Cities Propel Majority of Economic Growth in the U.S., Report Finds

Key Takeaways

Cities represent 90.8% of U.S. GDP, significantly driving national economic growth.
Forecasts indicate slow GDP growth of 1.3% for 2025, primarily due to declining investments and challenging economic conditions.
Housing prices are expected to rise at a decreasing rate, indicating market supply challenges.

Economic Impact of U.S. Cities

According to the 2025 Metro Economies Report by S&P Global Market Intelligence, cities are crucial to the U.S. economy, contributing 90.8% of the national GDP. Released by the U.S. Conference of Mayors during its annual meeting in June, the report highlights that cities also account for 89.5% of personal income, 92.1% of wages, 88.2% of employment, and 90.3% of employment changes. Notably, the gross metro product of the top ten metro areas—totaling $9.67 trillion—exceeds that of 37 states, which contribute $9.45 trillion.

Karen Campbell, associate director at S&P Global Market Intelligence, emphasized that almost all U.S. growth stems from its 386 metropolitan areas. However, recent national trends, including higher inflation and tariff fallout, are posing challenges. The report forecasts sluggish growth of 1.3% for 2025 and 1.7% for 2026, highlighting that a 2% growth rate is essential to maintain living standards. Falling below this rate weakens the economy’s capacity to foster growth necessary for improving living conditions.

Investment levels significantly influence growth. Campbell indicated a contraction in business investment over the past two years, predicting that this trend will persist into 2026. Lower investment translates to delayed returns, hampering economic recovery.

The housing market also plays a vital role in economic health. June’s National Association of Home Builders and Wells Fargo Housing Market Index recorded a low of 32, the third-lowest since 2012. Despite this, housing prices in the top 100 metro areas continue to rise, driven by a lack of supply. Campbell forecasts a slowing in price increases, estimating a rise of 5.4% in 2024, followed by 3.3% in 2025 and 2.7% in 2026.

Additionally, Campbell pointed out risks such as domestic terrorism and trade policy uncertainties, which could adversely impact manufacturing-heavy metropolitan areas and their exports. Although all states saw year-over-year employment growth in the first quarter, the pace is decelerating compared to the previous year. Federal job cuts in the Washington, D.C., Maryland, and Virginia areas are expected to have significant implications for these regions in the coming years.

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