worst-hit cities, like New York, Las Vegas, Orlando and New Orleans, will be some of the fastest recovering metros when their key leisure and transport sectors fully re-open. It also says manufacturing hubs like Detroit and Buffalo are set for strong growth in the year ahead. However, these job gains will follow deep losses in 2020.

Oxford says tech hubs like Seattle, San Francisco, and Raleigh will round out the top 10 fastest growing metros in 2021. These areas also saw greater job losses in 2020.

Beyond the cities that suffered the greatest in 2020, the largest gains will be found in metros positioned to benefit from the approval and roll-out of COVID-19 vaccines, including Trenton, NJ, and Durham, NC. Oxford notes that vaccines will drive an increase in pharmaceutical jobs and supply-chain industries such as packaging, distribution and administration.

The largest net job gains through 2024 compared to pre-recession levels will come in tech hubs, such as Austin, San Jose, Seattle and Raleigh, according to Oxford. It also says lower cost cities away from the coasts, such as Phoenix, Dallas, Denver and Charlotte, will grow by 4% or more over the next five years, compared to pre-recession levels.But overall, GDP will return to pre-recession levels in the US. Leading that charge will be the tech-five: San Jose, Seattle, Austin, San Francisco and Raleigh, which should hit pre-recession GDP levels within a year of the vaccine dissemination.

While cities like San Francisco have been hit hard in the pandemic, people see these large metros coming back. 

“They attract talent,” Chris Ludeman, global president, Capital Markets, for CBRE said on the company’s “The Weekly Take” podcast. “They attract innovation. They attract capital. And when those three things come together, they’ll be near term disruptions.”

But one-third of the country, employment gains are forecast to be lower than before COVID hit. Large and small manufacturing hubs throughout the Midwest that lack a significant exposure to the strong growth sectors will lag in the recovery, according to Oxford. Metros like Cleveland, Detroit, and Buffalo won’t hit pre-recession GDP levels until sometime in 2022.