There are 382 metropolitan statistical areas (MSAs) in the United States, and nearly 70 percent have populations less than 500,000. While regional analyses of economic development and innovation have tended to focus on metro areas with populations above 500,000, there has been increased interest in exploring the economic dynamism of relatively small metro areas (i.e., those with less than 500,000 people).
Recently, the Federal Reserve Bank of Atlanta launched a research project on the economic dynamism of small cities. An outcome of this project was the creation of an economic dynamism index based on 14 indicators related to the demographics, economic performance, human capital and infrastructure of metropolitan statistical areas with less than 500,000 people. As one of the 245 MSAs included in the study, the Evansville MSA is shown to be in the medium-high economic dynamism quartile, with strong anchor institutions and industrial structure being important drivers of growth.
The closure of Alcoa's smelting plant in 2016 was a drag on output and employment in the Evansville metro area. However, new investment in the health care and hospitality sectors provided a boost in economic activity that will continue in 2017.
Relatively strong growth in the education, health care, and leisure and hospitality sectors in 2016--combined with increases in personal income and announcements of future fixed investments--provide the basis for projecting increased output, income and employment in 2017.
Nominal personal income for 2016 is estimated to have increased by 3.9 percent and real gross metro product is estimated to have increased by 3.2 percent. In 2017, Evansville metro area output is forecasted to increase by 2.6 percent, the number of jobs is projected to increase by 1,800, nominal personal income growth is forecasted to increase by 5.6 percent, while the unemployment rate is projected to be 4.2 percent.
The unemployment rate in the Evansville metro fell from 4.7 percent in January 2016 to 4.4 percent in August 2016. Meanwhile, the national unemployment rate slightly increased from 4.9 percent to 5.0 percent over the same time period. Job gains occurred primarily in the following sectors: education, health care, and leisure and hospitality. The primary sectors experiencing jobs losses were manufacturing and professional and business services.
On average, homeowners experienced an increase in existing-home prices over the year, from an average of...